Baghdad’s impasse over the 2014 budget has taken centre stage before parliamentary elections set for April 30. Nouri Al Maliki, Iraq’s prime minister, has framed the debate in fiscal terms, as a need to fund salaries and projects. In the short term, at least, this should not be a real danger – with only two-thirds of 2013 project money spent, the state should not grind to a halt soon.
The problem, instead, is a political one, as Mr Maliki has chosen to use the budget as a wedge against his Shia rivals in a way that is exacerbating the country’s two major challenges: the conflict over oil between Baghdad and the Kurdistan region, and the security conflict focused in the Sunni-majority provinces. The tactic is working politically, as the prime minister’s key Shia rivals, the Sadrists and the Islamic Supreme Council of Iraq (ISCI), have fallen in line.
Between the Shia Islamists and centralist Sunni parliamentarians aligned with Saleh Al Mutlaq, the deputy prime minister, a nominal majority exists. The budget passed its first of three necessary readings on March 16, and as long as it is on the schedule, it should pass soon.
Getting the budget on the schedule is the crux of the crisis, and herein lies Mr Maliki’s hopes in strangling his rivals over their own alliances. Speaker Osama Al Nujayfi, who is the head of the largest Sunni Arab bloc, the Mutahidun, has worked with deputy speaker Arif Tayfur, a Kurd, to keep the budget off the schedule.
While the Mutahidun and the Kurds have common agendas, namely promoting decentralisation and undermining Mr Maliki, their voter bases have different and, at times, adversarial interests.
The Baghdad-Kurd conflict relates to efforts by the Kurdistan Regional Government (KRG) to maintain autonomy, especially in regard to energy sector contracting and revenue.
Then last year, Mr Maliki and his centralist ally, Hussein Al Shahristani, deputy prime minister for energy affairs, produced a budget allowing Baghdad to cut off the KRG’s payments for exporting oil outside of Baghdad’s control. The Kurds boycotted the vote, and Mr Maliki, with unified Shia support and Mr Mutlaq’s backing, passed it anyway.
This dispute came to a head in January when Baghdad took two steps.
Firstly, on January 15, the cabinet passed a budget that retained last year’s offending passages but upped the ante by assuming a higher export target for the KRG than anyone considers realistic (400,000 barrels per day) and explicitly stated that profits for oil companies working in the KRG had to come out of the region’s 17 per cent allocation.
Secondly, at about the same time, Baghdad cut off budget payments in retaliation for the KRG’s commencement of oil exports through Turkey the previous month.
It helps that Mr Maliki now has control of the financial levers. Former finance minister Rafia Al Issawi was forced out early last year, and the planning minister Ali Al Shukri held the post in an acting capacity until December 16, when Mr Maliki appointed Safa Al Din Al Safi as acting finance minister. Mr Safi belongs to Mr Shahristani’s faction within Mr Maliki’s coalition.
For January and February, Baghdad has paid just short of half of the approximately $1 billion it owes the KRG each month.
Yet even this partial cut-off has been enough to cause a profound economic crisis in the region, as the KRG’s economic model has been based upon expansion of the public sector to ensure political loyalty to the dominant parties. Just in the last few days, the KRG has offered to begin exporting modest amounts of oil through the federal system.
The Kurds alone cannot block the budget, and would have no leverage were it not for their alliance with Mr Nujayfi’s Mutahidun.
Mr Nujayfi cannot, however, openly block the budget to help the Kurds, so the Mutahidun’s boycott has been tied to Mr Maliki’s security policies in Anbar, over which there is much Sunni Arab anger.
Following Mr Maliki’s raid on an Anbar protest site in December, Mr Nujayfi’s 44 Sunni MPs threatened to resign. Their initial demands were sweeping, including a cessation of military actions in Anbar’s population centres.
Over the past three months Mr Maliki’s Anbar operations have groped around inconclusively, but his control of state media and sympathy for the army in all other major Shia outlets has allowed him to craft a narrative framing himself as leading a war against Sunni insurgents.
Perhaps sensing that appearing antagonistic to the military would weigh down the anti-Maliki coalition as a whole – which informally includes the ISCI and the Sadrists – Mr Nujayfi has dropped the end of operations as a condition.
Mr Nujayfi’s most recent concession was to schedule a session of parliament to question senior officials from the health, commerce and refugees ministries about the humanitarian situation in Anbar, promising to end Mutahidun’s boycott if it was productive.
This was much less confrontational than trying to question security officials, whom Mr Maliki has shielded from oversight. Nonetheless, Mr Maliki’s bloc boycotted the March 19 session, saying they would not attend any session not focused on the budget.
This makes Mr Maliki’s intent crystal clear – it makes no practical difference whether the budget is passed this week or next, but the closer they get to the election, the more damage this will do to any Shia party appearing to be even implicitly allied with Mr Nujayfi.
And that, in turn, increases the likelihood of a third term for Mr Maliki.
Kirk H Sowell is a political risk analyst and the publisher of Inside Iraqi Politics
On Twitter: @uticensisrisk
