ERBIL, Kurdistan Region - Washington on Thursday called on Baghdad and Erbil to fulfill their constitutional commitments and resolve their financial dispute through dialogue, saying swift action would boost investor confidence and pave the way for reopening the Iraq-Turkey oil pipeline.
“We urge both Baghdad and Erbil to make their constitutionally mandated payments and to resolve their issues through constructive dialogue,” the US State Department told Rudaw.
“Resolving the payments issue quickly sends a signal that Iraq puts the interests of its people first and is creating an environment in which companies will want to invest. It would also send a positive signal on possibilities for reopening the Iraq-Türkiye Pipeline,” it added.
Iraqi Finance Minister Taif Sami said on Wednesday that his ministry is “unable” to continue financing the Kurdistan Region, alleging that Erbil has exceeded its 12.67 percent share set out in the 2025 budget.
In an official letter to the Kurdistan Regional Government (KRG), Sami said that Erbil exceeded its allocated share by 13.547 trillion dinars ($10.34 billion) and that under decisions from Iraq’s Federal Supreme Court further funding in such circumstances is prohibited.
The KRG’s Finance Ministry responded on Thursday, saying that the federal ministry was violating the constitution and that the Kurdistan Region’s share of funds “must be based on collected federal revenues, not actual expenditures.”
Finances are a frequent source of friction between Erbil and Baghdad. In this latest dispute, the Iraqi Finance Ministry accused the KRG of not handing over oil and non-oil revenues and said it can no longer send money for salaries for the remainder of the year.
Baghdad is also upset over new oil and gas contracts Erbil signed earlier this month with American firms.
The US State Department said “US support for the Iraqi Kurdistan Region remains a crucial element of our relationship with Iraq. Secretary Rubio recently hosted KRG Prime Minister Masrour Barzani and spoke with IKR President Nechirvan Barzani, highlighting the importance of ongoing collaboration to enhance stability and prosperity in Iraq and the region.”
The ongoing budget dispute has also stalled progress on resuming Kurdish oil exports, a key issue tied to broader economic and political stability.
Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been suspended since March 2023 after a Paris-based arbitration court ruled in favor of Baghdad that Ankara had violated a 1973 pipeline agreement by allowing Erbil to export oil independently.
Iraq’s Federal Supreme Court in February stated in a ruling that the KRG must hand over all the oil and non-oil revenues to Baghdad. In the same month, the KRG stated its readiness to hand over its non-oil income to the Iraqi government in a bid to abide by the federal budget law and prevent obstacles regarding the flow of money from Baghdad.
