The Kurdish region of northern Iraq (Iraqi Kurdistan) and its fight against the jihadist group Islamic State in Iraq and Syria (Isis) has been a rare success story in a region plagued by increasing chaos and violence.

Close coordination with the US helped the Kurds stop Isis’ advance across Iraq in August last year. Since then Erbil has further strengthened its defences against the group and the Kurdish military have gained ground in several key areas, including the oil fields of Kirkuk.

The military gains and the economic independence that has come with increased independent oil exports mean Iraqi Kurdistan now has more autonomy from Iraq’s central government than at any other time since the country was created in 1921.

However, as the frontlines with Isis have stabilised, fractures within the Kurdistan Regional Government (KRG) have widened to the point that they threaten to weaken the effectiveness of the Kurdish military machine and derail Washington’s strategy for containing Isis.

Domestic unrest

Violent protests erupted on 9 October in Qalad Dze, a small town near Iraqi Kurdistan’s second city of Suleimaniyah, where protesters burned down two offices operated by the ruling Kurdistan Democratic Party (KDP) after two of their number were shot dead and more than 20 were wounded at a demonstration outside the town’s main KDP office.

Over the next two days, rioting saw about 10 more KDP offices burned down and at least four more deaths.

In the wake of the protests, the KDP blamed the attacks on its offices on activists from Gorran, a moderate party that campaigned on an anti-corruption platform in the 2013 elections and secured 24 seats, more than any other party apart from the KDP.

On 11 October, the KDP unilaterally decided to expel the Gorran party from the existing national unity government, further escalating political tensions. The next day, armed members of Kurdistan’s security forces loyal to the KDP prevented politicians from Gorran from reaching their offices, including four government ministers and the parliament speaker Yousif Mohammed.

Speaking to reporters later, Mohammed said the KDP had no legal justification for its actions and described the KDP’s efforts at blocking Gorran politicians as “an orchestrated military coup d’etat against parliament”.

Presidential problem

At the heart of the political clashes is an ongoing dispute over the presidency of the KDP’s Masoud Barzani, who has been president of Iraqi Kurdistan for more than 10 years. Barzani saw his mandate run out on 20 August this year without any political agreement on how the power vacuum should be filled.

Earlier in the year there were hopes that Iraqi Kurdistan’s major political parties would reach an agreement to extend Barzani’s term for a second time, but these were dashed in June when he refused to sign a draft law that would have curbed his powers and made the president more accountable to parliament.

“It’s hard to imagine a scenario where [Isis] doesn’t benefit from the political problems in Iraqi Kurdistan”

Richard Mallinson, Energy Aspects

In the absence of an agreement, Barzani has continued to act as president, something that has stoked political tensions in regions loyal to Gorran and the KDP’s other main rival: the Patriotic Union of Kurdistan (PUK).

Widening fractures

Although the presidency issue has acted as a catalyst for political unrest, it is not the only factor at play; poor services and declining standards of living have also fuelled the protests.

Over 2014, Iraqi Kurdistan was hit by four major crises. The first came in February, when Baghdad cut budget payments to Erbil due to a row over oil revenue-sharing. The second came in August, when Isis began to attack Kurdish-held territory in Iraq.

This was followed by a humanitarian crisis as 1.5 million refugees and internally displaced people (IDPs) crossed into Iraqi Kurdistan to escape the war on its borders.

The fourth crisis was the collapse in global oil prices that saw Brent crude drop from $112 a barrel in June 2014 to less than $50 in recent months, significantly reducing the KRG’s oil revenues.

Economic problems

Over 2015, Erbil has successfully ramped up oil exports, increasing government revenues, but due to huge debts built up over 2014 and the expense of the ongoing war with Isis, the KRG is still struggling to pay salaries. Many public sector workers have yet to receive their wages for August and September.

At the same time, jobs in the private sector have become harder to come by. The government owes about $3bn to international oil companies as well as several billions of dollars to local contractors.

The debt to oil companies has led to reduced investment in exploration and production projects, and worsening prospects for oil field services companies, some of which have reduced their presence in the region.

Speaking to MEED in an interview, KRG Deputy Prime Minister Qubad Talabani said the government’s debts to local contractors have also sent shockwaves through the economy – with about 5,000 capital projects stalling as a result.

Extra pressures

On top of the expense of the war with Isis and the region’s debt burden, Iraqi Kurdistan has been put under further strain by the refugees and IDPs who have flooded in to take advantage of the relative security the region offers.

In central Erbil, refugee children mill among cars at traffic lights trying to sell flowers or begging, and families line the pavements in the evenings next to food distribution centres that have been set up by the UN’s refugee agency.

As well as putting a financial burden on the government and the region’s existing population, which has tried to house and feed the migrants, the influx has heated up competition in the job market.

“Among the 1.5 million refugees, there are some very skilled individuals and they’re willing to work for low wages,” one unemployed Kurdish computer engineer told MEED. “I want a job with a good salary so I can buy a Ford or a Chevrolet, but these refugees are fighting to survive.”

Escalation likely

With no end in sight for the region’s economic problems and a volatile political environment, there is significant scope for a further escalation in hostilities if nothing is done to resolve the crisis.

The civil war fought between Iraqi Kurdistan’s rival factions between 1994 and 1998 forms a highly polarising backdrop to the current political crisis. The separate administrations that existed during the civil war were only formally reunified less than a decade ago and the reunification remains superficial in many ways.

The Kurdish armed forces, known as the peshmerga, is mainly made up of partisan brigades that are either loyal to the KDP or the PUK. On top of this, both the KDP and the PUK control separate military intelligence agencies, and the strength of the local government in Suleimaniyah means the region still effectively has two governments.

Escalation impact

Kurdish military officials have stressed that relations and cooperation between the peshmerga’s partisan brigades remain healthy, but they have also voiced concerns about the impact that the political infighting could have on the military if the presidency issue is not settled.

Speaking to MEED on 7 October, two days before the fatal protests broke out in Qalad Dze, peshmerga colonel Mahdi Younes said he was concerned about the failure to find common ground.

“The peshmerga is very unhappy about the games that the political parties are playing,” he said. “This is a crisis that did not have to happen. We are in a war. The politicians should put their differences to one side and focus on the war against Isis rather than arguing over the presidency.”

Exploiting weakness

Analysts are also worried that continued political bickering could play into the hands of Isis.

“Isis has a proven track record of exploiting weaknesses,” says Richard Mallinson, a political risk analyst at UK research company Energy Aspects. “It’s hard to imagine a scenario where it does not benefit from the political problems in Iraqi Kurdistan.”

As a result of the rioting on the weekend of 9 October, the KDP has already ordered party-affiliated intelligence officers and frontline peshmerga fighters to redeploy to defend party offices, and there are concerns that more resources could be diverted away from the war.

Peshmerga commanders say important decision-making processes relating to security are being delayed due to the ongoing political dispute and, crucially, clashes between Iraqi Kurdistan’s political parties are likely to make the autonomous region’s international partners far more wary of providing arms to support the Kurdish frontlines.

Political breakdown

On 9 October, the Pentagon announced it was scrapping its $500m programme to train and equip moderate Syrian rebels to fight Isis, saying it would now focus on providing weaponry and training to existing Kurdish groups, which have proved more successful at combating the jihadist group.

The recent political clashes in Iraqi Kurdistan have highlighted the divisions within the Kurdish community and will make this plan appear more risky to the US, which will be concerned that weapons intended to be used against Isis will instead be deployed by Kurdish political groups as they compete to control the machinery of government and the oil revenues that go with it.

Intervention by Iraqi Kurdistan’s international partners could prove crucial in preventing the KRG’s ongoing political and economic problems from boiling over into further political violence.

Before Barzani’s mandate expired in August, diplomats from both the US and the UK tried to step in to help find a solution to the presidential crisis – without success.

Now that the blood of protesters has been spilled smoothing over the region’s political differences and putting America’s regional strategy back on track is likely to be harder than ever.