Iraq passes highly-contentious federal budget bill

ERBIL, Kurdistan Region - The Iraqi parliament passed all articles of the three-year federal budget in a Monday dawn session after four days of trial-and-error and political wrangling between the country’s different actors, primarily Kurdish parties. 

The legislature resumed its session late Sunday night to vote on the remaining articles of the federal budget bill. Many points continued to cause intra-Kurdish conflict between the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), as well as deliberations between Kurdish and Shiite MPs. 

“The House of Representatives voted to pass the draft federal budget law for the Republic of Iraq for the years (2023, 2024, 2025),” the parliament said in a statement. 

Included in the budget is a record $152 billion in spending, 12.6 percent of which is allocated for the Kurdistan Region. The massive spending has sparked concerns of instability should oil prices drop below the $70 per barrel threshold set in the bill. 

Article 14 was among the most disputed in the bill. The article details the management of the Kurdistan Region’s oil income, and certain paragraphs in the article caused commotion to erupt in the parliament between Kurdish and Shiite MPs, especially paragraph seven.

Paragraph seven of Article 14 of the bill stipulates that in case of any dispute between the Kurdistan Region and the Iraqi government, a joint committee will meet within 30 days to reach a solution. Shiite parliamentarians wanted to amend it so that the Kurdistan Region’s budget share would be cut if a solution was not reached in 15 days. 

Fuad Hussein, head of the KDP delegation and Iraqi Foreign Minister, told reporters on Saturday that an agreement was reached regarding paragraph seven of the article without providing further details. 

Shiite blocs hold the majority of seats in the 329-seat legislature. Kurds have around 60 seats but are divided. 

Shakhawan Abdullah, second deputy speaker of the Iraqi parliament, blasted the Shiite blocs for attempting to amend the article so that the Kurdistan Regional Government’s (KRG) share would be suspended within 15 days. 

“The committee might not even meet in 15 days, so the Region’s share would be cut. This is an excuse to cut the budget. This allows them to suspend the Region’s share even if a trivial thing happens,” said Abdullah, who is a Kurd from the Region’s ruling KDP. 

Abdullah described Article 14 as “the soul of the budget.” 

Another disagreement arose between the KDP and PUK over an additional eighth paragraph to the article. The additional text states that the KRG must commit to giving priority to the financial merits, salaries, and wages of the public servants, as well as committing to the expenditure of the fund of investments in the province. Otherwise, the Iraqi prime minister would take specific measures to send the financial entitlements directly to the provinces. 

The KDP said that the paragraph divides and weakens the Kurdistan Region, while the Sulaimani-based PUK argued that it guarantees that none of the Region’s provinces will be withheld from their share of the budget. The latter has often accused the former of withholding funds from provinces under their control. 

PUK parliamentarians defended the extra paragraph, saying it commits Erbil to prioritizing the payment of salaries of the public servants and pensioners in the Kurdistan Region, as well as spending the investment funds for the provinces. In case of unequal sharing between the provinces, the Iraqi prime minister would have to take necessary action, which includes directly funding the provinces. 

The controversies in the legislature regarding Article 14 did not end, however, as disputes arose over a paragraph that required the KRG to pay back ten percent of the money it cut from civil servants as part of austerity measures over the past several years. The KDP was among those opposed to this provision and the section was removed from Article 14, according to MP Soran Omar. The KRG argues that its share is not enough to pay back the money it owes civil servants and requested an increase. 

Omar told Rudaw’s Halkawt Aziz following the Monday session that the Shiite blocs inside the Iraqi parliament acted aggressively against the Region’s proposals to repay the salary cuts using extra revenue from the Region’s oil sales.

“The topic of salary cuts, whatever was read, said that it is a mandatory responsibility of the Region because these are the money of the people, the employees, for the extra funds from oil to be taken from this text. They did not allow the text to be read. The Shiite bloc heads responded in a very loud and disrespectful way and [Iraqi Parliament Speaker Mohammed al-] Halbousi later read it but it did not pass the vote,” he said. 

Omar, who is from the Kurdistan Justice Group (Komal), sent a message of caution to the Region’s parties about their alliances with the Shiite blocs. 

"This is for the Kurdistan Region's people, the KRG, KDP, and PUK to know that those they make alliances with, when it comes to the rights of the Region, this is what they do to the Region and the people of Kurdistan ... What they did is a dirty chauvinistic act towards the rights of the people over extra funds taken from our oil sales,” Omar added. 

“The situation inside the parliament meeting turned into a fight – people hurting each other. A human being was ashamed for a legal budget to be passed like that,” he regretted.

KRG Prime Minister Masrour Barzani in a tweet slammed “traitors” for attempting to compromise the Region’s constitutional rights.

“The courageous attitude of the patriots on one hand and the dishonesty of the traitors on the other will be recorded in history,” he said on Saturday. “Everyone can be sure that the Kurdistan Region will become stronger and we will not compromise on our constitutional rights.” 

The Iraqi parliament also passed Article 13, which details exporting the Kurdistan Region's oil in coordination with the Iraqi government and handover of its non-oil revenues to Baghdad.

Baghdad and Erbil signed a deal to resume the exports of the Kurdistan Region’s oil following a late March ruling on a case between Iraq and Turkey that led to the suspension of the Region’s oil flow to global markets. Oil exports are yet to resume despite the agreement.