Baghdad and Erbil to jointly run KRG border crossings as part of financial agreement

ERBIL, Kurdistan Region — Baghdad and Erbil agreed on Saturday to jointly manage border crossings in the Kurdistan Region as part of an agreement securing 320 billion dinars ($268 million) per month from Baghdad to the Kurdistan Regional Government (KRG) in order for the KRG to pay its civil servants.

According to a document obtained by Rudaw from a Council of Ministers official on Sunday, both Erbil and Baghdad reached an agreement to resolve a number of outstanding issues between both governments. The document consists of seven points, including the agreement on the border crossings in the Kurdistan Region, as well as outstanding debts owed by the KRG.

Baghdad agreed with Erbil to jointly run border crossings in the KRG by establishing a “team” from both the federal government and KRG. The border crossings will follow federal “guidance and rules”, the statement read.

The Kurdistan Region has border crossings with Syria, Turkey and Iran. 

KRG spokesperson Jotiar Adil announced on Saturday that Baghdad agreed to send some 320 billion dinars to the KRG for it to pay its civil servants. The decision was announced after a phone call between Kurdistan Region Prime Minister Masrour Barzani and Iraqi premier Mustafa al-Kadhimi.

"The prime minister of the Kurdistan Region and the premier of federal Iraq agreed on some main steps towards the resolution of all unresolved issues," Adil said in a Facebook post. "It was decided that depending on the current financial situation of Iraq, a salary segment of some 320 billion dinars will be sent to the Region from Baghdad in the nearest future."

Kurdish officials have openly said they cannot pay civil servants without money from the federal government. The KRG has not paid public sector employees on time and in full since Baghdad stopped sending funds in April. Erbil says it is entitled to its 12.67% share of federal funds, as stipulated by Iraq’s 2019 budget law, while Baghdad says the KRG has not lived up to its end of the deal that includes turning over 250,000 barrels of oil daily to Iraq’s State Organization for the Marketing of Oil (SOMO), a state-owned oil company.

KRG public sector employees have taken to the streets over delays in salary payments. Demonstrations and strikes calling on the KRG's current cabinet to resign have occurred several times in Sulaimani province, while protests by teachers in May over delayed pay in Duhok were shut down.

According to the agreement, money will be sent to the KRG during the months of August, September, and October.

The federal government clarified in the agreement that the amount to be sent is an estimate, due to lack of clear data from the KRG on the civil servant salaries and number of the civil servants in the Kurdistan Region.

Baghdad called on Erbil to provide the federal government with data and information about the debts that KRG is yet to pay back, in order to be resolved after “finding a planned strategy” on debt repayments.

The heavily oil-dependent economies of Erbil and Baghdad were dealt a dramatic blow by a collapse in global oil prices in April and the ongoing coronavirus pandemic. Officials from both governments made admissions acknowledging state economic mismanagement, with Kurdistan Region Prime Minister Masrour Barzani warning in June that his government is $27 billion in debt, while Iraq's new finance minister warned the same month that his country was in an “existential economic situation” with little available funds.  

Erbil and Baghdad have met multiple times to resolve budget disagreements to little avail, each blaming the other in a public war of words.

According to the agreement, Erbil “showed readiness” to also resolve oil issues between the KRG and Baghdad, and officials from both sides will soon meet to resolve the issue.

Control of oil revenues has long been a thorny issue between Erbil and Baghdad. The KRG has operated an independent oil and gas sector since 2006 and later began exporting its oil to the international market via a pipeline through Turkey.

Years of tensions over the independent oil sales came to a head in 2014 when then-Prime Minister of Iraq Nouri al-Maliki suspended the Kurdistan Region’s share of the federal budget – leaving hundreds of thousands of public sector employees with unpaid salaries.

That same year, the Kurdish Peshmerga took control of security in the disputed territory of Kirkuk, allowing the KRG to also seize control of the province’s bountiful oilfields.

When Iraqi forces retook the area in October 2017, the KRG lost around half of its oil revenues, compelling the government to suspend exports via Turkey for several months.