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Erbil Demands Full Budget Rights Before Handing Revenues to Baghdad Amid Rising Tensions

Amid escalating tensions between Baghdad and Erbil, the Kurdistan Regional Government (KRG) has articulated a pivotal condition regarding the transfer of its internal revenues to the federal government in Baghdad. The KRG asserts that such a handover is contingent upon the full disbursement of their entitlements from the federal budget, and not limited to employee salaries alone.

In a recent meeting, a KRG delegation, led by Sven Dzi, head of the Department of Foreign Relations, alongside other key officials, convened with representatives and consuls of various states in Erbil. The delegation included prominent figures such as Aumid Sabah, Chairman of the Cabinet Court, Al-Sheikh Janab, Minister of Finance and Economy, and Kamal Muhammad, Minister of Electricity.

The discussions centered on crucial topics, including the financial obligations owed to the Kurdistan region, the export of Kurdish oil, and the overall economic and political landscape in Iraq. The KRG emphasized its commitment to remit internal revenues to Baghdad, reiterating the prerequisite that the budgetary allocations for the Kurdistan Region encompass all budgetary provisions, beyond merely salary payments.

Addressing inquiries about possible delegation visits to Baghdad to resolve salary disputes, KRG official Bishua Huramani indicated that no decision had yet been made regarding sending a delegation from either the Ministry of Finance and Economy or any governmental body to the capital.

Huramani highlighted that while the KRG is prepared to sell oil through SOMO (State Oil Marketing Organization), external factors have stalled the resumption of oil exports, resulting in an economic downturn with losses exceeding $25 billion attributed to inefficiencies on the part of the federal government. He stated that the KRG has consistently adhered to agreements, while asserting that impediments to the agreements between Erbil and Baghdad reside with other political entities.

Furthermore, Huramani made a strong case to the consular representatives, noting that in nations with diverse populations and religious affiliations, it is unheard of for governments to neglect or deprive regions of their salaries. He underscored that the treatment Kurdistan faces from the Iraqi government is unjustifiable and presented convincing data illustrating breaches of agreements between the two governments.

The KRG continues to position itself as a stabilizing force in the region and seeks to foster resolution rather than exacerbate socio-political tensions within Iraq. The delegation engaged in extensive discussions, shedding light on the ongoing complexities surrounding budgetary allocation, salary disbursement, and oil revenues.

The contentious relationship over oil revenue sharing between the federal government and the KRG remains a multifaceted challenge, where legal and political considerations converge. As the federal government and parliament aim to address issues through legal reforms and auditing practices, the KRG’s commitment is crucial to ensuring employee rights and cultivating stable relations.

Recently, the discourse has intensified, characterized by a “data war” between the KRG and the Federal Ministry of Finance concerning salary discrepancies. Notably, salaries for December 2024 have yet to be allocated for KRG employees, while the Federal Ministry insists that adequate funds have been transferred, a claim the KRG refutes, citing a deficit of approximately 800 billion dinars that impedes salary distribution.

In a concerted effort to address this fiscal impasse, U.S. officials have urged the Iraqi parliament to expedite the approval of the federal budget, highlighting the need for a sustainable budget that would facilitate oil production in the Kurdistan region. U.S. State Department spokesperson Matthew Miller underscored the importance of rapid budget amendment approval in his recent briefing.

The Iraqi House of Representatives has included a budget amendment discussion on its agenda for the upcoming Sunday session, reflecting a commitment to alleviate mounting disagreements between the KRG and the federal authorities.

The ongoing salary crisis coincides with President Nigervan Barzani’s recent visit to Baghdad, during which he engaged with Prime Minister Mohammed Shia Sudani and leaders from the State Administration Alliance regarding barriers to effective governance and constitutional compliance in resolving regional disputes.

Salary allocations and their implications remain a pressing concern within the KRG, as Baghdad emphasizes the necessity of the KRG handing over oil revenues for distribution, a stipulation that the Kurdish leadership contests. This contention has resulted in significant delays in salary payments, particularly for the displaced and irregular forms of compensation implemented since 2014, leading to a deterioration of market activities.

As of January 11, the Parliamentary Finance Committee reported an ongoing lack of consensus regarding proposed amendments to Article 12 of the Budget Law pertaining to the costs of oil production and exportation from the Kurdistan region. The contentious amendment, which includes calculating the price of exported oil, remains unresolved.

The KRG has conveyed dissatisfaction with the federal government’s approach, stressing the necessity of unity among the Kurdish representatives to assert their constitutional rights effectively. President Masroor Barzani emphasized the need for decisive action to ensure equitable treatment for the people of Kurdistan.

It is critical to note that the current year’s budget has yet to be executed, raising concerns among experts regarding the government’s effectiveness in financial oversight, which could potentially cause further economic and political disruptions in Iraq.

The perennial disputes over the KRG’s share of the budget underscore the challenges in the relationship between Erbil and Baghdad, particularly related to adherence to budgetary protocols and legal frameworks for oil exports, significantly hampered by the halt in operations through Turkey and the evolving salary localization efforts as mandated by the Federal Court.

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