The latest trend of Iraqi Kurds selling their oil directly to Turkey has outraged Washington and Baghdad over fears that such a move can, in part, weaken a united Iraq.  The concern is that the Kurds may decide to demand greater, if not complete, independence, based on confidence in strong oil sales.

Currently, trucks deliver oil from Kurdish Iraq to Turkish cities on Turkey's West coast.  Kurdish oil is also being delivered via a pipeline, with a second, and until recently, secret pipeline already in the works.  The U.S. has been unable to stop the flow of trade for the past year and a half, which some analysts consider to be a sign of the weaken U.S. influence in the region, despite America's strong relations with Turkey and Iraq.

The oil contracts with Turkey could be worth billions of dollars.  The Kurds are looking to cut their own energy deals and exploration agreements with foreign companies like Chevron and Gazprom.  Iraq's central government says such deals are illegal.  However, the Kurds say that they will pay the central governments its portion of the proceeds.  A legal loophole, however, exists.  Under President Bush, the Americans did not force Iraq to pass a national oil law.  That means Baghdad and the Kurds continue to fight over how to divide oil revenues.

Currently, Baghdad gets 83% of the oil sales with the remaining 17% going to Iraqi Kurdistan.