The bazaar in this city near the Iranian border teemed with the ancient rhythms and smells of the Middle East. Hawkers barked for attention. Richly coloured spices were carefully measured. Chickens got their necks rung. Sheep heads were piled high on tables near great shanks of lamb and goat.

But that Old World is disappearing fast as Iraq’s six million Kurds embrace a future that may include independence underpinned by fabulous oil wealth.

Even before Sunni extremists seized a big chunk of Iraq last week, most of the country was only sputtering along economically despite being blessed with some of the world’s most productive oil fields. Iraqi Kurdistan, which sits atop many of those oil fields, has been the exception.

The U.S. invasion in 2003 gave the Kurds some room to manoeuvre as their Sunni and Shiite countrymen battled for control of the government. Over the years the Kurds have quietly achieved de facto statehood although a lot of the oil money still flowed to Baghdad.

Kurds control who enters and leaves their autonomous region. They fly their own red, white and green flag with a sun symbol almost everywhere. They have their own highly regarded army — the Peshmerga — and a western-focused diplomatic corps. They, unlike Baghdad, have waved entry visas for westerners. Contracts to export oil through Turkey have been signed.

These were all powers the Kurds had acquired before the Iraqi army ran away from nearby Mosul last week rather than fight Sunni extremists. The army’s shambolic retreat handed the Kurds a gift — oil-rich Kirkuk, a city they have long regarded as their cultural capital.

Less well known is that the Kurds also gobbled up a swathe of land to the northwest of Kirkuk all the way to the Syrian border town of Rabiah, while to the southeast of Kirkuk the Peshmerga established a defensive line that in some places is only 40 kilometres away from Baghdad.

By rushing to fill this vacuum, the Kurds gained control of another 40,000 square kilometres of territory, effectively doubling their homeland, which is now about the size of New Brunswick.

Putting oil revenues to good use, the Kurdish autonomous region has a bureaucracy that is organized and efficient. It presides over cities that are clean and investor-friendly. Scores of impressive skyscrapers, megamalls, schools and hospitals are being built. Streets are choked with luxury SUVs and sedans. The airports at Irbil and Sulaymaniyah have direct flights to the Middle East and Europe, sparing travellers the agony of trying to get out of Iraq through Baghdad.

The most obvious reason for Iraqi Kurdistan’s economic miracle is that it has side-stepped the cycle of violence that the Sunnis and Shiites took up again during the early years of the U.S. occupation and then resumed about 30 months ago after President Barack Obama ordered his troops to come home.

Kurds, including dozens whom I spoke with across the region this week, never grow tired of speaking about how much they want to become independent.

“It’s been my dream my entire life,” said Mohammed Osman Ahmed who sold meat in Suylamaniyah’s bazaar. “The Arabs never treated us properly. This our chance.”

At another butcher shop a few metres away, Alan Abdullah, said an Arab news program from Baghdad had just called on Kurds to form a military alliance with the Shiite-led government to push the Sunnis back. He wanted nothing to do with it.

“We are surrounded by enemies and all we wish for is to stay away from their fighting,” he said.

Omar Ali Sharam took a moment out from selling lottery tickets to explain how even wearing the Kurds’ distinctive billowy trousers could be hazardous.

“If we wear them in Baghdad today it could get us killed,” he said.

History has never favoured the Kurds. They are told from birth about the oppression that their people have suffered over the centuries at the hands of the British, French, Ottoman Turks, modern Turks, Iranians, Syrians and Iraqis.

As a result, the Kurds, like the Serbs, seem to forever be celebrating defeats, rather than victories. A portrait overlooking a square in the centre of Sulaymaniyah is a reminder of a tribal commander who presided over several epic losses to the Persians. A lovingly tended monument to the west of the city recalls a failed revolt against the British in 1919 when Sheik Mahmoud al Hafeet al Barzanji called his kinsmen out to fight after Britain and France carved up Mesopotamia for themselves, leaving the Kurds straddling four countries with few rights in any of them.

While they have far more control over their destiny than the other 24 million Kurds spread across the Near East, Iraq’s Kurds were cautious about whether their luck had finally changed.

The biggest hurdles to Kurdish independence remain the U.S., Turkey and Iran. It is still American policy to try to keep Iraq in one piece. Turkey and Iran fear an independent Kurdistan on their doorstep because it could cause more trouble for them with their large, restive Kurdish minorities.

Although most Kurdish politicians refuse to express their opinion quite so baldly, there is an almost universal feeling across Iraq’s Kurdish autonomous region that it will be impossible to hand Kirkuk back to Baghdad or ever again tolerate rule by Arab Sunnis or Shiites.

Asked why Kurds were so unbending about this, bodybuilder Araz Aziz al Barzanji explained: “I am only 36 years old but I grew up never knowing how to read or write Kurdish because Saddam Hussein would not let me.

“In my lifetime 180,000 Kurds were forced from 5,000 villages. Chemical weapons were used to kill thousands of them before their bodies were bulldozed into the ground. Kurdistan works well now so there is no reason for me to want to be Iraqi,” he said.