In this ancient Kurdish city’s sprawling bazaar, Sarbaz Gawhar is in a quandary over the impact of his government’s recent territorial advances. While the rapid incursions of Sunni jihadists have helped Kurdish forces cement control of oil-rich Kirkuk province, the conflict in Iraq has added to pressures on the Kurdistan Regional Government’s oil-rich but poorly developed economy. Mr. Gawhar is facing a precipitous collapse in his textile business. Amid severed supply lines, chronic fuel shortages, rising prices and plunging consumer demand, sales are down 90%, with few signs of a recovery. “Yes we’ve taken control of our lands, but the war is hurting our economy,” Mr. Gawhar said, surrounded by candy-colored fabric rolls he sells wholesale to stores in dozens of Iraqi cities. “People are starting to panic and hoard, and if things continue this way, it could be a disaster.” Since Saddam Hussein’s demise […]