Iraqi parliament discusses KRG oil exports and federal budget with Iraqi oil and finance ministers

ERBIL, Kurdistan Region — The Iraqi finance and oil ministers went to the Iraqi parliament on Wednesday to discuss ongoing disputes between the federal and Kurdistan Region governments over Kurdish oil exports and the federal budget.

Deputy Speaker of the Iraqi parliament Hassan al-Kaabi said the ministers met with finance and oil and gas committee members to deliberate on the matter.

“The finance and oil and gas resource committees confronted the ministers regarding KRG oil exportation, and the failure of (Kurdistan Region Government) KRG to meet the demands of the federal budget bill of 2019,” Kaabi said in a statement. 

The majority of the MPs in the meeting demanded the Iraqi Ministry of Finance require the KRG to export 250,000 barrels per day through the state-owned oil company SOMO to help pay for the federal budget, as Article 10 of the constitution demands, according to Kaabi. 

Following months of negotiations to draft a budget for 2019, the Iraqi parliament finally approved a budget for 2019 in January. The salaries of Peshmerga forces and civil servants in the Kurdistan Region are now insulated from potential political disputes between Erbil and  Baghdad for the time being.

The KRG currently receives a 12.67 percent share of the federal budget, short of the desired 17 percent it received before relations between Erbil and Baghdad soured in 2014.

The budget requires the KRG to export 250,000 barrels of oil per day through Iraq’s SOMO and hand over all revenues to the central treasury. The KRG has failed to meet this obligation this year.

Not everyone was pleased with the meeting.

Yousif al-Kilaby, a member of the parliamentary integrity committee, released a statement on his official Facebook account accusing Finance Minister Fuad Hussein of hiding data and numbers regarding KRG oil revenues by refusing to answer specific questions asked by MPs during the meeting. 

“We didn’t get enough and accurate answers from the Iraqi finance minister,” said Kilaby.

“The Head of the financial control bureau stated that the KRG is not supportive regarding the implementation of the bill conditions,” he added.

MP Aram Naji Balatay, a member of oil and gas committee, told Rudaw that the KRG has two options to implement Article 10.

“KRG is either going to send revenues of 250,000 barrels per day to  Baghdad, or leave Baghdad to cut 250,000 barrels per day worth in the KRG shares in the federal budget every day,” said Balatay.

Balatay rejected the claims of some MPs that the finance minister refused to answer some of the MPs' questions.

“The Finance Minister answered all the questions, but, due to time shortage and the large number of questions, the finance minister could not answer all of the questions,” he said.

The KRG’s share of the Iraqi budget was cut in 2014 due to disagreements over the Kurdistan Region’s independent oil sales. 

Faced with a financial crisis caused by a budget cut from Baghdad, falling oil prices, a costly war with the Islamic State (ISIS), and hosting nearly two million displaced Iraqis, the KRG introduced a salary-saving scheme.

The wildly unpopular measure slashed the salaries of KRG employees and delayed payments for months at a time. Fed up with the austerity measures, public sector employees, mainly in Sulaimani, staged protests and strikes in early 2018.

Relations between Erbil and Baghdad turned sour after Erbil went ahead with its  referendum for independence from Iraq in September 2017, a move that culminated in an embargo on international flights in and out of the Kurdistan Region and Iraqi security forces retaking the disputed territories previously controlled by Kurdish Peshmerga forces.

Relations have vastly improved since current prime minister Adil Abdul-Mahdi took office, but remain tentative.