Iraqi Govt And KRG Resolve Budget Dispute

On September 17 Baghdad and Irbil resolved their differences over the budget. The Sudani government agreed to send 3 monthly loans of 700 billion dinars ($538 million) starting this month. This came after Kurdistan Regional Government (KRG) Prime Minister Masrour Barzani visited the capitol to argue for more money to deal with the region’s financial crisis. That was caused by Turkey closing down its oil pipeline which Kurdistan was dependent upon. Beforehand the KRG was earning an average of $733 million a month from oil exports. Instead of blaming Ankara for its problems Barzani focused upon the central government. That’s because Barzani’s Kurdistan Democratic Party is aligned with Turkey and won’t go against it publicly.

 

After Turkey lost an arbitration case to Iraq for allowing the KRG to sell its oil Ankara closed its pipeline. Its estimated that Kurdistan has lost around $4 billion as a result. PM Barzani claimed Baghdad had sent no budget payments and owed the region 1.375 trillion dinars for July, August and September. In fact, Baghdad had just approved 500 billion dinars ($381.7 million) for September, October and November. That was still not enough to meet the KRG’s bills such as government salaries which stand at 906 billion dinars ($691 million) a month. Like the rest of Iraq Kurdistan has a bloated public sector using jobs as patronage to maintain its support. So many employees are unsustainable and the regional government has had difficulty covering their costs for years as it has argued over its oil industry and budget with several administrations. There is no talk of cutting the workforce because that could cause the ruling parties to lose support.

 

The result has been strikes and cutbacks in Kurdistan. Government employees have stopped working and protested in Sulaymaniya province over not receiving their pay. Oil companies operating in the region have begun laying off employees as well with some cutting up to 95% of their staff because they are not being paid as well.

 

Attacks on the Sudani government have also played into the hands of the Coordination Framework which has a history of disputes with the Kurds. Politicians and government officials in Baghdad have said the KRG has gotten too much money and not met its obligations under the budget. With elections coming in December both the Kurdish and Framework parties are looking for issues to rally the public around and the budget appears to be an early candidate.

 

SOURCES

 

Agence France Presse, “Baghdad increases funding for Iraqi Kurdistan to address salary crisis,” 9/17/23

 

Hussein, Mohammed, Tahir, Rawaz and Van Heuvelen, Ben, “Baghdad approves 3-month stop-gap funding for KRG,” Iraq Oil Report, 9/19/23

 

Hussein, Mohammed, Tahir, Rawaz, Porter, Lizzie, Mohammed, Araz, Van Heuvelen, Ben, “Budget stalemate threatens Kurdistan’s solvency and stability,” Iraq Oil Report, 9/14/23

 

Kurdistan 24, “’Our aim is simple: defend the constitutional rights, of Kurdish people, says PM Barzani in Baghdad,” 9/14/23

- “’Zero payments’ from Baghdad hurt Kurdistan Region citizens, says PM Barzani,” 9/7/23

 

Mahmoud, Sinan, “Iraq export pipeline closure wreaks havoc on Kurdish region economy,” The National, 9/21/23

- “Iraqi Kurdish region appeals for Baghdad funds to meet financial commitments,” The National, 9/7/23

- “Iraqi Kurds seek solutions to financial woes in Baghdad and call for budget amendment,” The National, 9/14/23

 

Zaman, Amberin, “In letter to Biden, Barzani warns of Iraqi Kurdistan’s collapse, urges mediation,” Al Monitor, 9/14/23