On the one side, there is the menace of extremists, who are wreaking havoc on the fringe areas bordering the regions controlled by the Kurdistan Regional Government (KRG) of Iraq. On the other side, there is the damaging budget and oil dispute with the central government in Baghdad, which is draining the financial means of the KRG, and beginning to cause social unrest among the Kurds. The peshmerga forces of the KRG are facing their first meaningful test in Iraq since the fall of Saddam Hussein and the American occupation as they struggle to keep the Islamic State of Iraq and al-Sham (ISIS) hordes out of the Kurdish region. But it seems at the moment they are facing an uphill battle as the latest news indicates that the ISIS forces have captured the Sinjar province despite efforts of the peshmerga forces. The Baghdad government forces vacated the Syrian-neighboring Sinjar, and the peshmerga forces quickly entered the area just like they did in Kirkuk, which is further to the east. But now, news comes in that the extremists have pushed out the peshmerga, and are moving ahead to open a major corridor to their comrades in Syria.The extremists are making headway and the peshmerga are retreating. The KRG has already ordered the evacuation of several Yazhidi villages around the Mosul area near Dohuk. That is bad news for the KRG as ISIS extremists continue to make headway. On the economic front, the KRG has failed to export its oil worth $100 million (TL 213.2 million) because an American court decided to confiscate the oil as it was carried to the coast of the U.S. with a tanker.The court ruled that the crude is the property of the Iraqi central government, and that the Kurds cannot sell it without the consent of Baghdad. In a major budget dispute, Baghdad has denied vital monthly funds to the KRG that is the rightful share of the Kurds from Iraqi oil revenues; thus, the Irbil administration tried to bypass Baghdad by selling the oil extracted from the Kurdish region through Turkey, whereby trying to use the funds to subdue the financial crisis. But that failed with the U.S. court ruling. The Kurds, which seem to be the cement of Iraq, have to continue to play a role that is ironic as they have started to speak about independence. Kurdish veteran politician, Fuad Masun, a close friend of outgoing president, Jalal Talabani, has been elected president of Iraq, and will no doubt strive to mend fences in Baghdad to help to create a national unity government that will include Sunni and Shiite Arabs and the Kurds - a development pleasing to Ankara.Now is the time for Ankara to display its weight in Iraq, and use its good ties with the KRG to create a permanent solution to the plight of the Turkmens living in Iraq. The first step to settle Turkmen refugees around Dohuk is positive, but a genuine and more permanent solution is needed. Turkmens who are scattered all over the Iraqi territory and especially in the northern regions should be brought together in the KRG area in a special enclave that will give them autonomy, and secure their future.