Flickr: tj.blackwell The political crisis in Iraq that began after the departure of U.S. troops in December 2011 has heightened tensions between Baghdad and Erbil. The instability also has deepened the historic cleavages between Iraq's two largest ethnic communities, the Arabs and the Kurds. Without a dialogue that aims to normalize relations between Baghdad and Erbil, the growing polarization could lead to an outbreak of Arab-Kurdish conflict. The civil war in Syria, which has begun to spread to the country's eastern provinces, has added one more element to an already volatile situation in Iraq and may be the catalyst that causes year-long tensions to ignite.

In early 2012, the Kurdistan Regional Government (KRG) joined the opposition against Iraq's prime minister Nuri Kamal al-Maliki. Maliki’s Shia-dominated government in Baghdad had set off a political crisis by issuing an arrest warrant for Vice President Tariq al-Hashimi, a Sunni. Politicians representing the Kurdistan Alliance worked with the Sunni-dominated Iraqiya and the Shia al-Ahrar blocs to seek a parliamentary vote of no confidence. The goal was to remove the prime minister from office and obstruct the central government's consolidation of power and autocratic practices.

In the countermove to deter the opposition, Maliki proposed to hold early elections. According to recent polls, he has gained popularity nationwide and is likely to win should the elections be held soon. In addition to garnering the support of considerable numbers of the Shia in Baghdad and the country's southern provinces, the prime minister counts on the allegiance of the members of the oversized Iraqi army and security forces and their families—many of whom support Maliki because their livelihoods depend on the incumbent. By most accounts, Maliki's popularity extends to Iraq's northwestern provinces, where he has won friends among the Sunnis by opposing the Kurds, as well as among some Kurds who oppose the KRG.

The inability of either Maliki or his opponents to prevail and their unwillingness to defuse the crisis has produced a stalemate, which, in addition to deepening the rifts between the Sunni and Shia Arabs, has polarized the Arabs and the Kurds.

The range and complexity of the political and security issues that underlie the rift between Baghdad and Erbil—such as the lack of progress on a federal hydrocarbons law, conflict over the disputed territories in Iraq's north and the status of the armed Kurdish fighters known as the Peshmerga—make the growing disagreements between the Arabs and the Kurds increasingly difficult to resolve.

In April 2012, the KRG suspended its oil exports for more than four months, claiming that the federal government had not reimbursed the costs of the producing companies in Iraqi Kurdistan. In response, Baghdad threatened to fine the KRG by an amount equal to the revenue the oil exports would have generated. Exacerbating the fight over oil revenues, which has occurred on numerous occasions, are disagreements over contracting. The KRG infuriated Baghdad by signing contracts with ExxonMobil in October 2011 and Chevron in July 2012—with deals with Total and Gazprom close on their heels—which allowed foreign companies to explore for and extract oil in areas where both land and oil rights are ferociously disputed by Arabs and Kurds.

The dispute extends beyond oil. Baghdad and Erbil have failed to reach an agreement on the status of Iraq's internally disputed boundaries. As a result, conflict persists over what areas in the northern provinces of Diyala, Kirkuk and Ninewa are Kurdish and to what degree of autonomy they are entitled.

Equally contentious is the status of the Peshmerga forces. The KRG has sought to integrate thirty thousand of its Peshmerga troops into the Iraqi Security Forces (ISF) to form two divisions in the country's army and deploy them in Iraqi Kurdistan, but no agreement with Baghdad has materialized to date. The KRG claims that the Peshmerga are part of Iraq's national-defense apparatus and therefore the federal government must arm them, pay their salaries and cover the budget of the Kurdish Ministry of Peshmerga. Perhaps suspicious of the Kurds' aspirations for statehood, Baghdad argues that the Peshmerga's expenses should be paid from the KRG's 17 percent share of the federal budget.

The absence of a constitutional framework to address these contending claims and long-standing grievances, when combined with the lack of a functional command-and-control structure between Baghdad and Erbil, creates security dilemmas with strategic ramifications.

In the past, the ISF and the Peshmerga came close to fighting each other in the disputed territories in the provinces of Diyala, Kirkuk and Ninewa, but U.S. troops stationed nearby intervened to prevent combat. Since the U.S. withdrawal from Iraq, there has been no effective barrier between the ISF and the Peshmerga. A case in point is the standoff in late July between the two near the Iraqi-Syrian border.

Because of the ongoing war in Syria, the Iraqi army is on alert to prevent violence from spilling across the border. However, the army's movements in the disputed territories trigger reactions from the Peshmerga, who are concerned that Baghdad may use the Syrian conflict as a pretext to reinforce its territorial claims by deploying more forces in the disputed areas. With Baghdad sympathetic to the Syrian regime and Erbil aligned with the rebels, the discord between the respective armed forces grows.

Tensions between the ISF and the Peshmerga tend to raise fears among the Arab and Kurd inhabitants of the disputed territories. By evoking historical animosities and collective memories of discrimination, mistrust and atrocities, these fears could spiral swiftly into conflict between the two ethnic communities. And there is no doubt that extremists and militant groups all over Iraq will readily exploit civilian fears and vulnerabilities to foment war.

Baghdad and Erbil must resume a dialogue and resolve their differences peacefully—before the rapidly closing window of opportunity shuts completely.

Irena L. Sargsyan is a research analyst at the Saban Center for Middle East Policy at The Brookings Institution.