Relations between the central government in Baghdad and the Kurdish Regional Government (KRG) in Irbil are souring as Irbil awaits full payment for oil, according to a statement by the KRG. Unless Baghdad begins to make timely and full payments, the KRG has warned that it will find other solutions to the problem.
Irbil and Baghdad had reached an agreement in December 2014, whereby the Kurdish region can export 550,000 barrels of oil per day under the supervision of the national Iraqi State Organization for Marketing of Oil (SOMO, which is responsible for marketing Iraq's oil). In return, Baghdad is to allocate 17 percent of the national budget to the Kurdish region.
But when Irbil started exporting to different countries through Turkey, Baghdad failed to send the full amount of Irbil's share, citing obligations on its funds. According to Kurdish officials, Baghdad is supposed to send a monthly amount of $1 billion to Irbil. However, Irbil received only $500 million in three months totaling $1.5 billion. The Kurdish region is suffering from the non-payment, and the KRG is struggling to pay the salaries of peshmerga soldiers, police and civil servants. The KRG cabinet met on Tuesday to discuss the issue.
Barzani also said that the KRG could take a political decision and find another way to solve the economic need in the region, according to a statement on the KRG's official website on Wednesday. "The central government's problem is that it thinks that the region has no other option and deals with the region as it wants to, and this is wrong. The region has other options and we will make our decision. But we still seek to reach a solution with the Iraqi government, and we will visit Baghdad," Barzani said.
KRG Minister of Natural Resources Ashti Hawrami accused Baghdad of looking for excuses to escape payment and of not calculating the amount of oil supplied by the region correctly.
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