Iraq drafted complicated budget for 2014, keeping Kurdistan under pressure
Iraq drafted complicated budget for 2014, keeping Kurdistan under pressure
31 Dec 2013
The draft of Iraqi budget for the next year, which has not been sent to the parliament yet for ratification, contains a lot of clauses as well as conditions which may lead to disastrous consequences for the autonomous Iraq region, Kurdistan. This has been warned by the experts and economic advisors. For instance, it contains many conditions that the Kurdistan Regional Government (KRG) must fulfill, and stipulates cuts to the 17 percent of Erbil’s share of the national budget if any of these remain unfulfilled.
The KRG’s deputy finance minister Rashid Tahir warned, “The Kurdistan Region will be at a disadvantage if the bill is passed in its current form.” Ali Hama Salih, MP of the Change Movement (Gorran) in the Kurdish parliament, said, “There are a number of articles in the bill that would cause a big crisis in the Kurdistan Region if passed.”
He also stated, “For example, an article in the bill stipulates that the Kurdistan Region must export 250,000 barrels of oil per day through the Iraqi pipelines, which amounts to $9.125 billion. This amount will be subtracted from the 17 percent budget of Kurdistan if the latter fails to export that volume.”
The MP has also warned that the bill will cause financial as well as economic crisis if it has been ratified in the parliament. The draft budget contains no guaranteed allocation for the Kurdish Peshmarga forces, an issue that has only been mentioned once in the bill in a very elastic manner. “After reaching an agreement between the two Council of Ministers of Kurdistan Region and Baghdad, the salaries and ammunition expenses for the guards of the Kurdistan Region (Peshmarga), will be released in a manner that would not contradict the constitution.” the draft bill states. Salih said that another article in the bill says that the Peshmarga forces will receive their budget allocation only after Erbil and Baghdad have reached agreement on the Kurdish force, which he said was far from imminent. “Baghdad can easily use this article to pressure the Kurdistan Region during political disagreements,” Salih warned.
He said that revenues from customs at the border check points in the Kurdistan Region have not been sorted out nor investigated since 2003, “so if it was found out that the revenues were not sent to the Iraqi National Treasury, then that amount would be subtracted from the budget of Kurdistan Region.”
However, Mr. Tahir reassured, “The revenues of customs have been delivered to Baghdad since 2003.” The bill stipulates payments owed by Erbil to Baghdad, but not vice versa. It allocates 1 trillion Iraqi Dinars as dues to be paid to oil companies working in the Kurdistan Region, and 16 trillion ID for the oil companies in central and southern Iraq. But the Kurdistan Region estimates the fees of the oil companies to be around $3.5 billion.
Regarding compensation based on Article 140 for resettled Iraqis, no changes have been made and the amount remains at 172 billion ID. Cuts to the Kurdistan Region’s budget are mentioned in the bill four times, in case the KRG fails to fulfill conditions of the bill. The bill was prepared by the Iraqi government and has not been sent to the parliament yet.
It is anticipated that the new proposed budget draft will raise a lot of arguments. Officials from Kurdistan’s finance ministry describe the bill as laden with landmines against the Kurds. “The parliament is not the place to fight over the budget, because the majority will win the vote. The fight for the budget must commence in the Iraqi Ministry of Finance and the Council of Ministers during drafting the budget bill,” Salih explained.
After finalization, Iraqi budget for 2014 may reach 174 trillion ID.
iraqdirectory.com
