ERBIL, Kurdistan Region – In a speech marking 100 days since the current Kurdistan Regional Government (KRG) cabinet took office, Prime Minister of the Kurdistan Region Masrour Barzani made a lengthy televised speech detailing its achievements and goals in fighting corruption, improving Erbil-Baghdad relations, and increasing domestic revenue.
"We have made great developments and our works are moving forward on the right track and that considerable achievements have been made," Barzani said. "We reiterate our commitment to work towards a stronger Kurdistan and have a government to serve the people, not the contrary; that has been the basis of our work since day one."
The KRG has made good progress in "improving our relations with the federal government of Baghdad, fighting corruption, restoring transparency to the domestic and public revenues, and ending bureaucracies across government apparatuses," Barzani added.
Domestic revenues
"Concerning revenues of government institutions, it was decided since the early days of this government that all the revenues must go to the Ministry of Finance in order to know what the government's revenues are and to have a clear vision for our expenditures. On this basis, we have planned to increase domestic revenues and decrease expenses.
"We have been able to increase our domestic revenue and are working to further increase it by 50 percent by the end of this year [2019] by reorganizing and establishing a balanced taxation system, aimed at serving public interests and providing funds to public services.
"Through the establishment of a central control, public spending of the government will be precisely monitored in order to make sure that the public revenues are not wasted," Barzani said.
The KRG signed a contract with Deloitte at the request of the World Bank to audit oil sales and revenues in early October 2016 to audit its oil and gas sector.
"We have launched a transparent process in terms of natural resources. We have continuously made the data information available for the public. The people have now the access to know what are our revenues and in what areas they are spent."
Corruption
The new KRG cabinet headed by PM Barzani has repeatedly pledged to tackle corruption.
The KRG Integrity Commission has submitted 198 corruption cases to courts in the past year alone, of which just 33 have concluded.
The Commission estimates nearly 298.5 billion dinars ($250 million) is wrapped up in corruption cases. Almost 5.4 billion dinars ($4.5 million) has been recuperated so far, mostly in Sulaimani province.
Officials within the ruling Kurdish parties have also acknowledged the serious lack of transparency in government revenues and expenditure.
"Concerning corruption, we have created an ample atmosphere where corruption can no longer grow. I am very determined on this matter and do not turn a blind eye on corruption from any side. We have currently taken strict legal measures against those who receive or pay bribes for the carrying out their works at the government institutions. Recently many government officials and employees or tens of business owners have their cases of involvement in receiving bribes and paying bribes refereed to courts.
“We have so far removed hundreds of ghost employees from government payrolls and the process will continue.
"After one hundred days of work, I dare to say that to a considerable extent, we have restricted corruption to a considerable extent and will oppose all corruption though law.
According to Transparency International, Iraq, of which the Kurdistan Region is part, is among the world's most corrupt nations.
Reform
The new cabinet of the KRG is amending the previous government's reform package before sending it back to the parliament to be passed as law. The project aims to reform the Kurdistan Region’s pension and salary systems.
The KRG sent a reform package to parliament to be debated and passed in August 2018. However, the previous parliament did not pass the bill, which would have eased the financial strain on the KRG due to disagreements among different blocs. The task was therefore left to the current parliament.
The changes that will be made to the package will include: decreasing salaries of high-ranking officials, increasing salaries of civil sector's pensioners, and removing ghost employees on the KRG payroll. The government will rely on a number of things to do this, including its biometric system to determining the number of its employees.
"Since the government took office, we set up a high level committee from all the relevant sides of the government and after months of reviewing the reform bill, it is now ready to be referred to the parliament.
"To enhance and better provide services to the people, I have called upon all the ministries to reduce bureaucracy and prepare their four-year long reform plan.
“We have launched the digitization of a set of public services and we will expand it.”
"We are in the process of establishing an information center for the government, for which 50 percent of the work has finished. In the next few months, it will start work. This center is set to provide public services to the people and business owners digitally, in order to provide easy access to government services. For example, through the internet, we have connected many border crossings with each other. Our efforts are ongoing to connect other crossings and the airports with one another. It will speed up the collection of customs and lead to trade movement development. It has improved quality control.”
Erbil-Baghdad relations
After months of talks, Erbil and Baghdad finally came to terms over the 2020 budget draft which will see the KRG committed to handing over a daily average of 250,000 barrels of oil in return for its share of the federal budget, after reaching an initial deal with the Iraqi federal government for the year 2020.
A KRG delegation has travelled between Erbil and Baghdad to reach a deal with central government over Erbil's share of the budget and its independent oil exports. A deal to hand over the 250,000 barrels of oil per day to state oil marketing company SOMO was finalized last week.
"One of the top priorities of the ninth cabinet of the KRG was to strengthen and improve our relation with the federal government in Baghdad.
"Following the first meeting of the Council of Ministers, we visited Baghdad in order reaffirm our goodwill to reaching a just agreement within the framework of the constitution to them.
"Improving our relations with Baghdad will leave a positive impact on the daily lives of the people of the Kurdistan Region and the whole people of Iraq. The Kurdistan Region’s interest is for Iraq's situation to be stable.
"Our aim is to reach a comprehensive wide-range agreement with Baghdad which will be in the interests of all sides. And I am pleased to announce that good development has made in our talks on four main topics.
"First, finding a just formula about the Kurdistan Region's share of the federal budget. Second, according to the Iraqi constitution, the authority and rights of the Kurdistan Region related to oil be preserved. Third, the problem of the disputed areas be resolved per the constitution. Fourth, the Kurdistan Region Peshmerga forces be part of the Iraqi defense system and have their constitutional rights protected.
"The federal government has taken our concerns. And currently we are engaged in resolving them. For example, this is the first time ever for the Kurdistan Region to take part in preparing the drafting of the annual budgets of Iraq. We have taken good steps with the Finance Ministry of Iraq to fix the Region's financial entitlements in the 2020 budget.
"We receive part of the budget now, jointly export Kirkuk oil, and have unified our customs fees.”
The KRG started exporting oil directly to world markets from its fields through the Ceyhan port in Turkey in 2013.The independent oil sales infuriated the Iraqi government, led by then Prime Minister Nouri al-Maliki. Baghdad cut off the Kurdistan Region from its 17 percent federal budget share in 2014 while war against the Islamic State raged and Iraqi IDPs and Syrian refugees flocked to the Region for safety, sending the Region into a deep financial crisis.
The budget cut remained in place until the beginning of 2018, under Prime Minister Haider al-Abadi, who just gave a small percentage of the Region's share of the budget to the Region.
The KRG was able to secure a more favorable 2019 budget bill with current Iraqi Prime Minister Adil Abdul-Mahdi, widely seen as an ally of Kurds.
In return for 12.67 percent share of the federal budget, the KRG was supposed to handover 250,000 barrels of oil per day to SOMO. Failing to do so would give the federal government the right to cut an amount of the Region's budget share corresponding to the amount of the oil not handed over.
