Is the KRG heading for Bankruptcy?

The Kurds’ wrangles with Baghdad and plummeting oil prices aren’t the only worry. Some 1.8 million refugees fleeing IS within Iraq and in Syria have added to the strain. “Countries like Jordan and Lebanon also have big refugee populations, but unlike us, they are not on the front line fighting IS,” Bayan noted.

The Kurds have always enjoyed a sympathetic audience in Washington and other Western capitals. Over the past two years, the United States has given $600 million in aid to the Iraqi government. “And much of that was spent in the KRG,” a senior US official, speaking on condition of strict anonymity, told Al-Monitor. At the same time, the United States is preparing to train and equip up to three new peshmerga brigades to fight IS.

These were meant to be formed by new recruits to ensure they did not cleave to party loyalties as is often the case in Iraqi Kurdistan. But due to the extra financial burden that this would impose, the brigades are now to be drawn from existing peshmerga forces.

Many agree that cronyism, mismanagement and a lack of transparency have contributed to the current impasse. “There are a number of overdue reforms the Kurds need to carry out to improve their own situation,” the senior US official said. US government advisers are working with KRG Deputy Prime Minister Qubad Talabani for just such an overhaul.

The KRG has made some changes, slashing allowances of Cabinet ministers and senior government employees by some 50% and scrapping such perks as free electricity and rents for them. But these are a drop in the ocean, critics say: Energy subsidies need to be cut, the bloated public sector shrunk and thousands of “ghost” employees, notably among the peshmerga, weeded out.

“The government has only two options: either to reform or cease to function,” opposition lawmaker Goran Azad told the Reuters news agency.

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