The Kurdistan Regional Government (KRG) has vehemently rejected last-minute amendments to the Iraqi federal budget bill, describing them as “unconstitutional and oppressive”.
The amendments, which were approved by a majority of the 23-member finance committee of the Iraqi Parliament, appear to challenge a previous agreement between Erbil and Baghdad.
These changes address the handling and management of oil revenues, the administration of border crossings, and procedures for settling disputes.
In a statement issued on Friday, the KRG asserted that the amendments are “unconstitutional and breach the agreement” established between Erbil and Baghdad ahead of forming the coalition government in Baghdad.
The statement added, “We, as the KRG, unequivocally reject this encroachment and infringement of the rights of the people of Kurdistan, and we will not abide by any decision that contradicts the prior agreement with the esteemed government of [Muhammed] al-Sudani.”
Members of the Kurdistan Democratic Party (KDP) walked out of the finance committee’s meeting on Thursday, staging a protest over modifications to the budget bill they deem inconsistent with the text endorsed by the Iraqi Government.
While the final budget law could be significantly different from the draft bill, these proposed changes reflect the enduring stances of some Iraqi political parties concerning the Kurdistan Regional Government (KRG).
Kurdistan 24, a website closely associated with KRG Premier Masrour Barzani, stated in a report that the new changes are designed with the intent of “weakening, dividing, and marginalising the Kurdistan Region.
Meanwhile, opposition New Generation Movement (NGM) and the Patriotic Union of Kurdistan (PUK) have hailed a particular part of the changes regarding the return of the public sector salaries which were cut or ‘saved’ by KRG several years ago.
Starting from 2014, in response to financial crisis triggered by stalemate with Baghdad over its portion of the Iraqi budget and later due to the Covid-19 pandemic, Erbil implemented reductions to all public sector wages. Depending on their position, employees experienced between 21% to 50% cut to their salaries.
This angered many people in the Kurdistan Region leading to widespread demonstrations and provided a cause for some political parties to criticize the KRG. If approved by parliament, this would be a welcome news to tens of thousands of employees and pensioners of the Region.
The new clause states that the KRG must pay, in addition to salaries, at least an extra 10 percent to public sector employees as a compensation for the cuts that were introduced until the balance is clear.
Srwa Abdulwahid, NGM head of faction, who recently submitted a request to parliament to introduce this clause, told NRT Kurdish’s Tavgar Sherko that this is a “good news” for the public sector employees of the Kurdistan Region and a good step towards its approval by parliament soon.
NGM leader Shaswar Abdulwahid also hailed the change in a short video posted on his Facebook Page saying this was the outcome of the NGM’s efforts to return the salaries and it is what the other Kurdish political parties have failed to do in Baghdad.
PUK’s MPs (whose members on the finance committee voted for the new clause) have also praised the change and said it was one of their election mandates.
Harem Kamal Agha, head of PUK’s faction, told his party’s PUK Media that the PUK “fulfilled its promise”. The cuts were introduced by different KDP-led KRG cabinets, to which the PUK was an essential partner.
Here are what changed and approved by the finance committee (in bold) in articles 13 and 14 of the budget bill:
The first change states that Erbil must “hand over” at least 400,000 barrel of oil per day to the Iraqi oil state marketer (SOMO) which to either export it or refine it for local use.
2. A. The Kurdistan Regional Government and the Ministry of Natural Resources in the Kurdistan Region commit to exportinghanding over no less than 400,000 barrels of crude oil per day on average from its fields to the Oil Ministry for export through the State Oil Marketing Company (SOMO) or for local use by the federal Oil Ministry’s refineries or refineries which has agreements with the Oil Ministry. This is provided that the final revenues are deposited into the federal treasury. [additionally] monthly data, the quantities of oil exported or used locally from the regional fields, and the prices of crude oil are sent to the Accounting Department in the federal Ministry of Finance for approved after being audited by the Federal Ministry of Oil and the Federal Financial Auditing Bureau, in coordination with the Financial Auditing Bureau in the Region.
Another modification pertains to the administration of oil revenue and its deposit destination. The updated text stipulates that the Iraqi Oil Ministry will deposit the revenue into a bank account opened by the Iraqi Central Bank. The KRG PM will then be granted authorisation by Baghdad to utilise these funds.
In contrast, the previous text proposed that a solitary bank account be established for depositing oil revenues, where the KRG PM would have the authority to distribute the money.
1. The Federal Oil Ministry will deposit all revenues from oil produced from the Kurdistan Region’s fields into a single bank account opened by the Iraqi Central Bank, accumulating all revenues resulting from the export or sale of crude oil and its derivatives without any deductions for any purpose. The federal Finance Ministry will authorize the Prime Minister of the Region, or his designated representative, to disburse funds from this account. The said account is subject to oversight by the Federal Financial Auditing Bureau by a committee of specialists belonging to the Federal Financial Auditing Bureau and the federal government, and all similar accounts must be closed.
Additionally, five new clauses have been introduced, addressing a range of issues related to the KRG’s public sector and salary payments, oil production in Kirkuk and Nineveh, and the management of border crossings.
New Clause 7
Kurdistan Regional [Government] is obligated to provide the Federal Ministry of Finance, after auditing by the Federal Financial Auditing Bureau in coordination with the Financial Audit Bureau in the Region, with the employment registry (civil and military) formations, categorized according to rank and job title (vacant or occupied) according to the numbers allocated to it in keeping with the employment table index attached to this law no later than 30/09/2023.
New Clause 8
Should any disagreements arise between the Federal Government and the [Kurdistan] Regional Government regarding the rights, obligations, or failure to comply with the stipulations in Article (13) Clauses (one and two), or Article (14) Clauses (one, two, three, four, five, six, and seven), a 15-day period is allocated to resolve the differences. If no resolution is reached within this timeframe, the transfer of the Region’s dues will be halted, and the Federal Court’s decision will then take effect.
New Clause 9
The Kurdistan Regional Government is obliged to giving priority to disbursing the financial dues of the region’s employees and retirees, while committing to disbursing the financial dues of the governorates in accordance with the standards followed in this law fairly and without discrimination. On the contrary, the federal government shall deduct the share of the affected governorates in accordance with the law and hand it over to the affected governorate directly.
New Clause 10
The federal government and the regional government are committed to preventing the extraction of oil from the Kirkuk and Nineveh fields by the current regional government.
New Clause 11
The federal government, jointly with the regional government, is obligated to manage the border crossings.
New Clause 12
The Kurdistan Regional Government is obliged to pay an additional amount, no less than 10% of each employee’s salary, on top of their full salary. This payment is intended as compensation for the compulsory savings deducted in previous years. This supplementary percentage will continue to be paid until the total amount deducted has been fully repaid.