Already six months into 2020, Baghdad is currently still operating its financial affairs based on the country’s 2019 budget law, after the government was paralyzed in political deadlock for most of the year.
Until Mustafa Kadhimi was approved as prime minister alongside his cabinet in early May, Iraq had not had a fully-functioning government since December, when Adil Abdul-Mahdi resigned from the post in the face of mass protests over unemployment, corruption, and the lack of basic services.
Both the previous caretaker and newly-established governments have failed to submit the 2020 draft budget to parliament to be turned into a bill and finally a law. This comes at a time of great financial distress for Iraq, which is simultaneously battling an economic slowdown related to the COVID-19 pandemic, a massive drop in oil prices, an increase in Islamic State (ISIS) attack, as well as budgetary disagreements between Erbil and Baghdad.
Iraq’s parliament held a session on Wednesday in the presence of 184 MPs to review a drafted loans bill, and discuss financial support for impoverished Iraqis, according to a statement from the parliament.
KRG share
The 2019 budget law stipulates that Baghdad should send a 12.67% share of the budget to the Kurdistan Region in return for the handing over of 250,000 barrels of oil per day to Iraq’s State Organization for Marketing of Oil (SOMO).
However, the Kurdistan Regional Government (KRG) has not sent a drop of oil to SOMO, leading to the suspension of the federal government’s budgetary flow to the Region in April. Baghdad finally decided to part with the KRG’s April share, but further months may be in jeapordy if both parties do not reach a deal.
The budgetary dispute was allegedly brought up in Wednesday’s session, with several Arab lawmakers accusing Erbil of violating the budget law. Speaking to Rudaw after the meeting, the MPs called on the Region to adhere to the original agreement.
Mohammed Baldawi, an MP for the Sadiqun bloc, called on “the [Kurdistan] Regional Government to show its adherence [to sending 250,000 barrels of oil per day] to the people of Iraq.”
He stipulated that he sees the people of the Kurdistan Region and Iraq equally, “but there are rights and duties.”
“We cannot take the money of Basra people and pay it for salaries [of the Region] … while the Region has income from oil sales and border crossings. Where does this money go? Why cannot they pay the salaries?” the MP stressed.
Burhan Maamuri, from the Sayirun bloc, said that they want to find a solution for issues between Erbil and Baghdad, adding that they support sending the KRG’s share of the budget, but accused the KRG of failing to send the negotiated amount of oil to Baghdad and “did not allow investigations on its incomes.”
“We have a humanitarian and moral responsibility. We want all to benefit from the income, from the Region or Basra.”
Most of Iraq’s oil is produced in Basra province, but residents and politicians have claimed that they have been sidelined by the government.
Abdul-Amir Mayahi, an MP for Badr bloc, says that he will not accept that Basra’s income goes to the Kurdistan Region.
“No income from the Kurdistan Region has come into the hands of the federal government. Every year, there are deals [between Erbil and Baghdad] but the Kurdistan government has violated them,” he said.
“They sell 600,000 barrels of oil per day but they do not hand over 250,000, which is less than half of it. What about their [income] from the formal and informal border crossings? It all goes into the pockets of the corrupt,” claimed Mayahi.
Iraq and the KRG have held several talks to negotiate a solution to the oil dispute, with delegations visiting each other in Erbil and Baghdad over the last several months, but the two sides are yet to come to an agreement.
Jotiar Adil, spokesperson to the KRG, told reporters on Wednesday that they are preparing to submit data to Baghdad, in order to get the Region a share in Iraq’s 2020 draft budget.
“Whenever this data is ready, the KRG will submit it to Baghdad so that the Kurdistan Region’s share of the budget is specified, as per its constitutional entitlement in the framework of Kurdistan Region’s people’s financial entitlements,” said Adil.
