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.

Turks in general are far more sanguine about the Turkmen. On a recent trip I took to Turkey, I asked almost everyone I met with what their preferences would be for the Turkmen in the event of a three-way split in Iraq along sectarian and ethnic lines. Invariably-with very few exceptions-Turks answered that they saw the future of the Turkmen in an Iraqi Kurdistan. The Kurds and the Turkmen, especially with partial access to the local oil riches of northern Iraq, are likely to be an attractive commercial partner for Turkey. It is far better for Ankara to have a prosperous partner in northern Iraq than an economically poor appendage, much like today's northern Cyprus. Oil revenues can help further consolidate this relationship. Turkey's concerns with respect to the Turkmen can better be addressed through an arrangement with the Kurds because a separate Turkmen entity is not in the cards. The KRG constitution already calls for respecting minority rights and languages, and Turkey can make sure that Kurds live up to these promises.

Iraqi Kurds have much to give in return: They are secular, anti-Shi‘i or Sunni fundamentalism, most interested in relations with Turkey-and beyond it with the West-and are anxious to find a patron in Ankara. Their future is very much dependent on how well they connect with Turkey. Iraqi Kurdistan can serve as a secular buffer zone for Turkey. As a landlocked territory surrounded by potentially hostile powers, such as the rump state of Iraq, Iran and Syria, Turkey will have a great deal of leverage over the Kurds. Oil pipelines from northern Iraq already flow into Turkish ports on the Mediterranean and will continue to do so as their capacity expands, benefiting the impoverished southeastern Turkish provinces that have historically been the source of the Kurdish insurrections.

Moreover, a grand bargain with Iraqi Kurds would have a salutary impact on Turkey's domestic Kurdish problem. Turkish Kurds have always been sensitive to developments in northern Iraq and are likely to moderate their militancy if Turkey emerged as a protector of a Kurdish state-even an autonomous one within a federal Iraq.

The KRG, especially the Kurdistan Democratic Party (KDP) led by Masoud Barzani, son of the legendary Kurdish leader Mullah Mustafa Barzani, has a great deal of influence over some Turkish Kurds by virtue of language affinities, conservative political outlook and history. Despite this affinity, it is not clear that Turkish Kurds also would seek independence or would fall for possible, though improbable, irredentist games. Turkey is far more prosperous, and the EU accession process promises to satisfy most of the Turkish Kurds' cultural and representational needs. For many Kurds outside northern Iraq, the emerging federation there represents something akin to what Israel means to Jews around the world. Similarly, not all Kurds desire to live in northern Iraq or become part of a greater Kurdistan, but as a traumatized population, it is important to know that such a place exists where not only Kurds are genuinely free-but as with the Jews-it could be a place to flee to if necessary.

It is in Iraqi Kurds' interest to see the PKK disbanded, not just removed from their territory. It is clear that the PKK-or for that matter any armed rebellion-will not and cannot improve conditions for Turkish Kurds, and worse, it could prevent Iraqi Kurds from consolidating their quasi-independence-at least the most they have achieved to date. During the last years of his presidency in the early 1990s, Turgut Özal had succeeded in earning the confidence of many Turkish Kurds with his overtures to the Iraqi Kurdish leadership. Iraqi Kurds were instrumental in getting the PKK, which was near the peak of its power, for the first time to unilaterally declare a ceasefire.

In the early 1990s, the Turks asked and received the collaboration of the two Kurdish groups in northern Iraq. With the Turks, they fought the PKK in large and small engagements and suffered serious casualties in the process. They were then beholden to Turkey, which hosted the American-led Operation Provide Comfort that prevented Saddam's forces from re-entering the Kurdish enclave. Today, domestic-nationalist considerations drive a war of words between Ankara and Iraq's Kurds-especially Barzani-over Kirkuk. The accusations and acrimony have served only to increase tensions further and prevent dialogue.

Nonetheless, the Iraqi Kurds are the only ones who have any chance of prevailing on the PKK and its support base to abandon both the armed struggle and Iraq. The success of the Kurdish experiment in northern Iraq is far too important to Turkish Kurds to jeopardize. Barzani and Iraqi President Jalal Talabani, also a veteran Kurdish leader, can exercise their considerable influence to whittle away at the PKK and isolate its leadership. They are unlikely to let the PKK stand in their way of concluding a genuine deal with Ankara, even if this means engaging in military action against PKK fighters who refuse to quit.

What is in it for the United States? An agreement between Iraqi Kurds and Turkey would help defuse a deteriorating situation and prevent northern Iraq from resembling the rest of that country. Similarly, as the most corrosive dimension of the U.S.-Turkish relationship, such a deal would halt the slide in relations with Turkey, arguably the United States's single most important strategic ally in the region. Such an accord would also strengthen Washington's hand in dealing with Iraq's other meddlesome neighbors by denying them Turkey's possible allegiance or cooperation. In other words, Turkey would help anchor stability in Iraq. The more the United States can negotiate accords designed to enhance local stability, the easier it will be to disentangle itself from Iraq in the future. For both the Iraqi government and the United States, a deal with Turkey is more likely to satisfy the Kurds' long-term needs and reduce the risk of separation in the context of a loose federation.

A GRAND bargain could be a win-win proposition for all, but the obstacles along the way could be daunting. For reasons discussed below, its realization will require extensive behind-the-scenes diplomacy, preparation of the respective publics in both Turkey and northern Iraq and a commitment by the United States to see it through. Both the Turks and Kurds will have to make some substantial commitments and sacrifices of their own in the negotiations.

At the beginning of the Iraq War, the Turks had made it clear that a robust federal Kurdish autonomous region in the north was unacceptable to them. With changes on the ground and the introduction of the new Iraqi constitution, which delineated the Kurdish region, they were obliged to soften their stand.

Nevertheless, their fear of their own Kurdish minority-estimated at 20 percent of their population-is as neuralgic as it is existential. Since the inception of the Turkish republic in 1923, Turkish Kurds, in one form of upheaval or another, have agitated for greater rights and recognition. These efforts at times assumed a violent character, as with the PKK-led insurgency in the 1980s and 1990s, or more often than not have followed a path of increased political mobilization. Either form of activity has been seen as dangerous by the state, which until a little more than a decade ago had refused to acknowledge the Kurds' existence.

The fear of further Kurdish mobilization in Turkey has hampered Ankara's cooperation with the KRG. Ankara has tried its best to ignore the KRG's existence on the grounds that the Iraqi constitution has yet to assume its final and definite shape. The outgoing Turkish President Ahmet Necdet Sezer, despite the Turkish government's entreaties, has obstinately refused to invite Iraqi President Talabani to Ankara simply because the latter is a Kurd from northern Iraq. The Turkish Chief of the General Staff, Yasar Büyükanit, forced the cancellation of an unofficial meeting between the Turkish foreign minister and the KRG Prime Minister Nechrivan Barzani by publicly admonishing his government for meeting with people who he claimed were "supporting the PKK militarily."

A compromise over Kirkuk lies at the heart of any solution. A first step over the sharing of existing oil revenues has been taken between the Kurds and the Iraqi government. There remain differences over future oil finds that will have to be worked out. In view of some Turkmens' anxieties and Ankara's objections to the manner in which the incorporation of Kirkuk into Iraqi Kurdistan is planned, the Kurds have to expend some energy providing ironclad assurances to the Turkmen and other non-Kurdish minorities. This may require special constitutional arrangements for the city itself-as opposed to the province-that include cultural and political rights for all minorities. In this context, the referendum should be postponed. It is unrealistic to expect that all the prerequisites for holding it, such as the normalization of Kirkuk-which includes the redrawing of provincial boundaries to correct for Saddam's ethnic manipulation and the conducting of a census-can be accomplished in an orderly manner before the end of the year. Here, it is important that the Kurds agree to its postponement for technical reasons, not because of foreign or domestic threats, and without conceding the constitutional principle underlying the reason for the referendum.

The confluence of two sets of developments has the potential to accelerate the derailment of U.S.-Turkish relations in Iraq and beyond. The first is the uncertainty over future U.S. intentions in Iraq, the outcome of the surge and the possibility of U.S. troop withdrawal or redeployment to Iraq's borders. The surge is viewed in Turkey as increasing the Kurds' influence, since Baghdad relies on them to provide extra forces to secure the capital. Although Turkish officials do not seem to contemplate alternative outcomes to a unified Iraq, almost no one in Turkey believes that the United States will be able to halt the country's spiraling deterioration.

The second is the increasing civil-military tensions, pitting Prime Minister Recep Tayyip Erdogan's moderate Islamist Justice and Development Party (AKP) against a secular military-civilian coalition determined to prevent him and his party from controlling the presidency. In fact, this coalition has already succeeded in preventing the election of Abdullah Gül to the presidency and forced new parliamentary elections in July with the help of a midnight military memorandum. It is quite possible that this may turn into a "rolling coup" of sorts as the military and civilian elites accelerate their insurgent tactics in the event the AKP emerges victorious from the upcoming polls.

For the civilian and military establishment and its allies, the AKP and the Kurds represent the most pressing dangers facing the republic-Islamic fundamentalism and separatism. These domestic tensions are being played out against the backdrop of a nationalist revival, increasing xenophobia and anti-Western feelings. Turks are being fed a daily barrage of news that not only accentuates these sentiments, but recounts and warns of massacres of Turkmen in Iraq, whether in Kirkuk or Tal Afar.

While uncomfortable with both the presence of the PKK in Iraq and the continuing threat to the country's political stability and economic well-being that the domestic PKK cadres signify, the AKP's approach to the totality of the Kurdish problem is more nuanced than that of the armed forces and the hard-line civilian opposition. The AKP is far more willing to experiment with a broadening of Kurdish participation than is the military.

For all these reasons, the Iraq dossier has come to represent the government's Achilles heel. It is vulnerable to accusations of being soft on Iraqi Kurds, the United States and the PKK presence in Iraq. Unable to undermine its overwhelming parliamentary majority, the anti-AKP establishment has tried to force the government's hand to initiate some kind of cross-border military operation against the express will of the U.S. military in Iraq and Iraqi Kurds. The government-especially the prime minister-has contributed to these tensions by adopting a combative stance of its own. Erdogan, in order to protect his nationalist flank, has publicly said that Turkey would not remain a spectator to events in Kirkuk, thereby raising the specter of an intervention and outpacing the military.

American efforts at handling the intricate problem of northern Iraq have been stepped up with the appointment of General Ralston. He and his Turkish counterpart-retired General Edip Baser who was recently fired-have sought ways to improve dialogue and intelligence cooperation between the Turkish and American bureaucracies. Ralston has managed to raise the issue's salience with the White House, and as one former senior U.S. diplomat commented, "his real job is to convince CENTCOM of this issue's importance." Ralston's appointment bought Washington some time and dissuaded the Turks from militarily intervening in northern Iraq against the PKK in 2006. It is in this context that a new American promise of action was delivered recently to Ankara. The Turks, especially the Turkish army, would very much prefer if the United States, with the help of its Kurdish allies, were to deal with the PKK by force, either by decapitating the organization's leadership or eliminating it altogether. Failing that, they would like the right to begin a sustained cross-border operation of their own.

The Kurds have assumed erroneously that their privileged position in Iraq protects them from the vagaries of both U.S. and Turkish policies. KRG President Barzani's discourse has had an inflammatory impact on the Turkish domestic political scene, and the United States has to not only impress upon the Kurds the precariousness of their current situation but also make use of its considerable influence with the KRG to change its tactics. The KRG's strategic imperative requires it to get along with Ankara, and it is in serious need of a "charm offensive" there. To be fair to Barzani and Iraqi Kurds, the Turkish discussion of them is equally provocative and unhelpful. While this is something both the Iraqi and the U.S. governments recognize, it is only likely to change with increased cooperation.

It is the Turks who have to execute the most important and, admittedly, conceptually difficult somersault. In a year of elections-and with the public riled up about the division of Iraq and the emergence of an independent Kurdish state-to argue almost the opposite takes a leap of faith. Working with Iraqi Kurds is not a new idea, and while Özal was perhaps the first to experiment with it, others, most notably Turkish National Intelligence Organization Chief Emre Taner, undertook such an initiative in 2006 that the military rebuffed. Clearly, Turkey is in need of building a broad societal consensus, which must include its powerful military establishment. The latter has to be convinced that with the end of the PKK, Turkish Kurds will not seek federal arrangements or independence. This is a tall order, but all parties need to start somewhere.

The gain for the United States notwithstanding, there still is the construction of such a bargain. Given its sensitivity and urgency, Washington has to approach this problem on multiple fronts by engaging NGOs as well as officials from either side. At the official level, the Ralston mission can be one of the spokes, but it needs to be supplemented by parallel efforts that feed ideas and solutions into the process. With the rapidly changing situation in Iraq, Washington cannot afford to waste time and opportunities.

Henri J. Barkey is the Cohen Professor of International Relations at Lehigh University and a public policy scholar at the Woodrow Wilson Center in Washington, DC.