Since the beginning of this year Baghdad has refused to release the 17 percent share of the national budget that Iraqi Kurdistan is entitled to, to them. This is due to a number of disputes between the two sets of governments but a lot has to do with the fact that Baghdad says Iraqi Kurdistan is exporting oil illegally and is therefore not entitled to their share of the national budget (which mainly comes from oil revenues). Iraqi Kurdish officials say that more than 95 percent of the region’s revenues come from Baghdad.
Former Iraqi Prime Minister, Nouri al-Maliki, was the leader who made the decision not to send money to Iraqi Kurdistan. The transfer of salaries to government employees - around 700,000 people in Iraqi Kurdistan are registered as such – has not been made since February. And even though al-Maliki has been replaced by Haider al-Abadi, the decision is still being enforced.
At first, Iraqi Kurdish business seemed to be able to weather the storm with donations from wealthy locals and profits from the sale of some oil used to fund government activities and pay salaries. However it seems that now the region has had enough.
There are a number of factors that are making life impossible in Iraqi Kurdistan, says Yassin Mahmoud Rashid, the spokesperson for the Kurdistan Investors’ Union, as well as its Deputy President. The financial blockade imposed by Baghdad, the security situation in the rest of Iraq and a decrease in trade with other countries like Iran and Turkey as well with other parts of Iraq are also making Iraqi Kurdistan’s financial situation impossible, he told NIQASH.
Rashid says that almost 3,000 projects are on hold because nobody can afford to pay for them and licenses for investment in the area have dropped by 80 percent in September, compared to previous months. A lot of foreign companies have also decided to lay people off or suspend work, due to the security situation in Iraq.