KRG delegates headed for Baghdad next week to secure budget

ERBIL, Kurdistan Region — With the deadline now set for the Iraqi parliament to draft its 2020 budget, a delegation will visit Baghdad next week to thrash out a long-running oil and budget dispute between the central government and Erbil, Kurdish officials tell Rudaw.

"The preparations have been made and next week a Kurdistan Regional Government delegation will visit Baghdad to help retain the financial entitlements of the Kurdistan Region," government spokesperson Jotiar Adil told Rudaw on Wednesday.

Several rounds of talks over the past months have failed to settle on a solution to the oil dispute, with delegations visiting shuttling between Erbil and Baghdad.

Prime Minister Masrour Barzani has already signaled that the KRG is amenable to reaching a durable agreement with Baghdad after the confirmation of Mustafa al-Kadhimi to the long-vacant premiership. "We now have a common understanding with the new cabinet in Baghdad [...] on the KRG employees' salaries," Barzani said following the start of Kadhimi’s term as PM.

This time, the Kurdish delegation's visit to Baghdad will include meetings with a sitting oil minister, after Ihsan al-Shammari was appointed by Kadhimi, along with six other vacant posts that at long last were filled with Iraqi parliament’s approval earlier this week.

"During the Kurdish delegation's visit to Baghdad, questions related to oil, finance, revenues and electricity will be discussed," Adil said, stressing that the KRG will provide Baghdad with a balance sheet of its revenues, expenses, and rolls of its public servants.

"Reaching an agreement for us will be the foundation of our work in Baghdad," Adil added.

Due to continued budget issues, the global plunge in oil price as well the dramatic plummet of domestic revenues due to the coronavirus containment measures, the KRG has been struggling to pay its civil servants.

In addition to efforts to secure the Region's financial entitlements in Baghdad, the government has put in motion a plan to cope with the crisis at home, too.

"To provide the salaries of civil servants, the expenses will be reduced. Investment expenses have been reduced. The government's expenses have been reduced from $240 million to $45 million, and the salaries of the high-ranking officials have been halved," he added.

Though President Nechirvan Barzani signed a contentious reform bill which would save the KRG 100-120 billion dinars in early February 2020, the law has not yet been implemented.

What is the core of the Erbil-Baghdad oil issue?

Iraq's 2019 budget law stipulates that the Kurdistan Region is entitled to a 12.67% share of the budget in exchange for turning over 250,000 barrels per day from its oil production to Iraq's State Organization for the Marketing of Oil (SOMO).

However, the KRG has not sent any oil to SOMO, prompting Baghdad to suspend the federal government's budget payments to the KRG, delaying the salaries of thousands of public employees.

With the premiership in Baghdad sitting vacant for months, efforts to reach a deal stalled. But when Kadhimi was finally confirmed in early May, his government signaled it would begin sending the KRG's budget share starting from April, with the caveat that future payments could be withheld again if the both parties do not reach a permanent deal.

Jamal Kochar, a Kurdistan Islamic Union (KIU) criticized Erbil last week for failing to keep its 2019 agreements, and urged the KRG to agree to turn over its oil exports to SOMO, suggesting that the KRG could turn a higher profit than it earns by marketing its oil alone.

"It is better if the KRG handed over the sale of its oil to SOMO because the company sells oil for six dollars more compared to Erbil," Kochar claimed. "If Erbil committed to its agreements with Baghdad, the problem of the Region's civil servant salaries would be solved," he added.

"I can only emphasize that a long-term sustainable approach is urgently needed," United Nations Assistance Mission to Iraq (UNAMI) chief Jeanine Hennis-Plasschaert told the United Nations Security Council in mid-May. "It takes two to tango," she added, urging both sides to make concessions and compromise.

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