Baghdad's move to reassert control over oil-rich Kirkuk and its surroundings from the KRG is displacing Peshmerga forces, who took control of the city when the Iraqi army lost the region to a Daesh advance in 2014.
The president of northern Iraq’s autonomous Kurdish Regional Government (KRG), Masoud Barzani, said the referendum for independence that his administration held last month "won't be in vain."
His comments come after Iraqi government forces and predominantly Shia militia allies continued on Tuesday to further consolidate control of areas in northern Iraq, displacing the KRG's Peshmerga forces from the territory.
The offensive began on Sunday. By Monday night, Iraqi forces had seized Kirkuk city, including the governor's office, key military sites and oilfields as they swept across the disputed province.
The advances were a second resounding triumph for Iraqi Prime Minister Haider al Abadi, the soft-spoken Iraqi prime minister, months after his forces recaptured Mosul from Daesh. Abadi had faced threats from Iran-backed Shia armed groups to take matters into their own hands if he did not act decisively to take on the Kurds.
Speaking on Tuesday, Abadi said the KRG's referendum "is finished and has become a thing of the past." Addressing a news conference in Baghdad, he called for a dialogue with Kurdish leaders "under the constitution."
His Kurdish counterpart Barzani, however, did not call for dialogue, but said that "Kurds have always been against waging wars and have worked in pursuit of peace."
The setbacks for the KRG led to recriminations among the two main Kurdish political parties - the KDP and PUK, which each control separate units of Peshmerga.
Barzani said political rivals had ordered the withdrawal of Peshmerga forces from Kirkuk, and officials in his KDP accused the PUK of his long-time rival Jalal Talabani of "treason" for abandoning the city.
Talabani, who served as ceremonial Iraqi president in Baghdad from 2003 to 2014, died two weeks ago. His widow denied blame for the fall of Kirkuk and said her party had tried to avert the advance through contact with US and Iraqi officials.
Iraqi forces completed an operation to take control of all oilfields operated by state-owned North Oil Company in the Kirkuk region, a senior military officer said.
The loss of the oilfields is a major blow for the finances of the KRG as they accounted for a significant share of the region's oil exports.
Iraqi forces took control of the Bai Hasan and Avana oilfields northwest of Kirkuk on Tuesday, after seizing the Baba Gurgur, Jambur and Khabbaz fields on Monday, military officials said.
Oil officials in Baghdad said all the fields were operating normally.
Crucial areas recaptured
Kurdish Peshmerga forces also moved out of Khanaqin, an area on the border with Iran as Iraqi forces prepared to take over their positions, security sources said on Tuesday.
The region is home to a large Kurdish community and the site of a small oilfield, Khana.
TRT World's Ediz Tiyansan reports.
Peshmerga displaced in Yazidi region
Iraqi forces and Shia militia allies also displaced Peshmerga forces from the Yazidi town of Sinjar on Tuesday as they pressed ahead with Abadi's campaign.
"The Iraqi army and Popular Mobilisation Forces entered the town of Sinjar after the Peshmerga withdrew without a fight," said the Hashd al Shaabi, a paramilitary force made up largely of Iran-trained Shia militias.
The Hashd said that Yazidi fighters in its ranks had deployed in Sinjar.
"There was no violence. The Lalesh [Yazidi] group moved after the Peshmerga pulled out," said a resident by phone.
Lalesh is affiliated with the Popular Mobilisation Forces, an armed group of predominantly Iran-trained Shia paramilitaries, with the participation of smaller forces from other communities including Sunnis, Christians and Yazidis. It is officially under Prime Minister Abadi's authority.
The northwestern town is infamous as the site of one of Daesh's worst atrocities where it killed thousands of Yazidi men and abducted hundreds of women as sex slaves in 2014, prompting an exodus into the mountains that helped trigger US intervention.
Displaced civilians are returning
Crowds on the streets of Kirkuk's southern outskirts welcomed Iraqi forces as they entered the city, where they were seen raising Iraqi flags in place of Kurdish ones.
Thousands of civilians streamed back to Kirkuk on Tuesday, a day after many had fled as Iraqi troops pushed into the city.
The police called on residents who fled to return as it said the situation was stable, and late on Monday declared a night-time curfew in Kirkuk city.
The US is "not taking sides"
President Donald Trump said the United States was "not taking sides" in the battle for disputed regions in northern Iraq as the US-led coalition urged Peshmerga and Iraqi government forces and their allies to focus on fighting Daesh, on the verge of losing their last strongholds in Iraq.
At least 10 Peshmerga fighters have been killed and 27 wounded during clashes since the government action began, a Kurdish health official said.
US State Department spokeswoman Heather Nauert said the United States was "very concerned" by the reports of violence.
"We strongly urge all parties to avoid provocations that can be exploited by Iraq's enemies who are interested in fuelling ethnic and sectarian conflict," she said.