As a result of the financial and political crisis, the delay in paying employees' salaries, and the Kurdish blocs' refusal to vote on the borrowing law that was approved by the Iraqi Council of Representatives (COR) in November 2020, thousands of demonstrators took to the streets of the Kurdistan region in the first week of December 2020. The protesters burned party headquarters in Sulaymaniyah and blocked roads with burning tyres, while the security services carried out crackdowns and arrests and used live ammunition to disperse the protesters, which led to deaths and injuries among the protesters.
While most of the demonstrations were confined to the provinces of Sulaymaniyah and Halabja, which are under the control of the Patriotic Union of Kurdistan (PUK), they indicate the exacerbating danger that may be caused by the economic crisis throughout the region, especially as it comes at a time when the Kurdish Region is about to split, given that the differences between Baghdad and Erbil have reached their climax. Therefore, the Region quickly sent a delegation headed by Qubad Talabani, Deputy Prime Minister of the Region and a leader of the PUK, to Baghdad to reach a solution to the budget and salary issues.
The reasons for the protests
The protests began on 5 December 2020 and lasted nearly a week in the governorates of Sulaymaniyah and Halabja, which are controlled by the PUK led by Lahore Genki and Pavel Talabani, with hundreds of employees leaving in protest against the continuing deductions in salaries and the delay in their disbursement. The protests expanded in the following days and witnessed the burning of headquarters of the Kurdish parties, including both the parties participating in the government, such as the Kurdistan Democratic Party (KDP, PDK), the PUK and the Gorran Movement (Movement for Change), and those outside it, such as the Kurdistan Islamic Group (KIG) and the Kurdistan Islamic Union (KIU). In addition to the security crackdown on those demonstrations, the authorities imposed curfews and travel bans, and the Internet service was cut off. According to statistics by the Sulaymaniyah-based Metro Center for Defending the Rights of Journalists, clashes with the Kurdish security forces have resulted in 10 deaths, more than 120 injuries, and the arrest of more than 100 protesters.
The Region’s employees received two salaries only in the last six months, with nearly a fifth of the two salaries being deducted as well. The local government in the Region had approved the deduction of 20 percent of employee salaries, which are usually paid every 40 or 45 days, after they were monthly before the economic crisis that is witnessed by the country in general due to the decline in oil prices and the closure caused by the coronavirus epidemic in the first quarter of 2020, in addition to the faltering agreement between Baghdad and Erbil, which was approved before the end of 2018 and provides for the payment of salaries of the Region's employees by the central government in exchange for Erbil's pledge to deliver 250 thousand barrels per day of the Region’s oil to the State Organization for the Marketing of Oil (SOMO). The reason is the large debts owed by the Kurdish government to international oil companies that left the Region in conjunction with the control of Daesh (ISIS) over the areas near Kurdistan, the decline in oil prices, and Baghdad’s challenge of the contracts concluded by the Region without the consent of the federal authorities.
All those reasons, among others, have made the Kurdish citizen in Sulaymaniyah, who lives on an acceptable margin of freedom in comparison to the tightened security imposed by the KDP led by Masoud Barzani in the governorates of Erbil and Dohuk, rise against the "corruption" of political parties whose leaders are in a good financial condition and are not affected by the successive economic crises, even as the working classes have been suffering from a difficult economic situation for years, and some political parties in Sulaymaniyah, such as the New Generation Movement (NGM) and figures from the PUK and the Gorran Movement, accuse the KDP that controls the Kurdistan Regional Government (KRG) of thwarting the negotiations with Baghdad and monopolising decisions related to oil, which exacerbated the crises in the Region.
Faced with these events, the head of the KRG Masrour Barzani issued a statement in which he indicated that "the difficult conditions in the Region are beyond his government’s will and desire", warning of attempts by "some" to use the people's livelihood for their own benefit, and warning that his government is continuing negotiations with Baghdad "to obtain the Region’s rights and financial receivables". The President of the Republic Barham Salih, a PUK leader, also issued a statement urging for respect for the right to peaceful protest, and expressed his concern about the violence that has claimed the lives of a number of citizens and members of the security forces, and the need to seek to reach "radical solutions to the problem of salaries".
Return to Baghdad
In an attempt to resolve the crisis, the parties taking part in the KRG, namely the PUK, KDP and Gorran, decided to send a negotiating delegation headed by Qubad Talabani, the Region’s Deputy Prime Minister and a PUK leader, to the Iraqi capital to initiate negotiations with the central government about the fiscal budget for 2021 and the Region's receivables.
These negotiations come after the COR approved, on 12 November 2020, the fiscal deficit law despite the withdrawal of the Kurdish blocs and their objection to the law’s conditions that determine the Region’s share of total actual spending on the condition that the Region fulfil its commitment to pay its dues from non-oil revenues and oil revenues in the quantities specified by SOMO exclusively; otherwise, Baghdad would not fund the Region’s expenditures.
So far, the Kurdish delegation headed by Talabani has not achieved final results in the negotiations with the Iraqi government and parliamentary blocs regarding the Region’s budget and the KRG’s involvement in the obligations of the borrowing law.
Qubad Talabani had said in a statement on 28 December 2020 that "the Kurdistan Regional Government shall fulfil its duties, whether in oil or non-oil revenues, as we have agreed with the federal government on the 2021 budget bill". The Member of Parliament (MP) for the Change Bloc Ali Hama Saleh revealed in a post on Facebook that “the Deputy Prime Minister of the KRG assured parliamentarians six times of the Region’s commitment to handing over 250 thousand barrels of oil to the federal government after the approval of the 2021 budget".
The KRG Deputy Prime Minister for Financial Affairs stated that the Region is ready to deliver to Baghdad the agreed oil quantity – which amounts to 250 thousand barrels – and half of the revenues of the border ports in exchange for handing over the salaries of employees and the accumulated receivables of the oil companies, provided that Baghdad bear the fees of transporting the oil through the Region’s oil pipelines to Turkey, which amounts to 350 thousand barrels from Kirkuk and the cities of the Region. He also added that Baghdad and the Region differ on the number of employees, given that Baghdad believes that the number of employees in the Region is 682 thousand, while the Region underlines that the number of employees amounts to one million and 252 thousand.
The Rapporteur of the Finance Committee in the Iraqi COR Ahmed al-Saffar announced that the federal government has reached a preliminary agreement with the KRG in the same form of the agreement that was concluded during the era of Adel Abdul Mahdi and the current government. The MP for the KDP Dana Jaza added that the Region's share of the 2021 budget will reach 12.67 percent.
However, the Kurdish MP Hoshyar Abdullah expressed his conviction of the failure of the negotiations between the Kurdish delegation and the Iraqi government. He said in televised statements, "there is no evidence so far of the existence of an agreement, and no money has been sent to Erbil, and the government side in Baghdad has not announced any progress in the negotiations. What are being circulated are only the statements of the Kurdish side". Abdullah linked the success of the task of the Kurdish delegation to the entry into force of the 2021 budget and the start of financing Erbil by the central government.
The Head of the KRG Masrour Barzani had met with the Kurdish negotiating delegation, indicating that his government would not waive its financial and constitutional rights and entitlements, and that the Region continues to wait for its receivables for the months from May to October 2020, and the payment of the Peshmerga salaries and entitlements.
Indeed, the Kadhimi government did not issue any official statement regarding the negotiations with the Kurdish side. There were simply statements by Iraqi MPs about the necessity that Erbil fulfil its obligations to pay the oil money and the rest of the federal dues to the public treasury. It seems that Talabani’s delegation needs the approval of the rest of the leaders in Erbil and the Kurdistan Parliament. Indeed, the government in Baghdad needs real guarantees to start financing the Region and pay the entitlements of its employees after all previous agreements had failed due to Erbil’s failure to pay what it owed to Baghdad. Thus, the Kurdish Parliament announced that it awaits discussing the results of the negotiations with Qubad Talabani, and perhaps a new round of negotiations to be held by the President of Kurdistan Region Nechirvan Barzani in January 2021.
Official positions in the capital
Iraqi Prime Minister Mustafa al-Kadhimi premises his dealings with the Region on a firm conviction, namely: any agreement that is unfair and inconsistent with the Constitution would impede the economic reform project that he proposed a few weeks ago under the name of the "White Paper". It would also cause political crises with the MPs of the oil provinces, especially Basra, who demand an oil and financial treatment similar to that offered to Erbil. Therefore, the conditions of his government are clear, namely the delivery of oil and revenues of border crossings in exchange for the settlement of the two issues of salaries and the Region’s share of the budget.
As for the rest of the political actors taking part in the government, they have tried to take positions that are compatible with their current and future alliances. For example, the Sunni blocs focused on the need for "dialogue between Baghdad and Erbil" and containing the crisis that is being experienced by the Region's residents because of the conviction of those blocs that siding with one or the other of the two sides would harm their intertwined interests with both sides. On the other hand, the hard-line Shiite blocs sought to exploit the Kurdish protests to put pressure on Erbil and make it subdue to Baghdad’s conditions by supporting the protests of the Kurdish demonstrators, given that those blocs are mainly accused of suppressing the Shiite protests in the country’s centre and south. This includes, for example, the tweet by the leader of the Asaib Ahl al-Haq (Leagues of the Righteous) militia Qais al-Khazali on Twitter, in which he said: “Similar to our position with regard to the demonstrations of our people in central and southern Iraq of support for the rightful demands and the peaceful demonstrations and rejection of arson and sabotage, so is our position with regard to the demonstrations of our people in the beloved Iraqi Kurdistan. We reiterate our previous proposal that the salaries of employees of the Kurdistan Region be repatriated and dispensed directly by the central government and kept away from political disputes and financial corruption".
The expected repercussions of the crisis in the Region
At the level of the Kurdistan Region, the continuation of the economic crisis in the Region and the protests, if they erupt again as a result of the failure of the negotiations with Baghdad, could be in the interests of the Sulaymaniyah parties, specifically the PUK which for months has been hinting at the possibility of seceding from Erbil and setting up its own independent administrative region because of the continuing disagreements over power-sharing, the failure to unify administrations since 2003 until today, and the monopoly by Barzani's party over the issues of negotiations with Baghdad and oil export to Turkey.
In this connection, Masoud Barzani may respond to the pressures of the PUK and agree to deliver the Region's oil to Baghdad, end the salary crisis, and possibly make other concessions at the administrative and political levels. However, if Erbil rejects Baghdad's conditions, the PUK may proceed to conclude a separate agreement with Baghdad on paying the salaries of the employees of the two governorates under PUK control.
While the issue of separation between Sulaymaniyah and Erbil is not an easy matter, the current crisis may be the beginning, especially that the last general elections in 2018 demonstrated that Barzani did not adhere to the political agreements concluded with the PUK when he wanted to obtain the Presidency of the Republic for his party, in addition to the Region’s Premiership and Presidency in Erbil. The party of the late Iraqi President Jalal Talabani [PUK] may actually plan to withdraw from the agreements with Erbil, secede from the Region, and prepare for the upcoming elections in accordance with the new "regional" election law.
On the other hand, Barzani's party [KDP] believes that dividing the Region is the goal of Iran, whom he accuses of being behind the recent protests. The KDP leading figure Muhammad Zangana believes that Tehran fears the increasing influence of the KDP in Sulaymaniyah, and wants control in the province to remain only with the PUK. As for the Kurdish opposition parties, such as the New Generation, they will seek to benefit from the popular demonstrations to prove the validity of the allegations and accusations of mismanagement and corruption it constantly makes against the governing parties. While they will demand more political change, they may be suppressed by the PUK in case the protests abate, after being accused of undermining internal security. Indeed, the security forces (Asayish) of the PUK stormed the NRT channel, which is owned by the New Generation leader Shaswar Abdul Wahid, due to its broadcast of the violent events that accompanied the demonstrations.
The popular protests in the cities of Iraqi Kurdistan have been expected. They constitute an extension of the protests that took place in the past few years, especially in 2015 and 2017, considering that they reflect the deteriorating economic reality in the Region and the difficult conditions suffered by the citizens of the Region due to the delay in the payment of salaries and the continuation of the policy of stubbornness practised by Erbil towards Baghdad, now bringing matters to the edge of the abyss.
It seems that the KRG faces two options: either to submit to the conditions of the central government, or face new popular protests that may expand to include areas controlled by Barzani's party in Erbil and Dohuk, and may exacerbate the differences between the two main parties in the Region, leading to its division.
EPC | 14 Jul 2021
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