This Week In Iraq

Top Energy Stories

Iraq's Oil Ministry is reviving and expanding a policy of blacklisting companies that work in Kurdistan's oil sector — an escalation of the federal government's efforts to implement a landmark court ruling against the Kurdistan Regional Government (KRG). In a June 12 letter addressed to "all lead contractors and sub-contractors," which was seen by Iraq Oil Report, Hassan Muhammad Hassan, the director general of the state-run Basra Oil Company (BOC), lays out two stark demands: that companies should submit a "pledge" not to work in Kurdistan and that any current contracts should be terminated within three months. "In case of non-commitment," the letter says, "the involved companies will be blacklisted." The letter comes as the Oil Ministry also takes legal action against several international oil companies (IOCs) operating in Kurdistan, as part of a broader campaign to implement a February ruling by the Federal Supreme Court (FSC) that invalidated the legal foundations of the KRG oil sector. Read the full story on Iraq Oil Report.

Iraq’s oil production fell for a second consecutive month in May with output declines from fields both under federal control and in the Kurdistan region. Overall total production decreased to 4.48 million barrels per day (bpd), down 79,000 bpd from April, according to field-by-field data compiled by Iraq Oil Report. Fields under Baghdad’s control averaged 4.04 million bpd in May, slightly below 4.11 million bpd the previous month. Output from fields managed by the semi-autonomous Kurdistan Regional Government (KRG) fell to 438,000 bpd last month, from 455,000 bpd in April, having held steady since the start of the year. Read the full story on Iraq Oil Report.

Interview of the Week

Finance Minister Ali Allawi spoke with Iraq Oil Report about a host of topics affecting Iraq's oil sector and economy, including the aftermath of the Federal Supreme Court's ruling against Kurdistan's oil sector, a stop-gap spending law that was just passed in Parliament, a multi-billion-dollar financing program with China, and payments to Iran for electricity imports. Read the full interview on Iraq Oil Report.

Muqtada al-Sadr Quits Parliament

"If you think what you do for a living is beyond insufferable please remember that there are poor souls out there who have to make sense of what Muqtada Al Sadr says or does for a living." Those insightful words were written by an Iraqi Twitter user known as Local Observer, in the aftermath of Sadr's surprising and perplexing decision to order his entire 73-member political bloc to resign from Parliament on June 12. The resignations were officially accepted and processed by Parliament Speaker Mohamed al-Halbousi. Sadr had controlled the single largest bloc in Parliament — about one-fifth of the seats — putting him in a commanding position to dictate the composition of the next government. Now he has taken his movement out of the legislature. Why?

One obvious factor is frustration. Sadr wanted to form Iraq's first majority government since the fall of Saddam, forging an alliance with Halbousi's Sunni bloc and the Kurdistan Democratic Party (KDP). That would have split the major Shia parties, relegating the Coordination Framework — an alliance of Iran-backed parties — to parliamentary opposition. Those plans were doomed, however, because "Sadr's allies overplayed their hand," according to Abbas Kadhim, writing for the Atlantic Council:

The KDP delivered the first blow to Sadr’s project by presenting a presidential candidate—former Finance Minister Hoshyar Zebari—with little hope of being appointed and insisting that he was their only candidate.

... The KDP, taking advantage of their new strong coalition with Sadr, violated the traditional distribution of political positions that assigned the presidency to their Kurdish partners, the Patriotic Union of Kurdistan (PUK). This KDP encroachment pushed the PUK to join the Shia opposition and some Sunni and independent members of parliament—all amounting to more than one-third of [Parliament] members.

The last blow to the “national majority” proposal was dealt by the Supreme Court, which mandated the presence of a two-third majority of [Parliament] members to achieve a quorum for electing the president. All the opposition needed to do was abstain from attending the election session to block the KDP candidate. Without electing a new president, Parliament cannot proceed to form a new government.

Sadr's apparent solution to this problem is confusing, to say the least. If the Sadrist MPs' resignations are indeed final and irreversible, then they will be replaced by the candidates who finished as runners-up for those seats in the October 2021 elections. Preliminary tallies circulating in Iraqi media suggest the Coordination Framework is likely to gain about 40 seats. In other words, Sadr rejected a compromise in which his Shia political rivals would have a seat in the new government and instead handed over the keys. Harith Hasan, writing for the Emirates Policy Center, cautions against squinting too hard to find the political genius in this apparent self-inflicted wound: "His calculations of gains and losses are not based solely on concrete and rational grounds but also involve psychological, ideological, and emotional factors."

That said, Sadr's move does not constitute a unilateral political disarmarment. "Sadr’s political power is not limited to Parliament," Hasan writes, "it is founded on other pillars, including his ability to mobilize the masses, a robust military wing – the Saraya al-Salam militia – and religious clout. Thus, his tactical sacrifice of influence through his parliamentary bloc does not imply surrendering other avenues of influence."

What could Sadr do with that influence? Hamzeh Hadad hazards a guess in a piece for the European Council on Foreign Relations:

This move allows him to deflect blame for the delay in government formation. It also allows him to express his frustration with all political parties, including his allies, who he does not believe are committed enough to a majority government. However, because parliament is in recess, the new MPs have not been sworn in. As a result, Sadr is positioned to benefit from this move, as it forces his rivals to present more concessions – such as offering lucrative ministries and his choice of prime minister – to keep him in the system. Outside it, he poses a threat to the state, whether through delegitimisation of the political system, the mobilisation of protests, or the spectre of violence.

By having his MPs resign during the parliamentary recess, Sadr is also protecting himself from any backlash from summer protests, as his move attempts to demonstrate his own dissatisfaction with the political elite. In fact, he is in a position to co-opt potential protests and use them as a tool to pressure his political rivals. Even before the October poll, Sadr threatened not to support any government formed without him. Having invested in, and benefited from, the political system for years, Sadr will only leave it if he has concluded that the best route to political dominance is through mass mobilisation.

Sadr may retain major levers of influence, but that hardly means he is in control of what happens next. Hasan lays out three broad scenarios:

1. The Coordination Framework could use its new plurality in Parliament to form a new government. If it does so, however, "there is a significant risk that the Parliament might lack legitimacy in the absence of the party that came first in the October 2021 elections and that forming a government without the Sadrists could clash with the al-Sadr movement that might escalate into an armed conflict."

2. Aware of the legitimacy crisis it might face by forming a government without Sadr, the Coordination Framework might instead decide to hit the reset button on government formation by dissolving the entire Parliament and holding early elections. "In this instance," Hasan writes, "two issues need to be addressed before new elections are to be held: Resolving disagreements over the election law and convincing al-Sadr to participate in new elections."

3. The Coordination Framework and other blocs might persuade Sadr to revoke his decision to withdraw from Parliament, which would require finding a legal justification for his MPs to undo their resignations. "Such a legal escape would not be impossible," Hasan writes, "because prior experiences have shown that the law in Iraq is vulnerable to power calculations and political manipulation."

Whatever happens, more surprises are in store, especially if Sadr continues to position himself outside of the political process. "Although the Iraqi political system no longer faces existential crises, the political infighting among the Shia risks creating a new form of crisis," Hadad writes. "Iraq’s political system may have withstood numerous challenges to it since 2003, but current public dissatisfaction, if manifested through revolution-orientated (rather than reformist) protest, could create a new existential crisis."

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