Kurdish MPs protest Iraq oil policy

16 November 2020
Dispute is focused on Iraq’s fiscal deficit bill

Kurdish MPs stormed out of an Iraqi parliament session on a fiscal debt bill over requirements for the Kurdistan Region to hand over an unspecified amount of oil revenue to Baghdad in return for its monthly share of the federal budget.

The fiscal debt bill was passed on 12 November after the Iraqi parliament met on 11 November to discuss the fiscal deficit coverage bill.

The bill was key in deciding on the payment of Iraqi civil servant salaries, in addition to salaries of public sector workers within the Kurdistan region for the last two months of the year.

The session, which started in the afternoon on 11 November, finished at 6am on 12 November, with the bill passed by a majority vote.

Baghdad will now borrow ID12 trillion ($10bn) from the central bank in an attempt to cover the fiscal deficit and pay civil sector employees.

Initially, Iraq’s Prime Minister Mustafa al-Kadhimi had asked the finance committee for ID30 trillion ($25bn).

Budget dispute 

Members of the Kurdish parties decided to leave the parliamentary session after arguments with Shiite bloc members regarding the ID320bn ($268m) monthly budget share for the Kurdistan Region.

“The Shiite bloc and the parliament speaker told us to attend the meeting and said they would delay voting on the section concerning the Kurdistan Region,” Viyan Sabri told Rudaw, a local media network based in Iraqi Kurdistan.

“However, when we accepted and entered the meeting, they disregarded their own statement.”

According to the legislation passed, the Kurdistan Region will have to send some monthly oil income to Baghdad.

The amount is due to be decided in talks between the Kurdistan Regional Government (KRG) and the State Organisation for Marketing of Oil (Somo).

In return, the region will receive its share of the federal budget.

Kurdish MPs say this deal was not part of the original bill.

“[Committee] members from Al-Sadiqoun bloc [Asaib Ahl al-Haq], Sairoon Alliance, and State of Law Coalition told the parliament’s finance committee that they would not agree on a single dinar being sent over to Kurdistan Region if the KRG does not deliver oil revenue,” said Ahmed Haji Rashid, a member of the parliament’s finance committee.

Control of oil revenues has long been a thorny issue between Erbil and Baghdad. The KRG has operated an independent oil and gas sector since 2006 and later began exporting its oil to the international market via a pipeline through Turkey – angering Baghdad, which then cut Erbil’s budget share to zero.

Salary payments

The KRG has struggled to pay civil servant salaries on time and in full for five years, due to an economic crisis, the war against the Islamic State, and a drop in oil prices.

Kurdish officials have said they cannot pay civil servants without money from the federal government.

The KRG has not paid public sector employees on time and in full since Baghdad stopped sending funds in April this year.

Erbil says it is entitled to a 12.67 per cent share of federal funds, as stipulated by Iraq’s 2019 budget law.

However, Baghdad disputes this and says the KRG has not kept to its side of the deal, which includes turning over 250,000 barrels of oil a day to Somo.

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