Late winter, 1991. The northern Iraqi city of Duhok is attacked by government forces after an uprising against dictator Saddam Hussein. The brutality of Saddam's response drove tens of thousands of people out of Duhok and into the surrounding hills to shiver and starve in the cold. The ensuing humanitarian disaster prompted the United States and its Gulf War allies to declare Duhok and the rest of Iraq above the 36th parallel a safe haven from Baghdad's attacks.

Late summer, 2004. Duhok is awash in new construction and other signs of prosperity. The highway through the city is clogged with oil tankers heading both to and from Habur, the entrance to Turkey. Dohuk province, along with two others, Erbil and Sulaimania, and parts of the province of Kirkuk have now spent more than a decade successfully self-governing and developing an economy.

Baghdad didn't give these provinces an alternative. In the wake of the Gulf War, the effective withdrawal of the central government from the north and the imposition of an internal embargo left Iraqi Kurdistan without essential services and profoundly isolated.

In May 1992 elections created the Kurdistan Regional Government, or KRG, based in Erbil. The two main political parties, the Kurdistan Democratic Party or KDP and the Patriotic Union of Kurdistan or PUK essentially split control between them. But conflict between these parties that erupted in 1993 led to a divided government according to American University's Carole O'Leary.  "By the time we get to 1996, you had mirror-image regional governments. One, based in Erbil, KDP controlled, one based in Sulaimania, PUK controlled," she says.

Iraqi Kurdistan's post Gulf War economic isolation has compelled it to rely on its trade with Turkey for survival. Patrick Clawson with the Washington Institute for Near East Policy contends that neighboring countries want that dependency maintained. "The Kurdish Region of northern Iraq" he says "has neighbors who are unenthusiastic about a successful Kurdish region such as Turkey, Syria, and Iran."

Integrating Iraqi Kurdistan into the global business community remains a challenge. Everyday instruments of commerce such as credit and wire transfers still do not fuction there, both because of a lack of communications infrastructure as well as a viable banking system. But KRG Ministry of Economics and Finance official Aziz Ibrahim says that work is underway to build these vital financial structures. "We had a problem in not having any connections with other countries," he says.  "But now there is a plan opening private banks. And, these banks will have connections with other countries."

Building a regional economy depends not only on such measures but also on security. The instabilities facing Iraq as a whole since the end of the 2003 war have spilled over into parts of Iraqi Kurdistan. KRG Interior Minister Karim Ajari in Erbil attributes the trouble to outsiders.  "We know the two groups of Ansar al-Islam and Ansar al-Sunni are backed by al-Qaida and have mixed together," he asserts.

The city of Erbil, where part of the KRG sits, has been a target of sporadic terrorism. On February 1, 2004, near-simultaneous suicide attacks against both the offices of the KDP and the PUK killed some 50 people in each. Other killings have followed, including attacks on KRG officials.

Both major Iraqi Kurdish political parties are focused today on the permanent constitution Iraq is expected to write in 2005. The KDP and PUK insist that it must create a federal system for Iraq that allows Iraqi Kurdistan to maintain its regional free hand and its ethnic identity. KDP Politburo Secretary Fadhil Mirani sets forth what his party considers non-negotiable.   "The constitution should be democratic freedom of political activity, also for trade unions, human rights, and rights for women. If any constitution does not contain all these subjects, we will reject it," he says.

Iraqi Kurdistan officials insist that they will continue to work with other factions in the country to build a viable national government respectful of regional identity and group rights. The unanswered question, according to observers, is what the Kurds might do if that is not achieved. The alternatives, they say, are few. For now, as before, independence is not a viable option.