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Decade-long standoff: salary crisis sparks public outcry in Iraqi Kurdistan

Decade-long standoff: salary crisis sparks public outcry in Iraqi Kurdistan
Decade-long standoff: salary crisis sparks public outcry in Iraqi Kurdistan

2025-01-17 15:45:23 - From: Shafaq News


Shafaq News/ As 2025 begins, the salary crisis in theKurdistan Region remains contentious, sparking public concern and demands for alasting resolution. With unpaid salaries for December 2024 still unresolved,the issue underscores a decade-long standoff between Baghdad and Erbil over oilrevenues and budget allocations.

A Decade of Tensions

The long-standing crisis between the federal government inBaghdad and the Kurdistan Regional Government (KRG) traces back to 2014 whendisputes over oil resource management and budget allocations began to escalate.

The war against the Islamic State (ISIS) further exacerbatedthese tensions, a sharp decline in global oil prices, and the economic falloutfrom the COVID-19 pandemic.

In 2014, Baghdad halted the transfer of the KRG’s share ofthe federal budget, prompting the KRG to export oil to cover public salariesand services independently. This standoff disrupted salary disbursementmechanisms, leading to a series of delays and financial backlogs that persistto this day.

At that time, the KRG was permitted to market its oilindependently but must deposit the resulting revenues into a monitored bankaccount accessible to federal officials. Baghdad deducts these revenues fromits monthly allocation to the KRG, transferring any remaining fundsaccordingly.

In February 2024, the Federal Supreme Court directed Baghdadto bypass the KRG and directly pay salaries to employees in the KurdistanRegion after months of delays.

However, tensions have persisted. In Parliament, Iraqi PrimeMinister Mohammed Shia Al-Sudani emphasized that the salary issue is notpolitical, but criticized the KRG for “failing” to meet its obligations underthe Budget Law.

He stated that no additional transfers would be made for theRegion’s salaries and confirmed that only 760 billion dinars (approximately$608 million) would be disbursed, representing the KRG’s fixed share of 12.67%.

In November 2024, the salaries issues exacerbated whenIraq's cabinet ordered the KRG to immediately transfer its oil output to thestate-run Oil Marketing Company (SOMO) as part of an effort to centralize oilexports and revenue management. This directive came after Turkiye halted oilflows through the KRG’s pipeline in March, following an internationalarbitration ruling that required Turkiye to pay Baghdad $1.5 billion forunauthorized KRG oil exports between 2014 and 2018.

A Growing Crisis

Calls for the implementation of Federal Supreme Courtrulings that mandate timely salary payments have intensified, driven bypolitical and economic activists advocating for change.

The ongoing salary delays continue to take a heavy toll onordinary citizens in the Kurdistan Region, with increasing frustration amongthe population.

Government employee Ahmad Karim shared his frustration withShafaq News, saying, "We work hard, but we are denied our rightful pay.The constant delays in salary payments present daily challenges and undermineboth our financial and mental stability."

The prolonged salary delays have also triggered asignificant slowdown in the region's markets, as traders and shop ownersstruggle with reduced consumer spending.

Economist Suzanne Al-Sormiri explained to Shafaq News, “Mostcitizens depend on their salaries as their primary source of income. When thesepayments are delayed, it causes a downturn in local markets, jeopardizing thesurvival of many small and medium-sized businesses.”

With approximately 70% of households in the Kurdistan Regionrelying entirely on government salaries, previous delays have driven a 40% risein personal debt levels.

Furthermore, market activity has dropped sharply, withsurveys conducted by Shafaq News indicating a decline of between 30% and 50% in2024 alone.

In addition to its economic repercussions, the crisis hashad a profound impact on social relations, with rising personal debts and anincrease in divorce rates driven by financial pressures. Many families arestruggling to cope with the burdens of daily life.

Activist Sardar Ali told Shafaq News, “The financial crisisin the region is not just an economic issue, it is tearing apart the socialfabric. We are seeing an increase in divorce rates due to financial strain anda rise in family disputes.”

He added, “Furthermore, the salary delays are pushing manyyoung people to seek employment opportunities abroad, contributing to thedisintegration of many families.”

Latest Development

Following the Paris Court’s decision to halt oil exports,the KRG now depends on non-oil revenues for funding investment projects andcovering operational expenses. The member of the Iraqi Parliament's FinanceCommittee Nermin Maarouf told Shafak News earlier.

“The KRG's non-oil revenues are reported to total around 4trillion dinars, compared to Iraq's national non-oil revenues of 12 trilliondinars. The KRG has received less than 11 trillion dinars for salaries, andDecember salaries have not yet been paid,” she explained.

The KRG needs one trillion Iraqi dinars ($762.86 million)per month to cover salaries for employees and retirees, she added.

“Without the Federal Supreme Court ruling obligating thefederal government to pay salaries, the KRG would have been forced to use itslimited revenues to fund them,” Maarouf continued.

In addition, the Iraqi Parliament’s Financial Committee hasformed, this month, a special committee to monitor the KRG's financialentitlements for 2024 and 2025.

KRG spokesperson Peshawa Hawramani urged the federalgovernment to ensure full salary payments for public sector employees and sendthe region’s share of the federal budget, noting that “less than 7% of theregion’s financial entitlements have been sent and that December salaries arestill pending.”

Calls for Lasting Solutions

As public pressure mounts, observers and analysts arecalling for long-term solutions to be implemented by both Baghdad and Erbil.Political analyst Hawri Karzan told Shafaq News.

The solution requires genuine political will and a seriouscommitment to implementing Federal Court rulings to secure employees' salarieswithout political interference.

Political analyst Fakher Ezzeddine told Shafaq News, “Thesolutions are not complicated, but they require genuine commitment from bothsides to implement the Federal Court's decisions.”

A joint committee should be formed by both governments toestablish clear and binding mechanisms for salary payments, free from politicalmanipulation, with transparency in revenue management to ensure citizens'rights, he suggested.