The Iraqi parliament’s finance committee on Thursday amended two articles that relate to the Kurdistan Region, prompting the KRG to slam the amendments as “unconstitutional,” labeling them as a violation of agreements previously agreed upon by Erbil and Baghdad.
“Tonight in Baghdad, at Dr. Fuad Hussein’s house, who is the deputy prime minister of Iraq and the representative of the Kurdistan Democratic Party (KDP) and the decision-maker in Baghdad, all the parties of the State Administration Coalition will gather, including the Patriotic Union of Kurdistan (PUK), Sunni parties, and Shiite parties, to discuss the process of the state administration and the budget,” Rebaz Hamlan, assistant to the Kurdistan Region Prime Minister Masrour Barzani and former KRG finance minister, told Rudaw’s Sangar Abdulrahman.
The amendments under dispute relate to establishing Iraq’s State Oil Marketing Organization (SOMO) as the responsible party for selling the Kurdistan Region’s oil, decreasing the time for Erbil to pay off its debts from seven years to five, creating an account for the Region's oil revenues in the Iraqi central bank, and granting the finance minister the power to authorize the Region's prime minister to make withdrawals from that account. In the previous draft, that power was held by the Iraqi prime minister, Mohammed Shia’ al-Sudani.
Another amendment requires Erbil to pay back 10 percent of the cuts made to the salaries of public sector employees on a monthly basis. The cuts were in 2014 as the government introduced austerity measures like salary cuts to reduce expenditures following a financial crisis that arose during the years-long struggle against the Islamic State (ISIS), low oil prices, and budget disputes with Baghdad.
Hamlan, who was KRG finance minister at the time, said four years ago that the government owes $10 billion to public sector employees due to the salary-cutting measures.
“If you want to pay the salary cuts along with the salary for the Kurdistan Region’s employees, you are supposed to increase the Region’s share of the budget and not lower it,” Hamlan stated.
The amendments by the finance committee were passed with the help of two lawmakers from the PUK who “unfortunately” signed on the changes, according to Hamlan. KDP members in the committee left the meeting in protest and plan to appeal the changes.
“The changes [to the budget bill] have been completely rejected because they do not resonate with the facts,” Hamlan said. “We are adamant on the rejection of the changes.”
While reiterating the KRG’s rejection for the amendments, Hamlan called the changes “unacceptable” and said “not only has the core of the bill been changed, but they are trying to change the constitution as well.”
Shakhawan Abdullah, second deputy speaker of the Iraqi parliament, called on Saturday for the suspension of the finance committee for breaching parliamentary rules that limit the number of committee members.
Responding to Abdullah’s letter in a tweet, Hussain Mouanes, a member of the finance committee and the leader of the Rights (Huquq) movement, said “the texts that were agreed upon by the members of the finance committee are irreversible, and no one can obstruct it as long as we exist.”
The Iraqi parliament was scheduled to convene last Saturday to vote to pass the budget bill, but the session has been postponed indefinitely.
The amendments drew strong condemnation from Kurdish leaders, such as President Nechirvan Barzani and Prime Minister Masrour Barzani, who called on Iraqi lawmakers on Saturday to honor agreements made between the KRG and the federal government.
The 2023 budget includes a record $152 billion in spending, 12.6 percent of which is allocated for the Kurdistan Region.
The State Administration Coalition is an alliance of Shiite, Sunni, and Kurdish political parties in Iraq that successfully broke the political deadlock that suffocated the country and left it without a government for over a year. The coalition backed Iraqi Prime Minister Mohammed Shia’ al-Sudani and voted to elect his cabinet in October of last year.
Financial matters are a frequent source of tension between Erbil and Baghdad. Erbil says it regularly does not receive its entitled share of federal funds and Baghdad opposes Kurdistan Region’s independent oil sales.
Iraq was left devoid of a budget law in 2022 amid political instability after the 2021 election. The lack of a budget jeopardized the oil-dependent economy with Baghdad prevented from taking advantage of soaring oil prices following Russia’s invasion of Ukraine to combat poverty and bring much-needed economic stability.
