Iraqi Kurds agree in principle with central government on the division of oil revenues

(November 26, 2019)According to officials said to be familiar with the situation a delegation from the Kurdish autonomous region met with Iraqi officials in the capital Baghdad. There was an agreement in principle on oil revenue sharing involving Oil and Finance Ministers.

Oil revenue a large portion of Kurdish area budget

The vast majority of revenue in the autonomous area comes from oil revenue. Although in the past the Kurds have tried to sell some oil on their own under present arrangements they are not allowed to do so. The central government considers independent oil exports unconstitutional.

A recent article reports on the deal: "The decision was made in a meeting chaired by Finance Minister Fuad Hussein, attended by Oil Minister Thamir Ghadhban and a visiting delegation from the Kurdish region. The officials say the deal, which has been in the works for months, will be the main pillar of a broader agreement to address longstanding political issues such as revenue-sharing, territorial disputes and military cooperation."

The deal

The deal will see the autonomous Kurdish region produce 250,000 barrels of oil each day an increase from current levels. In return the central government would provide the Kurds a larger share of the national budget.

Kurds look favorably on the present government

There is a long history of friction between the Kurds and the central government on sharing oil revenues.

A recent article sums up the situation: "The Kurds’ independent oil policy has been a source of friction with the federal government for over a decade. The central government says independent oil exports are unconstitutional and has cut the annual budget allocation for the region as punishment.But relations have improved under Abdul-Mahdi, who assumed office last year. For the first time ever, the 2019 budget provided the Kurds with funds to pay civil servants even without oil transfers."

Ironically, as there are huge protests against corruption and other issues against the government of PM Abdul-Mahdi, the Kurds regard him as an ally. They may be anxious to ensure that new oil-sharing legislation is passed while the present PM is still in power.

Previously published in the Digital Journal