KRG risks 2020 budget cuts if it fails to send oil to Baghdad: MP
ERBIL, Kurdistan Region – The Kurdistan Regional Government (KRG) should start showing a measure of goodwill and some kind of commitment to Baghdad by gradually sending a quantity of oil to the federal government to secure its fair share in the country’s 2020 budget, a Kurdish lawmaker has said.
Following months of party negotiation to draft a budget for 2019, the Iraqi parliament finally approved the bill in January. It has insulated the salaries of Peshmerga forces and civil servants in the Kurdistan Region from potential political disputes between Erbil and Baghdad.
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 collapsed in 2014.
The bill requires the KRG to export 250,000 barrels of oil per day through Iraq’s state oil-marketing company SOMO and hand over all revenues to the central treasury.
If the KRG fails to meet its obligations, the federal government will only “cut a part of the budget for investments and projects proportional to that amount,” Bashir Haddad, second deputy speaker of the Iraqi parliament and a member of the Kurdistan Democratic Party (KDP), told Rudaw in January.
Six months since the bill was passed, the KRG is still yet to meet its obligation to export 250,000 barrels of oil daily through SOMO and hand over federal revenues to Baghdad.
Now that the Iraqi parliament is entering the second half of the year, during which the 2020 budget will be discussed, there is uncertainty over whether the federal government will again accommodate the KRG’s budget share for next year.
That is why Kurdish officials and lawmakers are urging the KRG to start showing some goodwill and commitment to its obligations toward Baghdad before the 2020 budget bill is discussed in the federal parliament.
“It has now been seven months we haven’t committed [to the obligation to send 250,000 oil barrels per day to Baghdad]. Five months are left during which the 2020 budget bill will be discussed. If we don’t give anything to [Iraqi Prime Minister] Adil Abdul-Mahdi, he will surely not do anything for us in drafting the 2020 budget,” Jamal Kochar, a Kurdistan Islamic Union (KIU) MP in the Iraqi parliament who sits on the finance committee, told Rudaw on Saturday.
He warned that Kurdish lawmakers in Baghdad will not be able to defend the rights of Kurdish civil servants if the KRG continues to disregard its obligations under the 2019 budget law.
“I suggest we gradually start sending him oil – sending him 100,000 [barrels of oil] in July, 150,000 in August, 200,000 in September, and 250,000 in the remaining three months – so he can defend a solution for the Region among his people,” said Kochar. “Otherwise, we the Kurdish lawmakers on the finance committee will be very embarrassed and we will have nothing to say when we start discussing the 2020 budget.”
The KRG’s share of the Iraqi budget was cut in 2014 due to disagreements over the 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 state 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 planned referendum for independence from Iraq in September 2017, a move that culminated in an air embargo on the Kurdistan Region and the loss of the disputed territories previously controlled by Peshmerga forces.
Following months of party negotiation to draft a budget for 2019, the Iraqi parliament finally approved the bill in January. It has insulated the salaries of Peshmerga forces and civil servants in the Kurdistan Region from potential political disputes between Erbil and Baghdad.
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 collapsed in 2014.
The bill requires the KRG to export 250,000 barrels of oil per day through Iraq’s state oil-marketing company SOMO and hand over all revenues to the central treasury.
If the KRG fails to meet its obligations, the federal government will only “cut a part of the budget for investments and projects proportional to that amount,” Bashir Haddad, second deputy speaker of the Iraqi parliament and a member of the Kurdistan Democratic Party (KDP), told Rudaw in January.
Six months since the bill was passed, the KRG is still yet to meet its obligation to export 250,000 barrels of oil daily through SOMO and hand over federal revenues to Baghdad.
Now that the Iraqi parliament is entering the second half of the year, during which the 2020 budget will be discussed, there is uncertainty over whether the federal government will again accommodate the KRG’s budget share for next year.
That is why Kurdish officials and lawmakers are urging the KRG to start showing some goodwill and commitment to its obligations toward Baghdad before the 2020 budget bill is discussed in the federal parliament.
“It has now been seven months we haven’t committed [to the obligation to send 250,000 oil barrels per day to Baghdad]. Five months are left during which the 2020 budget bill will be discussed. If we don’t give anything to [Iraqi Prime Minister] Adil Abdul-Mahdi, he will surely not do anything for us in drafting the 2020 budget,” Jamal Kochar, a Kurdistan Islamic Union (KIU) MP in the Iraqi parliament who sits on the finance committee, told Rudaw on Saturday.
He warned that Kurdish lawmakers in Baghdad will not be able to defend the rights of Kurdish civil servants if the KRG continues to disregard its obligations under the 2019 budget law.
“I suggest we gradually start sending him oil – sending him 100,000 [barrels of oil] in July, 150,000 in August, 200,000 in September, and 250,000 in the remaining three months – so he can defend a solution for the Region among his people,” said Kochar. “Otherwise, we the Kurdish lawmakers on the finance committee will be very embarrassed and we will have nothing to say when we start discussing the 2020 budget.”
The KRG’s share of the Iraqi budget was cut in 2014 due to disagreements over the 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 state 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 planned referendum for independence from Iraq in September 2017, a move that culminated in an air embargo on the Kurdistan Region and the loss of the disputed territories previously controlled by Peshmerga forces.
Relations have vastly improved since Abdul-Mahdi took office but remain tentative.