Gulan: what do you think about the recent oil revenue agreement between Erbil and Baghdad?

Knights: I think it is a very complicated thing. We have been waiting for this for a long time and this is just a beginning. We have seen this deal written into 2015 budget… it is just an idea.

Gulan: to what extent do you think this will be written in 2015 budget?

Knights: I think that the key Iraqi decision makers like Haider Al-Abadi and Adel Abdul-Mahdi, the oil minister have invested significant effort in bringing this deal together and I don’t think they are doing so just to see the collapse or not written in the budget of 2015. So I think there is a chance to be written in the budget in a flexible way. I think there is a good chance to get into 2015, and beyond 2015, in 2016 and 2017, which is a different case. Will the federal government and the Kurds agree that it is a win-win or the Kurds will go their own way in oil exports in 2016 and 2017? So this is really just a one thing, but it could grow into something bigger if both sides find a big thing of a deal.

Gulan: recently we have seen good progress in terms of the capability of Peshmerga forces in fighting ISIS terrorists. To what extent has improving Peshmerga’s ability to fight ISIS changed the dimension of the war?

Knights: I have always said from the start that the key threat to ISIS was the Kurds. Relating to that is geography. The Kurds are so close to the ISIS capital, the Mosul; the Kurds have a thousand kilometer front line with ISIL, and the Kurds are on the perfect place to launch anti-ISIL campaign both in Iraq and also in Syria. We can see the international community thinks that too. It is Kurdistan is becoming the preferred basing option for most of the coalition partners. They will to work out in Erbil airport or out of Bashur air base in Harir for this is safe in Kurdistan Region, and they are welcome, and it is close to enemy. So I think the Kurds have a critical role to play both in terms of Kobane and in Iraq when it comes to cutting the border with Syria even though the Kurds can do that initially by guarding south from Rabia to Sinjar and around Mosul clearly the Kurds are going to be very significant in the Mosul operation in terms of closing the circle on ISIL in Mosul and in terms of providing a base for certain Arab militia movements associated with the Nujayfis like the Mosul Liberation Force, both forces have been trained at the moment under Kurdish protection. I will say one final thing about Peshmerga. I think this conflict is going to be very good for the Peshmerga. Now clearly it has been a costly war so far. Over seven hundred Peshmerga killed and we have to remember their sacrifice, but I think overall this is going to be a transformational experience for the Peshmerga. And in the end of this war, we may finally see most of the Peshmerga units under one unified ministry of Peshmerga, and that is a very good thing. It means that the international community can deliver aids to the Peshmerga almost directly. In a moment the airplanes stop in Baghdad for inspection and then they move straight on to Erbil and none of the weapons has been stopped. So on the situation when the international community now having increasing amount of interaction with the Peshmerga, in the next three months, we are waiting to see almost thirty thousand Peshmerga could quickly reequipped by the US and the German governments. That is four, five brigades of troops with entirely new body armor, radios, tactical vehicles, and in some cases heavy weapons as well, which is a major step forward for the Peshmerga.

Gulan: your comments about the current ability of Kurdish government in exporting oil, to what extent has this changed the balance of Iraq in terms of negotiations with the central government?

Knights: I will say one final thing on Peshmerga before I ask your question, which is now we have a hundred million dollars each month in peshmerga salaries being paid by Baghdad, that is again another major gains I forgot to mention, that is very positive hopefully. So going on to the oil export, the revenue sharing, I think the Kurds did a very effective political maneuver this autumn, there was disputes in summer between Kurds about the economic locate in Baghdad and what to do next, how can we survive without Baghdad money? and all these issues, but now there are quite a lot of unity on that issue because I think Nechirvan Barzani and Qubad Talabani and Ashti Hawrami and Minister of Finance Rebaz Hamlan all work together to try to create trust in the Kurdish Region Government to show that Kurdistan Region has an economic plan for 2015, and if the federal government in Iraq make a deal, well that is ok because Kurdistan Region has finance itself in 2015. Now with independent exports for Kurdistan is not an easy way. It would mean that Kurdistan would be still short of money at least for the first half of 2015 and it would be a tough year economically in the KRG, about the end of 2015, Kurdistan Region would be able to set finance. Now that plan which was brief to Kurdistan Parliament about a month ago gave the Kurdistan politicians a lot more leverage when they went into negotiations with Baghdad because they had explained exactly what was going to do if Baghdad did not come to a deal and they received good Kurdish political support from across the parties. That was a real help. So I think if something has changed in the economy of Kurdistan, they now have two options. One to go independent export or two to do a revenue sharing deal with Baghdad, and it maybe that the revenue sharing deal make sense in 2015, and maybe in the future the independent export part makes more sense in 2016, 2017, we will see, but Kurdistan now has options.

Gulan: do you think that Iraqi government’s attempt for arming different groups to fight ISIS is a wrong decision which bring about chaos because under Maliki, the Iraqi government armed the groups and minorities, but now, for example, there are demonstrations in Kirkuk asking for unified armed force like the Peshmerga. Do you think this is a good response to a bad decision?

Knights: it is a complex issue obviously. I would say that there are good militias and there are bad militias. It sound like a simple way to put it, but it is a way to understand what is going on. I think that some of the Shia militias coming up from the south are dangerous force to have in the long term on the borders of Kurdistan. So some of the Badir organization forces with strong Iranian backing will make the Kurds nervous to have them around Kirkuk, Tuz Khurmatu, Kifri, Jalawla, in all these places, that is going to be a problem going forward. On the other hand, I do believe that it is important to do a National Guard scheme in Iraq where the provinces can raise their own special police forces, National Guard forces to hold the terrain once ISIS have been driven out. I was a supporter of the Sahwa, I think it was a good idea, and if the Iraqi government has taken on, it probably have not been ISIS today. So I think it is easy work carefully arming various Sunni tribes, minorities in their own areas so Christians on the Nineveh plains, and the Kakayans, the Shabak as well, the Yazidis within their areas. We did this for a long time. It is really what the local police forces could be. They are usually representatives of the local population, and that is true even in the disputed areas where Kurds, the Sunnis, and all the other groups have worked together to maintain balance within local police forces. So I don’t think there is an alternative… I know it is uncertain for the Kurds to have new arms groups on the border, but in reality, the Peshmerga are going to be the most powerful forces in the area. If they don’t like what another military force is doing, they are going to be able to stop that force from undertaking the bad behavior. So I think Kurds need to be confident that they will remain the key actor in the disputed areas in the coming years.

Gulan: to what extent is the United States hoping and what is the range of its intervention in fighting ISIS in Iraq and Syria, the US is going to provide Iraq with 1500 soldiers to train and help Iraqi and peshmerga forces, what will be the US priority and how is it going to implement this decision? And what about Chuck Hagel’s visit, the former secretary of state?

Knights: the US is slowly escalating its security assistance to Iraq and Kurdistan Region. Now in the situation where the US has requested the funding to train and equip nine Iraqi army brigades, one brigade in Anbar, and three peshmerga brigades at the cost of six million dollar of training and equipment. It is a very substantial program. We also have the Germans providing training and equipment to at least two brigades of Peshmerga forces which are also very substantial. International coalition’s air operations are accelerating. Probably in the second quarter of 2015, the battles for Mosul, Tikrit and Faluja is, I think, going to happen, and at that point we will probably see the US intensifying its security cooperation again to include combating ISIS, US special forces on the ground with the peshmerga and the Iraqi army can call air strikes, and provide assistance to the planning operation and intelligence. So, I think we will see that in the second quarter of the 2015. I think the main point about Kurdistan and the US is that Kurdistan is now much closer US ally than ever was before from the military perspective. The US new training base in Bashur near Harir and this base will be a long term base I think. At first it will train those three peshmerga brigades, but beyond that I am sure it will continue as the US facility with air power located in the base training and supporting the military peshmerga. The US now provides the long term support for military peshmerga and this is a very good thing. Previously the US had no interaction with the peshmerga. This conflict will make the Kurdistan Region get serious about unifying the ministry of peshmerga and it will make the US get serious about its future military alliance with Iraqi Kurdistan.

Gulan: what do you think of peshmerga’s going to Kobane?

Knights: I think it is great to see the commander in chief of peshmerga forces, president Barzani welcoming the heroes of Kobane. I think also it is good to think Turkey supporting that deployment. I know Turkey has its own reasons to do it, to do with own Kurdish issues, to do with gaining a degree of control over what happen in Syria’s Kurdistan, but it is still good to see Turkey facilitating that movement of peshmerga. So I think it is good for Iraqi Kurds, Syrian Kurds, and Turkish Kurd. I hope it will go in the right direction.

Gulan: officials in Kurdistan Region warned Turkey while ISIS was on the gates of Erbil, and Turkey did nothing. Yet after that Dawood Oglu paid a visit to Erbil and provided training for peshmerga. What do you think of this?

Knights: Turkey is trying to recover its position with the Iraqi Kurds. It was a bad August and September and slowly the Turks came up with a solution. The solution was to support the Kobane deployment and to release the funding from Kurdish oil exports directly to Kurdistan region. In these two things, Turkey shows that it could be a friend again and that repairs some of the damage and now Turkey is playing a very useful role in helping Iraq, Kurdistan Region, and Turkey to export KRG and Kirkuk oil. If you look at the first shipments of Kurdish oil, the agreement with federal government in November 150000 barrels a day, that oil when it got to Turkey was immediately purchased by Tüpraş, the Turkish refiner and make it very easy for the Iraqi government, the oil came in and the Turks ported straight away, and that deal is going very quickly and both side are playing a very positive role. So I am hopeful that Turkey may play a more positive role going forward including around Mosul where it seems to be starting to provide some support to the fight against ISIS in that area in terms of offering training for anti-ISIS forces, and Turkey obviously has a good contact in the Mosul area that it reveals to help support operation in Mosul in the next year.

Gulan: you seem you are optimistic about the situations in the area?

Knights: yes I am quite optimistic right now. I am pleased to see the Iraqi government made a strong gesture of good will in negotiations so far, and I am pleased to see that peshmerga recovering terrain, we knew that is going to happen, we knew that peshmerga would fight back strongly, but it is good to see that happening. It is good to see Turkey reacting to Iraqi Kurds disappointment by getting involved in both the oil and security issues. So I think the issues are moving in a positive direction, and later today I will be seeing Qubad Talabani here in Washington DC, and I hope good for that conversation as it is and a lot of positive things are happening right now.

Gulan: any message for our vreaders?

Knights: congratulations to the people of Kurdistan for hanging on through the very tough year 2014, and I wish them the best of luck in 2015. I think it is going to be a much better year.