Kur­dis­tan’s battle with Bagh­dad over oil rev­enues

The Kurdish Globe - - NEWS -

The Kurds' battle with the Is­lamic State has been more com­pli­cated by the halv­ing of global oil prices over the past year and a dis­pute with the cen­tral gov­ern­ment that has lead the Re­gion's rev­enues dry up.

Many in Kur­dis­tan have not been paid for months.

Com­man­der Fari­don Jwan­royi holds up his AK-47 ri­fle and fires off a few rounds, purely for my plea­sure.

"I wish there were the Is­lamic State ter­ror­ists here, I could fire at them!" he jokes.

I would have asked for a more dra­matic dis­play, but the Pesh­merga are a bit run­ning short of weaponry.

In fact they're a bit short on ammunition, too. And since De­cem­ber, they've even run out of money to pay their sol­diers.

"Some haven't been paid for three months," he con­fides, when we met in late March.

"It's hard. They have to pay for their rent, for the chil­dren's clothes. But still, we fight on. We have be­lief."

Weaker oil prices

But with the talk now of a com­bined Iraqi-Kur­dish op­er­a­tion to lib­er­ate Iraq's sec­ond city, Mo­sul, it is an open ques­tion whether be­lief alone can bring victory.

In­deed, a fi­nan­cial cri­sis has been brew­ing for sev­eral months.

The halv­ing of the global oil price - un­der­cut­ting Kur­dis­tan's main source of rev­enue - and the ef­fect of the war have both had a dele­te­ri­ous ef­fect, espe- cially af­ter fight­ing in Au­gust saw the black flags of Is­lamic State (IS) ap­pear just 19 miles (30km) from Er­bil.

"When IS is at the door, log­i­cally it's hard to con­vince for­eign in­vestors that Er­bil's safe and noth­ing's wrong," says Go­van Haji Akravi, chief ex­ec­u­tive of Fast­net, an in­ter­net sys­tems provider for for­eign com­pa­nies in the city.

"Al­most from one day to an­other, many of them packed up and left."

Dis­placed peo­ple

There's also been a ma­jor refugee cri­sis.

Some one-and-a-half mil­lion dis­placed peo­ple have ar­rived in Kur­dis­tan, flee­ing the fight­ing in Syria and north­ern Iraq. That's a 30% in­crease in the pop­u­la­tion of the re­gion, lead­ing to huge ex­tra stresses, I'm told, on lo­cal ser­vices like wa­ter and ed­u­ca­tion.

The refugees are mostly housed in im­pro­vised camps.

One of the more bizarre is the Ankawa Mall - a half-built shop­ping cen­tre on the out­skirts of Er­bil. Like many build­ing projects, it was aban­doned by its de­vel­oper as the cri­sis hit last year.

Now the raw con­crete shell is oc­cu­pied by some 4,000 Iraqi Chris­tians from the Mo­sul re­gion, sleep­ing in al­coves cre­ated for designer bou­tiques. A makeshift wick­er­work cru­ci­fix hangs over the en­trance.

One of the refugees, Issa, charges about 30 cents for a hair­cut and shave in his makeshift bar­ber's shop in the main atrium at the foot of two mas­sive es­ca­la­tors that are now derailed and dis­in­te­grat­ing.

"I'm cheaper than the Kur­dish bar­bers here," he tells me. "No one wants to look hairy like the guys from the Is­lamic State, so they come to me!" he laughs.

But the smile quickly fades.

Life in the shop­ping cen­tre is mis­er­able, he says: "It's like a camp for chick­ens." He dreams of es­cap­ing to Europe.

Dis­pute with Bagh­dad

Per­haps the big­gest eco­nomic chal­lenge for Kur­dis­tan stems from its trou­bled re­la­tions with the cen­tral gov­ern­ment.

For the last year, Bagh­dad has only fit­fully been pay­ing the re­gional gov­ern­ment in Er­bil its share of the na­tional bud­get.

Un­der the con­sti­tu­tion, Bagh­dad re­quires the Kur­dis­tan Re­gional Gov­ern­ment (KRG) to share its own oil pro­duc­tion with the rest of the coun­try. The Kurds should then be re­im­bursed with 17% of the to­tal na­tion­wide bud­get, which is cur­rently set at $105bn (£71bn).

Bagh­dad has ac­cused Er­bil of sell­ing oil il­le­gally, with­out its author­ity, and of fail­ing to meet pro­duc­tion quo­tas - al­le­ga­tions the Kurds deny.

"Bagh­dad knows very well we are sell­ing oil - we have to pay peo­ple's salaries," says Dr Ali Sindi, the KRG's Min­is­ter of Plan­ning.

"Mean­while five mil­lion Iraqi cit­i­zens have been cut off from their right­ful share of the na­tion's re­sources. This is a threat to the sta­bil­ity and the sus­tain­abil­ity of the re­gion," he says.

The anger in Kur­dis­tan is all the greater since Bagh­dad is con­tin­u­ing to pay salaries to gov­ern­ment work­ers living un­der the Is­lamic State.

Even some refugees - civil ser­vants dis­placed from Mo­sul - are, it is said, re­ceiv­ing their salaries from within the camps, whilst some of those car­ing for them haven't been paid since De­cem­ber.

In the last three weeks, Bagh­dad has an­nounced a break­through, say­ing it is re­new­ing bud­get pay­ments, although so far th­ese amount to less than half what is owed for just March alone.

Salaries for most work­ers, in­clud­ing sol­diers, re­main many months in ar­rears.

The Iraqi Prime Min­is­ter, Haider Al-Abadi, has been quoted as blam­ing de­lays on a wider eco­nomic cri­sis in Bagh­dad.

'We don't give up'

"If we don't reach a last­ing so­lu­tion, we will have to han­dle it through our own ex­port of oil," says Dr Sindi. Kur­dis­tan is this month said to be com­plet­ing a new pipe­line to its north­ern neigh­bour, Turkey.

But de­spite the threats, few in Er­bil be­lieve Kur­dis­tan has the po­lit­i­cal power to cut its own deals with the wider world.

In the mean­time, some state em­ploy­ees are get­ting des­per­ate. Civil ser­vant Na­jad Amin and his wife Iqbal say they ex­pect the last of their sav­ings to run out in the next month.

They've started grow­ing veg­eta­bles in their back gar­den, to help feed the fam­ily.

Do they blame the politi­cians in Bagh­dad or in Er­bil, I ask?

"They're all to blame," they say. "But we Kurds are used to depend­ing on our­selves. We will find a way. We don't give up, ab­so­lutely."

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