Despite weeks of intensive negotiations and multiple official visits between Baghdad and the Kurdistan Region, a final resolution to the long-standing oil and budget disputes remains elusive.
As a result, hundreds of thousands of public sector workers in Kurdistan have gone unpaid for over 75 days, deepening an already severe economic crisis.
While the Iraqi federal government announced last week that an agreement to resume oil exports through the Turkish port of Ceyhan was near, and both sides reportedly reached a “near-final” deal, tangible progress has stalled.
Reuters reported Friday that a restart of Kurdish oil exports is not imminent, citing both ongoing disputes and drone attacks on oilfields in the region that have slashed production by half.
Nevertheless, Kurdistan Regional Government (KRG) Prime Minister Masrour Barzani reiterated Sunday his administration’s readiness to hand over oil to Baghdad on one condition: that the federal government guarantees the region’s share of the national budget and secures public salaries.
Speaking at the inauguration of a new emergency water project in Erbil, Barzani demanded an end to what he described as “collective punishment” of the Kurdish people.
Addressing public criticism over local revenue use, Barzani said: “We don’t respond to irresponsible claims meant to mislead public opinion. Our projects are the real answer.”
Barzani also pushed back against Kurdish voices advocating for Baghdad to directly distribute salaries, asserting the region’s constitutional right to manage its own budget.
“We are a federal entity. Kurdistan must have its own budget, and how it is spent should be decided by its institutions and people,” he said.
Tensions have grown in recent months as some Kurdish civil servants traveled to Baghdad, demanding the federal government bypass the KRG and pay salaries directly, a move Erbil firmly rejects.
Barzani expressed frustration with Baghdad’s withdrawal from earlier agreements, despite Erbil agreeing to hand over 230,000 barrels of oil per day to the federal SOMO company, as well as 120 billion dinars in monthly revenue. He warned that recent drone strikes on oil infrastructure could impact output but should not be used as an excuse to delay payments.
The federal government counters that the KRG has failed to meet its oil transfer obligations and exceeded its allocated share of the national budget. In May, Iraq’s Finance Ministry formally warned that funding would cease, citing overpayments that exceeded Kurdistan’s legal 12.67% share.
