Turkey raises oil threat after Iraqi Kurds back independence

ERBIL/ISTANBUL, Iraq (Reuters) – Turkey threatened potentially crippling restrictions on oil trading with Iraqi Kurds on Thursday after they backed independence from Baghdad in a referendum that has alarmed Ankara as it faces a separatist insurgency from its own Kurdish minority.

Iraq’s Kurds endorsed secession by nine to one in a vote on Monday that has angered Turkey, the central government in Baghdad, and other regional and world powers, who fear the referendum could lead to renewed conflict in the region.

Iraqi Prime Minister Haider al-Abadi’s office said he had been told by Turkish Prime Minister Binali Yildirim in a call that Turkey would break with past practice and deal only with the Baghdad government when purchasing oil from Iraq. [nL8N1M90XG]

Most oil that flows through a pipeline from Iraq to Turkey comes from Kurdish sources and a cut-off would severely damage the Kurdish Regional Government (KRG), which relies on sales of crude for almost all its hard currency revenues.

So far the oil pipeline is operating normally despite Turkish threats to impose economic sanctions on the Kurdish autonomous region in Iraq. Turkish officials, however, ramped up pressure on the Kurds on Thursday.

Yildirim said Turkey would respond harshly to any security threat on its border after the referendum, although that was not its first choice.

Yildirim also said he agreed with Abadi to coordinate economic and trade relations with the central government in Baghdad. He said Turkey, Iran and Iraq may meet to discuss the referendum. [nA4N1L2006]

Turkish government spokesman Bekir Bozdag said Turkish armed forces would stop training Iraqi Kurdish peshmerga forces, which protected oil fields from capture by the Islamic State.

With the region’s largest Kurdish population, Turkey has been battling a three-decade insurgency in its largely Kurdish southeast and fears the referendum will inflame separatist tensions at home.

ECONOMIC BLOCKADE

Kurdish officials say they can withstand an economic blockade because they are self-sufficient in terms of power generation and fuel supply, and they also have fertile agricultural land.

They also say that three quarters of the trucks that cross the Turkish border are heading to territory controlled by Baghdad rather than to the Kurdish region, so the Turkish and Iraqi economies would suffer from any blockade.

But travel to the Kurdish region will become harder if airports in Erbil and Sulaimaniya are closed to international…

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