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As a matter of U.S. foreign policy, the Iraqi-Kurd oil deal is a welcome development. It gives hope of the good faith of new Iraqi government, led by Prime Minister Haider al-Abadi, toward inclusion of the Kurdish minority in governance, and the capacity for statesmanship of both Kurdish and Iraqi leadership on the delicate subject of Kurd autonomy, both in Iraqi Kurdistan and the disputed region of Kirkuk. Equally importantly, the deal restores the flow of oil revenues to the Kurds.

Previously denied by the Iraqi central government, oil dollars are a vital resource to the Kurdish peshmerga fighters who have proven a key U.S. ally in the battle against the Islamic State. One hopes, a healthy flow of oil dollars will renew this most western of Iraqi provinces, and reduce its dependence on America for aid. It validates the rule of law and other principles for which America has given so much to promote in the region.

The bigger picture is more complex. Declining oil prices are having a dramatic effect on marginal petroleum dependent states across the globe, including Iraq. Most agree that America’s technology-driven shale boom has turned the global market upside down, with the U.S. rapidly approaching energy independence, failed states, like Venezuela, careening toward disaster, new adventurism by lapsed hegemons like Russia, and America’s allies all concerned about continued U.S. engagement. In Iraq, ironically, where U.S. has expended significant resources to set up an Iraqi state, American shale is likely to make the going increasingly rough, depressing oil revenues for the time being.

 

Read the full article at Forbes.