ERBIL, Kurdistan Region – Erbil and Baghdad must work together to resolve the ongoing oil-for-budget dispute, United Nations Assistance Mission to Iraq (UNAMI) chief Jeanine Hennis-Plasschaert told the United Nations Security Council on Tuesday.
“With regards to Baghdad-Erbil relations, we still cannot point to a final, fully agreed and implemented deal... on the contrary, we recently witnessed movement in the opposite direction,” she told a meeting of the Security Council, referring to Baghdad’s recent decision to halt the payment of civil servant salaries to the Kurdistan Region.
On April 16, Iraq’s caretaker Prime Minister Adil Abdul-Mahdi called on the finance ministry to halt budget transfers to the Kurdistan Regional Government (KRG) and to take back all transfers made since January 1, 2020.
“I can only emphasize that a long-term sustainable approach is urgently needed,” Hennis-Plasschaert said. “It takes two to tango,” she added, meaning both sides would have to compromise.
The remarks to the UNSC follow on the heels of meetings with officials in Erbil and Baghdad.
Hennis-Plasschaert met with Kurdistan Region President Nechirvan Barzani in Erbil on April 28. During their meeting, Barzani urged the UNAMI representative to “mediate” in the renewed oil-for-budget spat between Erbil and Baghdad.
Mindful of the pain Baghdad caused when it cut the KRG’s budget in 2014, President Barzani urged the UNAMI chief to facilitate negotiations.
“The president asked the UN Special Representative to mediate in resolving the ongoing dispute,” the presidency statement read.
Baghdad accuses the KRG of failing to send a single barrel of oil in exchange for its share of the federal budget – an arrangement agreed in December.
In a statement following his meeting with Hennis-Plasschaert, Barzani called Baghdad’s move “unconstitutional” and “unlawful”.
“The KRG budget and salaries must not be politicized,” Barzani told Hennis-Plasschaert, according to a statement from the KRG Presidency.
The KRG was obliged to deliver a quota of 250,000 barrels per day (bpd) of oil to the state marketing firm SOMO in exchange for public funding.
Now that a collapse in world oil prices is threatening Iraq with financial ruin, Baghdad appears to be running out of patience.
Hennis-Plasschaert previously met with KRG Prime Minister Masrour Barzani, who told her Baghdad’s decision to cut the KRG budget was “politically motivated” and designed to “punish” the Kurds.
The KRG started exporting its oil independently of Baghdad via its own pipeline to the port of Ceyhan in 2013.
The independent oil sales infuriated the Iraqi government of Nouri al-Maliki, which cut the Kurdistan Region’s share of the federal budget from 17 percent to zero in 2014.
The move coincided with the outbreak of war with the Islamic State group (ISIS), a massive displacement crisis, and the collapse of world oil prices, which coalesced to plunge the Kurdistan Region into financial crisis.
The Region had been steadily recovering since former Iraqi PM Haider al-Abadi reinstated a portion of the KRG’s budget in late 2018 and Abdul-Mahdi secured a bigger lump sum under the 2019 budget.
Now, the KRG has once again been plunged into financial uncertainty, threatening the livelihoods of many in the Kurdistan Region.
“Recent internal tensions do not serve the interest of the Kurdish people, far from it,” the UNAMI chief concluded.
Hennis-Plaschaert met with Iraq's new Prime Minister Mustafa al-Kadhimi on Monday to discuss the formation of the new government and the current issues facing Iraq.
"SRSG Hennis-Plasschaert congratulated PM Al-Kadhimi on the formation of his government, expressed hope for the speedy completion of the remaining [ministry] posts, and underlined UNAMI's support and readiness to work closely with the new government," read a statement posted to Twitter.
