This Kurdish people was created as
Kurdish by Allah …The Arab people is part of the Arab nation
and the Kurdish people is part of the Kurdish nation...
Jalal Talabani 
The Kurds are prone to repeating the mantra that they are the largest nation in the Middle East without a state, though not for lack of trying, fighting, and sacrificing. After decades of struggle, the Iraqi Kurds appear to be finally in a position to live in peace and prosperity within the safe boundaries of Iraqi Kurdistan, whether it is a de facto state, a de jure state, or just simply a broadly autonomous "federated region" within the greater federation of Iraq. In the words of MEMRI's Baghdad analysts, the Kurds are "the luckiest horse likely to collect the prizes of the American war to bring down the Saddam regime," and it is among the Kurdish people that the Americans are most likely to find true friends and allies.
The rest of the Iraqi provinces or governorates, mired in terrorism and sectarian violence, envy Kurdistan. It is a magnet for Iraqis seeking work or seeking a safe environment. It is also a model for the Iraqi Shi'a in the central and southern parts of Iraq who are striving against heavy odds to create similar federated entities for themselves.
The Kurds have put in place all the ingredients of a modern state - reasonably well-defined borders, common language and culture, a modern army subject to command and control, a flag, an elected parliament, a government, diplomatic/consular representations by and in Kurdistan, international airports, a bustling economy, and, above all, national identity and a strong sense of accomplishment. But, for now, sovereign Kurdistan is not a reality, and the cause of Kurdish self-determination has many opponents.
The Kurds were conquered by the Arabs in the seventh century and have since lived under the rule of others, including the Ottoman Empire from the 13th century to the early part of the 20th century. With the collapse of the Ottoman Empire after WWI, the victorious powers negotiated, with Turkey, the Treaty of Sevres, which was signed on August 10, 1920. Under Article 62 of the Treaty, the entire Kurdish population, including the parts now residing in Turkey, Iraq, Iran, and Syria, was to be granted political autonomy. Article 63 stipulated that "The Turkish Government hereby agrees to accept and execute the decisions… mentioned in article 62 within three months…" 
The post-imperial Turkish government under Mustapha Kemal (Ataturk) rejected the Treaty of Sevres because of provisions it found unacceptable. A new round of negotiations started, culminating in the Treaty of Lausanne of July 24, 1923. Turkey was no longer obligated to grant the Kurds autonomy. The treaty divided the Kurdish region among Turkey, Iraq, and Syria, and it has remained divided since.
The Kurds of Iraq have had their share of troubles and disappointments with the various governments of Iraq since the monarchy was established in 1922 with the help of the British government. These troubles reached their zenith under the Saddam regime which used chemical weapons and mass deportations to suppress Kurdish national aspirations. In 1991, encouraged by the United States, the Kurds, like the Shi'a in southern Iraq, rose up against the Saddam regime, only to be crushed by it when the United States left both the Kurds and the Shi'a to their own devices. Then, with public pressure mounting in favor of the Kurds, the U.S. and Britain established a no-fly zone for Iraqi planes over Iraqi Kurdistan. This was a turning point in the history of modern Iraqi Kurdistan.
The no-fly zone was followed in 1996 with 13 percent of oil revenues earmarked for the "Northern Provinces" [i.e., Kurdistan] from the proceeds of the Oil for Food Program. This turned Kurdistan into an increasingly prosperous part of Iraq, even while the rest of the country was descending into poverty.
The progress that was made in Iraqi Kurdistan did not go unnoticed in the rest of Saddam-controlled Iraq, thanks to an uncommonly vivid and detailed report on the situation of Kurdistan that was published in the former Iraqi daily Babil, owned by Saddam's son Uday. In the report from Kurdistan, Babil's reporter made these observations:
This is supposedly an Iraqi land, but no one utters the name 'Iraq'… Here they use cellular phones called kurdistell, they watch a Kurdish TV… Its people argue that they enjoy freedom unknown to neighboring countries. Unbelievable changes have taken place here. Imagine: Most of the children born after 1991 do not speak Arabic… The surrounding neighboring countries of Syria, Turkey, and Iran do not wish to see [Kurdistan] as a model for their minorities, even though they represent 23 million people, the largest group without a state in the Middle East." 
The fall of Saddam signaled the end of oppression of the Kurds and lifted their spirits. But the Kurds soon discovered that most of the Iraqi new political leaders, who only a short while earlier, while serving in the opposition, had promised to support Kurdish national aspirations, were now beginning to renege on old promises. The tone had changed. Iraqi nationalism had quickly dominated the political discourse in Iraq, and the Arab-Kurdish alliance had begun to fray. Kirkuk, Iraqi leaders argued, was to remain an Iraqi city; the whole issue of federalism, which had been one of the cornerstones of the new constitution promulgated on December 15, 2005, was seen as a Kurdish ploy that needed to be brought under the demands of multiple revisions. Kurdish hopes for national reconciliation and for a full Iraqi recognition of their unique status as a federated region within a unified Iraq were frustrated, and there was even a sense of betrayal. Soon, voices began to be heard calling for secession from Iraq and the establishment of a sovereign Kurdistan. Thus, taking advantage of the current turmoil and uncertainty in Iraq, the Kurds have moved forward in cementing the foundations of their federated status - a fait accompli that will be next to impossible for any future centrally oriented Iraqi government to undo.
Baghdad and Erbil - Violence vs. Construction
More than a decade after the visit of Babil's reporter to Kurdistan (endnote 3), an Iraqi-born reporter from the London daily Al-Sharq Al-Awsat described the dramatic contrast between Baghdad and Erbil, the capital of Kurdistan, as he had viewed both from an airplane window. When he approached Baghdad, his birthplace, it looked desolate, overwhelmed by garbage accumulating everywhere, and covered by a dusty sky often mixed with the smoke of gunpowder.
Three weeks later, as he flew from Baghdad to Erbil, he was struck by the sight of cranes around the Erbil International Airport engaged in the construction of "a forest of residential and commercial buildings." At the airport, a big sign welcomes the passengers in three languages: Kurdish, Arabic, and English. The airport itself is undergoing a major expansion to facilitate the landing of the largest aircrafts, both civilian and military. Not far from the airport there is an area surrounded by a colorful fence, where 1200 villas are being built at prices ranging from $150,000 to $700,000 per unit.
A significant indicator of the economic situation in the two cities is that while unemployment is about 60 percent in Baghdad, in Kurdistan there is a shortage of labor. Not surprising there is a flow of Iraqi professionals and workers from the central and southern provinces in Iraq into Kurdistan, seeking employment opportunities and personal safety. 
Massive construction is also going on in Suleimaniya, where just one of the construction companies from the United Arab Emirates and Kuwait is investing up to $60 million to construct a shopping mall, a four-star hotel, and five high-rise commercial buildings. 
The Unified Kurdistan Government
For almost 30 years, Kurdistan was run by two parallel governments, one headquartered in Sulaymaniya under the Patriotic Union of Kurdistan (PUK) headed by Jalal Talabani and the other headquartered in Erbil under the Kurdish Democratic Party (KDP), headed by Mas'oud Barzani. The relationships between the two governments and their leaders were often hostile, resulting in a military conflict in the mid-1970s that was brought to an end by the Clinton administration. In January 2006 the two governments agreed to unify, and on May 7 the 111-member National Kurdistan Council (Parliament) voted unanimously in favor of a unified government made up of 27 ministries and 40 ministers, with the two major political parties KDP and PUK each controlling 11 ministries. The five remaining ministries were assigned to smaller political parties. Four ministries - Finance, Peshmerga, Justice, and Interior, will continue to operate separately in each of the two previous regional administrations, but they are to be unified within a year. This arrangement has left the impression that the unification of the two administrations remains somewhat tentative.
Under the unification agreement, the president of the region and the prime minister will be from the KDP, while their deputies and the speaker of parliament will be from the PUK. This agreement will remain in force until new elections are held at the end of 2007. The ceremony for installing the new government was witnessed by representatives from the central government, including the vice president Adel Abd al-Mahdi and diplomats from many countries, including the U.S, the U.K., Iran, and Syria. Noticeably absent was a diplomat from Turkey.
The oath of office taken by the regional prime minister and the ministers is almost completely separatist, both in word and intention. It reads: "I swear by God the Almighty that I will loyally defend the unity of the people and the land of Iraqi Kurdistan, that I will respect the law and I will serve the interest of the people."  The oath of office offers no loyalty to Iraq or its constitution.
In his speech welcoming the creation of Kurdish Regional Government, Barzani made two significant comments: First, he asked that the government make serious efforts to restore to Kurdistan, by "legal and constitutional means," Kurdish territories that were taken away from it; and second, he extended a hand of friendship and cooperation to all neighboring countries while emphasizing: "The style of threats has gone for good. Henceforth, we shall not accept threats from anywhere." 
The vote of confidence by the Kurdish parliament for the new Kurdish government coincided with the election of Jalal Talabani as president of Iraqi for a second term. It is significant to note that while most of the Iraqi press refers to him as "President of Iraq," the Kurdish media refers to him as "The President of the Federal Republic of Iraq" [ra'is jumhuriyat al-iraq al-fidirali]. It is a message the Kurds never tire of pressing upon the Iraqi political public.
Symbols of Autonomy
Apart from regional elections for parliament and the appointment of a regional government almost entirely independent from Baghdad, there are other symbols and other measures that the KRG has taken to underscore its autonomy from the dysfunctional government in Baghdad. Some stand as a reminder to the Iraqi political establishment that the Kurds will not hesitate to go it alone if some of their fundamental demands, such as the inclusion of Kirkuk into Kurdistan, are not met, or if the central government in Baghdad tries to assert its authority over the internal affairs of KRG. It is a delicate balance that the Kurds are striving to maintain, at least for now - on the one hand, expressing the intention to remain as part of Iraq, and, on the other hand, seeking to run their lives and their regional government almost entirely independently from the central government in Baghdad. This balance is so delicate that any number of external shocks, whether political or economic, could make it go out of kilter.
The Kurdish Flag
National flags are symbols of a nation's identity, history, culture and geography. Iraq was caught by surprise when, in September 2006, Mas'oud Barzani, the president of the Kurdish region, issued a directive that all the government agencies under the KRG should lower the Iraqi national flag in favor of the Kurdish flag. But for Kurds, the current Iraqi flag with Saddam Hussein's handwritten words "Allah Akbar" is a symbol of atrocities committed against them by the Saddam regime, and the Kurdish leadership has vowed never to live under its shadow again.
For Jalal Talabani, the president of Iraq and a Kurdish national, the issue of the flag represented the dilemma between affaire d'etat and personal emotion. For Talabani no less than any other Kurdish leader, the Iraqi flag symbolizes many of the evils perpetrated against the Kurds by the regime of Saddam Hussein. But, as he told an interviewer: "This is the flag of Iraq until it is replaced. It is true that it is the flag of the ancien regime but it is the flag of Iraq, and in my capacity as the President of Iraq, it is inevitable that I serve under it."  When the flag crisis broke out following Barzani's directive, Talabani never wavered in his support for the Iraqi flag being raised in Kurdistan and everywhere else in Iraq. Talabani even withheld any public criticism of the Barzani's decision. Always diplomatic, he attributed Barzani's decision to what he characterized as "a constitutional void" and pledged himself to respect any Iraqi flag sanctioned by parliament. Other Iraqis would argue that Barzani's directive about the flag must be viewed as yet another challenge by the Kurds to get Iraq accustomed to their ultimate destiny.
Expanding Diplomatic Contacts
The Iraqi constitution permits each of the 18 provinces of the country to send a representative to each of the Iraqi diplomatic missions abroad. The Kurds have opted to establish their own representative offices in a number of countries.
At the same time, there is a clamoring from countries to open consulates in the Kurdish region, and the permission to do so is sought not from the Iraqi central government in Baghdad but from the Kurdistan regional government in Erbil. The countries that have either opened or plan to open such consulates are the United States, the Czech Republic, France, Italy, the United Kingdom, Lebanon, the United Arab Emirates, and Iran (two consulates). It has also been announced that United Nations will open in Erbil its largest office in the Middle East.  In that connection, the UNDP representative arrived in Erbil in May 2006 and was received by the coordinator for the UN in the province of Kurdistan.  The relatively high degree of security and the assurance that they can operate with a large measure of safety in Kurdistan is the biggest incentive for foreign governments to open their consulates there. But the push to locate consulates there is also a reflection of the economic and strategic significance of Kurdistan in the context of both Iraq and the Middle East.
The visit by Secretary of State Condoleezza Rice to Kurdistan in early October for discussion with the Kurdistan regional government is another indication that while, at least for now, Kurdistan remains politically part of Iraq, it is nevertheless an entity to be dealt with outside the formal diplomatic channels with the central government.
In November 2005, Amr Moussa, the secretary-general of the Arab League, visited Kurdistan. The President of KRG, Mas'oud Barzani, visited the U.S. and was received by President Bush. He has also traveled to China and to a number of European countries where he was received in a manner befitting a head of state.
American Air Bases
In his interview with TheWashington Post,  President Jalal Talabani called on the United States to build two air bases in Kurdistan to protect it from foreign incursion. This is perhaps another example of Kurdistan's determination to be treated as a separate entity from Iraq.
Arabic Language Reduced to Third Place
In presenting his government program the Prime Minister of KRG indicated his government's support for teaching the Turkmen, Chaldean, Assyrian, Armenian and Arabic languages. The Arabic language was mentioned last. He then proceeded to say that the KRG will adopt the instruction of the English language throughout Iraqi Kurdistan "in all stages and for all ages." In short, Kurdish and English will be the two leading languages, while Arabic, like the languages of other minorities, will be an elective subject. It is no secret that a whole new Kurdish generation, including many who studied at Kurdish universities, has little or no proficiency in Arabic. That situation raises a serious question about their future integration into a federated Iraq.
One of the key issues pending between the Kurdistan Regional Government and the central government in Baghdad is that pertaining to the exploration of natural resources, particularly oil and natural gas in Kurdistani territory.
The Iraqi constitution, which was approved in a referendum in December 2005, is ambiguous on this issue. Under Article 111, "oil and gas are the property of the Iraqi people in all regions and governorates." However, the following article distinguishes between existing and future oil and gas fields. Article 112 assigns the central government the responsibility for "managing the oil and gas" extracted from existing fields together with the producing regions, provided the revenues are equitably distributed in accordance with the size of population, and while taking into consideration those regions that were unfairly deprived by the Saddam regime. The draft Kurdish constitution has interpreted Article 112 to mean that all mineral and water resources will also fall under the jurisdiction of the KRG, subject to the approval of the Kurdish parliament. 
When the Iraqi oil minister Hussein Shahristani questioned the KRG's right to sign exploration agreements with foreign companies, the Prime Minister of KRG, Nechirwan Barzani, basically told the oil minister to mind his own business. He then warned that if Baghdad continues to meddle in Kurdish autonomous affairs, Kurdistan may opt to consider seceding from Iraq. In a subsequent interview with the Financial Times the Prime Minister complained that the central government was not transferring to KRG its share of oil revenues.  In a testimony before a Congressional Committee, Qubad Talabany, the KRG's representative to the U.S., said Iraqi Kurds have little confidence that "an Iraqi government in Baghdad, including one with Kurdish ministers, will safeguard their fair share of national resources."  At the same time, President Talabani himself told the Iraqi press that any agreement relating to the exploration of oil or natural gas must be approved by the Ministry of Oil, which is in the process of preparing a new law that would regulate such agreements.  As noted earlier, President Talabani often finds himself in the unenviable position of having to act as president of all Iraqis without sacrificing the fundamental interests of his own people.
Signing of Oil Exploration Agreements
The Kurdish regional government signed in 2005 an exploration agreement with the small Norwegian company DNO to search for oil in the Kurdish region. The first location selected for exploration was approximately 12 miles east of the city of Zacho on the Turkish-Kurdish border. DNO has announced the discovery of approximately 100 million barrels of light crude. Encouraged by the initial results, the Norwegian company will expand its exploration activities in the area. 
A politically more significant agreement is with the Turkish-Canadian company General Energy, whose first drilling resulted in the production of 5000 barrels/day. The company is committed to drill two additional wells with a production capacity of 20,000 b/d. 
A Canadian company, Western Oil Sand, has also started exploration in four different areas in Sulaymaniya. The initial topographical survey indicates the existence of "huge quantities" of oil.  Other agreements are being negotiated. 
Despite the Kurds' many accomplishments and their determination to forge ahead toward independence at some time in the future, the path which lays ahead remains pregnant with difficulties, including determining the future of Kirkuk, establishing proper governance, and weighing the implications of seceding from Iraq.
The Issue of Kirkuk
The Kurds maintain that the city of Kirkuk is the heart of Kurdistan and should be integrated into the Kurdish region, which currently comprises the three governorates of Dahouk, Erbil, and Suleimaniya. It is Kirkuk, not Erbil, the Kurds would insist, that is the real capital of Kurdistan. In fact, the city has two large minorities, Arabs and Turkmen, but the Kurds maintain that the roots of Kirkuk are geographically Kurdistani, even if the city is not exclusively Kurdish in terms of population structure. The Kurds are so determined to include Kirkuk in their region that they have proceeded to declare the city as their own in their draft constitution and to include it in the administrative map of the region.
The Kurds also have territorial claims on other districts or cities which are geographically outside the three Kurdish governorates but have a majority Kurdish population. The Kurdish official map, currently in use in Kurdistan, includes the districts of Aqra, Sheikhan, Sinjar, Telaafar, Telkaif (mainly Christian whose population prefers integration into Kurdistan) and Qaraqosh (part of the city of Mosul) in addition to some districts in the Governorates of Dyala and Wassat. When asked about the borders of their region, the Kurds respond, "Wherever the camel stops is the border of Kurdistan." 
The Kurds have stated forcefully and often that they have absolutely no desire of reaching any compromise on the future of Kirkuk other than including it in the Kurdish region. 
Issues of Governance
While signs of prosperity are palpable across Kurdistan there are also signs of corruption, nepotism and, generally, poor governance. Also, like in the rest of Iraq, there are shortages of electricity and gasoline, which are causing a lot of hardship to large segments of the Kurdish population.  The shortage of electricity is mitigated by the use of electric generators, which seem to be common in many homes.
Further, there is the issue of poverty. Despite rapid economic growth generated by local and foreign investments, many families still live below the poverty line. A reporter of the London daily al-Hayat underscored the vast differences in the standards of living in Erbil, the capital of RGK. Local residents compared the differences in income and quality of life between two quarters in Erbil, the rich quarter of Azadi and the poor quarter of Bihar, as a difference between the earth and the sky. 
The Kurdish Position in Case of Civil War
One of the intriguing questions is what the Kurds would do in the event of a civil war breaking out in Iraq and engulfing the Shi'ite and Sunni communities. The Kurds will do their utmost to stay out of such a conflagration, as they have been doing so far. The Kurds would gain nothing by siding with either of the two sectarian groups and, in fact, there is much for them to gain by watching the conflict from behind their defensive walls. A full-fledged civil war may impel the Kurds to separate themselves from the rest of the Iraq by declaring their independence.  This was, in fact, the tenor of a statement made by Barzani as early as November 2005, and echoed since repeatedly by other Kurdish officials.
The Kurds have also threatened to secede should the central government in Baghdad be taken over by an Islamist party. In the words of the First Lady of Iraq, Hiro Talabani: "I am a Kurd to the marrow but I would not want to live in a fundamentalist Kurdish state for a single day." Another leading Kurdish politician who served as a prime minister in Suleimaniya, Kusrat Rusol, has also threatened to secede should an Islamist political party take over the central government. 
The Threat of Secession
The threat of secession from Iraq in the case of civil war should not be taken too lightly. The threat may be intended to be a warning to the two other sectarian communities - the Shi'a and the Sunnis - to avoid civil war as it would be calamitous for the entire Iraqi people, the Kurds included.
Virulent Reactions to Kurdish Aspirations
The most virulent reaction to Kurdish aspirations was by the Iraqi Republican Bloc, a Sunni group which is opposed to a federalized Iraq. It referred to "decisions and laws" frequently issued by forces seeking through "malicious conspiratorial intentions" to harm the unity of the Iraqi people. These forces "cannot exist without crises and they lack the most basic requirement for proper leadership." The statement both challenges the provisions of the Kurdish constitution which identify parts of Iraq's territory as properly belonging to Kurdistan, and threatens that such inclusion will not occur even "if seas of blood are to flow." This statement was published in the pro-Saddam daily al-Quds al-Arabi, and it is hardly surprising that it has not been published in the Iraqi mainstream newspapers. 
The Iraqi liberal daily al-Zaman points out that it was difficult to claim that the Kurds are going ahead with the creation of a state, but neither can one claim with certainty that they are not going to do so. For 13 years, they have built the foundations of their state, but it has been a silent state. The ultimate question will be the reaction of the Arab countries to the creation of a non-Arab state in their midst. 
The aspiration for an ultimately independent and sovereign Kurdish state runs into the harsh reality that such a state will be surrounded by hostile countries in every direction. Turkey poses the biggest threat to such an entity, particularly if the Kurds succeed in incorporating Kirkuk into their region. With its prospects for admission into the European Union increasingly dimming, Turkey will be increasingly less restrained to use force to frustrate Kurdish sovereignty. At a minimum, Turkey could close its borders with Kurdistan and prevent the movement of people and goods across the border. In the absence of access to ports and overflight rights, an independent Kurdistan will be far worse than an autonomous Kurdish region that enjoys so much freedom and so few constraints.
Kurdistan also faces internal problems. It must convert the slogans of democracy and political competitiveness into reality by establishing the foundations of proper governance and policies.
Finally, the Kurdish people must demonstrate genuine unity, after years of intra-Kurdish disagreement and even bloody clashes. The two historic leaders of modern Kurdistan, Jalal Talabani and Mas'oud Barazani, have agreed to unify their separate administrations, but it is not certain that they have buried the hatchet. The two men must convince not only the outside world but also their own people that henceforth they will march hand in hand to achieve whatever they determine to be in the best interest of the Kurdish people.
*Dr. Nimrod Raphaeli is Senior Analyst of MEMRI's Middle East Economic Studies Program.
 Interview with President Jalal Talabani on al-Arabiya TV, PUK Media, August 30, 2005.
 The Treaties of Peace 1919-1923, Vol. 11, Carnegie Endowment for International Peace, New York 1924.
 Babil (Iraq), October 16, 2002.
 Al-Sharq Al-Awsat (London), June 16, 2006.
 Al-Qabas (Kuwait) February 11, 2006.
 Al-Hayat (London), May 12, 2006.
 Al-Mada (Iraq), May 8, 2006.
 PUK Media, August 30, 2005.
 Al-Mada (Iraq), December 7, 2005.
 Al-Taakhi (Iraq), May 27, 2006.
 The Washington Post, September 25, 2006.
 The Financial Times (London), October 23, 2006.
 KRG Third Occasional Paper, September 28, 2006.
 Al-Zaman (Iraq), October 1, 2006.
 Al-Zaman (Iraq), June 13, 2006.
 Al-Hayat (London), September 29, 2006.
 Kurdish News Agency, March 2, 2006.
 Al-Zaman (Iraq), November 30, 2003.
 Al-Ahali weekly (Iraq), April 21, 2005.
 For more analysis on the subject please refer to MEMRI Inquiry & Analysis No. 215, "Kirkuk: Between Kurdish separatism and Iraqi federalism," March 31, 2005, Kirkuk: Between Kurdish Separatism and Iraqi Federalism.
 On the problem of governance in Iraq, see Bilal Wahab, "Iraqi Kurdistan: Time to get serious about governance," www.carnegieendowment.org/publications/index.cfm?fa=view&id=1878&prog=zgp&proj=zme.znpp#iraqikurdistan.
 Al-Hayat (London), July 4, 2006.
 Al-Sharq Al-Awsat (London), November 7, 2005.
 Al-Sharq Al-Awsat (London), December 10, 2005.
 Al-Quds al-Arabi (London), October 1, 2006.
 Al-Zaman (Iraq), September 18, 2006.