Kurdistan's salary crisis escalates ahead of Eid

Shafaq News

30-05-2025

Shafaq News/As Eid al-Adha approaches, more than a million public servants in Iraq's Kurdistan Region face yet another holiday without salaries—caught in the crosshairs of a deepening standoff between Baghdad and Erbil that underscores unresolved constitutional, political, and economic rifts.
The Iraqi government recently suspended salary payments for May 2025, accusing the Kurdistan Regional Government (KRG) of failing to deliver oil and non-oil revenues as mandated by the federal budget law and a Federal Supreme Court ruling.
The Ministry of Finance warned of legal action to hold the KRG accountable, laying blame squarely on Erbil for disrupting monthly payments and social welfare programs.
The row has intensified following the KRG's announcement of two major energy deals with American firms worth over $110 billion to develop gas and oil infrastructure in the Region.
Baghdad views these agreements as violations of its sovereign authority, while Erbil insists the contracts fall within its constitutional right to enhance local revenues and diversify the Region's economic base.
Responding to the federal decision, the KRG's Ministry of Finance and Economy said Baghdad owes Erbil over 4.22 trillion dinars (about $3B) and has yet to release the remaining 9.11 trillion dinars (around $6.5B) of Kurdistan's 2025 allocation.
Kurdish officials argue that Baghdad's revenue calculations ignore the KRG's operational expenses and the local funds used to cover salary gaps. They also point to the federal government's failure to compensate victims of the Anfal genocide, which they say adds to long-standing grievances.
'The federal government is trying to create unconstitutional roadblocks,' the KRG stated, citing a February 2025 ruling by the Federal Supreme Court directing Baghdad to disburse salaries directly to Kurdish employees regardless of political disagreements.
Erbil has framed the latest salary freeze as a political tactic that targets ordinary citizens and threatens regional stability.
Since 2014, salary payments to the Kurdistan Region have shifted from fixed budget allocations to ad hoc 'emergency advances' subject to Baghdad's oversight. Each budget cycle has become a flashpoint for constitutional disputes, driven by the absence of a federal oil and gas law since 2007 and competing interpretations of revenue-sharing rules.
For many Kurdish families, the result is a familiar cycle of uncertainty and hardship. Despite multiple court rulings, federal disbursements remain entangled in political maneuvering.
Jamal Kocher, a Kurdish member of Iraq's financial committee, criticized Baghdad's decision as 'poorly timed and unjust,' warning that it effectively punishes over 1.2 million employees who are uninvolved in high-level political disputes.
Kocher stressed that 'a series of steps must be taken to resolve this issue,' urging Prime Minister Mohammed Shia al-Sudani to 'respond to Iraqi citizens in a manner that promotes fairness. It is unacceptable for employees in Iraq to receive their salaries while those in the Kurdistan Region face cuts.' He also emphasized the need to engage the Federal Supreme Court to take further decisions on the matter.
Political analyst Hamza Mustafa described the crisis as a symptom of deeper institutional dysfunction.
'The salary crisis is just the tip of the iceberg,' he said. 'The deeper issue is Iraq's failure to pass an oil and gas law for nearly two decades. As always, it's the citizens who pay the price.'
The United States has called for calm, urging both Baghdad and Erbil to resolve the standoff through dialogue and constitutional mechanisms.
A US State Department official told Shafaq News in an exclusive statement, 'A swift resolution will show that Iraq is prioritizing its citizens' welfare and create an environment attractive to investors.'
He added that resolving the crisis could also signal readiness to reopen the suspended Iraq-Turkiye oil pipeline.
This appeal follows recent high-level meetings in Washington, where KRG Prime Minister Masrour Barzani met with US Secretary of State Marco Rubio and other senior officials.
The salary freeze comes at a delicate moment in Iraqi-Kurdish relations. Prime Minister Mohammed Shia al-Sudani faces competing pressures: demands from political blocs in Baghdad to assert federal control, and calls from international partners to ensure stability and fair treatment for the Kurds.
Analysts believe al-Sudani is keen to avoid further escalation ahead of the holidays, with back-channel negotiations possibly underway to explore temporary fixes.
However, without structural reforms—such as the long-stalled oil and gas legislation—many fear the cycle of crisis, court rulings, and emergency payments will continue to define Baghdad-Erbil relations.
With public frustration mounting and Eid just days away, all eyes are now on whether Baghdad and Erbil can move beyond legal sparring to reach a sustainable fiscal settlement—or whether yet another round of crisis budgeting awaits the Kurdistan Region.