Page 4 - MEOG Week 50 2020

MEOG COMMENTARY MEOG

Kurdish unrest

impacts oil sector as

Erbil seeks solution

Protests about unpaid public sector salaries have
boiled over and are hitting Erbil where it hurts: oil.

KURDISTAN CIVIL unrest in the Kurdistan Region of north- However, while Baghdad has not kept to
ern Iraq that began at the start of the month its side of the bargain, it has long complained
has boiled over, leading to widespread violence that the KRG has failed to hand crude over to
WHAT: that has in recent days spread to the oil and gas SOMO. Last month though, the Iraqi parlia-
The KRG is stuck in limbo industry. ment approved the fiscal deficit coverage bill
unable to pay public Protests have been commonplace in Iraq in which stipulates that the KRG must now pro-
servants and otherwise recent years, focusing on issues including over- vide SOMO with “unspecified amounts of oil”,
unable to quell growing due reform and poor electricity connectivity. a policy that had been rejected by Kurdish MPs.
public discontent. However, the overarching issue in both Federal Meanwhile, the protestors are demanding the
Iraq and the Kurdish north is the unreliable pay- resignation of the regional administration amid
WHY: ment of civil service salaries. claims that the political system has been ‘bro-
Public sector workers Workers in Kurdistan have been regularly left ken’ by the Barzani and Talabani families who
have not received their without pay following seemingly never-ending respectively control the Kurdistan Democratic
full salaries since April, budget disputes between Erbil and Baghdad, Party (KDP) and the Patriotic Union of Kurdis-
and Erbil has been forced the years-long struggle to counter the spread tan (PUK), effectively the only two horses in the
to agree to new terms of Islamic State (IS), oil price volatility and the race. In May 2019, the KDP’s Nechirvan Barzani
with Baghdad in order to coronavirus (COVID-19) pandemic. won 68 votes from the 81 members present in
receive its share of the Middle East Oil & Gas (MEOG) understands the 111-seat chamber, with the PUK and New
Iraqi budget. from local sources that public sector employees Generation Movement having boycotted the
have not been paid in full since April. election and the two Islamic parties Komal and
WHAT NEXT: The protests, which started in Sulaymaniyah, KIU abstaining.
Oil exports have already have largely been limited to the south-east of the
begun to suffer, with country, with the regional government banning Oil dependence
Gazprom Neft electing to demonstrations and all travel between cities With oil accounting for more than 90% of the
halt shipments from its in the area, imposing a curfew and cutting off Federal Iraqi budget, the confluence of the pan-
Sarqala field, and this access to the internet. demic and low oil prices has served to exacerbate
serves to exacerbate the Speaking to Deutsche Welle, Sulaymaniyah the situation yet further.
strain felt in Erbil. journalist Zanko Ahmad said: “Most of those Kurdistan is by extension nearly completely
on the street are younger … Many are not even reliant on oil and gas for government spending.
state employees. At the last election, the young Apparently growing in desperation to resolve
people were expressing their anger through the the unrest, the KRG’s Minister of Finance Awat
ballot box. But now there are no effective opposi- Sheikh Janab last week announced that Erbil
tion parties. So they’re expressing their anger by would now agree to hand over the unspecified
burning the headquarters of political parties and crude volumes to Baghdad so as to receive its
even the homes of officials.” share of the budget.
The Kurdistan Regional Government (KRG) Speaking to reporters in Erbil, he said: “Our
maintains that the root cause of the non-pay- ministry received a letter from the Federal Min-
ment is Baghdad’s decision to withhold pay- istry of Finance regarding the fiscal deficit bill
ment of Erbil’s 12.67% share of the Iraqi budget. and we replied that we are ready to abide by the
Until November 12, payment of the budget was [new] bill … from now it is up to the federal gov-
dependent on the KRG exporting 250,000 bar- ernment and Kurdish representatives in Bagh-
rels per day (bpd) of crude through the Iraq’s dad to do their job.”
State Oil Marketing Organization (SOMO) and In addition to the revised terms pertaining
giving the revenues to the central treasury. to the KRG’s share of the budget, the bill also

P4 www. NEWSBASE .com Week 50 16•December•2020