Erbil must fulfill obligations towards Baghdad for financing of salaries to continue: Official

ERBIL, Kurdistan Region - The Kurdistan Regional Government’s (KRG) cabinet secretary on Monday told Rudaw that if Erbil wants Baghdad to continue financing salaries, it must fulfill its obligations towards the federal government, as stated in the ruling of the Iraqi top court, adding that negotiations between the two sides will resume after the Eid al-Fitr holidays.

In an interview with Rudaw’s Nwenar Fatih, KRG Cabinet Secretary Amanj Rahim discussed several pressing issues including civil servant salaries, the resumption of oil exports, promotion of employees, reduction of taxes and fees, and employment of the top students of universities and colleges of the Kurdistan Region.
  
Rudaw: Kurdistan Region President Nechirvan Barzani said in Baghdad that salaries should not become news. People are tired of salaries making the news for years. Since 2014 people often hear about hopes for a new agreement, but it has always failed. Has the salaries issue passed the stage of anxiety?
 
Amanj Rahim: I will reiterate what the President of the Kurdistan Region said. I wish interviews like these were not about salaries, because salaries are a financial and legal entitlement of the Kurdistan Region employees in return for the tasks they perform, but after 2014 I think that public sector employees have borne the brunt of the financial crisis. This is the first time in the past 10 years that the federal government has deposited the full salaries of Kurdistan Region employees according to the lists submitted by the KRG. The question on everyone’s minds in the Kurdistan Region is whether Baghdad will continue to provide salaries on time or not? Of course, if we talk about the legal framework for the financing of Kurdistan Region salaries, the framework is the Iraqi budget law, which has three articles related to the Kurdistan Region, Articles 11, 12, and 13. In the discussion of drafting the law, I wrote that this bill contains some restrictions that prevent the Kurdistan Region from receiving its fair share.
 
In this law, which is currently in force in Iraq, the Kurdistan Region has been allocated 16.67 trillion dinars as a number, which means at least 1.4 trillion dinars should be provided monthly for the Kurdistan Region. However, what prevented the amounts included in the budget law from reaching the Kurdistan Region is the presence of the term “actual expenditure,” in addition to the linking of the salaries of the Kurdistan Region employees to the agreement between Erbil and Baghdad on resuming Kurdistan Region oil exports, the handing over of revenues, and the repayment of TBI [Trade Bank of Iraq] debts.
 
At the end of 2023, we visited the Iraqi Prime Minister. Our delegation consisted of the Minister of Finance, the Chief of Staff of the Kurdistan Regional Council of Ministers, and I. We met with the Prime Minister and proved to him that this law as it is now and in these terms will not guarantee the salaries of the Kurdistan Region, at a time when we had not received 16 trillion according to the previous tables and they had sent 50 percent of it, because the phrase “actual expenditure” halved all entitlements.
 
10.8 trillion dinars have been allocated for the salaries of the Kurdistan Region, which will be enough if provided, so we came to the conclusion that the law needs to be amended. We agreed on three main points for the amendment, which were, first, for the salaries of the Kurdistan Region and the salaries of the whole of Iraq to be included in the ruling budget. The second was to eliminate the actual expenditure when it comes to salaries. The third was that the salaries of the Kurdistan Region employees are a financial and legal entitlement and should not be held hostage in the disputes and agreements between Erbil and Baghdad on oil exports and revenues. This was the essence of a governmental agreement and we signed a memorandum of understanding and even the head of the parliamentary finance committee joined the negotiations, but later due to the political situation, some changes occurred, the [Iraqi] parliamentary speaker was ousted and the parliament was in a way crippled and the issue remained as is. That is why, in January this year, the salary money came to the Kurdistan Region on the basis of actual expenditure, which was 618 billion dinars, but for February and March, 949 billion dinars was sent for each month. If we add the two up, it is about 1.9 trillion dinars, which means that in less than 10 days, the Kurdistan Region has received about 1.2 billion dollars.

So the Iraqi Federal Supreme Court did what you wanted in the amendment?
 
Yes, for sure.
 
But the term “actual expenditure” is still in the law.
 
But the ruling of the Federal Supreme Court is like amending Article 11, paragraph 2, which uses the phrase “actual expenditure,” so if the Iraqi prime minister had applied the budget law in February and March, he should have once again sent 600 billion dinars to the Kurdistan Region.

So the Iraqi Federal Supreme Court's ruling paved the way for the prime minister to pay the salaries of the Kurdistan Region employees?
 
Yes, the payment of salaries by the prime minister and then the Iraqi finance minister is an administrative decision. Every administrative decision must have a constitutional and legal framework. If we look at the documents of the Ministry of Finance, which talk about depositing the money into the bank account of the KRG, they mention the ruling of the Federal Supreme Court at the start.
 
Does the Federal Supreme Court's ruling apply to this year’s budget and the budget for the coming years?
 
Yes, as I mentioned, this ruling of the Federal Supreme Court is to amend the articles and clauses in the Iraqi budget law that were obstacles, now the amendment has become a bill and is before the Secretariat of the Council of Ministers. I can say that this ruling of the Federal Supreme Court is removed from all the political differences that exist in the parliament. Because even I, as a member of the negotiating delegation, did not think it would be easy to pass the amendment in the parliament without problems, even if it passed in the Council of Ministers. However, the ruling of the Federal Court created a favorable environment for this understanding to become part of the amendment. The ruling obliges the parliament to change those provisions of the law, and we can use the decisions of the Federal Supreme Court as the basis for the amendment in our negotiations, [whose main points we agreed on] are first of all, as I mentioned, the term “actual expenditures,” and not taking the salaries of the Kurdistan Region employees hostage to negotiate an agreement on resuming oil exports or non-oil revenues.
 
What guarantees are there that there will be no obstacles to salaries again?
 
Indeed, in Iraq, guarantees may not be very easy. Decisions are always subject to any political change, but as a technician and a member of the negotiating delegation, I can say that there are some guarantees.
 
The guarantee of a few is the ruling of the Federal Supreme Court, although there are comments in the Kurdistan Region about the ruling itself, but for Iraq, the ruling creates obligations for all authorities.Therefore, this ruling is one of the guarantees. The second important guarantee is the cash available to the federal government. If we look at the budget law, the estimated oil budget is 3.5 million barrels per day at $70, but yesterday the price of Brent oil reached $90 per barrel, which means that Iraq has a profit of about $20 per barrel. In other words, Iraq is now in a very good financial situation and this can be the second guarantee. The third guarantee is very important and we saw in the meetings that the Minister of Finance, the advisors of the Iraqi prime minister, and even the governor of the Central Bank of Iraq [CBI] have a different understanding of the salaries of the Kurdistan Region employees and how they must not be affected by political disputes.
 
Another point is the issue of auditing. For the first time, the salary list of the Kurdistan Region was audited by the financial supervision bureau and even the salaries of the security forces, which were codified, were audited by the financial supervision bureau. Therefore, I can say that the coordination between the two bureaus of financial supervision somehow provides an assurance to the federal government that this money will be spent on employee salaries.
 
Iraq has a budget deficit of about 80 trillion dinars this year. Does this not create problems for paying the Kurdistan Region salaries?
 
The Finance Minister last week officially said that the salaries of Iraq and Kurdistan Region employees are guaranteed for the entire year of 2024 and there are no problems.
 
What guarantees has the Kurdistan Region president's recent visit to Baghdad created for the salaries of the Kurdistan Region employees?
 
Now everyone has come to the conclusion that the solution to our problems is in Baghdad. It turned out that if there is a balanced constitutional relationship between the Kurdistan Region and Baghdad, these problems are not very difficult [to address] and can be solved, and above all the issue of Kurdistan Region civil servant salaries [can be solved]. Therefore, the current relationship between the prime ministers of the Kurdistan Region and Iraq, and as you mentioned, the President of the Kurdistan Region, who has regularly visited Baghdad, as well as other political leaders, strengthening and developing this relationship can be said to guarantee the continued resolution of issues between the two sides, especially those related to the salaries issue.
 
Another point that is a guarantee is that the federal government is now saying that it has fulfilled its obligations to the Kurdistan Region for two months. It is important that we as the Kurdistan Regional Government fulfill our obligations.
 
The Federal Supreme Court has also given the Kurdistan Region some obligations, will not abiding by them create problems?

The main condition the Federal Supreme Court set for the Kurdistan Region is the issue of banking the salaries of the Kurdistan Region. Banking is an important issue and the KRG has started the banking process through several banks for about six months, but none of these banks are state-owned banks, but rather non-governmental commercial banks under the supervision and license of the Central Bank of Iraq. The Governor of the Central Bank also participated in our last meeting, and one of the topics was to talk about banking. The Federal Supreme Court also gave an official explanation after the ruling and said that since banking takes time, it will allow the Ministry of Finance to pay salaries according to the lists, until the two governments agree on a joint mechanism for banking. The goal for both the Iraqi government and the Federal Supreme Court is banking, not the mechanism and details. Mr. Hadi al-Amiri recently said very clearly in the Rafidain Forum that the goal for the government and the court is the banking, meaning ensuring the salaries reach the employees that are entitled to them. Now there is some kind of coordination between the two governments and the central bank has been appointed to set up this coordination. Two weeks ago, TBI officially applied to participate in the banking process within My Account.
 
The word “my account” is just a brand, otherwise the work is done by the banks, because my account itself is not a bank. There are now a number of banks and if TBI enters the process, we can say that it will open an outlet for the Kurdistan Region employees who wish to receive their salaries from an Iraqi bank, then the option of TBI is available to them.
 
Does Iraq have any problems with the My Account project?
 
Banking is done by banks and the central bank is the mother of banks. The My Account project is under the umbrella of the central bank. The banks participating in the project are under the supervision and guidelines of the central bank. This is a strong point in itself, but the Federal Supreme Court's ruling officially mentions state-owned banks, which are Rashid Bank, Rafidain Bank, and TBI. Therefore, there is now an attempt to prevent the issue of banking from becoming an obstacle again and the happiness of the salaried employees of the Kurdistan Region to vanish due to a technical issue, so an understanding has been reached and we have a committee in the Prime Minister's Office for this case and it is expected that a mechanism will be found in the light of the Central Bank to implement the ruling of the Federal Supreme Court.
 
That was related to salaries, but the financial entitlement of the Kurdistan Region is not only salaries. Does Baghdad send the budget to the Kurdistan Region?
 
According to the budget law, the Kurdistan Region has 16.7 trillion dinars, of which 10.8 trillion dinars are from the operating budget and 2 trillion from investment projects. If this understanding continues, if the demands of the federal government are implemented in light of the rulings of the Federal Supreme Court, the Kurdistan Region will certainly be eligible for the operating budget and the project budget, which combined is 4 trillion dinars per year.
 
Another point that is like a protector for the salaries of the Kurdistan Region is that any deduction from the share of the Kurdistan Region must be from the operating budget and projects, which is one of the guarantees that the deposited salary money will not be changed.
 
Another important point is related to pensions. In the Kurdistan Region, there is a pension of 150,000 dinars, but in Iraq, the pension is more than 500,000 dinars. For this point, we can use the Federal Supreme Court's ruling as an argument for equalization of salaries and ranks, which is a positive point.
 
There is a disagreement between Iraq and the Kurdistan Region over the financial management law, over which is domestic revenue and which is federal revenue, also border revenue and oil. Is there any progress relating to oil?
 
If we want the current situation to continue, the Kurdistan Region must fulfill its obligations to show our good intentions to the federal government.
 
We have prepared a proposal and intend to submit it to the federal government. All Iraqi provinces are with us on this point and we demand that part of the oil revenue return to the provinces for services. The budget law allows 50 percent of the revenue of the border crossings to be returned to the provinces, so this point is the demand of all Iraqi provinces, that part of the revenue is returned, and this is legal.

There is a difference between Iraq and the Kurdistan Region regarding taxes. Will taxes be reduced in the Kurdistan Region?
 
There is a misunderstanding about taxes. It is not within the power of the Council of Ministers to change taxes. There is a constitutional article that states that changing taxes or imposing new taxes is within the power of parliament and must be regulated by law. In other words, the Council of Ministers and the executive branch have no right to amend the tax laws. The tax laws in force in Iraq and the Kurdistan Region are the same. No new law has been passed in the Kurdistan Parliament. Some changes have been made in the Kurdistan Region, but the principle is the same.
 
There is a difference in customs fees between Iraq and the Kurdistan Region. Will there be amendments? Will fees in the Kurdistan Region be reduced?

Yes, the fees are different. If we want to complement the financial system of federal Iraq, the issue of fees and taxes must be organized in a single system throughout Iraq. Part of the proposal we have prepared is how we can bring taxes and fees throughout Iraq and the Kurdistan Region into the same framework and to the same amount and the same rate.

The promotion of employees has been suspended in the Kurdistan Region for eight years. If it were to resume, expenditure will increase. Will that not create problems for salaries?
 
Promotion is a legal right of salaried employees, unfortunately they have been deprived of it for several years. Now the procedures have started and some guidelines and general orders have been issued. The Council of Ministers has instructed the Ministry of Finance to prepare a map of what rank each employee will be eligible for in the event of resumption of promotions, but the issue varies from ministry to ministry and from employee to employee, so the process takes time.
 
The Federal Supreme Court and the Iraqi government have given some explanations about the content of the rulings of the Federal Supreme Court. Are you waiting for any further explanation from the Federal Supreme Court?
 
In early March, the Federal Supreme Court explained that the issue of salary banking takes a long time, obliging the Iraqi Ministry of Finance to complete the banking list of salaries, which can be seen as a kind of guarantee.
 
What will be the fate of the last three salaries of 2023?
 
The Iraqi prime minister's office has issued a statement on these salaries, saying that we are in compliance with the budget law and the decision of the Federal Supreme Court, which provides an opportunity for us to work on these salaries.
 
The question is, the government sometimes needs to increase the number of employees or start the employment process. Does this situation not make the Kurdistan Regional Government dependent on Baghdad?

It is a valid question. If we look at the ruling of the Federal Supreme Court, the responsibility of providing the salaries of the Kurdistan Region has been placed on the Iraqi Ministry of Finance.
 
There is a table called the labor force table in Iraq, the number of salaried employees in the Kurdistan Region is 681,022 employees. This has not changed, because the Kurdistan Region until January 2014, would receive 1.25 trillion dinars from Baghdad, because there was no actual expenditure. This meant that the Kurdistan Region did not care how many of its employees were in the Iraqi labor force.
 
Now, in order for the executive branch to appoint a salaried employee, it needs two things. The first point is called the rank. This is determined by law. For example, you say that the Ministry of Health - the Erbil health directorate needs 100 new employees for 2025. These 100 employees must be included in the labor force table and the table must be updated, and money must be allocated to them, and financial allocation is done through the budget law.Therefore, if the current relationship and understanding with the federal government continues, the table can be amended in the budget amendment law, for example, if we do promotions, if we equate the salaries of the employees and relatives of the martyrs with those in Baghdad, 949 billion dinars will not be enough. If we fulfill our obligations as stated in the ruling of the Federal Supreme Court, and first of all solve the issue of banking, I believe the other issues can be solved easily.
 
Both the prime minister and his deputy as well as us as the negotiating delegation and the cabinet believe that we should not give excuses to Iraq to avoid another salary delay and fulfill our obligations.

What will be the fate of the Kurdistan Region’s top university and college students?
 
I am proud that I have always been advocating for this issue and those who have been employed before, I have played a role in it, because I was the top student of my college, so I assure them as the financial situation improves, they are a priority. A strong point is that in Baghdad, this is regulated by law. There is a special law for employing the top students of colleges in public universities, then the law of the federal government must be applied in the Kurdistan Region as well, so after the holidays, with the issue of promotion and salary equalization, we will also put this issue on the table. Let the students be hopeful.

What will be the fate of the contract employees? Will they be permanently employed?
 
Last week, alongside the Council of Ministers’ chief of staff and the head of the coordination office, we sat with the representatives of the contract employees and had a 45 minute meeting. We have received the approval of the Prime Minister and his deputy to take the issue of employing contract employees back to the Council of Ministers after the holidays. A strong point is that the Ministry of Finance has sent us a letter informing us that the current salary will not be much different if the employees are made permanent. Fortunately, we sent the list of contract employees to Baghdad, and the Iraqi Financial Supervision Bureau approved them within the lists of salaried employees in the Kurdistan Region and the Ministry of Finance has allocated money for them, who are about 28,000 people.
 
What will happen to the non-contract teachers?
 
If we take a step forward in terms of employing contract employees, after that we must work on the non-contract teachers. In the first phase, they must at least get contracts, which is one of the demands of non-contract teachers now, to address this situation.
 
There was one point of disagreement on the oil issue: the wages of the companies. Has any agreement been reached on this issue?
 
First of all, the Kurdistan Region does not have a national oil company to force its companies to agree to the money determined by the Iraqi oil ministry, so this problem is more between the oil companies and the Iraqi oil ministry, not between the KRG and the federal government. In the latest step, we took representatives of all companies to Baghdad and met with the oil ministry under the supervision of the finance committee, and provided any documents they requested. Therefore, the problem is now between the companies and the Iraqi oil ministry, although unfortunately the suspension of oil exports from the Kurdistan Region has caused more than $500 million monthly loss to the Iraqi treasury.

How is the coordination between the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP) teams in the Council of Ministers?
 
I can testify that in the negotiating delegation, nobody cares who is PUK and who is KDP. We have all worked together in unity and we have done what we could.
 
It is true that we have played a role, but the normalization of relations between Erbil and Baghdad, especially in the field of salaries is the work of all other dedicated officials, especially the Iraqi prime minister. I have worked with all the previous Iraqi prime ministers and have been a part of the negotiations for a while, but what I sense from [Prime Minister Mohammed Shia’ al-] Sudani is that he is seriously determined to solve these issues during his cabinet.
 
At the same time, the Prime Minister of the Kurdistan Region has always instructed us not to leave any excuses within the framework of the constitution and we will resume our talks and negotiations after the holidays.

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