Dr. Burcu Ozcelik is an Associate Director of Middle East and North Africa at Audere International. She holds a PhD from the Department of Politics and International Studies at the University of Cambridge
The decision last week by the Iraqi government to authorize three monthly loans of 700 billion Iraqi dinars ($538 million) to cover Kurdistan's public sector salaries followed a visit to Baghdad by Prime Minister Masrour Barzani and his extensive negotiations with Prime Minister Mohammed Shia Al-Sudani. The decision was made against the backdrop of months of economic tensions in Kurdistan since Turkey shut off the KRG's independent oil exports in March, in the aftermath of an international arbitration ruling.
The agreement that will see Baghdad finance the salaries of the Kurdistan Region’s civil servants for the next three months has drawn plaudits for overcoming the perennial budgetary standoff. But it remains a stop-gap measure, points to a deeper issue in Baghdad-Erbil ties and fails to avert the likelihood of future tensions.
Baghdad’s commitment to a functioning system of federalism in Iraq remains inconsistent, treating the Kurdistan Region as a dependency rather than a legally recognised entity in possession of constitutional rights and responsibilities. This approach has been emboldened by the ongoing dispute over the KRG’s oil exports. Turkey suspended the flow of Kurdish crude oil through the Iraq-Turkey pipeline to its Ceyhan port in March following a ruling from the Paris-seated ICC tribunal’s arbitration, causing the KRG billions of dollars in losses and making the future of the region’s oil and gas sector unclear. Baghdad has long argued that the Kurdish government does not have the right to make its own trade deals.
Baghdad’s commitment to a functioning system of federalism in Iraq remains inconsistent, treating the Kurdistan Region as a dependency rather than a legally recognised entity in possession of constitutional rights and responsibilities.
The opaqueness around closed-door diplomatic talks between Ankara and Baghdad over the future of the Ceyhan pipeline has put the KRG’s economy in a chokehold--with no end in sight. Neither side appears to be in a hurry to resolve the stalemate. For its part, Baghdad is using the impasse to strengthen its grip over the autonomous region, which lost its independent oil export revenue that had partly covered salaries and government expenses. Ankara is moving to squeeze as much out of the negotiations with Baghdad as possible, likely including demands that Baghdad drop a second legal dispute, and that Iraq blacklist the PKK.
The agreement followed the visit of a high-level Kurdish delegation that included Deputy Prime Minister Qubad Talabany, led by Prime Minister Masrour Barzani, showing how forging a united Kurdish front against lawmakers in Baghdad pays off.
Despite its shortcomings, the budget deal offers an important take away. The agreement followed the visit of a high-level Kurdish delegation that included Deputy Prime Minister Qubad Talabany, led by Prime Minister Masrour Barzani, showing how forging a united Kurdish front against lawmakers in Baghdad pays off. Deep seated intra-Kurdish in-fighting has been a notoriously destabilising factor for Iraqi Kurdish politics, with the fallout from polarisation having ever more dire consequences for the region’s economy. A united approach across the KDP, PUK and Gorran vis-à-vis Baghdad will diffuse accusations that the Iraqi Kurds are too divided to govern.
Comments