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In response to supposed allegations by NRT Kurdish, the KRG is launching a legal challenge. NRT Kurdish is reported to have claimed that the Prime Minister was planning to invest $100 million in a new television station, according to Kurdistan24 (K24).
K24, itself an outlet reported to have close ties with the Prime Minister, has reported that the KRG is vehemently denying these accusations. They cite a government source stating the claims are baseless, viewing them as a product of the channel owner's imagination.
In an effort to uncover the truth behind these allegations, the KRG is not only denying the claims but also turning the tables on NRT. The KRG is said to be pushing for a legal investigation into NRT's own funding sources.
The KRG is reportedly seeking to compel the disclosure of NRT's funding sources as part of this legal action. The move comes amid allegations that NRT's has costs ranging in 'millions of dollars'.
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CNBC has a detailed piece up on the impact of Turkey's runoff election on the delayed resumption of roughly 450,000 barrels per day of Iraqi crude oil exports. Analysts and market sources tell CNBC that Ankara's political actions are being closely watched as it reassesses its relationship with Baghdad.
The legal wrangle involving federal Iraq, the semi-autonomous Kurdistan Regional Government (KRG), and Turkey has paralyzed oil flows since March 25. These flows normally flow through the Iraq-Turkey Pipeline, linking Iraq with Turkey's Ceyhan port. The stalemate's resolution hinges on the outcome of this weekend's second presidential vote, which, if prolonged, could further curtail Iraqi crude production.
The dispute has intensified following the International Chamber of Commerce's verdict against Turkey in a nine-year lawsuit over the violation of a 1973 pipeline transit agreement. Turkey was ordered to pay Iraq around $1.5 billion in damages, with a second arbitration suit still ongoing.
This legal victory for Baghdad follows a domestic win in which the KRG's oil and gas legislation was deemed unconstitutional, leading to U.S. companies withdrawing from contracts in Kurdistan.
Despite Baghdad stating readiness to restart flows through Ceyhan, the Turkish authorities are hesitant to take responsibility for the restart, given the contentious presidential elections between incumbent President Erdogan and his primary rival, Kemal Kilicdaroglu.
CNBC's sources emphasize Turkey's priority to avoid further legal conflicts, insisting on a transparent agreement on oil export legality between Baghdad and Erbil. This focus on water resources from the Euphrates River and Turkey's military presence in Kurdistan and Sinjar is part of the ongoing negotiations.
The piece highlights that an Erdogan loss could prolong the oil stalemate, as Kilicdaroglu would likely require independent negotiations with Iraq, a point unlikely to be a priority on the new leader's agenda. However, Erdogan's strengthened position ahead of the polls, thanks to the endorsement by third-party candidate Sinan Ogan, makes the situation more complex.
Domestic issues also play into Erdogan's decision-making, given his tumultuous relationship with Turkey's largest ethnic minority, which typically accounts for 15-20% of the population. While Erdogan has sought rapprochement with KRG Prime Minister Masrour Barzani, he could still leverage the oil export stalemate to secure benefits from Baghdad.
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Shaswar Abdulwahid, leader of the opposition New Generation Movement, once again dismisses the ongoing tensions between the KDP and PUK.
Abdulwahid alleges, "This recurring game between the PUK and KDP is a stale tactic aimed at avoiding elections." He suggests that the KDP wants the elections to be postponed but seeks to pin the blame on the PUK for any potential delay. His reasoning is that the KDP could have easily agreed to the electoral reforms demanded by the PUK.
Although NGM has consistently accused both parties of attempting to delay the elections, seizing every opportunity to critique the ruling parties in its media narrative, there is some truth to Abdulwahid's claim: the KDP has indeed been notably stubborn this time. Forcing through a "vote" in parliament after the session had been adjourned is one textbook example of this intransigence. The KDP had strategized to pass a bill but found itself outmaneuvered by PUK Speaker of Parliament Rewaz Faiq's adept legislative tactics. Nonetheless, in an attempt to salvage their position, the KDP exploited every lever of governance at their disposal to assert that the bill had indeed been passed, thereby setting the stage for a fait accompli.
However, there's another credible interpretation — that the KDP faction led by KRG Prime Minister Masrour Barzani is visibly less inclined to negotiate with the current PUK leadership.
Barzani is reputed to be inflexible not only with the PUK but also with KDP officials at all levels of governance. Barzani shoulders a considerable share of the blame for the current impasse, alongside the PUK leadership.
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Article 13 is also being picked at in the committee stage. Here's the full text:
1. Financial obligations between the Federal Government and the Kurdistan Regional Government from 2004 to 2022 will be settled after an audit by the Federal Financial Auditing Bureau and the Financial Auditing Bureau in the Region. This is based on the rights and responsibilities outlined in the Federal Budget laws for each fiscal year.
2. A. The Kurdistan Regional Government commits to exporting no less than 400,000 barrels of crude oil per day from its fields. This is based on the monthly data provided by the Ministry of Natural Resources in the Kurdistan Regional Government and approved by the Federal Ministry of Oil and the Federal Financial Auditing Bureau, in coordination with the Financial Auditing Bureau in the Region. This will be recorded as final revenue for the Federal Treasury.
B. The Kurdistan Regional Government is obligated to contribute non-oil revenues to the state treasury according to the Federal Financial Management Law. The Federal Financial Auditing Bureau, in coordination with the Financial Auditing Bureau in the Region, will audit the data related to these revenues.
C. The Federal Ministry of Finance is obligated to pay the Region's dues under the provisions of this law monthly. Coordination must be established with the Ministry of Finance and Economy in the Region. The Ministry of Finance and Economy in the Region should send monthly balance sheets to the Accounting Department to include them in the state's monthly accounts. Account settlements related to the rights and responsibilities of both parties in the oil and non-oil sectors should be carried out after auditing by the Federal Financial Auditing Bureau in coordination with the Financial Auditing Bureau in the Region on a quarterly basis. This will ensure smooth payment and settlement of these dues.
D. The balances of the Iraqi Trade Bank in government and private banks owed by the Kurdistan Regional Government are settled. The Ministry of Finance schedules monthly installments to be deducted from the Region's share starting from the fiscal year 2023 for a period of seven years.
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As we delve into the budget bill, here's a translation of Article 14, currently under discussion by finance committee members in Baghdad. This version dates back to March and the final text might differ:
Article 14
1. All revenues from oil produced from the Kurdistan Region's fields are to be deposited into a single bank account, accumulating all income resulting from the export or sale of crude oil and its derivatives without any deductions for any purpose. The Prime Minister of the Region, or his designated representative, is authorized to disburse funds from this account. The said account is subject to federal government oversight, and all similar accounts must be closed.
2. The Federal Financial Auditing Bureau, in coordination with the Financial Auditing Bureau in the Region and the Federal Ministry of Oil and the Ministry of Natural Resources in the Region, will audit the account mentioned in clause 1. This will involve contracting with a specialized international company in line with contractual instructions and obligations. This company will have access to all details concerning contracts, shipments, and discounts relating to extraction, transportation, and exports. The Ministry of Finance and Economy of the Region must provide the Federal Financial Auditing Bureau with a monthly return balance, to be audited in collaboration with the Financial Auditing Bureau in the Region. This will then be forwarded to the Federal Ministry of Finance/Accounting Department for accreditation within the state's accounts.
3. The bank account mentioned above is audited in its entirety—both income and expenses—by the international auditing company stated above, which submits regular reports to the Federal Financial Auditing Bureau and the Financial Auditing Bureau in the Region.
4. The annual and semi-annual financial statements are submitted and signed by the Minister of Finance and Economy for the Region and the independent account monitoring entity (the international company), with a certified copy deposited with the Federal Ministry of Finance.
5. A joint committee, comprising representatives from both parties, is established to conduct a comprehensive review of the past period concerning everything related to the oil and gas sector in the Region and the relationship between the Federal Ministry of Oil and the Region. This committee aims to propose a solution aligned with the constitution, acceptable to both parties, and actionable to settle the past period.
6. The provisions of this article—clauses 1 through 5—are enacted from the date of this law's effectiveness until the Oil and Gas Law comes into force.
7. In case of any disagreements between the Federal Government and the Regional Government concerning the rights, obligations, and mechanisms set forth in this law's provisions, a joint committee is formed to investigate the outstanding issues. This committee should raise its recommendations within 30 days from its formation to the Federal Prime Minister to make an appropriate decision.
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Kurdistan Region expresses concern over proposed budget vote on Saturday
Concerns persist among the Kurdish population as deliberations proceed over the Kurdistan Region's allocation of the Iraqi federal budget. Speaker Muhammed al-Halbusi announced on Wednesday that a vote is planned for Saturday.
Halbusi informed parliamentary officials and the media that the finishing touches are being applied to the 2023 budget bill. Two months earlier, Iraqi Prime Minister Mohammed Shia Al-Sudani revealed that this year's budget stands at 197.82 trillion Iraqi dinars (roughly $152.17b). The budget foresees a deficit of 63.27 trillion Iraqi dinars ($48.67b). Operational and investment expenditures are projected to be around $115.59 billion and $36.58 billion, respectively.
The budget is predicated on an estimated oil price of $70 per barrel and a daily crude oil production of 3.5 million barrels, which includes 400,000 barrels from the Kurdistan region.
Kurdistan Region apprehensions
KDP MPs have voiced concerns about the sections concerning the Kurdistan Region's share.
The Kurdish Deputy Speaker of the Iraqi Parliament, Shakawan Abdullah, told Rudaw TV that there are attempts to alter two of the articles related to the Region's portion of the budget, specifically articles 13 and 14.
"We won't allow any modifications as this is the outcome of months of negotiations between the Erbil and Baghdad governments. Some articles could be amended, but these two have political implications first and foremost before they are fiscal issues," stated Abdullah.
Article 14 addresses oil revenue collection, oil contracts, auditing, and the establishment of joint committees to scrutinize and settle lingering issues in the oil and gas sector between Erbil and Baghdad.
Abdullah disclosed that five new clauses have been added to article 14, "which contradict the [Iraqi] constitution and the spirit of the agreement [between Erbil and Baghdad]."
One suggested clause is "If the Kurdistan Region oil is not sold, its financial entitlements will be withheld," which Abdullah contests as being contrary to the constitution, laws, and agreements, and some Shiite factions also oppose this provision.
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Delving deeper into the commission's workings
In the Kurdistan Region, many bodies and departments, including the Independent High Elections and Referendum Commission, are controlled primarily by the ruling parties, the KDP and the PUK.
Unsurprisingly, the KDP holds position of commission's head and accounts for three of its nine members. The deputy head of the commission is PUK, which also has two of the nine members on its side. Together, they form a simple majority within the commission, which enables them to convene meetings and make decisions if they reach a consensus.
Following the announcement of the decision (which the KDP claims was made by parliament) to renew the mandate of the commission, Handren Muhammed Salih, the head of the commission, has stated that the commission will convene next week to continue preparations for the November elections.
However, there are a few unanswered questions that need to be addressed before this occurs. Firstly, the KDP maintains that two new members were approved during the tumultuous session on Monday, but this is disputed as the PUK and other political parties reject this assertion.
Secondly, even if the commission successfully incorporates the two new members, the issue of a quorum arises.
A comprehensive report by Sulaymaniyah-based Draw Media discusses the various scenarios that could unfold, contingent upon the stances of the Change Movement (Gorran), Islamic Union of Kurdistan (KIU), and Komal members.
To secure a majority, the KDP, with its three seats, requires the backing of either both Gorran members or at least one Gorran member in conjunction with a member from one of the other two Islamic parties.
Apart from the KDP, none of the aforementioned parties endorsed the KDP's alleged parliamentary vote. Therefore, it remains uncertain whether they would extend their support in this instance.
Draw's report outlines an outlandish but quintessentially Gorran scenario in which one Gorran member would back the KDP while the other would oppose it, thereby satisfying both sides— the story of the former opposition party’s life as it tries to haplessly please both of its senior coalition partners.
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In case you missed this report published yesterday: In a landmark ruling this week, the Justice Department announced the conviction of an American for torture in a US court, marking only the second time a US citizen has been convicted of the offence. Peshmerga forces and officials from the Sulaymaniyah region were also implicated in the case, according to court documents.
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Tensions persist over the upcoming Kurdistan Region parliamentary elections
Tensions are not showing any signs of easing over the controversial issue of conducting the forthcoming Kurdistan Region parliamentary elections, scheduled for November. As of now, there has been no response from either the KDP or the PUK in the wake of the UN's strong statement yesterday.
Jeanine Hennis-Plasschaert, chief of United Nations Assistance Mission for Iraq (Unami), warned that "the ongoing political infighting within Kurdistan Region of Iraq (KRI) is deeply concerning." The apparent problem is that the KDP is trying to circumvent a deadlock it's facing with the PUK. This is being done through manipulative tactics and its media channels to spread the narrative that bills have been lawfully passed in the parliament and supported by Erbil – a view not shared by the PUK, which maintains that parliamentary bylaws were violated.
The central issue: the electoral commission
The PUK staunchly opposes the activation of the electoral commission before an agreement is reached on electoral reforms. It has begun probing the KDP's insistence on the issue and is threatening to escalate the legal dispute to the Iraqi Federal Court. PUK Members of Parliament assert that the KDP is exploiting its influence over institutions to disseminate its narrative that parliament has lawfully passed the bill to activate the commission and prepare for elections.
Abbas Fatah, Deputy Chairman of the Kurdistan Parliament's Legal Affairs Committee, said to PUK Media:
Another PUK official stated that his party plans to move the conflict to Baghdad. Ghyas Surchi further dismissed the likelihood of holding the election this November, citing the current circumstances.
Increasing role of the Iraqi federal court in Kurdistan affairsThe Iraqi Federal Court has been handling an escalating number of cases from the Kurdistan Region.
Just last year, the court processed 26 complaints related to the Kurdistan Region, the majority of which were filed by the Region itself.
So far this year, the court has received seven lawsuits.
The court is accessed of being unduly influenced by Iran-backed Shia political parties; its involvement in the local affairs of the Kurdistan Region appears to be growing more pronounced.
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Morning briefing
Good morning from London, and a good afternoon to those in Kurdistan.
Here's your morning briefing:
- The PUK continues to strongly oppose the 'reactivation' of Kurdistan's electoral commission. This stance persists even after the new 'law' was published in the Chronicle of Kurdistan. They maintain their skepticism, stating that it would still be deemed a farce, even if it were published in the US's Federal Register.
- Emerging reports suggest that the KDP may face challenges in reaching a quorum in the electoral commission. This issue is predicted to arise if the Gorran and Islamic Union commissioners decide to join the PUK in boycotting it.
- The KRG's Ministry of Culture has published a draconian set of rules regulating free expression.
- Iraq's federal parliament is finally due to vote on the budget bill this Saturday after months of glacial progress.
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