PM Barzani about Baghdad accord: We struck a deal with a bankrupt country

By Bahez Kamil

ERBIL, Kurdistan Region – The Iraqi government is unable to live up to its commitment of paying the Kurdistan Region’s share of the national budget because of a sharp shortfall in revenues due to a plunge in oil prices, Kurdish Prime Minister Nechirvan Barzani told reporters on Monday.

He said that Erbil would live up to its December agreement with Baghdad and export 550.000 barrels of oil per day through the Iraqi government, but warned that the deal would be annulled if either side is incapable of fulfilling the terms of the contract.

“Obviously we have an agreement with a bankrupt country,” Barzani said, referring to Baghdad’s mounting financial problems that are only exacerbated by the war with Islamic State (ISIS).

“We are fully committed to the agreement but the implementation should be from both parties,” Barzani said. “If they don’t send the budget, we won’t send oil,” he warned.

According to an earlier deal between the Kurdistan Regional Government (KRG) and Baghdad, the Iraqi government agreed to send Erbil 17 percent of the Iraqi budget -- roughly estimated at $103 billion for 2015 -- in exchange for Kurdish controlled oil.

“In yesterday’s meeting they said they could only send $300 million, which is less than half of what we agreed on earlier,” Barzani told reporters in Erbil.

The KRG was without its share of the budget virtually for much of the last year, as the then prime minister Nouri al-Maliki froze payments to Erbil in February 2014 over oil disputes.

The deadlock between Erbil and Baghdad left Iraq without a ratified budget in 2014.

The Kurdish government has since struggled to finance its hefty expenses, which include the salaries of public servants and pensions, through multiple loans often borrowed from oil companies that are operating in Kurdistan, in exchange for oil.

“All public salaries will be paid even if they are delayed,” Barzani vowed.