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Below is the clause that seems to be causing the dispute
Given the numerous alterations in sequence and deletions of clauses that have been transpiring in the past few hours, it's challenging to ascertain with certainty.
Clause 7
Should differences arise between the federal government and the Regional Government regarding the rights, obligations, and mechanisms stipulated in this law, a joint committee will be established to address these unresolved matters. This committee is obligated to present its recommendations within a 30-day period from its formation date to the President of the Federal Council of Ministers, who will then make an informed decision.
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KDP MP: Disputes are over Clause 7 of Article 14
KDP MP Sipan Sherwani tells Rudaw TV that the disputes are centered around Clause 7 of Article 14. Certain Shia factions are seeking to modify this clause so that Baghdad is compelled to suspend disbursements of Kurdistan's budget entitlements should disputes arise over Kurdistan's implementation of other articles in the budget bill.
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9. June 2023 23:14
Here is text of the approved clauses of Article 13:
Clause 1
The financial entitlements between the Iraqi Federal Government and the Kurdistan Regional Government for the period 2004 to 2022 will be settled following an audit conducted by the Iraqi Financial Auditing Bureau. This will be done in coordination with the Kurdistan Region's Financial Auditing Bureau, with consideration given to the rights and obligations of the federal budget law in question.
Clause 2.a
The Kurdistan Regional Government (KRG) will coordinate with the Iraqi Ministry of Oil to ship a minimum of 400,000 barrels of crude oil produced in the Kurdistan fields to the State Organization for Marketing of Oil (SOMO) warehouses located at the Turkish port of Ceyhan. SOMO will handle the export of this oil in coordination with the Ministry of Natural Resources, using the same mechanisms as the company.
Clause 2.b
In case the oil from the Kurdistan Region is not exported through the Port of Ceyhan or any other official port designated by the Ministry of Oil, the Kurdistan Regional Government is obliged to provide the equivalent amount of oil to the Iraqi Ministry of Oil for domestic consumption. The quantity will be determined according to the needs outlined by the Ministry.
Clause 2.c
The Iraqi Ministry of Finance is tasked with compensating the cost of production and transportation for the amount of oil produced in the Kurdistan Region and received by the Ministry of Oil. This is under the condition that the cost of production and transportation is on par with the average cost of production and transportation incurred by the Iraqi Ministry of Oil.
Clause 2.d
The KRG must transfer all non-oil revenues to the State Treasury in compliance with the Financial Management Law.
Clause 2.e
The debts held by the Kurdistan Regional Government with the Iraqi Trade Bank, as well as those with other government and private banks, must be settled. Starting from the fiscal year 2023 and continuing for a period of seven years, the Ministry of Finance will arrange for monthly deductions from the region's share to accomplish this.
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Vote on Article 14 'set aside'
The vote on Article 14 has been 'set aside for later', according to reports from within parliament.
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Tensions flare up among Iraqi MPs as they review Article 14, which relates to the Kurdistan Region's financial obligations.
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Lawk Ghafuri claims the version passed tonight is closer to the original government draft sent to parliament than the amendment passed by the finance committee.
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Amendments to Articles 13 and 14 caused a political firestorm last month as the main Kurdish political parties took their domestic squabbles to Baghdad.
Here’s our coverage of the changes at the time. These articles have since been through more revisions, including throughout today, as political leaders thrashed out compromises in the crunch moments leading up to the much-delayed vote.
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Yerevan Saeed isn’t impressed with the antics of Kurdish MPs in Baghdad
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BREAKING: Article 13 passes
Article 13, concerning Kurdistan oil revenues, passes the floor vote.
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As one MP put it: “We’re now passing through the eye of the storm.”
Iraqi MPs are now debating some of the most contentious parts of the budget bill concerning the Kurdistan Region: Articles 13 and 14.
Do not leave our live blog as a we bring you the latest updates and insights.
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BREAKING: Article 12 passes
Article 12 is approved which means that KRG will get 12.67 of the Iraqi budget
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Article 12 also approved
The first part of that article states: "First: The share of the Kurdistan Region in the total actual expenditures, as shown in Table D (Sovereign Expenditures) attached to this, will be determined by this law and disbursed by the Federal Ministry of Finance, subject to the approval of the Federal Prime Minister."
This article is about the Kurdistan Region share of the Iraqi budget and is not expected to be contested.
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Political games over public sector salary debts
The contentious issue of reinstating cut salaries in the Kurdistan Region appears to be predominantly about the political leverage and clout it could provide to the party that successfully pushes it through, particularly considering the forthcoming elections.
If the measure is enacted, both the NGM and PUK are poised to claim this achievement, which could notably threaten the KDP by possibly tilting voter sentiment away from them.
The KDP professes its support for the reversal of the salary cuts but indicates its intention to obtain the necessary funding from Baghdad. This approach could be perceived as a strategic ploy to meet budgetary obligations while also winning political favor.
However, such a feat seems unlikely. Getting the Iraqi federal government to pay for salaries owed by the KRG over the last decade is a tall order. For starters, the KRG insisted on its independent energy policy all that time, forgoing federal budget entitlements in order to continue selling its oil independently from Baghdad. The clause, if carried, would have compelled the KRG to pay employees back from its own share of the budget.
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Breaking: Article II passes
Parliament has unanimously passed the text of Article II of the budget following modifications. We now approach the vote on Articles 13 and 14, which have been at the heart of significant controversy over the past few weeks.
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Foreign Minister: All-nighter expected for MPs
Latest figures have 259 members in attendance in the chamber. The Iraqi Foreign Minister Fuad Hussein (KDP) tells Kurdistan 24 that he expects MPs to pull an all-nighter.
Who needs sleep, anyway.
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New Generation MPs in chamber for vote
Despite earlier media briefings by MPs from the Kurdish opposition New Generation Movement, it appears they’re not boycotting the session and are present on the floor as voting continues in parliament.
We’ll bring you updates as they come.
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Voting (re)commences. Again (again).
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According to NRT Kurdish correspondent Gorran Fatah, New Generation MPs plan on boycotting the vote and "taking the fight to the Federal Supreme Court."
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The excised clause 12
The Kurdistan Regional Government is required to pay an extra amount, no less than 10% of each employee’s salary, in addition to their full salary. This payment is designed as compensation for the mandatory savings deducted in prior years. This additional percentage will persist until the total deducted amount has been completely repaid.
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This is a blow for New Generation and a win for the KDP, which had opposed the amendment as "political gamesmanship".
New Generation Movement MPs in Baghdad have been lobbying for the repayment of cut salaries for years.
In recent weeks, it appeared their efforts were close to bearing fruit.
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BREAKING – Amendment requiring repayment of slashed salaries for KRG public sector workers removed from budget bill
Per various sources and MPs, the provision demanding the KRG to reimburse salaries reduced during the financial crisis commencing in 2014 has been omitted from the bill prior to its presentation for a floor vote.
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In an unexpected (read: very expected) turn of events, Fuad Hussein announced to reporters, "we are still in discussion."
That five is looking awfully presumptuous right now.
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Clause 1 of Article 14 in the finance committee's amendment has been a subject of disagreement. This clause, which initially appeared to concern the KRG officials, stipulates that the regional Prime Minister needs approval from the federal finance minister to distribute funds from oil revenues. The KDP, however, proposed that this authorization should instead be given by the Iraqi Prime Minister, specifically for the bank account holding the oil revenues. The latest updates suggest that the amended text now includes both the Iraqi Prime Minister and the federal finance minister.
The amendment read:
1. The Federal Oil Ministry will deposit all revenues from oil produced from the Kurdistan Region’s fields into a single bank account opened by the Iraqi Central Bank, accumulating all revenues resulting from the export or sale of crude oil and its derivatives without any deductions for any purpose. The federal Finance Ministry will authorize the Prime Minister of the Region, or his designated representative, to disburse funds from this account. The said account is subject to oversight by the Federal Financial Auditing Bureau by a committee of specialists belonging to the Federal Financial Auditing Bureau and the federal government, and all similar accounts must be closed.
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Another delay as MPs "take five"
The commencement of the sitting has been delayed once again. Reports suggest that the political factions are taking a final "five-minute break" before the decisive vote.
The potential stumbling block is that the contentious Articles 13 and 14, which concern the share of the Kurdistan Region, are approaching as the MPs progress through articles starting the eighth (articles 1-7 were cleared yesterday).
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In an odd bit of political theater, KDP MPs entered the chamber for the sitting, ostensibly to participate in the latest votes on the budget articles.
Sipan Sherwani, a KDP MP, was outside the lobby speaking to Rudaw TV. He wasn't able to provide a definitive answer either way on whether the KDP would take part in the vote or boycott.
However, Foreign Minister Fuad Hussein then entered the chamber and ushered all of the KDP MPs back out for an internal party meeting. This is presumably a whipping operation for MPs who may be confused about which way to vote (or not vote) on upcoming amendments or article.
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The Iraqi parliament has resumed voting on the budget.
The House of Representatives has commenced its sitting to finalize the vote on articles of the proposed federal budget law, with 180 deputies present.
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Talks between Iraqi FM and his US counterpart
US Secretary of State Antony Blinken and Iraq's Foreign Minister Fuad Hussein have engaged in discussions to strategize a resolution to Baghdad's lingering debt to Tehran, accrued from natural gas imports.
In November 2022, to constrain the flow of dollars to Iran, Washington ceased money transfers to 14 Iraqi banks. In a meeting that took place on the sidelines of the ministerial gathering of the Global Coalition to Defeat the Islamic State in Riyadh, Hussein stressed the need to "address this issue, given its direct impact on Iraq's electricity sector."
Due to Baghdad's default on debts, Iran recently curtailed its natural gas and electricity exports to Iraq, leading to a significant drop in Baghdad's power generation capacity.
The following is a statement from the Foreign Ministry:
On Thursday, 8/6/2023, Deputy Prime Minister and Minister of Foreign Affairs Fuad Hussein met with US Secretary of State, Antony Blinken, on the sidelines of the ministerial meeting of the International Coalition Against Daesh, convened in Riyadh.
Various aspects of bilateral relations between Baghdad and Washington were discussed during the meeting, with emphasis on potential avenues for cooperation in diverse fields. The Minister underlined the importance of ongoing joint work and cooperation within the 'strategic framework agreement for the relationship of friendship and cooperation between the Republic of Iraq and the United States of America'. He also praised the US's efforts as the leader of the international coalition in the fight against the terrorist organization Daesh.
The dialogue touched upon a spectrum of bilateral, regional, and global issues, with discussions around Iraq's efforts to bolster its economy and strive for energy independence.
The two ministers also addressed numerous regional and international matters of mutual concern, underscoring the need to work towards reducing tensions, achieving regional calm, and avoiding escalations that serve no one's interests.
The conversation also included discussions on Iran's financial dues owed by Iraq due to the purchase of gas and electricity from the Islamic Republic of Iran. The ministers deliberated over how to navigate US measures against international banks, including Iraqi banks, which are part of the US sanction policy on Iran. The Deputy Prime Minister emphasized the need to find a resolution to this issue as it directly impacts Iraq's electricity sector. From this standpoint, he expressed his gratitude to the US for enabling the resolution of financial payments to Iranian pilgrims and Iranian funds in Iraqi banks.
US Secretary of State Antony Blinken affirmed that the US is committed to supporting Iraq's stability and democratic process, advocating for political stability, communication, and joint action between the federal government and the Kurdistan Regional Government. This commitment is aimed at enhancing Iraq's standing and strength in the region, with hopes of reaching understandings to solve outstanding problems between the two parties, especially in the oil and financial sectors.
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Bell rings (again) for MPs to return to chamber
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No breakthroughs at meeting earlier today
At present, there have been no reported breakthroughs from the meeting organized by the Coordination Framework in parliament.
This gathering included prominent figures such as:
- Parliament Speaker Mohamed Al-Halbousi
- Al-Fateh Alliance President Hadi Al-Amiri
- Foreign Minister Fuad Hussein
- KDP faction leader Vian Sabri
- PUK faction leader Harem Kamal Agha
- Minister of Justice Khalid Shawani (PUK)
- Second Deputy Speaker of Parliament Shakhawan Abdullah (KDP)
The meeting was convened in the office of the Badr parliamentary bloc.
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KRG spokesperson Jotiar Adil also chimes in
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Shwan Mohammed, the KDP's rapporteur in the Iraqi Parliament, informs Rudaw TV that all other Kurdish factions, including New Generation, oppose the contentious amendment in the budget bill. This amendment would allow provinces to receive direct funding from Baghdad in instances of fiscal disputes with the KRG.
The PUK continues to firmly support this clause, having long argued that the KDP-led KRG discriminates against the PUK-controlled provinces of Sulaymaniyah and Halabja.
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And Deputy Speaker of Kurdistan Parliament Hemn Hawrami
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Plea from KRG PM Masrour Barzani
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Last-minute talks between the KDP, PUK, and Hadi Al-Amiri's Al-Fatah Alliance
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More political bigwigs arrive at parliament
NRT Kurdish reporter Goran Fahah reports that in addition to Fuad Hussein, Justice Minister Khalid Shwani (PUK) and Fars Issa (KDP), the KRG representative in Baghdad, have also arrived in parliament.
Fatah confirmed earlier reports indicating the session is slated for 4.00PM.
Let's see how that plays out. Four minutes to go.
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Turkish Kurd shot in Sulaymaniyah
A Turkish Kurdish man is in critical condition following a shooting incident in Sulaymaniyah. The incident occurred in front of a local workers' organization.
Pro-PKK news outlet Roj News has identified the victim as 45-year-old Hussein Arasan. Turkey has long accused the organization of backing the PKK, and members have reportedly faced threats for years.
Earlier reports from pro-PKK websites suggest that there has been mounting pressure on members of the organization to surrender themselves to Turkey.
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We've also learned that the leader of the al-Fatah Alliance, Hadi al-Amari, and Foreign Minister Fuad Hussein (KDP), are currently in parliament. They're engaged in eleventh-hour meetings, with the goal of resolving the remaining issues related to the budget bill.
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Opposition leader objects to 'fragmenting' Kurdistan Region
Opposition leader Shaswar Abdulwahid, of the New Generation Movement, has voiced his objection to attempts at fragmenting the Kurdistan Region. His comments likely allude to a contentious amendment in the budget bill that grants provinces the right to direct funding from Baghdad in the event of financial disputes with the KRG.
A longstanding grievance the PUK holds against the KRG centers on perceived disparities in the redistribution of wealth among provinces in the Kurdistan Region. The PUK argues that the provinces under its control, Sulaymaniyah and Halabja, receive far less from the KRG than what they are entitled to, compared to KDP-controlled provinces, Erbil and Duhok.
PUK members within the parliamentary finance committee have been instrumental in advancing amendments to the budget bill. These amendments allow provinces, in the event of disputes with the KRG, to bypass the KRG treasury and receive payments directly from Baghdad.
This amendment has been vehemently rejected by the KDP, which sees it as a breach of the Kurdistan Region's constitutional autonomy.
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We’ve received a press release from the First Deputy Speaker Muhssin al-Mandalawi announcing that he held "an important meeting" with the parliamentary factions and members of the Finance Committee.
"Mr. Mohsen Al-Mandalawi, the First Deputy Speaker of the House of Representatives, convened an important meeting with several heads of parliamentary blocs. The meeting, which also included the chair and several members of the Parliamentary Finance Committee, was part of his efforts to reach a consensus among all parties regarding the budget law."
"Mandalawi affirmed the legislative authority's determination to complete the vote on the articles of the federal general budget for the next three years today. This is an effort that aims to fulfill the rights and aspirations of the Iraqi people."
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Bell rings for MPs to return to chamber
MPs have been called to session for the vote on the remaining articles of the budget bill. However, there are reports that quorum has not yet been achieved, leaving uncertainty over whether the session will proceed at this moment. Rudaw and Peyam both report an hour's delay but this hasn't been confirmed yet.
Discussions are being conducted at the eleventh hour regarding the contentious articles, inclusive of those related to the Kurdistan Region.
Ever since the government presented the budget to the parliament on March 17, ongoing negotiations among political parties have been in motion to pass a substantial three-year budget bill. This is the first time in Iraq's history that a government has sent a three-year budget to parliament
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Iraq Interior Minister in Halabja
Iraq's Interior Minister Abdul Amir Al-Shammari was in Halabja and Sulaymaniyah today, engaging in discussions primarily focused on border security among other matters.
During his visit to Halabja, Al-Shammari pledged to open several new departments under the ministry, including the Department of Civil Status, Passports, and Residence, while meeting with local officials.
Al-Shammari visited the 21st Brigade of the Border Forces. He underscored the "importance of amplifying efforts and continuous follow-ups to secure borders, halt smuggling, and counter drug trafficking."
The 1603km border between Iran and Iraq has recently come under scrutiny due to alleged smuggling activities involving drugs, currency, and weaponry.
While in Sulaymaniyah, Al-Shammari discussed the illicit drug issue with KRG Deputy Prime Minister Qubad Talabani and advocated for a joint effort to tackle this problem.
In a separate meeting with PUK leader Bafel Talabani, Al-Shammari echoed the necessity for cooperation between the Iraqi and Kurdish security forces, particularly in areas disputed between Baghdad and Erbil.
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Production and transportation costs cause friction
The KRG and International Oil Companies (IOCs) in the region are grappling with a revised clause related to oil production costs.
The cost of oil production in the Kurdistan Region is typically higher, driven by factors such as geology and the agreements between the KRG and IOCs. These agreements often provide more favorable terms to the IOCs compared to those between the Federal Government and the IOCs.
The updated clause, however, mandates that "the cost of production and transportation must be on par with the average cost of production and transportation of oil barrels within the Federal Ministry of Oil." If passed, the fallout will be something to keep an eye on.
It suggests that the Kurdistan Region may have to bear any cost discrepancies for production and transport compared to the rest of Iraq.
Here is the full text of the clause:
The Federal Ministry of Finance must reimburse the Kurdistan Region for the oil extraction and transportation costs incurred within the Region. These costs are determined by the Federal Ministry of Oil in line with paragraphs (a) and (b) of this section. The costs should be equivalent to the average production and transportation costs within the Federal Ministry of Oil and should be multiplied by the number of barrels procured under this section.
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Ambassador Romanowski concludes Kurdistan trip
The US ambassador concludes her visit to Erbil with a meeting with the Kurdistan Region President Nechirvan Barzani.
She calls for cooperation with Baghdad on budget and hydrocarbon issues and asserts that US ties with the Kurdistan Region remain strong.
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Yet another last-minute delay
And it's pushed back. At the last.
Whether the shift is influenced by the Friday effect or rumors of a delay for today's session initially scheduled for 1300, NRT Kurdish has reported that multiple MPs have confirmed the session's postponement again. The rescheduled time could be anywhere between 1500-1700.
The outstanding disputes concerning the Kurdistan Region's budget share seem to be the more likely reason for this delay.
Here are the two unresolved articles among the Kurdish factions:
Here are the two contentious clauses that have not yet been agreed upon by the Kurdish factions:
New Clause 8:
This clause addresses the procedure to handle disagreements between the Federal Government and the Kurdistan Regional Government (KRG) over the rights, obligations, or compliance with stipulations in Article (13) Clauses (one and two), and Article (14) Clauses (one through seven). If disputes arise, a 15-day period is allotted to seek resolution. Should no solution be found within this period, the transfer of the Region’s dues will be suspended, and the decision of the Federal Court will subsequently come into effect.
New Clause 12:
This clause obligates the KRG to pay each employee an extra amount, not less than 10% of their full salary, in addition to their regular salary. This extra payment serves as compensation for the mandatory savings deducted in previous years. The additional percentage will be paid until the total deducted amount is fully compensated.
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Morning briefing
As lawmakers gear up to vote on the comprehensive budget bill for fiscal years 2023 through 2025, disagreements persist over the Kurdistan Region's share. The bill comprises 67 articles.
Central issues regarding the Kurdistan Regional Government (KRG) feature a provision requiring the KRG to compensate public sector employees an extra 10% of their salary for prior deductions until the balance is settled. The KRG owes public sector employees billions over the last decade, having cut salaries and often going months without paying wages at all.
Another controversial provision relates to the provinces' entitlement to direct funding from Baghdad amid unresolved disputes.
Recap of developments from last night:
- Late on Thursday, after prolonged negotiations among political parties, MPs came together to vote on various articles within the budget bill.
- The ratified articles were chiefly the (broadly) uncontested sections of the bill, including establishing the Iraqi dinar's exchange rate to the US dollar and setting a $70 price for a barrel of oil.
- The budget bill, based on the $70 oil price, is the largest ever in the nation's history, reaching $153 billion in total.
- An article dealing with the cabinet's power to reallocate loan funds and alter the loan beneficiary was entirely discarded.
- The vote proceeded relatively swiftly, with the presence of 258 MPs. The majority of the budget articles have undergone parliamentary discussion without significant obstacles.
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