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New budget law changes threaten Baghdad-Erbil oil deal

Last-minute additions to the budget bill could undermine a new framework for oil and financial cooperation needed to restart northern exports and support Kurdistan’s oil sector.
Iraqi Prime Minister Mohammed Shia al-Sudani (standing, center right) and KRG Prime Minister Masrour Barzani (standing, center left) oversee a ceremony in Baghdad on April 4, 2023, to sign a temporary deal for restarting northern oil exports. (Photo credit: Prime Minister's Office)

SULAIMANIYA - The Parliament Finance Committee has introduced changes to the draft 2023 national budget law that could undermine oil and financial cooperation between Baghdad and Erbil and jeopardize the future of Iraqi Kurdistan’s oil sector.

The new language, which was drafted by a small group of Shia Islamist MPs and provisionally adopted by the Finance Committee on Thursday, would prohibit the Kurdistan Regional Government (KRG) from operating oil fields along its disputed southern border that account for much of its production and would impose restrictions on federal financial transfers.

"The changes made by some members of the Finance Committee... are unconstitutional and against the agreement between the KRG and the federal government," the KRG said in a statement Friday. "We as the Kurdistan Regional Government will not accept this oppression and violation of the rights of the Kurdish people."

The committee is set to meet again on Saturday and could still modify or remove the controversial changes before the law is sent to the full Parliament for a vote, according to multiple MPs.

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