Beyond Ukraine: The mystery missile attack in Erbil

For the third instalment of our Beyond Ukraine series, where we analyse the broader, global impact of the invasion of Ukraine, our consultants deployed to northern Iraq to assess the influence this conflict could have on the geopolitics and stability of Kurdish Iraq; and why exactly it has become a target of Iranian attacks.

Background & History

The Kurds, one of the indigenous peoples of the Mesopotamian plains, are an ethnically and religiously distinct group in the Middle East without their own formal, independent state. Since the early 20th century, the Kurds have longed to have their own homeland. With a population between 25 and 35 million, the Kurds are primarily split between Turkey, Iraq, Iran and Syria. Kurdistan generally comprises the following four regions: south-eastern Turkey (Northern Kurdistan), northern Iraq (Southern Kurdistan), north-western Iran (Eastern Kurdistan), and northern Syria (Western Kurdistan).

The Kurdistan region’s primary industries are oil, agriculture and tourism, and importantly, Kurdistan holds about one third of Iraq’s total oil reserves. Historically, conflicts and sanctions have hindered the development of agriculture in the region, however approximately 13% of the region’s land is arable, and agriculture is the second-largest industry, following oil production.

After Saddam Hussein’s removal from Iraq, the U.N lifted some of the sanctions that had been enforced on the Kurdistan Region, allowing oil to be exported. In April 1991, the United States, the United Kingdom, and France established a “safe haven” in Iraqi Kurdistan, barring Iraqi forces from operating there. Within a short time, the Kurds had established autonomous rule, and two main political factions arose – the Kurdistan Democratic Party (KDP) in the north and the Patriotic Union of Kurdistan (PUK) in the south, both parties are family-led and have long dominated the politics of Iraq’s Kurdish Regional Government (KRG).

The two groups harbour long-held ideological and social grievances, that contribute to an atmosphere of distrust – one easily exploitable by outside influence. This invariably leads to one side accusing the other of selling out Kurdish interests. Despite this, for years, both parties abided by an agreement where the PUK would get the Iraqi president of choice, and the KDP would receive the presidency of Kurdistan. More recently, the relationship between these parties seems to have worsened following the recent spate of leadership crises in Iraq, and they have failed to elect a president for the third time on 30th March 2022, missing the constitutional deadline; the political outlook for the region is now considered to be very ambiguous.

Why is Kurdistan so important

The Kurds have played important roles in U.S foreign policy over recent decades, and were pivotal in fighting the Islamic State in 2014. With support from NATO partners, the Kurds pushed back the would-be caliphate and regained control of various northern cities, most notably Mosul in 2016. However, in October 2019, US President Trump announced the withdrawal of US troops from the border between Syria and Turkey. This was a large blow to Kurdish interests, as some Kurds had hoped that their role in the fight against IS could help them win an independent state. So far, however, the Kurds have not been able to gain the international support and recognition that they need to form a Kurdish state. Still, they continue to push for more self-governance and regional autonomy.

The lack of international acceptance of the region leaves the door open for outside influence. Its neighbours, Iran and Turkey, see the Kurdish drive for autonomy as a threat to their borders and internal security, but they also understand that northern Iraq’s oil and gas reserves present an opportunity to expand their regional influence. It is Russia, with the assistance of Iran, however, that has most benefited from the US withdrawal.

Russian influence in the region

Russia had long-held ties with the Kurdish region since Catherine the Great’s reign. When imperial Russia clashed with the Ottoman and Persian Empires, it was here Russia first encountered nomadic Kurdish tribes, and Russian leaders increasingly saw the Kurds as leverage against their rivals. The Kurds came to see the empire as their chief patron, especially by the early 1900s.

Since the US’s draw down of operations in the Middle East, Russia has taken the opportunity to fill the vacuum. In a direct comparison with its focus on Ukraine, Russia regards Iraq, both north and south, to be an integral part of the Iranian sphere of influence. The civil war in Syria that began in 2011 provided the vehicle for Russia to enter the region, secure bases in the Mediterranean and assist Iran in securing influence in the region. With Iran now firmly in Russia’s debt, they requested that Tehran place pressure on the Iraqi government to allow Moscow to achieve complete control over the huge oil and gas reserves in Iraq’s northern region of Kurdistan. In 2017, Russia was successful via state-owned oil company Rosneft.

As part of the deal, the Kremlin provided the KRG with $1.5Bn in financing through a five-year prepayment oil supply deal. They then took an 80 percent working interest in five major oil blocks in the region together with technical equipment assistance. Lastly, they established a 60% ownership of the vital KRG oil pipeline into southern Europe’s port of Ceyhan in Turkey.

Russian corporate interests later expanded, and further deals in the gas sector involving Gazprom were agreed. In addition, the Kremlin still has considerable interest in the south of Iraq, where major Russian oil companies Gazprom Neft and Lukoil are considered the country's centre of oil and gas production.

Russian Influence in the Joint Comprehensive Plan of Action (JCPOA) Nuclear Deal.

Another factor to consider when looking at Russian influence, particularly on Iran, is the Iran nuclear deal agreement, formerly known as the Joint Comprehensive Plan of Action (JCPOA). The JCPOA was a landmark agreement reached between Iran and several world powers, including the US and Russia in July 2015. The terms set out would require Iran to dismantle the majority of its nuclear programme and open facilities to international inspection in exchange for billions of dollars’ worth of sanctions relief.

Whilst Russia has become increasingly isolated over the invasion of Ukraine, Moscow unexpectedly demanded written guarantees that its economic trade with Iran will be exempt from US sanctions, seeking to leverage its relationship with Iran by exploiting its seat at the JPCOA table, and threatening to derail the nearly completed nuclear deal for its benefit.

March 13th 2022 Erbil Rocket Attack – Private Residence

On March 13th, Iran’s Revolutionary Guards Corps (IRGC) claimed responsibility for a missile strike in the city of Erbil, stating on their website that they launched the attack against an Israeli “strategic centre of conspiracy”. They did not elaborate but, in a statement, said that Israel had itself been on the offensive, citing a strike in Syria.

This attack consisted of 12 Fateh-110 missiles, launched from north-western Iran and were accurate to three metres; of the 14 missiles fired, six were successful. Initially, reports claimed the missiles targeted the US consulate but this was soon quashed by both the Iraqi and US governments.

We recently spent some time amongst power brokers in Erbil, to get an understanding of the situation on the ground, and credible sources revealed that the rockets targeted the private residence of Baz Karim Barzanji, the CEO of KAR Group, and one of Kurdistan’s most prominent oil businessmen, who holds no known ties to Israel. Barzanji’s KAR Group built and manages a domestic pipeline in the Kurdish region, according to a Kurdistan presidency official we spoke with. In a lease agreement, it owns a third of the region’s oil export pipeline. Russia’s Rosneft holds the remaining ownership. It was widely stated by Iraqi, Turkish, and Western officials that the attack came partly in response to Israel's plans to export Kurdish natural gas to Turkey and Europe, though Barzanji denied this.

April 6th 2022 Erbil Rocket Attack – Major Oil Refinery Complex

We were due to publish this article earlier this month, when a major oil refinery complex was targeted by rockets in Erbil on April 6th 2022. The refinery is also operated by the Iraqi Kurdish company KAR Group. It was reported that three rockets were fired, with one rocket landing approximately 1 kilometre away from the facility. Multiple security officials stated the attack was launched in the evening from Hamdaniya district, a district is known to be controlled by Iran-aligned paramilitary groups.

The Kalak refinery complex produces crude oil from the northern Kirkuk oil fields that are under federal Iraq control, alongside oil produced for the KRG. A witness said the rockets landed between the villages of Gardarasa and Albulans, from the west, along the Upper Zab River. This secondary attack against KAR Group and Barzanji's interests, demonstrates an escalation that might indicate Russia are leaning to Iran to disrupt the potential sale of gas to Turkey and Europe.

Summary

The Kurdistan region holds significant value to Tehran and Russia, both of which have aligned interests against the West. As the region has become a nexus of competing factions due to its natural resources, it is likely that further incidents will continue in the near future.

The EU may potentially see Kurdish gas as a short-term solution to wean itself of its Russian dependency, something that Vladimir Putin will want to discourage. For Tehran, Russian support in JPCOA negotiations and trade are crucial to maintaining the life of the Iranian economy.

It is anticipated that we will see the EU, UK and the US look to try and isolate Iran from Russia, and apply pressure to their relationship by offering concessions as part of the JPCOA – though this is currently looking unlikely given Russian intransigence. Further, as one of Iran’s last trading partners, and a market still open to Russian businesses, international sanctions are likely to continue bringing these two partners closer together.

Despite the denials of Baz Karim Barzanji, the possibility that KAR Group are seeking to compete with gas exports from Iran and Russia make it highly likely that further escalatory attacks will take place. We assess that these will continue to utilise precision missiles, targeting KAR Group locations or persons that might be influential in its operation. At this stage these attacks look to be a series of warnings. However if these do not achieve their intent, it is possible that attacks will attempt to damage key infrastructure, potentially exacerbating the current fuel crisis.

The volatile political situation in Iraq will also continue to be fertile ground for competing interests to involve themselves further in domestic Iraqi and Kurdish politics, potentially destabilising the country once more as factions begin to solidify around Western and Russo-Iranian interests.