The stunning collapse of the Iraqi army in Mosul, and the rapid advance of the fighters of the Islamic State of Iraq and Syria (ISIS) through Tikrit and toward Baghdad has created a new reality in Iraq.ISIS advances have continued this week; the organization has now taken the town of Tel Afar, with its 200,000 inhabitants, located west of Mosul.Iraq is now divided on a de facto basis into a Shi’ite south and center, including Baghdad, a Sunni, ISIS-dominated west and a Kurdish-ruled north.The biggest winners from this situation, apart perhaps from ISIS itself, are the Iraqi Kurds. The conflict between the Sunni jihadis and the Iran-supported Baghdad authorities has enabled the Kurds to add a number of key building blocks to the nearly completed edifice of Kurdish independence in the area once known as northern Iraq.Largely ignored by the Western media, the Kurds have been quietly building their autonomy in the three northern provinces of Erbil, Sulaymaniyah and Dohuk, granted to them by the Iraqi Constitution of 2005.A stable political system protected by a powerful armed force of around 100,000 men (the Peshmerga) has been out in place.In the weeks prior to the current crisis in Iraq, the Kurdish Regional Government (KRG) began to independently export crude oil, via Turkey, without seeking the approval of Nouri al-Maliki’s government in Baghdad. Maliki struck back by cutting funding to the KRG in Erbil.The dispute remained unresolved in the days prior to the sudden eruption of the ISIS offensive in early June. The disagreement over oil exports formed part of a larger standoff between the Baghdad government and the KRG over control of oil-rich, majority Kurdish areas in Kirkuk, Ninawa, Salahaddin and Diyala provinces. The Maliki government threatened to exclude any oil company that began to drill under KRG auspices from access to the giant oil fields in Shi’ite southern Iraq.The complex standoff now appears to have been resolved – entirely in the KRG’s favor. As Iraqi forces fled from the ISIS advance, the Kurdish Peshmerga swiftly moved in to the long-disputed town of Kirkuk. The Kurds refer to Kirkuk as their “Jerusalem,” and their population was largely ethnically cleansed from the city in the 1980s by Saddam Hussein’s regime. They have long sought its reincorporation into their area of control.This is not a matter only of sentiment: Kirkuk sits on an area of vast oil wealth, considered to contain nearly 9 billion barrels of oil reserves. By comparison, according to the International Energy Agency, the entire KRG area without Kirkuk contains around 4 billion barrels of proven oil reserves.The taking of Kirkuk, along with the recent opening of the pipeline to Turkey and thence to international markets, means the emergence of a Kurdish regional oil power is now a reality. The Kurds have already built a link that connects Kirkuk to their pipeline to Turkey.The political confusion, meanwhile, and the push east by ISIS and associated Sunni forces has demonstrated that the Peshmerga are the most powerful military force in Iraq. They are now deployed along the newly expanded borders of the KRG, and are directly facing the fighters of ISIS. Some clashes have already taken place.But, for the most part, ISIS and its allies appear to prefer to advance against Iraqi government forces and in the direction of Baghdad, while leaving the more formidable Kurdish fighters alone. Certainly, unlike the Iraqi government-controlled towns still falling to the advance of the Sunni fighters, the Kurdish-controlled areas do not appear vulnerable.Kurdish Prime Minister Nechirvan Barzani has also made clear that the Peshmerga will not assist the Iraqi army in the effort to retake Mosul. The Kurds, rather, will focus on securing their own borders.Barzani this week expressed support for an autonomous zone for Sunnis in Iraq, and laid the blame for the current situation largely at the feet of Maliki. Barzani told the BBC, “We have to leave it to Sunni areas to decide, but I think this is the best model for them as well. First, they have to take a decision: what they want exactly. And in our view... the best way is to have a Sunni region, like we have in Kurdistan.”What all this means is that there exists today an economically powerful, politically stable, well-defended Kurdish entity, with a population of 5 million people, in what was once northern Iraq.The effective collapse of any authority on the part of Baghdad over this entity means that the latter is now a Kurdish state in all but name.So will the KRG soon declare independence, turning the de facto state that the Kurds have quietly built up into a de jure sovereign area? The answer is that while it is now clear that statehood is the goal, an early, open declaration of independence by the Kurds remains unlikely.A source in the KRG told this reporter that Turkish opposition to any declaration of Kurdish statehood had been the main obstacle to any such move. Turkish lobbying in Washington and in the capitals of Europe meant that Western countries remained opposed to Kurdish independence.The US has also, for its own reasons, remained throughout staunchly in favor of the “territorial integrity” of Iraq. Secretary of State John Kerry reiterated this stance in a statement this week. The Turkish position in this regard appears to be softening, according to a number of reports.But for as long as the clear US and Western position remains (somewhat bafflingly) opposed to the aspirations of the powerful and openly pro-Western Kurdish de facto sovereign entity in northern Iraq, its independence is likely to remain undeclared.The collapse of Iraq into renewed sectarian war, and the powerful assertion of Kurdish self-government in the north are the latest evidence that the region – and specifically the area known formally as Iraq, Syria and Lebanon – is in the midst of a historic convulsion whose end is not near.Whatever the final outcome of all this, Kurdish sovereignty in practice is today a reality in the former northern Iraq. And if the KRG can successfully navigate the difficult diplomacy of the months and years ahead, at a certain point it is likely that the world will have little option but to adjust – and formally recognize this reality.