Despite warnings from both the United States and Iraq, Turkish companies, backed by the government, are forging ahead with direct energy agreements with Iraq's autonomous Kurdish region. The deepening trade ties come as relations remain strained between Ankara and Baghdad.
In the past five years, trade relations between Turkey and Iraqi Kurdistan have flourished. Analysts say 2013 could see the Iraqi Kurdish region become Turkey’s second largest trading partner.
The partners are a good match -- the Iraqi Kurdish region is energy rich but needs customers, and Turkey’s rapidly expanding economy is hungry for engery resources as it has little reserves of its own.
Sinan Ulgen, head of the Istanbul-based Edam research institute, says he expects trade to markedly increase.
"There is certainly a number of different initiatives. There are a lot of talks of a, quote or unquote, major agreement, which will more likely than not involve the building of a major pipeline, so that the oil and gas resources of the KRG can be exported to Turkey without relying on the present infrastructure, which gives more leverage to the central government (of) Baghdad," Ulgen said.
Much to the concern of the Iraqi government, Ankara and Turkish companies are increasingly dealing directly with the Iraqi Kurdish leadership.
Earlier this month, a private plane carrying Turkey's energy minister to a meeting with Iraqi Kurdish leader Masoud Barzani was denied access to Iraqi airspace. Iraq's central government insists any energy deals must be made with itself -- not the Iraqi Kurds.
Associate Professor Emre Iseri of Istanbul’s Kadir Has University is an expert on energy geopolitics.
"Baghdad is against direct links with northern Iraq, and the United States is also concerned about Turkey-Barzani relations. I don’t think it's not possible (to) materialize those deals without an agreement with Baghdad. One of the most important things is providing security guarantees for those pipelines. If you have tensions with Baghdad, I don’t think those projects are going to find a solid political ground to be materialized," Iseri said.
The United States has repeatedly warned the Turkish government and Turkish companies against making deals with the Iraqi Kurds, saying it could threaten the integrity of Iraq.
But a Turkish ministerial source told VOA that Americans practice double standards, saying that Exxon, a major U.S. oil company, has made such a deal.
Despite the U.S. pressure, diplomatic columnist Semih Idiz of the Hurriyet Daily newspaper, says the cooperation between Ankara and the KRG is expected to deepen.
"That relationship has developed almost to the point of being strategic both economically and politically," Idiz said.
That cooperation is rooted in the distrust shared by Ankara and Erbil towards Iraqi Prime Minister Nouri al-Maliki.
Analysts say the deepening economic relationship is a means by which Ankara is putting pressure on Baghdad. But analyst Ulgen warns that relationship could ultimately threaten the Iraqi state.
"The Kurdish regional government will try to acquire even more autonomy and (is) possibly on the way to creating an independent state in the region. Turkey has in the return for having much more of a role in the future of the oil and gas resources of the KRG, may actually give a green light to such a prospect," UIgen said.
With Turkey having its own restive Kurdish population, an economically strong Kurdish enclave across its border is seemingly an anathema to Ankara. But the trade revenues are apparently too big for both sides to pass up.