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BAGHDAD (AP) — Tensions have escalated between Iraq’s central government in Baghdad and the semiautonomous Kurdish region in the country’s north in a long-running dispute over the sharing of oil revenues.
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The central government has accused the Kurdish regional authorities of making illegal deals and facilitating oil smuggling. Baghdad cut off funding for public sector salaries in the Kurdish region ahead of the Eid al-Adha holiday. Kurdish authorities called the move “collective punishment” and threatened to retaliate.
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A long-running dispute
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It’s the latest flare-up in a long-running dispute between officials in Baghdad and Irbil, the seat of the Kurdish regional government, over sharing of oil revenues. In 2014, the Kurdish region decided to unilaterally export oil through an independent pipeline to the Turkish port of Ceyhan.
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The central government considers it illegal for Irbil to export oil without going through the Iraqi national oil company and filed a case against Turkey in the International Court of Arbitration, arguing that Turkey was violating the provisions of the Iraqi-Turkish pipeline agreement signed in 1973.
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Iraq stopped sending oil through the pipeline in March 2023 after the arbitration court ruled in Baghdad’s favor. Attempts to reach a deal to restart exports have repeatedly stalled.
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Last month, Prime Minister Masrour Barzani of the Iraqi Kurdish regional government traveled to Washington, where he inked two major energy deals with U.S. companies. The federal government in Baghdad then sued in an Iraqi court, asserting that it was illegal for the regional government to make the deals without going through Baghdad.
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Iraq cuts off funds for public employees in the Kurdish region
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The Iraqi Ministry of Finance announced a decision last month to halt funding for salaries of public sector employees in the Kurdish region. The move sparked widespread outrage in Irbil, triggering strong political and public reactions.
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The ministry said in a statement that the decision was due to the Kurdish regional authorities’ “failure to hand over oil and non-oil revenues to the federal treasury, as stipulated in the federal budget laws.” It added that any transfer of funds would be conditional on “the region’s commitment to transparency and financial accountability.”
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The federal Ministry of Oil accused Irbil of failing to deliver crude oil produced in the region’s fields to the ministry for export through the state-run SOMO company, which it said had led to massive financial losses amounting to billions of dollars.
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The ministry warned that “continued non-compliance jeopardizes Iraq’s international reputation and obligations, forcing the federal government to reduce oil production in other provinces to stay within Iraq’s OPEC quota — which includes Iraqi Kurdish production, regardless of its legality.”
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