Kurdistan Regional Government delegation to visit Baghdad
A delegation from the Kurdistan Regional Government (KRG) will today visit Baghdad to iron out a long-standing oil and budget dispute.
The meeting will attempt to reconcile the Iraqi parliament’s draft budget, the deadline for which will arrive at the end of June, and the KRG’s claim to financial entitlements. Iraq, which depends on the crude trade to cover roughly 95% of its expenses as OPEC’s second-largest exporter, has demanded that the KRG reduce its oil exports to 370,000 barrels per day to adhere to the OPEC+ agreement and combat the global pandemic-induced oil devaluation.
Upon its fulfilment of the supply reduction, the KRG, which has been struggling to pay its civil servants in the wake of COVID-19, will receive its share of the Iraqi federal budget. Control of regional oil revenues has long been a source of tension between Baghdad and Erbil; the latter has operated as an independent exporter via Turkish pipelines since 2006.
A failure to resolve the dispute could spark a diplomatic regression reminiscent of Iraq’s 2014 suspension of the KRG’s budgetary allocation, which left thousands of Kurdish public sector employees with unpaid salaries. However, the economic ramifications of COVID-19 have raised the stakes and spurred collaborative plans to supply regional electricity shortfalls with KRG gas fields. A resolution will likely see the KRG receive its allotted 12.67% of Iraq’s 2020 budget, while disagreement could significantly constrain economic recovery in the long-term, given the lengthy projected timeline for an oil rebound.
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