Tuesday, July 20, 2021

Baghdad Sends Money To KRG Without It Complying With 2021 Budget

(US Dept of Defense)
The Kazemi government has taken the controversial step of sending money to the Kurdistan regional Government (KRG) even though it hasn’t complied with the 2021 budget. Previous administrations have done the same which only encourages the Kurds to follow with their current policy of not fulfilling their obligations to Baghdad.

 

At the start of July 2021 Baghdad sent 200 billion dinars ($138 million) to the KRG. The money is supposed to pay for public workers in Kurdistan. In June the cabinet voted to allow partial budget transfers to the KRG. Prime Minister Mustafa Kazemi called it an advance. This was done despite the 2021 budget stipulating that the KRG had to turnover its oil revenues and border tariffs to the central government before it would receive any money. At the start of June it said it would do so, but hasn’t. 

 

The KRG has not followed any of the recent budgets. That’s because it has been in a severe economic crisis for years now. It took advances from oil traders, borrowed from Kurdish companies, international banks and the Turkish government accruing a large debt in the process. It lost control of the Kirkuk oil fields after Baghdad forced it out of the disputed territories in 2017 cutting its petroleum revenues. That has meant it couldn’t send any money to the central government as required by the budgets. In fact, its economic situation is so bad that even if it received all of its payments in 2021 it still wouldn’t be able to cover all of its bills. Therefore the KRG has no intention of complying with its obligations. Instead it will blame Baghdad for its problems.

 

Kazemi’s actions will simply lead Kurdistan to follow its current strategy. Why comply with the budget if Baghdad will send it money for nothing? Yes, they probably won’t last but it still gets millions of dollars which the region desperately needs. The Prime Minister is likely expecting Kurdish support for him in return. Kazemi heads a caretaker government and has no constituency or party behind him. In turn this will anger many parliamentarians who are tired of the KRG.

 

SOURCES

 

Ali, Sura, “PM: Money sent to Erbil is an advance, not part of budget,” Rudaw, 6/25/21

 

Bakr, Mera Jasm, “The War at Home: The Need for Internal Security Sector Reform in Iraqi Kurdistan,” Middle East Institute, 7/6/21

 

Dourian, Kate, Tahir, Rawaz, and Otten, Cathy, “Baghdad releases $138 million to KRG days before Kadhimi’s Washington visit,” Iraq Oil Report, 7/12/21

 

Jangiz, Khazan, “Baghdad sends 200 billion dinars to Erbil: ministry,” Rudaw, 7/11/21

 

KRG, “KRG Says Will Send Oil, Non-Oil Income To Baghdad This Week,” 6/6/21

 

NRT, “KRG Sending Data, But Not Money To Baghdad: MP,” 6/15/21

- “No Legal Basis For Iraqi Government To Send Money To KRG Outside Of Budget Law:MP,” 6/23/21

 

Osgood, Patrick, Lando, Ben and Ven Heuveln, Ben, “Private investors building financial life raft for KRG,” Iraq Oil Report, 3/11/15

 

Porter, Lizzie, Tahir, Rawaz, Hussein, Mohammed, Dourian, Kate, Otten, Cathy, Van Heuvelen, Ben, “Hope rises for Baghdad-Erbil budget deal, but hurdles remain,” Iraq Oil Report, 6/18/21

 

Tabaqchali, Ahmed, al-Shadeedi, Hamzeh, Abdullah, Sarwar, “Breaking the Impasse: The Baghdad-Erbil Budget Divide,” Iraq Economic Review, May 2021

 

 

 

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