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Baghdad and Erbil’s oil and budget dispute could be solved in “as little as two weeks” : MP

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Baghdad and Erbil’s oil and budget dispute could be solved in “as little as two weeks” : MP

6 hours ago
Demand for oil continues to fall due to the new coronavirus outbreak. Photo: Eric Gay/AP
Demand for oil continues to fall due to the new coronavirus outbreak. Photo: Eric ***/AP

ERBIL, Kurdistan Region — Now that the Iraqi parliament has set a deadline for the government to submit its 2020 draft budget, a Kurdish lawmaker in Baghdad is urging Prime Minister Masrour Barzani to visit the Iraqi capital to put an end to the long-running oil and budget dispute between the central government and Erbil.

Jamal Kochar, member of parliament for the Kurdistan Islamic Union (KIU) says the invitation is open for Barzani to visit Baghdad, and believes the long-standing issues could be solved in "as little as two weeks," he said in an interview on Rudaw TV on Wednesday.

"The Iraqi government has called on the prime minister of the Kurdistan Region and some of its ministers to visit Baghdad for [budget and oil] talks," said Kochar, who is also a member of the parliamentary finance committee. He did not clarify when the invitation has been made.

"The only reason there is not an agreement yet is because [Barzani] is not visiting Baghdad," Kochar added.

Iraq and the KRG have held several rounds of talks to negotiate a solution to the oil dispute, with delegations visiting each other in Erbil and Baghdad over the last several months, but the two sides are yet to come to an agreement.

Kochar said that Barzani’s visit is crucial to sealing a deal because the general view in Baghdad is that Erbil "has a massive amount of income, large quantities of oil – and yet hasn’t paid its employees and wants civil servants to be paid from Basra's [oil] money."

Prime Minister Barzani signaled the KRG is amenable to reaching a durable agreement with Baghdad after the confirmation of Mustafa al-Kadhimi to the long-vacant premiership. “We now have a common understanding with the new cabinet in Baghdad [...] on the KRG employees’ salaries,” Barzani said and Kadhimi began his term as PM. 

The Kurdish MP believes that Barzani can convince Baghdad by handing over its oil portfolio and allowing Baghdad's finance authorities to audit the Kurdistan Region's production and revenues from border crossings, and airports, putting disputes over how much income it generates to rest.

Jotiar Adil, spokesperson for the KRG, told reporters on Wednesday that the Kurdistan government is preparing to submit a data-based proposal to Baghdad for the region’s share in Iraq’s 2020 budget.

“Whenever this data is ready, the KRG will submit it to Baghdad so that the Kurdistan Region’s share of the budget is specified, as per its constitutional entitlement,” said Adil. 

Erbil-Baghdad oil agreement 

Iraq’s 2019 budget law stipulates that the Kurdistan Region is entitled to a 12.67% share of the budget in exchange for turning over 250,000 barrels per day from its oil production to Iraq’s State Organization for the Marketing of Oil (SOMO).

However, KRG has not sent any oil to SOMO, prompting Baghdad to suspend the federal government’s budget payments to the KRG, delaying the salaries of thousands of public employees. 

With the premiership in Baghdad sitting vacant for months, efforts to reach a deal stalled. But when Kadhimi was finally confirmed in early May, his government signaled it would begin sending the KRG’s budget share starting from April, with the caveat that future payments could be withheld again if the both parties do not reach a permanent deal.

Kochar criticized Erbil for failing to keep its 2019 agreements, and urged the KRG to agree to turn over its oil exports to SOMO, suggesting that the KRG could turn a higher profit than it earns by marketing its oil alone.

“I can only emphasize that a long-term sustainable approach is urgently needed,” United Nations Assistance Mission to Iraq (UNAMI) chief Jeanine Hennis-Plasschaert told the United Nations Security Council in mid-May. “It takes two to tango,” she added, urging both sides to makes concessions and compromise. 

"It is better if the KRG handed over the sale of its oil to SOMO because the company sells oil for six dollars more compared to Erbil," Kochar claimed. 

"If Erbil committed to its agreements with Baghdad, the problem of the Region's civil servant salaries would be solved," he added.

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