Oil vs. Salaries: KRG-Baghdad feud pushes Iraq to the brink

Shafaq News

a day ago

Shafaq News/ As the Kurdistan Region's salary crisis resurfaces, alarms grow louder over the broader ramifications. The economic tension carries a potent political undertone that, if left unresolved, could destabilize Iraq's political framework.
The dispute between Erbil and Baghdad reignited after the Kurdistan Region accused the federal government of "discrimination" in salary disbursement. The Region pointed to repeated delays in receiving dues despite earlier agreements. Baghdad countered by citing the Kurdistan Regional Government's failure to deliver oil and non-oil revenues as stipulated in the federal budget law.
To contain the escalating crisis, the federal government is expected to dispatch a financial advance to the Kurdistan Region within two days to ensure employees receive their salaries before Eid al-Adha (June 6-9). However, nothing has changed so far.
Economic War
Kurdish political analyst Mohammed Zangana describes the allocation of funds as 'not charity toward the people of Kurdistan, but a constitutional and legal right.' He references the tripartite budget law (2023–2025) and a 2024 Federal Court ruling mandating salary payments from the federal treasury to the Kurdistan Region.
Zangana characterizes the ongoing situation as an 'economic war waged by Baghdad against the region since 2014,' urging for a simple resolution: 'separate the salaries of Kurdistan's employees from political bickering and disputes.'
The agreement stipulates that the Kurdistan Region must send 400,000 barrels of oil daily to federal depots in exchange for employee salaries. However, those depots can handle no more than 80,000 barrels per day. 'Even the amount sent hasn't yielded a single cent,' Zangana notes, adding, 'no agreement has been reached on the price per barrel.'
On the Kurdistan Democratic Party's threat to withdraw from the political process, Zangana believes the Coordination Framework (CF), a predominantly Shiite group that controls the Iraqi government, fully grasps the danger posed by such a move. 'This is a warning to the Framework,' he asserts.
Zangana also highlights a 'lack of will' from Baghdad to pass an oil and gas law, explaining that such legislation would grant provinces and regions constitutional autonomy under Articles 112 and 121 of the Iraqi Constitution. He foresees only temporary solutions ahead: 'There won't be any radical remedies—just patchwork until the elections.'
Financial Strain
Parliamentarian Mukhtar al-Mousawi, a senior figure in the Badr Organization, a movement within the Framework, expects the two sides to reach a 'mutual understanding.'
'The Region's recurring threats to withdraw from the political process whenever it faces liquidity issues and pressures the federal government—that's not a sound approach,' he states in remarks to Shafaq News, urging the Region to 'reorganize its affairs according to its own budget.'
Al-Mousawi explains that Iraq is currently navigating a financial crunch, and the 2025 budget has yet to reach Parliament. 'Meanwhile, the Region resists accountability on how it manages oil and gas export revenues.'
Constitution and Oil & Gas Law
Ibrahim al-Sikani, a member of the State of Law Coalition led by Nouri al-Maliki, another CF group, strikes a balancing tone. 'The Constitution governs all national matters from north to south, especially Kurdistan Region salaries and the ongoing oil and gas issues,' he tells Shafaq News.
He places the responsibility for salary payments squarely on Prime Minister Mohammed Shia al-Sudani. 'The Coordination Framework is blamed because the shortfall comes from its nominee, Al-Sudani, but the Framework won't tolerate any failure from the government toward the Iraqi people—north or south.'
Al-Sikani also discloses that the Framework has resolved to form a delegation to visit the Kurdistan Region and negotiate solutions, emphasizing that passing the O il and Gas Law would eliminate recurring disputes.
He calls on Parliament to act, urging sessions to approve the law and the budget—still stalled in the Prime Minister's office— 'despite its direct impact on the lives of the Iraqi people.' 'I urge al-Sudani to hold a parliamentary session to lay all the facts bare before the public.'
In this context, political analyst Aed al-Hilali appeals to all political blocs to engage in frank and direct dialogue with Kurdish representatives. 'The salary issue is no longer bearable, especially with the Kurdistan Democratic Party threatening to boycott the political process, which could lead to the collapse of Iraq's political system,' he cautions.
Still, al-Hilali voices cautious optimism, 'The salary crisis may soon be resolved, but fundamental solutions remain necessary,' He outlines key steps forward—revisiting the Constitution and amending certain articles that 'may help achieve lasting resolutions.'