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ERBIL, Kurdistan Region — More than 100 Iraqi MPs have a signed a letter asking that the 2021 budget bill obliges the Kurdistan Region to hand over all its oil to the State Organization of Marketing of Oil (SOMO) in exchange for federal funds.
In a 16-point letter sent to the head of the parliament on January 23 and released by the state-owned al Sabah via Telegram on Tuesday, 113 MPs – mostly Shiite – have called for various changes to the budget bill.
The seventh point calls for a change of section 2a of article 11 – which deals with the Kurdistan Region’s oil revenues, exchanged for federal funds - to “the Kurdistan region will abide by sending 460,000 barrels of oil per day (BOPD) to SOMO, and in case of overproduction, they abide by sending the excess amount to SOMO as well.”
In December 2019, Baghdad agreed to send Erbil a 12.67 percent share of the federal budget in exchange for 250,000 barrels of oil per day. Neither side fully abided by the agreement, however.
Baghdad failed to pass a budget in 2020 because of political turmoil, record low oil prices, and the coronavirus pandemic. In November, Iraqi lawmakers passed the Fiscal Deficit Coverage Bill approving loans to cover civil servant salaries for the last two months of the year.
The bill passed with a majority vote, despite a walkout staged by Kurdish MPs, angered that Erbil is obliged to hand over an unspecified amount of oil in exchange for funds – a clause they said was not in the original bill.
Kurdistan Region Deputy Prime Minister Qubad Talabani arrived in Baghdad on Monday to lead a delegation meeting with the Iraqi parliament regarding Erbil’s share of the federal budget.
On December 22, Talabani announced Erbil and Baghdad had reached a deal on Iraq’s Federal Budget Bill for 2021 after months of dispute. As a result of budget disputes and low oil prices, the Region’s civil servants went unpaid for most of 2020 – prompting deadly protests across the Kurdistan Region.
The deal “keeps the common interest of all Iraqi people, including the people of Kurdistan Region,” Talabani said at the time.
The 2021 budget bill was approved by Iraq’s Council of Ministers on December 21. Parliament has met twice to discuss the bill.
Talabani said that the KRG’s proposed share of the budget is the same as in 2019 - at 12.67 percent, and is "less than what we expected and deserve.”
“Apart from the section talking about the reduction of dollar exchange rate, the rest of the requests are empty and will not be worked on,” Kurdistan Islamic Union (KIU) MP and member of the Iraqi parliament’s finance committee Jamal Kochar told Rudaw’s Srwa Hawrami on Tuesday.
In another section of the letter, it requests that the dollar exchange rate be reduced to 1,300 dinar per dollar.
According to the current draft, the value of the dollar is set at 1,450 dinars. Iraq's Central Bank announced on December 19 that it would sell the dinar to the country’s finance ministry at 1,450 IQD per 1 USD. The public can purchase the dollar at 1,470 IQD.
News of the devaluation enraged public sector workers, who said their salaries would be “worthless” in a country that lacks a developed manufacturing sector and is heavily reliant on imported goods.
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