MERI Forum 2014 | S8: Baghdad – KRG relations (Part 2)


Session 8: Baghdad-KRG relations, between interdependence and independence
Date: 06/11/2014

Part 1: Intervention of Qubad Talabani (Deputy PM, KRG)
Part 2: Intervention of Bayan Jabr al-Zubaidi (M. Transport, Iraq)
Part 3: Intervention of Ashty Hawrami (Minister NR, KRG)


Transcription of Bayan Jabr al-Zubaidi (Minister of Transport, Iraq)

Ladies and gentlemen, distinguished guests, may God’s peace and blessings be upon you all.

Undoubtedly, the topic of this session is about the mechanism of resolving the pendant issues between KRG and Iraq. These problems have not appeared only recently, but actually they go back to the past years. New issues have arise, though: the wages of the peshmerga, the mechanism of exporting oil according to what is stipulated in the Constitution, the suspension of KRG’s share of the budget, the KRG exporting oil independently and not through SOMO, etc.

We have plenty of issues unresolved. I believe that the previous government did not have the positive attitude to resolve these problems. Through meetings and dialogues, whether inside the government or outside, the current government [of Haider Al-Abadi] is actually serious to provide a resolution to the problems.

The political statement, specifically point 17, which was read in the council of representatives, confirms that the new government is willing to resolve the problems. Therefore, we do need to insist on the fact that the solution is dialogue and strategic agreements, as it was pointed by Qubad Talabani, as this is now without doubt.

Everybody has been negatively affected by these unresolved problems. Today, Iraq as a whole, including all its communities, is losing 600,000 barrels which might increase to a million in one year. Iraq cannot export all its oil due to security concerns, ISIS and a number of other reasons. The federal government believes that the problems would be solved in two weeks, if there was an honest and serious intention from all sides.

Committees can be formed for each of the technical pendant problems. The latest report from the Financial Monitoring Council, which has now been delivered to the KRG, specifies certain points of dispute on the fiscal and oil arena, on the Peshmarga issue and on the release of the budget instalments. All of these issues are solvable. As a former minister for finance, I can say that these issues existed 6 years ago. However, at that time it was not a problem as we enjoyed a budget surplus. I remember in 2008 when I was preparing the budget for 2009, there was an amount of 18 billion USD surplus. Today, the ministry of finance provides a figure of only 1 billion USD of surplus, which does not cover the wages of half month. This means that this is a serious problem and we should acknowledge it.

This financial problem has in turn made more difficult to resolve the disputes between us. That is why reluctance can be easily noticed. I want to introduce here an initiative, which I will touch upon later. I will first touch upon other points which I think are quite important to be understood and taken by all in order to reach a solution.

  • Adherence to the constitutional framework that organises the management of the country. The Constitution defines the relationship between any region and any governorate with the federal government. The same problems with Kurdistan exists with Basra. They say that Basra is just like a breastfeeding mother. Basra produces a certain amount of oil and Amarah [governorate of Misan] produces another amount… thus Basra cannot equated with the governorates which do not produce oil. The Constitution stipulates that the income generated from oil production has to be evenly distributed on all of the people of Iraq, the governorates which possess oil and those which do not, depending on the number of the population.
  • Enforcement of a national agreement about the high national interests based on the principle of exercising legitimate rights.
  • Agreement on a common binding legal basis for all of us in the process of national reconciliation, in order to jointly interpret which parts of the Constitution are being disputed. At the very beginning, every Constitution everywhere is interpreted in a number of ways. We should not turn to the politicians to interpret the constitution. Rather, we should depend on neutral legal experts.
  • Lobbying for the creation of the right atmosphere to support national reconciliation. A considerable number of statements -made by certain people, be it in KRG or the Sunnis or the federal government- have caused a lot of damage to the process of national reconciliation. Therefore, we are in need to ameliorate the situation and avoid using the media as a means to direct criticism and fierce polemics.
  • Re-design the nature of the relationship between KRG and the federal, in light of the recent years, in order to solve the pendant strategic issues like the oil and gas law, Peshmarga wages, the disputed territories, revenue sharing and the distribution of the salaries of the employees in KRG.

Therefore, from my point of view, the following elements are my suggested solutions:

  • To work on the implementation of the concept of partnership and enforce the Constitution.
  • To accelerate the enactment of an oil and gas law.
  • To recognise the Peshmerga forces as part of the federal government forces.
  • To create a dialogue between KRG and the federal government and form the technical committees needed to specify the priorities, including the rights of region and the duties of the federal government and vice-versa. I want to emphasize the fact that the current national unity government is willing and ready to reach a strategic agreement concerning the disputes between KRG and the federal government. But it is to be done through compliance of the Constitution in form and substance, based on the concept “oil for all Iraqis”.
  • SOMO to be the central oil exportation company with the inclusion of representatives of KRG and the other oil-rich governorates.
  • To agree on exporting the oil of Kirkuk through KRG. By doing so, Iraqi exports will increase by 600,000 barrels per day. This will benefit all.

I’m now going into detail on the last element. Why are we losing today around 600,000 barrels per day? This brings loss to KRG, to the federal government and to all the other governorates. We are talking about 2-6 billion USD monthly and 30-36 billion USD annually. Why don’t we connect Kirkuk oil pipes to KRG and export the resources through KRG? This will grant a guarantee to KRG. This is a very crucial point. KRG can control the exportation of oil. In the event the central government suspending the flow of money to KRG, the KRG can control the flow of oil in return. This idea has not been mentioned yet but I generated it. Kirkuk has the capacity to produce 600,000 barrels and might reach 1 million. I should not have stated this but this is my nature, I am frank.

If this was accomplished, the federal government, which is now suffering from a stifling financial crisis, would release the money to KRG. At this point, there would not be any excuse not to send money to KRG as it contributed to increase the percentage of exportation, namely 600,000 barrels. This will also help to get rid of ISIS and its likes. If it is God will, we can put an end to the regional pressure by connecting Kirkuk with Basra and Faw, as it was during the times of the previous regime. When we face a crisis with a neighbouring country, we easily use another channel through the Gulf. We are free to export whatever we want through the regional seas surrounding us.

Having achieved this, Iraq will enjoy a number of options for oil exportation. Saddam tried to export oil though Yanbu’ and this cost us billions of dollars. Only the pipes which extended from Basra to Yanbu’ in the Red Sea, thousands of kilometres, and the warehouses amounted 2 billion USD. When Saddam invaded Kuwait, the newly build pipeline was controlled by Saudi Arabia. This happened only after three years of completing the pipeline. This is because the pipeline was not passing through our own land. Neither have we been able to receive the money for the pipeline nor for the oil in the pipeline so far. However, my suggestion will be on our own lands. I hope this will be studied as it will have great benefits. Again, I emphasize the need to establish bases needed to reach a final strategic agreement between KRG and the federal government. I believe that the federal government is awaiting KRG Prime Minister to visit Baghdad to address the strategic agreement.

Thank you.

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