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Friends and relatives take the body for burial of Ali Hashim, 30, Killed Thirsday in a car bomb explosion in the Shiite enclave of Sadr city, Baghdad, Iraq, Friday, Dec. 5, 2014.

Karim Kadim/The Associated Press

Kurds are pinching themselves this week to make sure they're not dreaming – Did their Kurdistan regional government really reach agreement Tuesday with the federal government in Baghdad that gives the semi-autonomous northern enclave just about everything it ever hoped for in an oil production arrangement?

"I still can't believe it," said one man in this eastern Kurdish city who works for one of the major oil companies. "I've been telling everyone not to expect [Iraqi Prime Minister Haidar al-Abadi] to be any better than Maliki," he said, referring to former Shia prime minister Nouri al-Maliki, who was forced from office this past summer after two terms in which he made enemies of both Iraq's Sunni Muslim community and the Kurds.

It was Mr. al-Maliki who had punished the Kurds for exporting oil from Kurdistan instead of going through the central government's marketing arm. The Kurds resorted to the unorthodox measure after failing to convince Baghdad to allow them more latitude in how much oil they produced, and to give them the full 17 per cent of revenue to which they were entitled according to the constitution.

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This new arrangement, to be written into that constitution, achieves both. The KRG is promised its 17 per cent, as well as a share of production in the disputed Kirkuk oil fields, an incentive to produce more oil and $100-million (U.S.) a month to pay salaries of the Kurds' Peshmerga fighters who, along with Iraqi regulars and Shia volunteers, are waging an extensive campaign against the group calling itself the Islamic State that has seized about one third of the country.

No sooner had news of the big deal landed, when reports of another kind emerged: An Iranian fighter jet had attacked Islamic State forces in eastern Iraq, the first confirmed time Iran had carried out such an action on Iraqi soil. The development caught many people – but not the Kurds – by surprise . They more than anyone are well aware of the substantial role Iran has been playing in the campaign against IS forces.

It has been through the airport in Sulaimaniyah that Iranian forces have entered Iraq over the past five months arriving under the protective watch of the Peshmerga of the Patriotic Union of Kurdistan (PUK), the Kurdish movement headquartered in these parts. Some of the Iranians have been on their way to provide training to Iraqi Shia fighters (much as Canadian forces are training Kurdish fighters) while other Iranian troops joined Iraqi Shia soldiers in battle against Islamic State.

Not only that but, for the past several months, the former commander of Iran's Revolutionary Guards' special al-Qods force, General Qasem Soleimani, has been seen both in Kurdistan and other northern Iraqi provinces apparently leading Iraqi forces into some crucial battles with Islamic State. The secretive and debonair General, it turns out, has been making his home right here in Sulaimaniyah, based probably in a PUK compound outside town.

It's no secret what Iran's interests are in all this: Islamic State, an extremist Sunni movement, considers Shia Muslims, such as most people in Iran and Iraq, to be apostates, betrayers of true (Sunni) Islam, and would kill them if given the chance. As well, IS forces have vowed to destroy important Shia shrines found in several parts of Iraq, and Iran has vowed to help safeguard them.

As for the Iranian jet-fighter attack, about which Iran let the news slip, Islamic State apparently crossed a red line when it moved a little too close to the Iranian border. Iran's most important oil fields, a strategic asset, sit in Khuzestan just on the other side of the Iran-Iraq frontier and Tehran has decreed a 25-km-wide buffer zone all along the Iraqi side, into which no enemy should tread. With its first public air attack, Iran now has let it be known it will enforce that protective buffer zone, whatever the cost.

The U.S-led coalition against Islamic State, which includes Canada among others, has now seen its Iranian ally in action.

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As U.S. Secretary of State John Kerry implied in his remarks this week about Iranian attacks against Islamic State being an asset: The enemy of our enemy is our friend.

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