The United States ordered its non-emergency government employees to leave its Baghdad embassy and the consulate in Erbil on Wednesday. Erbil is the capital of the autonomous Kurdistan Regional Government (KRG), and locals are concerned that US-Iran tensions will now engulf the Kurdish region at a sensitive time. The Kurdistan region is strategically important and has been a center of security in the area between the Iraqi central government, Turkey and Iran.Over the last two weeks, the US has warned of Iranian threats across the region and that any attacks by Iran or its proxies will result in retaliation. According to reports, the US has also shared information with Baghdad and with European allies that indicate direct Iranian threats in Iraq. For instance, a BBC Arabic report said that Pompeo had handed Iraqis evidence of Iranian plans, and other reports indicated Iranian-backed Shia militias had deployed missiles in Iraq. The Kurdistan region knows Iran’s capabilities well. Last September, Iran’s Islamic Revolutionary Guard Corps fired ballistic missiles at Iranian Kurdish dissident groups in northern Iraq’s Koya. For years, some Kurdish groups that oppose the regime in Tehran have been based in northern Iraq. Iran has warned that any moves by those groups will be met with force.In addition, Iran has put pressure on the Kurdistan region in other ways. Like Baghdad and Turkey, it opposed the Kurdistan referendum in September 2017, in which millions of people in the KRG voted for independence. But Iran works in a more complex manner to influence Kurdish politics in northern Iraq. It is seen sometimes as both a threat and an ally historically. For instance, during the Islamic State offensive in August 2014 when ISIS was at the gates of Erbil, Iran was one of many countries that sought to aid the fight against the extremists.TODAY, ERBIL has a new crisis. As the US staff at the Erbil consulate were being ordered to leave, the real estate market was in turmoil, with concerns that the US-Iran crisis could harm the economy of the region. The Kurdistan region of Iraq has long been the safest area of the country, free from terrorist threats and the heart of a roaring economy. Its main trade links are through Turkey, but also to Iran. It has its own oil exports and two international airports. The region is not only a center of tourism, but many Iraqis have made their home there to flee sectarian tensions elsewhere. Minority Christians and Yazidis also fled ISIS to the Kurdistan region. In addition, Gulf nations and Turkey invest heavily in the KRG economy. Local reporter Adam Lucente said that he had seen a “bit of concern among friends” in Erbil amid the tensions.But the US-Iran tensions now bring back memories of the August 2014 and October 2017 crises. In the later, the Iraqi army took over Kirkuk and pushed the Kurdish Peshmerga out of the city, threatening to move against Erbil in retaliation for the referendum. The Peshmerga are the armed forces of the KRG. In addition, Iraq closed the Erbil and Sulaimaniyah airports to strangle the Kurdish economy. Today, things have returned to normal, but Erbil fears reverberations of the Iran tensions. For instance, Baghdad pays many civil service salaries in the KRG. A crisis in Baghdad will harm the region.While many residents of the Kurdistan region do not think the US is serious about a war, they are still concerned. “If the situation continues for another two weeks, some people might consider leaving,” one man said. Wealthy investors who usually invest in the region may move their money abroad.MEANWHILE, the Kurdistan region is still in the process of appointing a president. Nechirvan Barzani, who was prime minister, is the front-runner. The Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), the two largest parties, must come to some agreement regarding the composition of the upcoming government. The crisis with Iran comes at a difficult time because the PUK is considered more close to Iran while the KDP is usually closer to the US. However, after the US refused to countenance the independence referendum in 2017, the Kurdistan region is more aloof from US plans there.Diliman Abdulkader tweeted that the Kurdistan region is likely to be neutral in the upcoming tensions, in light of lingering memories of the independence referendum. Lucente tweeted that he agrees. After US Secretary of State Mike Pompeo went to Baghdad on May 8, a high-level American delegation also went to Erbil. David Satterfield, Acting Assistant Secretary of State for Near Eastern Affairs, went to Erbil to meet KDP leader Masoud Barzani and Masrour Barzani, head of the Regional Security Council. US Consul General Steven Fagin and Lt.-Gen. Paul LaCamera from the US-led coalition also came to the meetings. Iranian media was non-plussed, highlighting the Satterfield meeting as US “pressure” on Erbil to end its relations with Tehran. In fact the Washington has been trying to pressure Erbil regarding oil and other trade with Iran.The KRG is trying to improve its foreign relations with other high-level meetings with the UN and UK. But former US anti-ISIS envoy Brett McGurk has expressed concern about the US ordering its non-essential staff from Iraq. In addition, Germany and Holland both suspended training of Kurdish Peshmerga due to the tensions. European countries have invested in training the Peshmerga to help them fight ISIS and to increase their abilities. The KDP was displeased with the Dutch and German decision, saying they would resume their missions as soon as possible.The Kurdistan region of Iraq is an important strategic area that links Turkey, Iran and Iraq. It is also important for the US, which sees it as a reliable and secure area. America has transited equipment to support the anti-ISIS mission via Erbil, and the whole area is a linchpin of security to stop the spread of insurgents and extremists who are based in areas between Mosul and Baghdad. ISIS still threatens roads nearby and has recently burned fields of farmers who refuse to pay “taxes” to the group. Any instability with Iran will lead to ISIS resurgence. In addition, Iran will use instability to increase its influence. Kurdistan is stuck between the Iranians and the US, as well as other groups. But it is also a key conduit and bridge between Iran and other areas of the Middle East.