Baghdad has cut off monthly budget payments to the Kurdistan Regional Government (KRG) once again. While the central authorities are claiming this is a financial matter it is really about two new natural gas deals the Kurds signed.
On May 28 Finance Minister Taif Sami sent a letter to Kurdistan saying that it would not be receiving its monthly budget payment. The minister claimed that the KRG has not sent its revenues to the central government which is a requirement to receive money. The ministry would add that it had sent more to the Kurds then was authorized.
The Kurds immediately protested. One Kurdistan Democratic Party (KDP) official said the move was political while another threatened to withdraw the party from Baghdad. The KRG’s Finance Ministry said that that Baghdad must continue to fund the regional government as ruled by the Supreme Court.
The real reason why the Sudani government took this action was two energy deals signed by the KRG. In the middle of May Kurdistan inked natural gas deals with HKN Energy and WesternZagros of the United States. The Oil Ministry ended up suing the KRG claiming these contracts were illegal because they did not go through the central government.
Even before this the Kurds were complaining that Baghdad was not sending them enough money. This all started over a decade ago when the second administration of Prime Minister Nuri al-Maliki declared the Kurds’ independent oil deals illegal and stopped sending money to the KRG in retaliation. Kurdistan believed it could fund itself through its oil sales but that did not work out and the region fell into a massive debt, couldn’t pay its large government workforce and faced constant protests as a result. There have been deals upon deals to try to remedy this dispute but with no resolution. Now history is repeating itself.
SOURCES
Al Aalem, “Erbil accuses Baghdad of creating “obstacles” to withholding salaries, and the Kurdistan Democratic Party (KDP) threatens to withdraw,” 5/29/25
Iraq Oil Report, “Baghdad threatens to choke off KRG funding,” 5/30/25
Al Mada, “The Kurdistan Region's employee salary crisis returns to the forefront. Baghdad reduces the share and stipulates the delivery of revenues,” 5/12/25
Mahmoud, Sinan, “Iraqi Oil Ministry files lawsuit against Kurdish region over unilaterally signed energy deals,” The National, 5/27/25
Shafaq News, “Iraq-KRG salary row escalates: Baghdad cites revenue holdout,” 5/29/25
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