Kurdish region of Iraq appeals to Baghdad for financial aid amidst budget shortfall
The Kurdistan region of Iraq has issued a plea to the federal government in Baghdad, seeking additional financial support to fulfill its critical financial obligations, including the payment of employee salaries. The ongoing financial strain in the region has prompted this call for assistance.
Historically, the primary revenue source for the Kurdistan region was its oil exports, primarily channeled through Turkey. To supplement these earnings, a 12.67 percent allocation from the federal budget was provided to Iraqi Kurdistan. However, due to persisting disagreements between the two administrations, these payments have been inconsistent over the years.
The financial situation took a severe blow when Turkey halted Iraq’s exports of 450,000 barrels per day through the oil pipeline that stretches from the Kurdistan region to the Turkish port of Ceyhan on March 25. This suspension in oil exports has inflicted significant financial losses, amounting to billions of dollars, upon the Kurdistan Regional Government (KRG).
The decision to suspend oil exports by Turkey followed an arbitration ruling by the International Chamber of Commerce (ICC) in Paris. According to the ICC’s decision, Turkey is obligated to pay Baghdad $1.5 billion in compensation for damages resulting from the KRG’s unauthorized oil exports between 2014 and 2018. Baghdad has long considered the KRG’s independent crude oil exports, which began in 2013, as illegal.
In an effort to ease the financial strain, Baghdad has been providing monthly transfers to the Kurdistan region of Iraq. However, these funds have proven insufficient to meet the region’s mounting obligations.
In a recent development, the Iraqi Council of Ministers approved a financial transfer for the months of September, October, and November, totaling 500 billion Iraqi dinars, approximately $381 million.
Despite this allocation, the Kurdistan Regional Government (KRG) has voiced its concern, indicating that this amount falls short of the 906 billion Iraqi dinars, equivalent to $691 million, required every month to cover employee salaries.
The frustration over unpaid civil service salaries has led to public demonstrations in the autonomous region.
Thousands of demonstrators, brandishing the flags of Iraqi Kurdistan, took to the streets on Tuesday to voice their discontent, placing the blame for the salary delays squarely on Baghdad, according to reports from AFP. These protestors are demanding payment for the past two months’ salaries, highlighting the pressing financial challenges faced by the region.