The semi-autonomous Kurdish Regional Government (KRG) is increasingly moving toward independence from Iraq after northern and western territories fell into the hands of Sunni militants affiliated with the Islamic State (IS), or the Islamic State in Iraq and al-Sham (ISIS). While there lies opportunity for the creation of a sovereign state in the current chaos gripping Iraq, Kurds also face a number of challenges—not the least of which includes the geographical distribution of ethnic Kurds and international recognition.

As reiterated by US State Department spokesperson Jen Psaki, Kurds have long desired independence, but the United States sees it in its interests for Iraq to remain united. “The threat they’re facing requires unity and that’s why we’ve been emphasizing it so strongly,” she said in a press conference on June 30. Nevertheless, many note that the Kurds have never been so close to independence as now, with Baghdad being under siege, with the Iraqi army abandoning their positions, and with the Kurds exporting oil to Turkey.

Despite calls for Kurdish independence, Kurdish ministers in the Iraqi government have not withdrawn yet, and Kurds are still discussing candidates for the next Kurdish president of Iraq to replace Jalal Talabani (absent from the political scene after suffering from a stroke in December 2012). Current calls for a referendum on independence might be a political card to force more concessions from Baghdad as the Kurds try to expand their official borders.

Still, the Kurds are preparing the legal framework in the Kurdistan regional parliament for a referendum on self-determination, and another to decide if the oil-rich disputed areas between Baghdad and Erbil should join Kurdistan or remain with Baghdad. The process could take several months and exacerbate tensions with the Iraqi government, which sees it as a form of blackmail at best.

If such a referendum were held, it is likely that oil-rich areas would become part of the Kurdistan region, given that Kurds make up the demographic majority in Kurdish-controlled parts of Mosul, Diyala, Kirkuk, and Salahadeen. Even if Iraqi Kurdistan remains a part of Iraq proper, the annexation of oil would undoubtedly propel Iraqi Kurds towards greater autonomy.

Under what conditions could the Kurds achieve independence? Academic literature pays little attention to the specifics of state emergence. Generally, states need to establish effective control before being eligible for recognition. Defined borders, a legitimate effective authority between its people and a functioning economy greatly increases the chances of international recognition.

Academic Bridget Coggins also argues that independence projects falter if they cannot secure external legitimacy and recognition. One of the problems for the Kurds is their geographic diversity, spread over four countries (Turkey, Syria, Iraq, and Iran), each with its own geopolitical alliances. While Turkey is backed by United States, Iran is backed by Russia. This makes it more difficult to find support for Kurdish demands.

Authority and territorial control

The Kurds have run their own affairs since Baghdad lost control over three Kurdish populated provinces (Duhok, Slemani and Erbil) after a no-fly zone was imposed over northern Iraq in 1991. The Kurds created their own government in 1992, survived a Kurdish civil war between the Kurdish parties in the mid-1990s and, since the fall of Saddam Hussein in 2003, have managed to enshrine many of their demands in the Iraqi constitution in 2005 using their political strength to maximize opportunities for independence.

Although Baghdad and the international community recognize these three provinces as being part of the autonomous Kurdish region in Iraq, with their own government and institutions, this recognition leaves out territories that Kurds consider as part of a historical Kurdistan. The oil-rich multi-ethnic Kirkuk province that suffered from Saddam Hussein’s Arabization policy settled Arabs from other provinces to change the demography in these territories claimed by Kurds.

In order to solve this problem, the Kurds agreed to article 140 of the Iraqi constitution that would include a referendum on the future of the disputed territories where they have a clear majority. The article expired in December 31, 2007 due to opposition from Baghdad and an international community that feared instability. Since then, the Iraqi army under Prime Minister Nouri al-Maliki tried unsuccessfully to push back Kurdish armed forces in the disputed territories.

After the fall of Mosul to the Islamic State in Iraq and al-Sham (ISIS, or the Islamic State, IS) on June 10, the Kurds secured the disputed territories between Baghdad and Erbil including the oil-rich city of Kirkuk. They now control most of the territories they want to include in a possible Kurdish state. In bypassing expired article 140 and turning to the Kurdish parliament to prepare the legal framework for the referendum, Kurds would no longer need Baghdad’s input to annex the areas they consider as part of Kurdistan.

Moreover, Assyrian Christian, Turkmen, and Arab minorities living in Kurdish dominated areas prefer living under Kurdish stability, rather than under control of the Sunni militants of the Islamic State, seen as a terrorist entity by the international community. Arab and Turkmen politicians who oppose Kurdish policies have limited options without militias or support from Baghdad’s fleeing armed forces. Sunni politicians are also dependent on Erbil to push back against the policies of the Iraqi PM Nouri al-Maliki and Iran.

Sunni militants of ISIS cannot fight both Baghdad and the Kurds at the same time. ISIS could conduct nuisance attacks to destabilize Kurdish areas, but not control them. With all the focus on the raiding extremists, Baghdad has no forces to confront the Kurds. As a result, the IS does not pose a serious threat towards the security in the Kurdistan region. Even Kurdish members of ISIS prefer to fight against Baghdad outside of the Kurdistan region.

Popular legitimacy

Since 1992, Iraqi Kurds enjoy their own Kurdish parliament after suffering from years of exclusion under Saddam. They held parliamentary elections in 1992, 2005, 2009, and 2013. In the presidential elections in 2009, Masoud Barzani won more than 70 percent of the vote. Widespread disaffection over corruption and nepotism in Iraqi Kurdistan led to anti-government protests in 2009 and the rise of the anti-corruption party Gorran (Change) in April 2009, but despite these problems, the KRG maintains its legitimacy and trust within the population. Although many criticize the ruling Kurdish parties in Iraq, most Kurds endorse independence.

Although many point to Kurdish disunity, the Kurdish parties managed to form a multi-party consensus government in which all opposition parties joined the government. It paved the way for a unified strategy towards Baghdad. During the parliament session on July 3, no Kurdish MP objected to holding a referendum over the disputed territories and self-determination.

Some report that factions within the Patriotic Union of Kurdistan (PUK) remain critical of the Kurdish push for independence and the annexation of Kurdish territories, given PUK’s close relations with an Iran and Baghdad and the lack of international recognition. Masoud Barzani’s Kurdistan Democratic Party (KDP), on the other hand, wants to seduce Turkish support for Kurdish independence in Iraq by offering them oil and gas. The PUK and KDP both have their own Peshmerga forces in Iraqi Kurdistan, making a unified military more difficult.

Functioning economy

Kurdistan’s rentier economy is highly dependent on imports, government jobs, and oil sales with a budget determined in Baghdad. They have not been able to create a functioning private sector, leading to a younger generation still focused on government employment. Around 700,000 people in Iraqi Kurdistan are reportedly registered as government employees.

After Baghdad cut the KRG’s budget, Iraqi Kurds have been borrowing money from the private sector and from Turkey. However, as the KRG inches towards independent oil exports, Kurdish policymakers believe it can create an economy independent of Baghdad’s dysfunction. If Baghdad and the United States succeed in blocking Kurdish oil sales, this prospect would seem unlikely. So far, the Kurds managed to sell just $100 million in their first oil export which is not enough to replace the Iraqi budget.

Turkey now presents Kurdistan’s only lifeline, but remains officially opposed to the division of Iraq. As reported by the Washington Post, exporting oil and gas to Turkey through an independent pipeline is the determinant factor for Kurdish economic independence, but Turkey would only accept complete autonomy if a unity government in Iraq is not formed.

If the Kurds manage to find a way to export Kirkuk’s 500,000 barrels of oil per day to Turkey, it would undoubtedly make independence easier. The International Crisis Group always suspected that Kirkuk represents the Kurdish stepping-stone toward secession, with the Kurds relying on its oil wealth to reduce their economic dependence on both Iraq and neighboring countries. Opposed by the United States, the Kurds will remain bound by Baghdad’s control of the purse strings. The unintended effect, however, is increased leverage with the United States.

International recognition

The Kurds have popular institutions, territorial control, and the potential for financial independence, but without international support realizing statehood remains a dream. At least for the time being, major powers are cold to the idea of Kurdish independence.

Russia and China generally oppose any threat to the territorial integrity of states, having their own problems with secessionists. Russia and Iran heavily support Baghdad with arms and equipment, trying to draw Iraq into the Iranian-Assad-Russian axis. It is unlikely they would support Kurdish independence.

The West—particularly the United States—has opposed the fragmentation of the constitutional order in Iraq, opposing oil exports and Kurdish moves towards independence. Western countries fear the breakup of Iraq could lead to more instability and are traditionally opposed to separatism, unless it is in their direct interest to weaken adversaries. The Kurds have proved to be the most pro-Western actor in the region, but the West views Kurds as a necessary part of Iraq’s solution and prefer to see them play a constructive role in the country’s reconstitution rather than its dismemberment.

Iraq, Iran, Syria, and Turkey historically oppose Kurdish independence (naturally), but many Kurds believe Turkey would support independence in exchange for oil-wealth. A Kurdish state dependent on Turkey would not be a threat to Turkey and could decrease western opposition towards sovereignty.

The key to Kurdish independence remains in Turkish hands, and the Turkish Prime Minister Recep Tayyip Erdoğan so far is reluctant to announce publically any support for Kurds in Iraq. It remains to be seen in the coming months if the KRG and the Kurdish people are serious about independence, and if Turkey will publically endorse a free Kurdistan. Even if the Kurds do not follow through on independence, they could still vote to annex the disputed oil-rich areas, and will at least benefit politically from the current situation. Despite taking bold steps towards true political autonomy, the road ahead is still long.

Wladimir van Wilgenburg is an analyst of Kurdish politics for the Jamestown Foundation and a contributing writer for Al-Monitor. He is currently reporting from northern Iraq.

Image: Members of the Kurdish security forces stand at a checkpoint during an intensive security deployment on the outskirts of Kirkuk June 11, 2014. Baghdad will cooperate with Kurdish forces to try to drive militant out of Mosul, Iraq's foreign minister said on Wednesday, a day after an al Qaeda splinter group seized the country's second biggest city. (Photo: REUTERS/Ako Rasheed)