With economic sanctions burdening Iraqi Kurdistan, the Kurdish Regional Government (KRG) is working hard to resolve the crisis with all stakeholders.

More than two months after the Kurdish Regional Government (KRG) defiantly held a non-binding referendum for independence from Iraq, tensions between the autonomous Kurdish region in northern Iraq and the Iraqi federal government are persisting.

Shortly after the referendum, the Iraqi federal government’s military forces, including tens of thousands of militiamen from the allied Popular Mobilization Units (PMUs), seized disputed territory from the Kurdish Peshmerga, including the oil-rich city of Kirkuk.

Iraq also halted funding to the KRG, closed airports in the autonomous Kurdish region, and seized many of its border crossings, effectively isolating the area from the outside world.

Neighboring Iran opted to implement its own punitive measures against Iraqi Kurdistan, including economic sanctions on its oil and energy sector, which generates a large chunk of the KRG’s budget for public services and investment. Specifically, Iran imposed a fuel embargo on the autonomous region.

Turkey has threatened to impose similar sanctions, but has so far chosen to shy away from such measures. Relations between the two parties have seemingly improved, with the Turkish government allowing KRG PM Nechirvan Barzani to cross through the country during his recent trip to Paris.

Turkey is especially important to Iraqi Kurdistan’s oil industry, as it serves as a large buyer of Kurdish oil, as well as a conduit.

Prior to the crisis, the KRG was solidifying trade ties with Russia, in numerous sectors of the economy, and it remains unclear how these new projects will be affected by the ongoing dispute.

“Russia may prove to play an important role in the economy of the Kurdistan Region as they have already done so by the presence of Gazprom, and now Rosneft,” KRG FM Falah Mustafa told the Spuntik News Agency. “We hope and look forward to establishing areas of cooperation beyond the oil and gas sectors. Infrastructure advancements could include on-ground transportation and a railway network extended to the whole Kurdistan Region. On this matter, we can benefit a great deal from the experience of the Russian Federation.”

Such sanctions are not only damaging Iraqi Kurdistan’s economy, and adversely affecting living standards for its residents and refugees in the area, they are also financially hurting neighboring economies, as they are no longer engaged in lucrative trade with the autonomous region. Therefore, solving this dispute is undoubtedly of paramount importance to all stakeholders.

For several weeks, KRG Prime Minister Nechirvan Barzani has repeatedly called for dialogue with the Iraqi federal government and neighboring countries to end the ongoing crisis, to ultimately restore diplomatic and trade ties.

“The Kurdistan Region has always been a factor for stability and it will remain so by giving neighboring countries a helping hand. Kurdistan will remain committed to the fight against Daesh [ISIS] terrorists and helping the vulnerable refugees and displaced people,” PM Nechirvan Barzani said, pledging to continue to support refugees despite economic sanctions placing strain on the KRG.

Meanwhile, Iraq is yet to demonstrate its willingness or readiness to engage in such negotiations. Such an approach will inevitably cost the Iraqi government support, probably not from Turkey and Iran, who staunchly oppose Kurdish independence, but from the wider regional and international community.

The US, considered to be an ally of both the Iraqi federal government, and the KRG, adopted a somewhat non-interventionist approach to the dispute.

Officials from the KRG are hoping that the US will pressure its Iraqi ally to sit-down at the negotiating table, and reach a peaceful solution with Kurdish delegates, especially as the ongoing crisis is destabilizing the region, and driving a wedge between two of the US’ regional allies, while also improving Iran’s relations with Turkey and Iraq.

The US is keen to maintain strong relations with both the Iraqi federal government and the KRG, especially now, as some of its traditional regional allies, such as Turkey, are adopting a less hostile stance to Iran, and are actively coordinating efforts with them to end the war in Syria.