NORTHERN IRAQ has represented the one success of the U.S. occupation of Iraq. It is quiet and prosperous, and American troops are welcomed by the population there. This can all crumble in the next six to nine months if Washington is not careful. Neighboring Turkey, alarmed at the emergence of a Kurdish state in northern Iraq and the presence of the Kurdistan Workers Party (PKK) there, may throw caution to the wind by engaging in a cross-border military operation. Such an event is likely to pit Ankara, a nato ally, against both the U.S. military and its Kurdish allies. Fighting between Turks and Kurds in Iraq could spread to Turkey itself and, in the end, lead to a severe rupture in U.S.-Turkish relations. An unstable and violent northern Iraq would deal a fatal blow to the United States's Iraq project by accelerating, widening and deepening the current inter-communal carnage.

Turkey, which has a sizeable and restive Kurdish minority of its own, is fearful of the demonstration effect of the gains achieved by Iraqi Kurds. It has tried to resist not only Kurdish independence but also Kurdish attempts at incorporating the oil-rich city of Kirkuk into their area, thereby facilitating any future bid for independence. Renewed confrontations with the PKK in Turkey with concomitant increases in casualties have further soured the Turkish mood and have contributed to the rise of xenophobic nationalism and political instability in that country.

The Turks blame the Iraq War for creating the conditions that have given rise to a potential independent Kurdish state. They also accuse the United States of ignoring Turkish red lines on Kirkuk and federalism, and demands to take action against the PKK. In fact, Turks are convinced that the United States prefers its newfound Kurdish allies to its old nato ally. A deputy leader in the main opposition party, Ali Topuz, went so far as to accuse the United States of using the PKK as a weapon against Turkey. As a result, only 12 percent of the Turkish public, according to a recent Pew poll, holds a positive view of the United States. Widespread disaffection with the United States-exacerbated by politicians, pundits and generals-has translated into increasing public pressure for a unilateral Turkish move into Iraq.

Since the end of major combat operations, the United States has been distracted by the rising insurgency in the rest of Iraq. With too few troops to protect the entirety of the territory, the United States has been thankful for the relative tranquility in the north, where the Kurds have established a functioning administrative government. In fact, security in the north is almost completely in Kurdish hands. Although the United States considers the PKK a terrorist organization, CENTCOM, the U.S. military command in charge of Iraq, has demurred in fighting the widely dispersed PKK camps along the Turkish border and in its mountainous hideouts in Qandil, deep inside Iraqi-Kurdish territory. The United States and Turkey have not succeeded in persuading Iraqi Kurds to take on the PKK. A half-hearted attempt at dislodging the PKK risks the possibility of wider conflict with the group at a time when CENTCOM feels it already has its share of local enemies.

Residual bad blood, arising when, in March 2003, the Turkish parliament declined permission to the United States to send a mechanized division from the north to Baghdad, has not helped matters much. Even more damaging, on July 4, 2003, U.S. troops arrested a number of Turkish Special Forces troops on suspicion of planning to assassinate the governor of Kirkuk province. The arrested Turks were then hooded and transported to Baghdad. The image of Turkish troops being subjected to the Al-Qaeda treatment was a humiliating blow seared into the Turkish psyche, and this event became emblematic of Turkish-American relations. Paradoxically, few in Turkey noticed that the Turkish General Staff quietly retired or dismissed the three generals in command of special forces in Iraq, perhaps in an indirect admission that theirs was a rogue operation not sanctioned by higher echelons in Ankara. More than three years later, this event continues to cast its long shadow over Turkish-American relations.

Ankara has also stepped up its attacks on the approach of Iraqi Kurds to Kirkuk, accusing Iraqi Kurds of forcibly changing the demographics of the city and mistreating the Turkmen population, with whom Turkey has cultivated ties. It wants the United States to use its influence to prevent Iraqi Kurds from incorporating Kirkuk into the Kurdistan Regional Government (KRG) through a referendum mandated by the Iraqi constitution to take place by the end of 2007.

In August 2006, with Turkish patience waning, a Turkish move into northern Iraq was averted by last-minute diplomacy and the appointment of a special U.S. negotiator, retired General Joseph Ralston, to work with the Turks on the PKK. Although both the United States and Turkey are well-aware of the stakes involved, the fact remains that the continued stalemate is hostage to a flare-up of violence, a miscalculation or even an accident, especially now that Turkey will be beset with uncertainty as it struggles with its constitutional crisis following the failed May presidential election.

Washington is reportedly taking a more serious look at the PKK problem. There is, however, a serious risk of all the different dynamics converging to fundamentally alter the conditions in Iraq and the region. Is there a strategic approach that the United States can adopt to generate a more energetic and effective way of managing this problem? The United States should take a proactive role in shaping on-the-ground events: Instead of waiting for the situation to get out of hand, it should construct a "grand bargain" that encompasses Turks, Iraqis, Iraqi Kurds and the United States.

TURKEY AND the United States share the same basic medium- and long-term goals on Iraq. They both would like to see the re-emergence of a strong and secular Iraqi state capable of holding the center and balancing Iran. They differ on the internal arrangements that would underpin this new Iraqi state. The Americans have concluded that only a federal state can keep all the different nationalities and sectarian groups together, while Ankara still believes and hopes that the Iraqi state should be as centralized as before, ending the expectation of Iraqi Kurdish autonomy. But if current trends hold, Iraq's future will be determined by the separation of its three communities-whether this is within a loose federation or through three independent states. No amount of threats will alter a final outcome that may not be to the liking of either Washington or Ankara.

Ankara's options are quite limited. Turkey can actively align itself with Iran and Syria, two other neighboring countries with sizable and restless Kurdish populations of their own, to prevent the Kurds from achieving their goals. Such an alignment, however, would seriously undermine Iraq's already tenuous future and run afoul of the United States and the Europeans. A large anti-PKK cross-border military intervention risks embroiling the Turks in a guerrilla campaign with Iraqi Kurds which, as the Americans have discovered, they cannot win. Such an action would have extremely serious ramifications for Ankara's standing with the United States and the eu. Moreover, Turkey's Kurdish regions would erupt in violence were the Turks to intervene against their Iraqi brethren. Finally, Ankara has also closed the door on prospective amnesty for PKK fighters, other than the leadership cadres, for fear of appearing irresolute.

On the other hand, Ankara has much to gain from a grand bargain with Iraq, Iraqi Kurds and the United States that aims to peacefully and cooperatively resolve outstanding issues. Turkey can achieve many of its goals with minimum interference in Iraq through the use of its natural assets: its buoyant economy, access to Western markets, membership in NATO and existing oil pipeline networks. Turkey can offer, even if implicitly, protection to Kurds who are fearful for their future, especially given their landlocked geography. Since 2003, Kurds have had privileged investments from Turkish companies-even at the expense of Turkish Kurdish ones-in an effort to improve ties and deepen the integration between the two economies. There are some 1,200 Turkish companies operating in northern Iraq, mostly engaged in construction, but also in oil exploration and other services, which have generated some $2 billion in business. Some Turkish businessmen even expect that they will get as much as $10 billion of a total of $15 billion worth of contracts the KRG will issue in the next three years.

Turkey, as a hedge against Kurdish ambitions in Kirkuk, has developed its Turkmen card. It not only championed Turkmen rights but created and actively supported the Iraqi Turkmen Front (ITF). The ITF has not succeeded in making itself the voice of the Turkish-speaking Iraqi Turkmen; it failed miserably in the 2005 elections as the Turkmen cast their votes for the dominant Shi‘a coalition in Baghdad, and many even chose the Kurdish alliance (50 percent of the Turkmen are Shi‘a and tend to vote along sectarian lines). The ITF proved completely incompetent and incapable of distancing itself from its Turkish military patrons. It polled a meager 0.87 percent of the votes, leading to a serious re-evaluation of policy by the Turkish ministry of foreign affairs. Turkey, having exaggerated its alarm regarding the fate of the Turkmen population, finds itself not only without an effective card to play-except perhaps rhetorically-but also in a bind because the ITF has become a cause célèbre of sorts back home in Turkish nationalist circles. As such, it is a source of domestic political pressure that opponents can wield against the government.

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