Iraq News Now

Shafaq News/ As the Kurdistan Region (KRI) grapples with mountingfinancial strain and a deepening dispute with the Iraqi government, PresidentNechirvan Barzani’s visit to Baghdad in early 2025 marks a “symbolic” moment.Amid escalating external pressure, especially from the US, for a swiftresolution to the oil and budget conflicts, the stakes could not be higher.

As leaders from both sides sit down to negotiate, the central questionlooms: can Baghdad and Erbil resolve their long-standing issues, or willdivisions continue to hinder the nation's path toward stability and unity?

Inside the Baghdad-Erbil Conflict

The main points of disagreement between Baghdad and Erbil center on oilexports, budget allocations, and constitutional compliance.

A key matter has been the suspension of oil exports from the KurdistanRegion, which has been on hold since March 2023 due to a legal dispute overpipeline agreements. The Iraqi government proposed a budget amendment torestart these exports, but it has faced resistance in parliament.

The salary payment issue, tied to federal budget allocations and theKRI’s oil revenue contributions, has also deeply impacted the Region’s people,sparking strikes and shutdowns in several areas such as Al-Sulaymaniyah, with schools,universities, and government offices disrupted. After halting oil exportsthrough the Turkish Ceyhan pipeline, Baghdad began providing loans to coversalaries. In 2024, the Federal Supreme Court issued a binding decisionmandating the direct disbursement of salaries to Kurdistan Region employees,bypassing Erbil. However, payments continued to face interruptions, with theKurdistan Regional Government (KRG) accusing Baghdad of irregulardisbursements.

Last Opportunity for Baghdad

Throughout 2024 and 2025, several high-level discussions have takenplace to address these problems. President Barzani visited Baghdad in April2024 and January 2025 to meet with Iraqi officials and discuss thedisagreements, including the implementation of Article 140 of the constitutionaddressing disputed territories, delayed salary payments for KRI employees,amending Article 12 of the Federal Budget Law on compensating the KRG for thecosts of oil production and transportation and restarting oil exports throughthe Ceyhan pipeline.

Barzani’s recent two-day visit to Baghdad was viewed by many observersas a “last opportunity” for the federal government. During the visit, heparticipated in a meeting with the State Administration Coalition (SAC), apolitical bloc that includes the Iran-backed Shiite Coordination Framework, theKurdistan Democratic Party (KDP), the Sovereignty (Al-Siyada), the Taqadumalliance, and the Patriotic Union of Kurdistan (PUK).

Prime Minister Mohammed Shia Al-Sudani and Speaker Mahmoud Al-Mashhadanialso attended the meeting, where SAC emphasized that “the salary problem isstrictly technical, with no political motives,” urging all parties to refrainfrom media escalation.

The discussions between Barzani and Al-Sudani centered on addressingservice-related concerns affecting citizens and organizing mutual commitmentsbetween the federal government and the Region, based on constitutionalprinciples and the Budget Law. Barzani also met with Iraq’s Chief Justice ofthe Federal Supreme Court, Jassim Mohammed, to discuss the court’s role inresolving outstanding matters, particularly salaries and financialentitlements. Both sides recognized the importance of cooperation between thejudiciary, and federal and Regional institutions to resolve tensions based onlegal principles, contributing to national stability and upholding the rule oflaw.

In a separate meeting, Barzani and Haider al-Abadi, leader of Iraq'sVictory Alliance (Al-Nasr), stressed the importance of strengthening “jointaction” between both governments. The Kurdish president also met with SpeakerAl-Mashhadani, discussing the need for “enhanced cooperation” between the KRGand Baghdad and emphasizing the Iraqi Parliament’s role in “promoting nationaldialogue” and ensuring equality for all Iraqi communities. Barzani urged theparliament to take a more active role in amending the 2025 Budget Law to“fairly allocate financial rights and entitlements to the Region,” particularlyin ensuring KRG employee salaries are paid on par with those of other Iraqis.

In discussions with Nouri Al-Maliki, leader of the State of LawCoalition (SLC), and Hadi Al-Ameri, Secretary-General of the Badr Organization,Barzani reiterated the need for “strengthening political dialogue” among Iraq'sfactions and enhancing coordination to ensure unity. They all agreed thatongoing collaboration would help resolve disputes while safeguarding theinterests of all components of the Iraqi population.

Barzani’s talks with Ammar Al-Hakim, leader of the National WisdomMovement (Al-Hikma), reinforced the need to adhere to the constitution as thefoundation for achieving justice for Iraq’s diverse communities. Likewise,discussions with Khamis al-Khanjar, leader of the Sovereignty Alliance, focusedon fostering national partnership and ensuring the protection of the rights ofall individuals in Iraq.

After his trip, Barzani took to X, reaffirming his commitment to“supporting a stable Iraq that guarantees justice and fulfills the state’sobligations to all its components.” He wrote, “We emphasize our determinationto strengthen relations between Erbil and Baghdad, in a way that serves thepublic interest and lays the foundation for a more prosperous and stablefuture.”

Strategically Timed Journey

Speaking to Shafaq News, Khairi Bozani, a senior advisor in theKurdistan Region presidency, described the visit as both symbolic andstrategically timed. “President Barzani’s visit holds substantial importance,coming at the start of a new year fraught with challenges, and placing complextopics on the table for discussion,” he said.

Bozani confirmed that the trip is more than a routine event in relationsbetween the two governments. “It symbolizes the intricate and often contentiousrelationship between the federal government and the Region, marked by diverginginterests and priorities.”

The timing of Barzani’s journey, according to Bozani, is critical givenregional and international developments. “These dynamics underscore theimportance of internal dialogue in Iraq, which faces mounting challenges in itsregional environment. Iraq is at a crossroads: either strengthen its internalfront through consensus among its components or remain fragmented, leaving itvulnerable to external pressures,” he said.

Asked if the visit hinges on moving beyond traditional politicalrhetoric and toward the tangible implementation of agreements, the Kurdishofficial explained, “KRI people are no longer interested in new politicalstatements. They demand concrete solutions that guarantee their basic rights,such as salary disbursement and improved services, and that is what thepresident is seeking to achieve” he said.

US Blatant Interference

On Wednesday, the US State Department urged the Iraqi Parliament toexpedite the approval of Iraq's federal budget.

When asked for comments on the recent disputes between Erbil and Baghdadover oil and budget issues, State Department spokesperson Matthew Miller said,“We have engaged the Government of Iraq and the Kurdistan Regional Governmentto reach a durable budget agreement that would facilitate sustained oilproduction in the Iraqi Kurdistan region. We have seen the review of the budgetamendment this week and urge its speedy adoption.”

In response, committee member Mukhtar Al-Mousawi told Shafaq News Agency,“The US State Department's statements are unacceptable. This blatantinterference in Iraq’s internal affairs, including the budget and other topics,cannot be ignored and must be formally rejected by the relevant governmentbodies, parliament, and political forces.”

Al-Mousawi further affirmed, "The financial and oil controversiesbetween Baghdad and Erbil are internal matters, and no external party shouldinterfere, as such involvement only exacerbates the disagreements,” adding,“Therefore, the US State Department must avoid meddling."

"Any attempt to exert media pressure or other forms of influencehas not, and will not, have an impact on Iraq's legislative institution,” hepointed out.

A More Realistic Budget for 2025

The 2025 Iraqi budget could take a more pragmatic approach, according toMoeen al-Kadhimi, a member of the Parliamentary Finance Committee. He toldShafaq News Agency that the committee recently hosted a Ministry of Financedelegation, including budget, accounting, and public debt representatives, toreview the 2024 general budget and discuss complaints from ministries andprovinces about “insufficient funding.”

Al-Kadhimi detailed that the 2024 budget was set at 211 trillion dinars(approximately $176B), but spending reached only 156 trillion dinars (about$120B). "Revenues did not exceed 137 trillion dinars, and the remainingamount was covered by loans.”

The lawmaker stressed that the 2025 budget must be more realistic,suggesting a cap of 150 trillion dinars. Following the anticipated vote on theBudget Law amendment in the Council of Representatives, he noted that thegovernment will factor in the costs of oil extraction and transportation in theKurdistan Region. "The cost varies between 6 and 16 dollars in theupcoming budget tables," he clarified.

Proposed Kurdistan Oil Company

In a bid to address ongoing debates over oil revenues, the ParliamentaryOil Committee convened to discuss amendments to the Budget Law, focusing on theRegion’s oil sector. Committee member Basim al-Gharibawi affirmed that “thecommittee reached a consensus that any amendments must align with both the lawand the Iraqi constitution.”

Committee members have reportedly proposed amendments to Article 12 ofthe Budget Law, which would be “written up as recommendations and presentedduring the second reading of the law.”

Among the proposals under consideration is the establishment of theKurdistan Region Oil General Company. "The company would be directlyaffiliated with the Ministry of Oil and tasked with overseeing oil extractionand export operations in the Region," al-Gharibawi said. “This move,” headded, “could play a key role in easing the tensions between Baghdad andErbil.”

Other Efforts from Both Sides

The KRG's negotiation committee held a meeting on Thursday withdiplomatic missions in Erbil to discuss ongoing disagreements with Baghdad.Approximately 20 missions attended the gathering, underscoring theinternational community's interest in the resolution of these obstacles.

A day later, the Finance Committee of the Iraqi Parliament announcedthat a newly formed subcommittee will begin its work next week to monitor thedistribution of Kurdistan’s financial entitlements for 2024-2025 and audit thedata provided by the Baghdad government, following objections raised by theKRG.

Committee member Mustafa Al-Karawi said, “The committee will hostofficials from relevant federal institutions and thoroughly audit the figuresas requested by the Region to ensure transparency and fairness,” adding, “Theprimary goal of this parliamentary initiative is to protect citizens frompolitical discord and ensure they receive their entitlements and salaries ontime.”

The subcommittee, chaired by Ahmed Mazhar Al-Jubouri, the first deputyhead of the Finance Committee, comprises six members: Uday Awad Kazem, NerminMarouf Ghafour, Mustafa Khalil Al-Karawi, Faisal Hassan Sukkar Al-Naili, JamalKocher, and Samir Mubarak Mirza (finance committee rapporteur).

Recently, the Finance Committee met with Finance Minister Taif Sami todiscuss proposed amendments to certain articles of the 2025 Budget Law,including deliberations related to oil, salaries, and the KRI's budget.Additionally, the Parliament has completed the review and second reading of thedraft law for the first amendment to the federal Budget Law.