News Ticker

KDP, Gorran Fight Over Financial Leverage

On Tuesday, Masoud Barzani stated he would not allow Baghdad’s direct link with governorates in the Kurdistan Region. However, he did not respond to the public grievance growing on the streets of multiple cities in the region. Instead, he humiliated his rivals and the people on the streets by saying, “I do not listen to these people… they can dance and shout, but I do not care.” Barzani’s statement came after growing pressure from the public and a move by the Change Movement (Gorran) to propose a direct link between Baghdad and governorates in the Kurdistan Region without the consent of Erbil as an alternative to the collapsed Baghdad-Erbil budget agreement.

The Kurdistan Democratic Party (KDP), headed by Masoud Barzani, is the de facto ruler in the Kurdistan Region. It controls the presidency, the position of prime minister, foreign affairs and the chairman of the security council. It was they who engineered relations with Ankara and pushed for the policy of “independent” oil sales, which led to the break up with Baghdad. Later, it signed a 50 years “deal” with Ankara to export oil via Turkey without getting approval from Baghdad. However, no one has ever seen details of the deal except top KDP leaders such as Masoud Barzani and Nechirvan Barzani.

Consequently, in 2014, the Iraqi government cut the budget of the Kurdistan Region, 17 percent of the Iraqi national budget. Since then, the Kurdistan Regional Government (KRG) failed to sustain its economic status. The KDP purposefully encouraged Baghdad to cut the 17 percent budget to justify its “independent” oil sales, which is entirely dependent on Ankara. The KDP’s argument to convince other Kurdish parties was that if the KRG is allowed to sell its oil independently, its budget can double and this will facilitate toward political independence. This was not the only purpose behind the KDP strategy to shift from Baghdad to Ankara but it was a tactic to get away from shared access to the KRG budget with the Patriotic Union of Kurdistan (PUK) and Gorran.

Unlike the KRG budget from Baghdad, the KDP is the only party which has full access to the oil revenue because the deal with Turkey is signed between the KDP and Ankara, not the KRG. The revenue is saved in multiple banks abroad under no parliamentary scrutiny, while the budget from Baghdad was subject to monitoring by both the Kurdistan Parliament and the Iraqi Parliament. The KDP was not the only party which had access to the KRG budget, the PUK and Gorran did as well. The Kurdistan Parliament was able to discuss and approve the KRG budget from Baghdad. This situation made the KDP financially vulnerable, especially when KDP had a plan to dominate the KRG rule by using its financial status as it announced its intention to do so during the 2013 election campaign.

Therefore, the KDP intentionally failed all Baghdad-Erbil deals over oil and the budget. Over the last four years, the KDP led all KRG delegations to Baghdad and broke the agreements with the Iraqi government. It committed itself to provisions of the Iraqi budget laws. The KDP was also the one who violated agreements by not exporting the amount of oil the KRG was supposed to do on a daily basis.

Unlike the PUK and Gorran, the KDP is entirely aware of the oil production and the capacity of the Kurdistan Region’s oil fields. Therefore, it does not make any sense for the KDP to sign a deal with Baghdad if it is not hundred percent sure about its oil production capacity.

Currently, the other camp, Gorran, and the PUK, are trying to go back to the old system of receiving 17 percent of the budget from Baghdad by allowing Baghdad to directly deal with the governorates of the Kurdistan Region if the KRG failed to implement the renewed deal with Baghdad in Iraq’s 2017 budget bill. This camp has realized the “independent” oil policy was a strategy by KDP to limit the PUK and Gorran’s access to oil revenue and use that leverage for political purposes.

Thanks to the global drop in the oil price, the KDP has failed to sustain the KRG’s financial status and fix the delays in public employees’ paychecks. At the moment, public opinion is now against the KDP’s oil sale policy. To ease public pressure and turn the tables on the other camp, the KDP is trying to depict the other side as “traitors, pro-Baghdad and anti-independence.” The KDP is fighting back.

The Iraqi Constitution and the laws could support the PUK-Gorran proposal as well because they will condition their call for direct engagement with Baghdad if the KDP fails the upcoming Baghdad-Erbil 2017 budget deal. Also, Baghdad can deal with Kurdistan governorates if Kurdistan’s national institutions such as parliament and the presidency do not function.

Two things make this group stronger. First, the demonstrations held by teachers are growing, and their primary demand is to fix the delays in salary payments. In general, public enthusiasm for independence, which has been used over the last two years to silence opponents, is declining and people are worried about their financial status more than anything else.

To make the proposal doable, the Gorran-PUK camp should adopt a clear strategy. It should not be a tactic to bring the KDP under pressure but an approach toward transparency and a functioning financial policy. It should not only focus on the payment issue but also a better fiscal policy which gives direct access to a federal budget to all governorates in the Kurdistan Region without Erbil’s filter.

Sarkawt Shamsulddin is a Washington DC based political analyst and co-founder of the Kurdish Policy Foundation 

About Sarkawt Shamulddin (54 Articles)
Sarkawt Shamsulddin is a political analyst on Middle East Affairs and co-founder of the Kurdish Policy Foundation

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: