ERBIL, Kurdistan Region – Unless Baghdad agrees to pay billions of dollars in debts claimed by the Kurdistan Region, the autonomous northern enclave will raise the money by beginning its own oil exports, according to a new law passed by the regional parliament last week.
The Kurdistan Regional Government (KRG) and Iraq’s Shiite-led central government in Baghdad are at loggerheads over several serious issues, including debts owed by Baghdad since the region gained autonomy following the 2003 US-led invasion of Iraq.
The Kurds have been claiming back pay for foreign oil companies operating in the Kurdistan Region, but Baghdad considers those contracts illegal and insists that the KRG cannot initiate oil contracts or exports independently.
The row over revenues took a turn for the worse last month, after Arab MPs bulldozed the 2013 budget through the national parliament, ignoring KRG objections that the new budget did not allocate enough money to pay the foreign oil companies.
The new law, aimed at “defining and receiving deserved finances of the Kurdistan Region from federal revenues,” was sent to the Kurdistan Parliament on April 8.
It mandates that, after 90 days of informing Baghdad about outstanding debts, the KRG “can take necessary steps to export oil and gas in order to recover all the debts that Baghdad refuses to pay.”
“The law gives us legal and political leverage in our constitutional fight with Baghdad,” said KRG oil minister, Ashti Hawrami.
“We receive only 10.5 percent of the Iraqi budget, which is equal to 250 thousand barrels of oil, but now we produce 400 thousand barrels of oil per day,” he added, underscoring the crux of the dispute, over the share of oil the Kurdistan Region produces and gives to the central governnment for consumption and exports, and the revenues it receives in return.
The new law also requires that Baghdad compensate victims of crimes committed by the ousted Saddam Hussein regime against the people of the Kurdistan Region, which has an estimated five million population.
The new law is premised on Article 112 of the Iraqi Constitution, which states that: “The federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields, provided that it distributes its revenues in a fair manner in proportion to the population distribution in all parts of the country.”
The constitution also specifies “an allotment for a specified period” for regions deprived under Saddam’s regime, or damaged in the war and violence unleashed by his overthrow.
KRG Prime Minister Nechirvan Barzani said last month that, “Baghdad has a legal duty to implement the decision of the Iraqi High Criminal Court about compensation of the families of the victims who were subject to the crime of genocide by the former regime.”
He said that according to a KRG study, “The agricultural and infrastructural damage to the Kurdistan Region is estimated at $9 billion dollars.”
The KRG’s finance ministry says that Baghdad must pay more than $20 billion to the KRG, of which $6 billion would go to the Peshmarga ministry, $4 billion to oil companies, and the rest as compensation to families who suffered under Saddam’s anti-Kurdish atrocities.
The new law has been criticized by opposition groups in the Kurdistan Region, which say it will worsen tensions with Baghdad.
Regarding concerns voiced by the opposition, Hawrami said: “On a daily basis Baghdad threatens to cut our share of the federal budget. We are trying to create our own fiscal policy.”
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