Will Kurdistan's Energy Wealth Lead to the Next Iraq War? Playing tourists in one of the world's most dangerous cities is not how we imagined we'd end up spending Tuesday, but there we were atop Kirkuk's ancient citadel admiring - and mourning - the crumbling ruins of the five mosques that once occupied the plateau overlooking the contested city."See, look," says Akam Omar Osman, pointing to the north. You see how in Kurdish areas we pick up the trash, we have services. And then how in the south," he says, swinging around, "you have nothing." Osman is the translator provided by the Peshmerga Kurdish forces who brought us here. The north does look to be relatively bustling, while storm clouds gather over the quieter southern areas of the city, filled with banks of trash. This pivotal oil city, home to Iraq's main pipeline and numerous refineries, is part of the disputed territories between Iraqi Kurdistan and the Iraqi central government. And Kirkuk is now on the frontlines of a two-week old military stand-off. After a December shootout between Iraqi police and Peshmerga in another disputed city, Tuz Khormato, left one dead and several injured, both the Peshmerga and the Iraqi Army have ringed Kirkuk. MORE: OK in Iraq, But Wounded At Home But the tensions are far greater than just a singe firefight. Baghdad recently created a new command overseeing security forces in the disputed areas, angering the country's ethnic Kurds. The Kurds were further incensed when Lt. Gen. Abdul-Amir al- Zaidi, who has been linked to Saddam Hussein's genocide of hundreds of thousands of Kurds in 1988′s Anfal campaign, was placed in charge of the Iraqi forces at their doorstep. Iraqi President Nouri al-Maliki was infuriated when Kurdistan began inking its own oil contracts - including some in disputed areas - with Exxon, France's Total, Russia's Gazprom and Chervron. Not to mention a deal under way to build a pipeline between Turkey and Kurdistan, allowing the Kurds a route that did not have to cross the rest of Iraq to export the 45 million barrels believed to be beneath Kurdish lands. Maliki argues that the regional government doesn't have the authority to sign such contracts. On Tuesday morning in Erbil, Kurdistan's capital, we met with the Minister for Peshmerga Sheikh Jafar Mustafa, before heading down to see what we thought were the front lines. "It is illegal for Baghdad to use the Iraqi Army to settle provincial disputes," Jafar says. They make the same words - use the same words - as Saddam. Photographer Ivor Prickett and I piled into a brand new Ford F-150, a powerful flatbed four-wheel-drive with two rows of seating, with three Peshmerga troops and our translator. The car was so new, they had to peel the sticker off the passenger-side window. Their guns were so old, the wood is cracked on a couple of the hilts. If it were to come down to violence, there's a big question who'd win the fight. The Iraqi Army is better equipped, thanks to the Americans, but the Kurds have passion and knowledge of the treacherous mountains on their side. The ill-equipped Kurds, after all,succeeded in tormenting Saddam's powerful army for decades. And it's not clear how many Iraqi Army minority forces - Sunni and Turkmen - would want to fight their allies and friends. The Iraqi army is predominantly Shi'a. About half way into the hour's drive, Osman asks us if we'd like to see Kirkuk. Ivor doesn't have a visa to enter Iraq - the Kurds grant Americans and Europeans instant 10-day visas upon arrival that are only good for their territory, whereas Iraq requires a lengthy application process accompanied by a certified HIV blood test - but Osman says that's not a problem because Kirkuk is part of their territory, a point they're clearly keen to highlight. As to our concerns about danger, he waves them away: "With us, you're perfectly safe," he says, pointing at his gun. And, besides, it's safe, you'll see. We probably wouldn't have gone in if I hadn't heard from Western diplomats the night before that they travel to Kirkuk all the time and the areas controlled by the Kurds are, indeed, quite safe. MORE: The Truth About Torture Kurdistan is the safest part of Iraq these days. Travelers do not need to move in secured convoys or with bodyguards. Electricity, still unreliable to the south after more than $20 billion in investment, is stable in Kurdistan. The economy is booming: cranes building 30-floor five-star hotels dot Erbil's skyline, road and tunnel construction is everywhere and foreign business and tourism are flourishing. The Kurds have extended much of that stability to northern Kirkuk. The bazaar here is bustling. Every one I interview tells me they want to live in an independent Kurdistan, even the Arabs. "Barazani," Hadji Subiq, 80, tells me with a toothless grin, referring to Kurdish President Massoud Barzani, "if he's alive then we're all alive. If he's dead then we're all dead. At first I think they're only saying nice things about the Kurds given that I'm flanked by three heavily armed Peshmerga as I approach people. But soon, Osman and I sit down for a tea at a cafe and a crowd of 30 or more surrounds us, all eager to talk about how much they hate Maliki and love the Kurds. By Thursday the central government and the Kurdish regional authorities had come to an agreement to deescalate the troops, though no timetable for withdrawal was set and the two sides did not solve any of the underlying issues. In the meantime, tens of thousands of troops - by some estimates as many as 60,000 - are facing off in other locations, some as close as 100 meters to each other. "With two armed groups in close proximity, the danger is accidents that do happen and things blow war and you get an inadvertent war," says Harry Schute, a former U.S. Army colonel who led U.S. forces into Kurdistan in 2003 and has come back in his retirement to advise the Kurds on security. Both sides have an incentive to find a solution. Maliki faces provincial elections in six months and a populace sick of sectarian violence, political saber-rattling and bureaucratic bumbling. And the Kurds place a high premium on stability. "We hope it doesn't come to war, we know that there's a lot to be lost with this fight," says Falah Mustafa Bakir, Kurdish minister of Foreign Relations. Safety and security is essential to our growth, the growth that we want to continue and expand. Kurdistan is open for business. MORE: Iraq: Photographer Robert Nickelsberg Covers the War