The Iraqi prime minister Haider Al Abadi defended a proposal to cut Iraqi Kurdistan's share in next year’s budget from 17 per cent to less than 13 per cent in the latest tensions between the central and regional government.
The deteriorating relationship between Baghdad and Erbil, capital of Iraqi Kurdistan, took a new turn when the Iraqi Kurdish region decided to hold an independence referendum in September.
The vote was deemed illegal and unconstitutional by Baghdad, which launched a military operation to recapture the disputed of Kirkuk and the surrounding oil fields.
PM @HaiderAlAbadi: The previous 17% share from the federal budget allocated to Kurdistan region is not written in law and is unjust
— Government of Iraq - الحكومة العراقية (@IraqiGovt) November 7, 2017
Mr Al Abadi said the proposed budget cut to 12.6 per cent was not a punishment to the Kurds for their independence vote, but rather that Erbil's demands to receive its 17 per cent of the 2018 budget are "unjust".
He maintained that Erbil should receive a percentage of the budget that reflects its population compared to the rest of Iraq.
Mr Al Abadi said his government is considering the region's population data, the real needs of all Iraq's regions and the poverty level nationwide before announcing the new 2018 budget shares.
The proposal is still under discussion in the cabinet, it must be endorsed and sent to parliament for final approval. If approved by the Iraqi parliament, the budget will further damage the relationship between Baghdad and Erbil.
Mr Al Abadi also confirmed that "Baghdad is prepared to pay the salaries of the state employees in the Kurdistan region after it takes control of the region’s oil export, and conducts an audit of the number of employees."
"The number of employees of the region and Peshmerga is under scrutiny by the government agencies, and most of them are not reliable," Mr Al Abadi said at his weekly press briefing.
PM @HaiderAlAbadi: We are assessing the number of state employees in Kurdistan region so we can pay their salaries
— Government of Iraq - الحكومة العراقية (@IraqiGovt) November 7, 2017
Erbil announced this week that it has approximately 1.2 million people on its payroll, including 455,000 public servants and 266,000 Kurdish forces, which will cost Baghdad approximately US$771 million (Dh2.83 billion) a month.
According to the KRG, Baghdad's budget draft includes measures which would have the central government finance only 682,021 public servants.
Baghdad's responded to the Kurdistan's Regional Government's (KRG) independence vote by stripping the Kurds of the oil-fields vital to their budget.
In response, Erbil has demanded the Iraqi government to dismiss the budget proposal presented by Baghdad’s finance ministry.
A statement by the KRG said that "this violates Article 117 of the Iraqi constitution that recognised the Kurdistan region as a federal region with its own government, parliament and judiciary."
The KRG said that "ratifying the budget would harm high interests of the Kurdistan region, partnership basis, and coexistence in Iraq.”
The Kurdistan region’s allocation of the federal budget was cut off three years ago following disputes with Baghdad over independent oil exports and sales.
On Monday, the prime minister of the Kurdistan region, Nechirvan Barzani, said the KRG was ready to hand over the region’s oil and other sources of revenues to Baghdad if the federal government of Iraq agreed to give the full 17 per cent of the budget to Erbil.
"We are ready to handover oil, airports, and all border revenues to Baghdad if the federal government of Iraq sends the salaries of KRG employees, the Kurdistan region’s 17 per cent constitutional budget share, and other financial dues," Mr Barzani said.
Mr Barzani stressed that Baghdad had violated the Iraqi constitution by drafting a budget that does not recognise Kurdish entitlements.
Meanwhile, Masoud Barzani, who stepped down last week as president of Iraqi Kurdistan after the referendum crisis, said in an interview with NPR radio that he has "no regrets" for holding the independence referendum. He said that the consequences his region has suffered were worth it to make clear that Kurds want independence.
"I am very proud of the result. I am very proud that we have given the opportunity for the Kurdish people to express their vote and I do not regret it," Mr Barzani said.
In efforts to resolve the crisis, Kurdish authorities offered to put their independence push on hold in order to start dialogue with Baghdad, last month.
In response, Mr Al Abadi said that "Iraq's central government will accept only the cancelling of the referendum and following the constitution."
More than 90 per cent of Kurds voted in favor of independence from Iraq in September's nonbinding referendum, which Kurdish leaders had billed as an opening bid in negotiations with Baghdad over expanded autonomy.
