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ERBIL, Kurdistan Region – Changes cannot be made to the deal between Erbil and Baghdad concerning the delivery of Kurdish oil in exchange for Erbil’s share of the 2020 federal budget, Kurdistan Regional Government (KRG) planning minister Dara Rashid said Sunday.
Rashid’s comments come two days after Iraq’s Prime Minister Adil Abdul-Mahdi offered to resign following weeks of deadly protests against corruption and misrule.
If the Iraqi parliament accepts his resignation, the move would cast doubt on recent improvements in the factious Erbil-Baghdad relationship.
A KRG delegation was in the Iraqi capital on Monday to cement a deal with the central government covering Erbil’s share of the federal budget and its independent oil exports.
Following the six-hour meeting, a deal was reached whereby Erbil agreed to deliver 250,000 barrels per day (bpd) of oil to Iraq’s state oil marketing company SOMO in return for its slice of the budget.
A similar deal was reached for the 2019 budget, but Erbil failed to send a single barrel of oil. Some in the Iraqi parliament think Abdul-Mahdi has been too soft on the KRG.
Speaking on Rudaw’s breakfast show Nuroji Dostan on Sunday morning, Rashid said the agreement would not be scrapped or renegotiated even if the prime minister resigns or the government collapses.
“We have already agreed on a deal so even if the government resigns and a new one comes, our deal for 2020 budget stays the same,” Rashid said.
“The deal was reached during the last meeting on Monday with the Iraqi government, which consisted of the Finance Minister Fuad Hussein, Oil Minister Thamir Ghathban, and the Minister of Planning, Dr.Nouri al-Dulaimi,” he said.
A final meeting is scheduled for Sunday to review the deal and send it to parliament for approval, Rashid added.
“The KRG is to start sending 250,000 barrels per day of oil produced in the Region to SOMO from January 1, 2020, and in return 12.6 percent will be the KRG’s share of the federal budget,” he said.
However, Rashid said the problem with percentages instead of fixed sums means the KRG’s share of the budget is liable to sink if the overall budget is reduced.
“The KRG’s share decreases when the total budget of Iraq decreases. As Baghdad has 2.7 trillion Iraqi dinars provided for investment and public services projects, and KRG has 12.6 percent of this budget, but Baghdad will not spend that much on investment so the KRG’s share will decrease as well,” Rashid said.
Ghathban, the Iraqi oil minister, has already confirmed the deal, and says SOMO will supervise the export of the Kurdish oil via Turkey’s Ceyhan port from January 1.
The agreement between the KRG and the Iraqi federal government has been years in the making.
The KRG started exporting its oil independently of Baghdad via its own pipeline to the port of Ceyhan in 2013.
The independent oil sales infuriated the Iraqi government of Nouri al-Maliki, which cut the Kurdistan Region’s share of the federal budget from 17 percent to zero in 2014.
The move coincided with the outbreak of war with the Islamic State group (ISIS), a massive displacement crisis, and the collapse of world oil prices, which coalesced to plunge the Kurdistan Region into financial crisis.
The Region has been steadily recovering since Haider al-Abadi, the former Iraqi prime minister, reinstated a portion of the KRG’s budget in late 2018 and Abdul-Mahdi secured a bigger lump sum under the 2019 budget.
In return for it 12.67 percent share of the 2019 federal budget, the KRG was supposed to send SOMO 250,000 bpd, but failed to do so, claiming contractual arrangements and debts owed to foreign oil companies prevented the handover.
Two months of anti-government protests in Iraq’s southern and central provinces have left Abdul-Mahdi’s tenure looking precarious. KRG officials have moved with increased urgency to lock in a favorable budget agreement in case a potential successor is less amenable to Kurdish concerns.
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