Page 6 - DMEA Week 50 2020

DMEA COMMENTARY DMEA

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

P6 www. NEWSBASE .com Week 50 17•December•2020