The KRG Looking Forward: Strategies, Challenges and Opportunities

The KRG Looking Forward: Strategies, Challenges and Opportunities.

Summary Report and Session Video

Masrour Barzani, Prime Minister, Kurdistan Regional Government
Dlawer Ala’Aldeen, President of the Middle East Research Institute (Moderator)

This dialogue with Prime Minister (PM) Masrour Barzani focused on the Kurdistan Regional Government (KRG)’s strategy on a number of complex issues, including engagement with the new Iraqi government, institutional reform and other governance issues (click here for video of the session in full). Below is a summary of the Prime Minister’s messages. Detaisl are in the attached video.

Dlawer Ala’Aldeen, President of the Middle East Research Institute (MERI) began by asking the PM how the KRG could assist the new government of Mohammed Shia Sudani in Baghdad, which was inaugurated five days earlier.

The summary of the PM’s response:

We congratulate PM Sudani and wish him success in his difficult task. Iraq is going through a difficult period due to external and internal factors, some being the result of the continuous mistakes of previous Iraqi governments, which are not easy to correct.
Today, the Iraqi people need services more than ever. They need drinking water, electricity, schools, health centers, security, and a happy life, so any PM who wants to succeed must first of all try to improve services for the people . . . . If he tries to improve services, eradicate corruption, expedite the work of the ministries, these will help a lot because Iraq has reached at a level where any progress would be very noticeable and considered a great victory for the PM and his government.
I hope the Iraqi political parties will support the new government so that it can succeed, because political conflict often distracts the government or prevent its primary obligations, namely to serve the people.

Dlawer Ala’Aldeen: Today, the crisis in Iraq has become very deep. It major flaws in terms of structure and function. The economic, security, political and social sectors have reached a point of no return. But whether you like it or not, it is Iraq that you live with and Baghdad as a gateway is very important for the Kurdistan Region of Iraq (KRI). Whether these forty million people like it or not, it is their country and they must fix it. If you as the KRG want to help the Iraqi government, how will you do that?

Summary of the PM’s response:

The experience of the KRI in the past three years has not been easy. We presented an agenda to the Kurdistan Parliament that was a joint programme for the participating parties of the KRG. We can offer those steps where we have succeeded, the experience we have gained, or the achievements we have made, to serve the whole of Iraq.
We started to reform or build de novo, including: the digitalization of services, which I can say that by the end of 2025, all administrative services will be carried out electronically and paper will not be used. We are at the forefront of this, and can offer this experience to our partners in the Federal government. In terms of economic diversification, we have had a successful experience not only in developing the energy sector (oil and gas), but also in agriculture, tourism and industry. Despite the Covid 19 pandemic, that caused us a lot of damage in these areas, we did not stop, we were able to take good steps and have had good achievements. The KRG will start exporting its agricultural products to foreign countries next month.

Dlawer Ala’Aldeen: As for the KRG’s assistance to the new government in Baghdad, Sudani’s table is now covered with file of major issues and external and internal challenges. A small part of his table should relate to Kurdistan, however, the complicated issues and crises such as the KRI’s budget, oil and gas and the Disputed Territories have always occupied the most part of any Iraqi PM’s table. Now the new Iraqi PM has shown good faith and wants your help in reducing, delaying or solving these problems. How do you help him?

Summary of the PM’s response:

Of course, both sides should cooperate with each other. We in the Kurdistan Region have shown our readiness and are ready in every way to cooperate to resolve the outstanding issues, which the Iraqi government has not yet come forward. We can write the oil and gas law together and send it to parliament for approval. This will be a framework for cooperation. The issue of the Disputed Territories is defined in accordance with Article 140 of the constitution. We are ready to create joint forces in the borders that are now used by ISIS and have become a threat to Iraqi forces and civilians. On the budget issue, we have sent KRG delegations to Baghdad several times, which dominated all the negotiations with the federal government. Everything is clear in figures and what the rights and duties of the KRG are. Since I came, this issue has been discussed with the governments of Mr. Adel Abdul Mahdi and Mr. Mustafa Al-Kadhimi, and once again we are ready to send a delegation to discuss all these points.
One of the reasons why the Iraqi government has not been able to do these things so far is that the PMs have not exercised their authority, or did not have support. They have always complained that there was no political support from the political parties, or that there was a risk that resolving the issue with the Kurdistan Region would be used against the PM by some parties, so they refused to come and resolve it. Therefore, our solution with the federal government is neither technical nor legal, but political. If there is a political decision in Baghdad, we can resolve all these issues very quickly.

Dlawer Ala’Aldeen: Baghdad officials expect Kurdistan to feel the ownership of the Federal government and go to Baghdad with solutions. The Kurdish side is involved in forming the government and must take the initiative. The Iraqi PM has decided to solve some major problems within six months. Do you intend to take the initiative and help?

Summary of the PM’s response:

We have already agreed with the parties involved in the formation of this government on certain principles to regain the rights that have been taken away from us. We have called for genuine partnership.
The positions that belong to us and the people of this region should be given according to the proportion of the population.
We want to be partners in decision-making on strategic issues in Iraq so that things are not imposed on us. If we are part of a unified Iraq, we must have all rights and all decisions and participate in decision-making. We have shown our intention. I am ready to visit Baghdad whenever necessary We want to help them, but we also expect them not to violate the rights of the Kurdish people anymore.

Dlawer Ala’Aldeen: I’m sure the Iraqi PM would be pleased to hear that because that’s the kind of partnership he would wish for. The KRI has a formal representation in Baghdad, which is not fully functional. If they become a center of focus, they can do great things. Meanwhile, there are a number of posts that are for KRI to fill in the Baghdad, where one can influence decisions, especially within the central administration of the government, but they remain vacant. If the parties do not agree, can the KRG fill these posts?

Summary of the PM’s response:

The presence of a large number of Kurdish people in Baghdad and the federal government will strengthen relations. Anyone Kurd who takes a post in Baghdad must represent the Kurdistan Region and the whole of Iraq.
There are many posts that belong to the people of the Kurdistan Region and have not yet been filled. Unfortunately, in previous governments, these positions were systematically emptied from the Kurds, the Kurds were pushed out while non-Kurds were appointed in their place. Now these positions must be filled again. The people of the Kurdistan Region have always reacted to such preventative actions. If Baghdad’s doors are open to the Kurdistan Region and its people, I am sure we have many capable people who can take the experience of the Kurdistan Region to Baghdad and play an effective role in assisting the federal government.

Dlawer Ala’Aldeen: You submitted your manifesto to the parliament, which was translated into 56 reform points. Your team members worked on them, so now we want you to self-critically tell us where progress has been made, where things remained the same, and where things have gone backwards. We know that COVID-19 was a major and untimely blow in a country like ours. Oil prices fell below zero. But now oil prices have risen and the situation has calmed down and the COVID-19 is gone.

Summary of the PM’s response:

It is true that we presented an agenda that consisted of several points. There is progress. Unfortunately, Covid was one of the problems that disrupted government institutions for a long time, and we could not implement our agendas properly. Meanwhile, the budget problem with the Baghdad government continued.
Unfortunately, the Baghdad government did not send the KRG’s allocation of the budget, while most of the KRG’s revenue goes to salaries. We have not had a strong economic program or policy with a strong economic infrastructure to rely on other revenues. So we decided to diversify our economy and not rely solely on one type of income. The main programs of diversification were in the sectors of agriculture, industry, tourism, education and health. We needed serious reform, but in fact, when you go into the details, you feel that a lot of things had to be built from scratch as they didn’t exist.
We have been fighting ISIS for a long time and there have been political problems between Baghdad and the KRG, which have prevented previous governments from focusing on building this infrastructure.
One of the things I mentioned is the issue of digitalization, which people do not know about, because the results will take several years. Likewise, investment in agriculture will pay off in the near future. We have not completed many of the things we started in health reform, which is still an ongoing process. We have not completed the reforms in higher education, but we believe that we will move forward step by step.
Salaries have been paid every month in this Cabinet. Some months, it has been delayed for and we have not been able to pay it all, but we have paid 79% or 80% of the salaries. So a government was able to stand on its own feet after all these problems and obstacles. We have not borrowed any funds. We have repaid two billion dollars in advance. This means that we have been able to stand on our own feet and start good projects and move forward.
Another reason was the lack of support from the political parties for the government projects. The government was seen as an institution where some people are there and the parties are something else. If they are all concerned about how to serve the people, they must be honest with the people and describe that good as good and the bad as bad, reward virtue and punish evil. Unfortunately, due to political conflict, good deeds are often not rewarded. On the contrary, attempts are made to distort the facts. I didn’t see the support I was expecting. If the parties are all supportive of the government, and criticize things if we go wrong, stop us and get us back on track, I would thank them.
I have tried to make this Cabinet a service government, free from political conflict and have more unity in the Cabinet and with Ministers. I can say that the Cabinet was a committed and successful and, most importantly, none of these problems made us give up or surrender to this bitter truth. On the contrary, we have progressed and we will continue to progress.

Dlawer Ala’Aldeen: Every prime minister has had the suffering you mention. That is the nature and dynamic of our politics and it will remain so because all our governments will be broad-based. You can see from within the government how helpful or unhelpful politics can be outside. Meanwhile, the Kurdistan parliament has become weaker from round to round, and has not played its legislative and oversight role. It is not a good partner for the government. Also, people expect that after the merger of the two administrations, the unification would be institutionalized at the financial and administrative levels and go deeper day by day. Can you tell us how you can make a plan to eliminate the current problems and institutionalize the merger of the two administrations?

Summary of the PM’s response:

You mentioned that this parliament is weaker than before. I do not agree with you. I think this parliament has been active and successful, and the most engaged with the government in this cabinet. The greatest number of Ministers have visited the parliament and participated in discussions and in monitoring issues.

Dlawer Ala’Aldeen: We differ in this, but we leave this difference aside because we will not agree on it.

On the subject of governance, I made a lot of efforts in this government from the beginning to find out how the government expenditure is conducted and to see where we can start economic and administrative reforms. One of the points was to reduce government spending, and for that we had to know how much government revenue was. This helped us a lot because when we were in crisis, the government’s revenue was very low, but we continued to pay salaries.
Complaints were made that everything was being centralized and revenues were coming into the government coffers. Powers were called for to be devolved to the provincial and autonomous administration levels. I agreed and we devolved powers. Some counties have been much more successful in managing their economies and revenues than others. After that, there were again complaints that the revenue of certain places was low or blocked. This is not the case. When the government gives power to an institution, it must accept responsibility. Power comes with responsibility. If you want to own your local economy, you must be responsible for it.
Governing cannot be achieved by being nice to each other. In order for the government to be united and successful, it must be aware of all the details of the flow of its revenues. This is a major problem and if we solve it, other issues can be solved easier.

Dlawer Ala’Aldeen: It is good that the government team follows policies as one team, despite coming from different parties, so the KRG has much more ability to work and implement than Baghdad. Of course there are different opinions and you have expressed your opinion, others have their own. The government is known through the PM. No one remembers who were the ministers twenty years ago, but they know who the PM was. That is a huge responsibility.

When it comes to the investment environment in Kurdistan, there are many Ambassadors here and we often have very heated debates. They are concerned that the investment climate in Iraq has deteriorated, that global giants are not coming and that there are no large Iraqi companies that really offer the desired quality. In Kurdistan, they had the opportunity to come, but they do not like the situation. Even now, the Ambassadors cannot convince their big companies to come to the region. They need your help to create that atmosphere. What assurances do you give that foreign investors will come in?

Summary of the PM’s response:

We, the KRG, have tried. There was a law in the Kurdistan Region that was very supportive of investors, especially foreign investors, and they invested accordingly. To further attract foreign investors and to help domestic investors, we have amended some provisions of the law. Security is one of the main reasons why the Kurdistan Region has always been a more suitable place than other parts of Iraq because of the current situation.
On the issue of trust and confidence in the authorities and government, we have, through legislations, demonstrated the government and the authority’s commitment to investment and to how the investor can protect his property and assets, and how the government supports him. These have also been facilitated in many other areas, such as tax exemptions and many other things. The KRG has taken many positive steps to attract investment here. The Kurdistan Region can be used as a gateway to other parts of Iraq, so that foreign investors do not have to wait until the whole of Iraq improves. This will improve the situation in Iraq and will help the security and political situation. The more the economy improves in a country, the stronger the security situation and the more political decisions will be made. Therefore, we in the Kurdistan Region are ready to take advantage of this panel to encourage investment in Kurdistan.

Dlawer Ala’Aldeen: Most investors are listening and some of them are domestic investors. Regarding the biggest obstacle to investment, which we mentioned before, if you ask investors, they will say that there are three obstacles: the first is corruption, the second is corruption, and the third is also corruption! So we have to show that there has been progress in this area. In addition to the monopolies of big business, monopolies have also been created in medium and small size businesses. These businesses are important for empowering the youth and investing in new ideas and new opportunities. So tell us about the progress.

Summary of the PM’s response:

As we have mentioned several times, the issue of eradicating, or rather reducing, corruption is not just about bringing corrupt people to justice and punishing them. The system must be organized so that there is no opportunity for corruption. We have made very good steps in making all the services provided in the KRG transparent. For example, the purchase of supplies by any ministry is now made online and transparent. There is an expert committee that follows up. Therefore, eliminating such avenues is a big factor in reducing corruption. There must be punishment for those who break the law or commit corruption. So the issue of organizing the system is the point that I advocate a lot. Fighting corruption is about rebuilding and correcting the system, and we have done a good job and taken good steps.
Unfortunately, in the Kurdistan Region, most of our income goes to salaries, leaving little to build projects or help young people who want to start their own businesses. Very soon we will announce an institution to encourage innovation, support ideas and provide business assistance to young people. This, by gradually creating jobs, will enable the private sector to develop and grow. This helps the government in several ways by preventing people from looking for employment in government institutions that cannot accommodate everyone.
In order to encourage the growth and development of the private sector, we must provide social security and pensions. We have studied in the Council of Ministers and Parliament how to amend this law so that the private sector can move forward. This is an important part of creating the kind of economy that will take the Kurdistan Region to a more advanced stage.
The banking system is one of the main problems. Most investors who come to the Region have problems dealing with banks, but banks are centrally controlled by the Federal government. We have asked for a national bank, a branch of the Central Bank of Iraq, to do this in the Kurdistan Region, and we have also worked with other private sector banks. We have a program that will bear fruit in the next few months or years.

Dlawer Ala’Aldeen: The international community pays great of attention to the freedom of expression and the future of governance in the Region, which should be a very bright example for the Middle East. There is concern. Let us know from you to what extent this issue is acting as a guide for the political activities and for the political parties in power? And how you can ensure progress in this area?

Summary of the PM’s response:

I want to assure you that I support freedom of expression in every way. This is not something extra; I principally believe it. We have had many discussions with journalists. Our instruction to the government was to have more contacts and provide the media with the necessary information they request. But it is a shared responsibility, which means that we are all citizens of this country, and we must all feel our professional responsibility. Anyone who wants to help their profession and their government, they should know how to do it. Therefore, I am 100% in favor of everyone doing their job professionally. We will help and support them in every way and wish them success.

Dlawer Ala’Aldeen: It is important to the people when the PUK, KDP or the other parties hold their conference, to know what their strategy will be and where they are taking the Region. This time the door is closed at the KDP Congress (in two days time) and you have not held a Congress for twelve years. Very big events have happened in Kurdistan. Can you tell us what you expect from the congress and what clarity you can provide to the people?

Summary of the PM’s response:

The KDP, as an authentic Kurdish party, is a Kurdistan liberation movement, not just a party for a particular region or class. It is a party with a broad umbrella and there are people of all religions and nationalities in Kurdistan, and it has held the most conferences. One of the reasons for the postponement of the KDP Congresses was the war against ISIS. Unfortunately, the referendum and the events after the referendum caused the postponement of the congress for us. The KDP will continue as a major party for the development and promotion of democracy, prosperity and defense of the land and country. Other things may be part of the changes that are made.

Dlawer Ala’Aldeen: “You decorated it beautifully and I didn’t get anything”.

In response to questions from the Forum participants, the Prime Minister conveyed the following messages:

Regarding the issue of farmers’ lands in Kirkuk and their return to the Kurds, this issue is legal, not political, in nature according to the Constitution, but our problem with Baghdad is political, not legal. There must be political will to resolve legal issues. This will has not existed.
Regarding the Kurdistan Region’s relations with Baghdad, it has not been good before and it was not our fault. We, as the KRG, have always demanded the best possible relations with Baghdad. We participated in the creation of the nucleus for the Iraqi army, 28% of which consisted of Kurds. Systematically and over a long period of time, the proportion of Kurds in the Iraqi army was reduced to less than 2%. All the important Kurdish posts in Baghdad were taken away from us and the Kurds were expelled from Baghdad. It was not that we did not want to have good relations with Baghdad. Baghdad did not want to continue good relations with us. If this government opens its doors and embraces us, we are looking forward to having the best relations with the government of Baghdad.
Regarding Baghdad’s pressure on the Federal Court’s decision relating to the oil and gas revenues: we have already spoken with the Prime Minister. We have an understanding to stop this pressure until we work together to draft a new legislation for hydrocarbons, then we submitted it to the Iraqi Parliament and that new law will be an amicable solution to the whole issue. I hope that they will respect the agreement and I hope that we will reach a long-term solution.