Divided Kurds kill 500 in battle over the spoils of smuggling

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A savage war is being fought in Kurdistan over profits to be made from smuggled oil and cigarettes. Fighting between the two main Kurdish parties has cost 500 lives and is undermining the Kurds' claim to independence.

Each side commands between 30,000 and 40,000 soldiers known as peshmarga, mostly armed with light weapons but also with heavy artillery captured from the Iraqis. Over the last month forces loyal to Jalal al- Talabani, leader of the Patriotic Union of Kurdistan (PUK), have captured the Kurdish capital of Arbil, previously divided between the two, driving out the troops of Massoud Barzani, who heads the Kurdish Democratic Party (KDP).

Mr Barzani's men have in turn surrounded Arbil, a city of half a million people, and say their artillery has scored direct hits on Mr Talabani's headquarters on its outskirts.

Sceptics who said the Kurds would never rise above tribal divisions look vindicated. Douglas Hogg, Minister of State at the Foreign Office, wrote this week to both leaders asking for an end to the fighting. "The only gainer from this conflict is Saddam Hussein," said Hoshyar Zebari, the KDP spokesman . "He must be salivating."

Every day more than 1,000 lorries from Turkey pour across a rickety bridge on the border at Khabur carrying goods for Iraq. Welded onto them are enormous spare fuel tanks so they can carry cheap Iraqi petrol back to Turkey where it is sold for a large profit.

In a country as poor as Kurdistan, the $150 (£100) charged by the Kurds on each lorry crossing the bridge goes a long way. Technically, the import of Iraqi oil is in breach of UN sanctions but the Western allies turn a blind eye because Turks and Kurds need the money.

Baghdad encourages the trade, off-loading imports at the northern city of Mosul and selling the drivers cheap petrol, because it is desperately short of hard currency.

A more covert export also crosses Kurdistan. Iraqis and Iranians are heavy smokers and control of the sale of cigarettes is an important source of revenue for governments in the region. In Iran in particular, cigarettes are expensive. Cheap cigarettes are now being smuggled from Turkey through Kurdistan into Iran.

Relations between Mr Talabani and Mr Barzani have never been good. During the long and ferocious wars with the Iraqi government in Baghdad, they fought separately. Despite being brought together by the Gulf war and the Kurdish uprising in 1991, they havenever trusted each other. In theory, after elections in 1992, they both belonged to the same Kurdish government based in Arbil, but in practice each ruled his own areas of traditional support. Mr Barzani's KDP is, broadly speaking, in control of north-west Kurdistan and Mr Talabani's PUK ho lds the south-west.

It was the customs revenue which destabilised this arrangement. Khabur bridge near Zakho is in Dohuk province which is under KDP control. Mr Talabani got nothing. The KDP say that up to May last year it put $14m (£9.3m) in revenue in the Arbil Central bank for disposal by the official Kurdish government. But when clashes broke out between the KDP and PUK last May, Mr Talabani took over the bank and confiscated the money.

The clashes last summer were mostly in the countryside. The fighting which started on 16 December was much more serious. Hoshyar Zebari says the PUK planned to capture Arbil, the capital, and also the strategic Hamilton road linking Arbil and the Iranianborder, which was built by the British to control Kurdistan .

The PUK failed to take the Hamilton road, which runs through steep mountains and gorges, but did capture most of Arbil. Civilians fled as both sides used mortars, heavy machine guns and rocket-propelled grenades in the centre. Last weekend there was fighting to control Koi Sanjaq, a strategic town to the east of the Kurdish capital.

Fighting has been brought to a halt in the last few days by a snow storm blanketing Kurdistan.

Both sides are coming under intense pressure from the US and Britain, whose fighter-bombers patrol Kurdistan to prevent an attack by Iraq, to reach an agreement.

Mr Talabani has called for a general mobilisation of all his forces, though military specialists believe neither side could win a complete victory.

A KDP spokesman says everything turns on what happens at Arbil: "We have not taken the decision to storm it but it is the capital and we are determined not to let them hold on to it."