Kurdistan's unpaid wages: A crisis of trust and federalism

Shafaq News

14-07-2025

Shafaq News
The prolonged failure to disburse public sector salaries in the Kurdistan Region has pushed Baghdad-Erbil relations to a critical juncture. With over 70 days of unpaid wages affecting nearly 1.5 million employees, the dispute has intensified political tensions, sparked protests, and raised questions about the viability of Iraq's federal framework ahead of the November parliamentary elections.
While the issue is far from new, recent rounds of high-level meetings and political outreach have yet to produce a sustainable solution.
'This crisis is not just about unpaid wages—it's about the collapse of trust between Baghdad and Erbil,' said Analyst Ranj Alaaldin in remarks to Shafaq News. 'What we're witnessing is a system failing to deliver on its most basic obligations.'
Dispute Reignited
The latest escalation came after the delay of May 2025 salaries, and then Prime Minister Mohammed Shia al-Sudani approved a one-time loan to cover wage payments. The decision, intended to ease hardship ahead of Eid al- Adha, did little to calm public discontent.
Protests soon erupted in Al-Sulaymaniyah and other cities, as teachers and civil servants demanded immediate action. At the same time, Kurdish political parties convened in Erbil to condemn Baghdad's handling of the situation, describing the use of salaries as leverage as both unconstitutional and politically dangerous.
The episode revived a familiar cycle—emergency disbursements, legal disputes, and mutual accusations —with no permanent resolution in sight.
To de-escalate tensions, the Leader of the Kurdistan Democratic Party (KDP), Masoud Barzani, and Iraqi Parliament Speaker Mahmoud al-Mashhadani met on July 12 to announce a joint initiative. Both figures highlighted the humanitarian urgency of the issue and called for separating public entitlements from political conflicts.
The following day, Barzani and Patriotic Union of Kurdistan (PUK) President Bafel Talabani led a joint meeting of their parties to reaffirm Kurdish unity on the matter.
'The coordination between the KDP and PUK is critical,' observed Political Scientist Zana Ahmed. 'But without legal guarantees and implementation mechanisms, unity alone won't bring results.'
A joint statement from both parties underscored the need for constructive engagement on constitutional rights and equitable revenue sharing.
Institutional Gaps Exposed
Many experts view the impasse as symptomatic of deeper dysfunction in Iraq's fiscal system. Legal Expert Huda Al-Taie described the situation to Shafaq News as a 'recurring pattern in which Baghdad invokes legal justifications selectively' while avoiding the creation of transparent, lasting frameworks.
Meanwhile, Prime Minister al-Sudani formed a ministerial committee to evaluate policy proposals from both sides, focusing on the transfer of oil and non-oil revenues and a mechanism for salary domiciliation.
A Kurdish political source told Shafaq News later that the committee is expected to submit its final report on July 15, with recommendations that could determine whether salaries resume and whether the KRG agrees to hand over oil exports to SOMO under federal terms.
Political Fallout and Strategic Risks
Inside Parliament, frustration is also mounting. KDP MP Nasser Yousef Mohi criticized successive federal administrations for marginalizing the Kurdistan Region despite constitutional guarantees ratified in 2005. He also questioned the transparency of parliamentary processes, noting that decisions are frequently crafted behind closed doors and presented for routine approval.
'What we are witnessing is the erosion of constitutional order,' argued constitutional scholar Salam Qazaz. 'The salary issue reveals just how politicized and inconsistent Iraq's fiscal governance has become.'
PUK MP Dilan Ghafour warned that the deadlock is harming citizens and called for urgent depoliticization of basic services. In her view, boycotts or withdrawal from the government would only deepen the crisis. Instead, she emphasized negotiation as the only viable path forward.
Outlook and Consequences
Analysts caution that failure to resolve the dispute could have far-reaching consequences, undermining the credibility of the upcoming elections, widening institutional divides, and weakening public confidence in governance.
Alaaldin warned that external actors could exploit Iraq's internal vulnerabilities. 'An unresolved Kurdish crisis opens doors for regional players to deepen instability,' he said. 'Baghdad, Erbil, and Iraq's neighbors all have a stake in preventing that outcome.'
Much also hinges on stalled national legislation. Iraq's inability to pass a comprehensive oil and gas law remains a core obstacle, leaving federal-regional fiscal ties in legal and political limbo. The path forward depends on whether Iraq's leaders choose to entrench old patterns or lay the groundwork for a more stable arrangement.