Erbil- The Kurdistan Regional Government (KRG) released a statement in which it refuses 2017 federal budget law, but the statement doesn’t represent the whole KRG, but the KDP.
In Baghdad, three Kurdish factions, the Patriotic Union of Kurdistan (PUK), the Change Movement (Gorran), and the Kurdistan Islamic Group (Komal), hailed the passing of 2017 budget law. They called the approval a “national victory.”
In Erbil, the KDP dominated-KRG called the law as “imposed” and “conspiracy policy on Kurdistan.” It claims that no consultation conducted with KRG about budget before passing it to parliament. Nevertheless, there are 56 Kurdish lawmakers (28 KDP) in Baghdad who represent the people of Kurdistan. But the KRG wants Iraqi Government to directly negotiate the details of the budget with the KRG, but this is just an excuse.
The KDP makes up 40 percent of the KRG cabinet. But due to PUK’s non-decisive role and sacking Gorran ministers since October 2015, the KDP acts as a de-facto ruler. Therefore, the KRG’s statement doesn’t represent the KRG policy toward Baghdad.
In 2017 Iraqi budget, Baghdad will allocate fund for over 630,000 employees in Kurdistan plus a separate fund for Peshmerga as part of Iraqi ground forces budget. The KRG, in return, has to export 550,000 bpd oil via Iraq’s SOMO. This is the same condition has been fixed in the Baghdad-Erbil deals since 2014, but this year the law brings the Iraqi Supreme Court to the center of the debate. According to the budget law, Supreme Court can decide between Baghdad and Erbil and identify the violator. In thid case, the KRG is most likely to be blamed for the violation of the law.
The KDP wants to sustain its financial leverage over oil revenue as part of “independent oil sale” and “independent economy” in which Turkey is the only pillar of this policy.
The KDP shares the benefit of the KRG oil policy with Turkey; Ankara gets KRG oil in lower price compares to the global market, and Turkish banks benefit from KRG oil revenue. Also, Turkey gives full access to KRG oil revenue to the KDP only. Neither Baghdad nor other Kurdish political parties have access to it.
So, the deal with Baghdad may harm KDP’s ties with Turkey as well. One part of KRG wants Baghdad to sell its oil to end unilateral oil policy of the KDP.
But the division of KRG deteriorates the KRG financial status further. In order to the deal to be implemented, the KDP should be part of it because it can lock the pipelines it controls. Until the liberation of Mosul and Iraqi Government’s ability to utilize its pipeline, KRG pipeline is the only functioning pipeline between Iraq and Turkey. The KDP’s consent is important to allow the oil to flow without interruption. Otherwise, exporting Kurdistan oil may face interruptions, especially if Iraqi Supreme Court involved.
Although, the KRG’s oil policy does not seem to have KDP’s 100 percent support. It might be the KRG’s leadership policy, Prime Minister Nechirvan Barzani, Deputy Prime Minister Qubad Talabani, and Minister of Natural Resources Ashti Hawrami. Despite PUK’s pro-Baghdad policy, Talabani still supports “independent” oil sale. This leadership defends the current policy as long as they can.
Therefore, the change in the KRG leadership might be another way to facilitate the implementation of the deal with Baghdad.
Earlier this year, in an interview with pro-KDP Gullan gazette Masrour Barzani, Chancellor of the Kurdistan Region Security Council, criticized KRG’s economic policy and said: “First step, KRG should admit its failure and then finding solutions.” Barzani is not a normal KDP leader, he is oldest son of KDP President Masoud Barzani and most powerful figure within the party after his father. It should be considered as an alarming sign for KRG leadership.