ERBIL, Kurdistan Region – Baghdad and Erbil could reach an agreement on their problematic oil and budget issues by next month, Iraq’s Oil Minister Thamir al-Ghadhban told Rudaw on Saturday in Baghdad.
“We are close to reaching an agreement with Erbil regarding oil and the budget,” Ghadhban said on the sidelines of the RCD Security and Economic Forum. “I hope that we will reach an agreement during the month of October.”
In recent months, delegations have shuttled back and forth between Baghdad and Erbil as relations between the two continue to improve after hitting a low in late-2017 when the Kurdistan Region held a referendum on independence. The regional and federal governments formed committees for talks on joint administration of the disputed territories, the Kurdistan Regional Government (KRG)’s share of the federal budget, and the touchy subject of Kurdistan’s independent oil sales.
Within the coming weeks, the delegations will meet to discuss the oil and budget issues in a “very detailed way,” Ghadhban said.
Baghdad cut the KRG’s share of the budget from 17 percent to zero in 2014 in response to the Region’s independent oil sales. The funding slash, coupled with a costly war with the Islamic State (ISIS) and the collapse of global oil prices in 2016, plunged the Kurdistan Region into a financial crisis.
Erbil’s share of the budget was reinstated in 2018, but at the reduced rate of roughly 12 percent.
Under the 2019 budget, the KRG agreed to send 250,000 barrels of oil per day to Iraq’s state oil marketing body, SOMO, in exchange for its share of the budget. Although Baghdad has delivered funds to Erbil’s central bank, the KRG is yet to send a single barrel of oil south.
Kurdish lawmakers in the Iraqi parliament have advised the KRG to start sending Baghdad the oil in order to avoid losing out in the 2020 budget.
KRG’s newly elected Prime Minister Masrour Barzani, who was sworn in on July 10, has signaled that his administration wants to “develop a constructive and stable partnership” with Baghdad and resolve past disputes.
Relations have vastly improved under the leadership of Iraqi Prime Minister Adil Abdul-Mahdi, but this spirit of goodwill could soon run out if the KRG continues to flout its end of the bargain to deliver oil.
Improvements in the relationship were noted by Jeanine Hennis-Plasschaert, UN Special Envoy to Iraq, in her quarterly briefing to the UN Security Council (UNSC) when she expressed hope that the new governments in both Erbil and Baghdad can resolve their differences now.
“This has created a positive momentum to advance negotiations between Baghdad and Erbil, also demonstrated by the establishment of a High-Level Joint Committee,” she said.
“I cannot deny: the expectations are high, in particular on key files – including Kirkuk, Sinjar, and revenue sharing,” she added.
