Turkey has accepted US promises to block any bid by Iraqi Kurds to control northern oilfields, but has signalled it is still ready to send its own troops if it saw a Kurdish move towards independence.
Turkey sounded an alarm on Thursday after Kurdish peshmerga fighters moved into the oil city of Kirkuk abandoned by Iraqi government forces. The Kurds had crossed a "red line", one of many Ankara sees in its fraught relations with Iraqi Kurds.
The United States, fearing a disruptive Kurdish-Turkish clash if Ankara invaded, moved quickly to dispatch its own units to take control of the situation.
"Due to our initiatives those who entered Kirkuk have now begun to leave; those who entered Mosul will also move out," Prime Minister Abdullah Gul told a news conference.
But he left a pointed reminder for the Americans, working with the peshmerga, of a deepseated historic Turkish suspicion of Kurdish ambitions in the region.
"Yesterday we told (US Secretary of State Colin) Powell that if their forces are not enough, we can do it (take control) together and if neither of those work, we could do it on our own," Gul said.
Images of the jubilant peshmerga, splashed over newspapers, touched on a raw nerve in Turkey where schoolchildren learn of perfidious Western powers conniving 80 years ago at the partition of Turkey's heartland and creation of a Kurdish state.
The 1920 Treaty of Sevres, settling borders after World War One, created Kurdish and Armenian states partly in what is now Turkey but it was repudiated by Turkish nationalist leader Mustafa Kemal Ataturk.
Conservative Turks and others argue an Iraqi Kurdish state would reignite separatism in the Turkish southeast that killed 30,000 in the 1980s and 1990s. Turkish troops and armour wait on Turkey's mountainous border with Iraq.
The Kurdish issue is a potent one in both Turkey's domestic and its foreign policy.
Bulent Akarcali of the liberal Democracy Foundation believes Turkey and other neighbours with Kurdish minorities should accept assurances they do not seek independence, only autonomy in a new, federal Iraq.
"The Kurds have understood they cannot survive by being in conflict with Turkey, Syria and Iran," he said.