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Fleeing Iraqi citizens from Mosul and other northern towns are seen on their pickups and cars waiting in a queue to cross to secure areas at a Kurdish security forces checkpoint, in the Khazer area between the Iraqi city of Mosul and the Kurdish city of Irbil, northern Iraq, Wednesday June 25, 2014.Hussein Malla/The Associated Press

Iraq, in its recognized form, came to an end two weeks ago when jihadist fighters captured the city of Mosul and swept south toward Baghdad, Fuad Hussein, the chief strategist of the Kurdistan Regional Government, says.

Now Iraq's six million Kurds, who have long aspired to independence, are wondering what future they have in a country where he says Sunni Arab "terrorists" and Shia Arab "militias" are now the two dominant forces. Mr. Hussein believes the time has come for Kurds, who are predominantly Sunni Muslim but have their own language and culture, to discuss whether they should break away from the chaos to the south and declare their own state.

In an interview with The Globe and Mail on Wednesday, he tellingly used the past tense when speaking of Iraq.

"Self-determination is our right. But that has a process. It has an internal process, and an external process," Mr. Hussein, who is chief of staff to Kurdish President Massoud Barzani, said. "We cannot stay, just doing nothing," he added. "We will establish this process of discussion in our society, because internally you must prepare the ground" for an eventual independence vote.

Mr. Hussein's comments came one day after Mr. Barzani met with visiting U.S. Secretary of State John Kerry. In a symbol of the shifting realities here, the Kurdish leadership refused a U.S. request to send a delegation to meet Mr. Kerry in Baghdad and instead told the top U.S. diplomat to come to Erbil.

Mr. Kerry and Mr. Barzani began and ended their conversation with very different ideas about what needs to happen next in Iraq.

Mr. Hussein, who attended the 50-minute meeting, said Mr. Kerry came hoping to convince the Kurdish government – and its well-trained peshmerga army – to back efforts to hold Iraq together, form a new coalition government in Baghdad and confront the surging Islamic State in Iraq and the Levant (ISIL).

That effort was hit by further setbacks Wednesday as ISIL fighters consolidated their hold over border crossings into neighbouring Syria and Jordan, and Iraqi Prime Minister Nouri al-Maliki, a Shia politician who is supported by Iran, declared he would not step aside in favour of a proposed national unity government. He said the results of an April election – in which his State of Law coalition won 92 of 328 seats, the largest share of any bloc – gave him the right to rule.

"The dangerous goals of forming a national salvation government are not hidden," Mr. al-Maliki said in a televised address on Wednesday. "It is an attempt by those who are against the constitution to eliminate the young democratic process and steal the votes of the voters."

Mr. Barzani told Mr. Kerry that a "new reality and a new Iraq" had emerged after the fall of Mosul. Amid the chaos, peshmerga fighters seized full control of the oil-rich city of Kirkuk – a city Kurds compare to Jerusalem in terms of its significance to their history and culture – after the Iraqi army abandoned its positions there.

"Pre-Mosul period, Iraq was united. Pre-Mosul period, Iraq had an army," Mr. Hussein said in his office inside the fortified presidential offices in Erbil.

"Post-Mosul period, Iraq is divided. Post-Mosul period, the Sunni community has got their area. Post-Mosul period, [ISIL] became one of the main forces in Sunni areas. Post-Mosul period, Iraqi army collapsed. Post-Mosul period, instead of Iraqi army in Baghdad, it's [Shia militias] Asa'ib al-Haq, Badr army, Mahdi army.… [These are] two different eras."

Mr. Hussein made it clear that Kirkuk was now under full Kurdish control and said there was no need to discuss handing it back to the Iraqi army. "The Iraqi army disappeared, so we filled the vacuum and are protecting Kirkuk and other areas. … The Iraqi army doesn't exist.Where is the Iraqi army? It is not about the Iraqi army anymore."

Kurdish forces have clashed with ISIL in several locations, but the Islamist extremists seem content to largely leave the Kurds to themselves as they push toward Baghdad. Mr. Hussein said he was confident the peshmerga could repel an ISIL attack if it did come.

In many ways, the regions of Iraq under Kurdish control already feel like a different state from the rest of the country. The Kurdish north is an oasis of relative calm and secularism, with Muslim and Christian communities living side by side and women playing a visible role in society and politics. Foreigners can receive a 15-day "Kurdistan Region" visa upon arrival, without the need to visit an Iraqi consulate beforehand, and the booms heard in the night are caused by relentless construction rather than sectarian conflict.

Erbil gained a further measure of economic sovereignty this month as the first deliveries of Kurdish oil arrived by pipeline at the Turkish port of Ceyhan, where they were put on tankers for delivery to the international market.

While Kurdish oil is currently a tough sell, – it's being offered at a discount to help lure buyers concerned about Baghdad's threats to sue any party that buys Iraqi oil without going through the state oil company – one tanker appears to have offloaded its cargo at the Israeli port of Ashkelon. Turkish media have reported that another tanker is at sea waiting for a buyer, while two others are currently being filled with Kurdish oil in Ceyhan.

The oil sales have thus far fetched about $100-million (U.S.). "The Baghdad government, for six months, hasn't sent us a budget. So, we are responsible for our people. We must find revenue for our people. And we have got oil, so what do you expect?" Mr. Hussein said.

While the Kurdistan Regional Government has had wide autonomy since U.S. troops toppled Saddam Hussein's regime in 2003, threats from neighbouring Turkey and Iran – who fear unrest among their own Kurdish populations – have thus far forced Mr. Barzani's government to keep independence on the back burner. The United States, which is seen as Kurdistan's ultimate protector, has also pressured Erbil to remain within Iraq.

Mr. Hussein acknowledged there is a difficult lobbying job ahead to convince the region's powers to accept an independent Kurdistan. He planned to fly to Washington on Wednesday to continue that effort, in part by reminding U.S. officials about the kind of Iraq the 2003 invasion – in which peshmerga forces participated – was supposed to create.

"We are trying to make it clear to everybody: This was not the Iraq that we wanted. This was not the Iraq that the Kurdish people struggled for," Mr. Hussein said. "We were fighting for a democratic Iraq. We were fighting for a federal Iraq. We were fighting for an Iraq that respects human rights, women's rights, religious minority rights, the rights of every group.Now, it is unfortunate, we have got on one side militias that are the dominant forces, and on the other side terrorists that are the dominant forces. They are fighting each other and we cannot solve it."