Foreign drills, internal slicks

Foreign oil companies are being both courted and sidelined by Iraq’s central government

Love and favour can be achieved in the Iraqi energy market if you drill in the right areas. And, for the central government in Baghdad, the country’s semi-autonomous Kurdish region is certainly not one of those areas. Over the last week, temperatures have been rising between the government, the Kurds and external energy firms. Baghdad seems to be dishing out most of the orders, and all its demands seem to follow the theme of ‘Them (the Kurds) or Us’.

In 2011, the US oil giant Exxon Mobil was censured by the central government after it penned a deal with the Kurdish regional government. It has now been given an ultimatum by Baghdad; politicians have been trying to win the Americans over with the prospect of developing the lucrative southern fields. Exxon would like to be able to work in both the north and south of the country but the relations between Iraq’s national government and its restless, independentist Kurds up north have been deteriorating quickly recently.

The Kurdish semi-autonomous region is made up of three of the northern provinces along with parts of three more neighbouring provinces. It has been in charge of its regional politics and its armed forces since 1991. It feels that it is constitutionally allowed to pursue its own oil deals with foreign countries without Baghdad’s permission. The central government says that signing any such agreements behind its back is illegal.

The central government has already been weighing in when it comes to those sought-after southern fields. Earlier in the week, Baghdad signed a deal with the Kuwait Energy and Dragon oil group to explore an area near the Iranian border. However, the government stuck its oar in to ensure that the Turkish affiliate which had originally been involved was kicked off the team. Turkey has been one of the countries doing pipeline deals with the northern Kurds.

These arguments aptly demonstrate the power of the the growing black gold market in the Middle East. They also show us the contentious flare-ups that can arise when outside forces get involved in regional disputes. What may seem a simple problem (who drills where in Iraq) can be shown to be a serious undertaking despite an outsider’s first glance showing both sides to be part of the same country. The Kurdish issue is one of Iraq’s domestic fault-lines but we can find examples of bitter religious and cultural divisions across the region. The Kurdish example includes four nations – any future Kurdistan state would encompass land from Iran, Turkey and Syria as well as Iraq. Then there is the obvious conflict between Israel and Palestinian Territories, which is taking place on disputed territory. Syria, which is suffering from a devastating civil war at the moment that, on a simple level, pits Sunni Muslim rebels against the Alawite-led government (the Alawites are a smaller group, split off from Shia Islam).

In Bahrain, the Shia majority have been demonstrating against their Sunni rulers but their protests have been suppressed, in part, by Saudi Arabia. Despite being wary of Shia unrest in Bahrain, Riyadh has been more than happy to help Sunni rebels in Libya and Syria. In Egypt, Coptic Christians (who number about an eighth of the population) have been on the receiving end of attacks on their churches. The whole region is split up externally and internally along blurry fault-lines.

This is why the choices of companies such as Exxon Mobil cannot be taken lightly. The risks, pitfalls and blood-letting are clear when outside powers try to exert their hard influences on a particular place. But the reaction of the Baghdad government to this current oil argument also shows the significance of soft outside influences inside such unsteady countries. It is all very well planning (although in the case of Iraq it could be argued that the Western forces did not do that as well as they should have done) for the problems and transitions caused by international conflict, or hard pressure. But it is just as important to focus on the soft pressure side of foreign relations – be it who is supplying arms to whom in Syria or who is drilling where in Iraq.

Gangnam style

South Korea joins neighbours with a renewed nationalist outlook and agenda

“A classy girl who knows how to enjoy the freedom of a cup of coffee” – at least this is how South Korean rapper Psy describes his stereotypical woman from Gangnam, a smart neighbourhood of the capital, Seoul. It is unclear what Park Geun-hye, the new South Korean president (who comes from the celebrated suburb), thinks exactly about the phenomenally successful ‘Gangnam Style’ music video that satirises her home streets.

But for better or worse, that video unquestionably raised her country’s profile across the world. Such an unforeseen but welcome publicity drive came at the perfect time for Ms Park.

Her election last month was a landmark moment for South Korea: the nation had its first female leader. It also meant that a controversial bloodline was back in the hot-seat as Ms Park’s father, the authoritarian Park Chung-hee, ruled the country from 1961-1979. (At least this time Ms Park was voted in democratically – her father got into power via a military coup.)

Ms Park brings a zealous patriotism with her into the presidency – and this is a policy that is in vogue at the moment across the region. South Korea has joined China, Japan and North Korea in having either a new appointed, elected or inherited leader in the last year. They are all bristling with nationalist fervour, a nerve-wracking agenda that mostly involves ‘chicken and egg’ arguments over rocky outcrops in their shared seas.

For Japan and China, the dispute comes over the Senkaku/Diaoyu islands, and for Japan and South Korea, their argument relates to the Takeshima/Dokdo rocks. (Territoriality forms the background of their bilateral relationship, stemming from Japan’s 1910-1945 occupation of the peninsula.) Last week, the two countries held bilateral ‘quad’ talks. The vice-foreign ministers got together along with Japanese Prime Minister Shinzo Abe and Ms Park. This was the twelfth meeting of its kind since the two nations launched the framework in 2005. The US is particularly anxious that its regional pals Tokyo and Seoul get back together again – both sides let a $57bn currency swap agreement lapse because of the recent flare-up over the disputed islets.

On the part of North Korea, its jostling jingoism is nothing new and is more to do with its behaviour towards the international community as a whole, rather than on any one specific issue.

The election of Ms Park could have brought the space and hope for a new relationship (or, at least, a new outlook) to develop between the North and the South. Kim Jong-un is relatively new to his dictatorial position but he dismissed any faint chance that he would start his rule in a reformist manner by maintaining his father’s close links to the army and maintaining the country’s preference for stage-managed grand-standing over proper reform that will change the lives of his suppressed people.

North Korea successfully launched a long-range rocket in December last year, and while it was timed to mark the anniversary of the death of the despot’s dad, Kim Jong-il, it was also not a coincidence that it happened ten days before South Koreans went to the polls in the presidential vote. It was an inflammatory act and the US Assistant Secretary of State Kurt Campbell warned Pyongyang against further provocations in meetings with South Korean officials today (Wednesday 16 January).

Mr Campbell held talks with Ms Park, underscoring the alliance between Washington and Seoul. Both the US and South Korea, along with Japan and the EU, want further sanctions imposed on the North for its rocket launch last month.

But there is more lift-off talk in the South. Seoul will try again to launch its own rocket between 30 January and 8 February. In 2009 and 2010, its attempts to send a satellite into space failed.  The 140-ton Korea Space Launch Vehicle-1 (KSLV-1) will be ignited at the Naro Space Centre. The rocket was built jointly by Russia and South Korea, and would give Ms Park a triumphant boost of pride ahead of her swearing-in. It would also be a snub to North Korea – showing how to win global plaudits when it comes to launch-pad politics.

Ms Park will not only have to deal with overt North Korean bounciness. Police in Seoul today said that Pyongyang was behind a cyber-attack that disrupted operations at the conservative JoongAng newspaper last year. Hackers attacked the newspaper’s database from an overseas server. Police said that server had the same make-up as one from North Korea through which previous cyber attacks were staged on the South.