Marc Simms is an occasional blogger for Proelium Law LLP. Marc holds a MLitt in Terrorism Studies and a Masters in International Relations, both from St Andrews. His particular interests are in emerging international security issues, unconventional warfare and terrorism.
The ongoing dispute between the Iraqi government and the Kurdistan Regional Government looks set to continue well in 2018, as the Iraqi Prime Minister Haider al-Abadi unveiled the 2018 budget on January 2nd.
In the new budget, the allocation of funds to the KRG has been reduced from 17% to 12.6%, a move the PM has justified as being based on the population ratio for the region, but also appears to be another attempt to put financial pressure on Erbil in response to last year’s independence referendum.
Sanctions on KRG
Since the referendum, which the Iraqi government did not recognise as being legal, the Iraqi government has placed a number of sanctions on the KRG. On the 27th of December, the Iraqi government confirmed that it would extend the international flight bans to and from Erbil and Sulaimaniyah’s international airports through to the 28th of February (military, diplomatic, UN mission and diplomatic flights may still fly however, subject to approval).
The central government also placed sanctions on Kurdish banks, stopping the sale of US dollars to the major Kurdish banks and stopped all foreign currency transfers to the region. These sanctions compounded the ongoing funding crisis that KRG has faced since 2014, and led to riots in Halabja and Sulaimaniyah in December. The Iraqi government has offered to pay some civil servants and the Peshmerga, but it is currently auditing those salaries paid to the civil service, on the suspicion that there are a large number of ghost employees in the system.
Economic stranglehold and political instability
The IMF has stated that the 2018 Iraqi budget will not be sufficient to cover the needs of the KRG, and that the region will need an estimated extra $3 billion to meet those.
While the prospects of the Iraqi state appear to be improving, with both increased oil production in December and a steady increase in international oil prices, the primary problem here is the political one, and not so much the financial considerations, and is therefore very unlikely to improve, even if this favourable state of affairs continues.
To compound this issue, the Kurdistan Regional Government has lost control of the lucrative Kirkuk oil fields, which they seized in the aftermath of the ISIS expansion into northern Iraq in 2014, and were retaken by the Iraqi Army and PMU militias in October last year. Control of the pipeline and its profits played a key role in shoring up the KDP’s rule in Kurdistan, and allowed them to cultivate a strong political and economic relationship with Turkey.
Due to the protests, the PUK has already had to call upon vigilante groups to aid in restoring order, and Kurdish opposition Gorran party have already withdrawn from the KRG government in protest at how the protests were violently put down. Two other opposition parties also followed suit and quit alongside Gorran’s officials. The PUK also seized control of the offices of the NRT broadcaster, arresting the founder Shaswar Abdulwahid and another journalist.
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