US researcher: Washington should urge the leadership of the Barzani family to further decentralize decision-making

During a meeting held late on the night of November 11, the Iraqi parliament approved an emergency borrowing of 12 trillion dinars ($ 10 billion) to cover government expenditures for the last quarter of 2020.

The vote garnered the support of 173 Shiite and Sunni members of the 329-seat Legislative Council, although the nearly 60 Kurdish members left the session, making this decision a rare financial decision made without one of the main ethnic-sectarian components in Iraq.

About this, the American researcher said in a research published by The Washington Institute, "It can be said that it is impossible for the Kurds to skip the massive cuts required in a short time, and for this reason, and since the new law may set expectations for the 2021 budget, it is important to make an accurate description of the reason for the Kurds withdraw from the vote." How should the United States and other partners respond. "

The researcher explained that "if the new law to finance the deficit is implemented as it is, it will change this equation tremendously, and it seems that the monthly transfers amounting to $ 268 million will continue, but the law will also require the Kurdistan Regional Government to immediately send all its oil revenues and the customs part." From its non-oil revenues to Baghdad.

And if it is assumed that the Kurds sell 400 thousand barrels of oil per day at a reduced price of about 33 dollars per barrel (compared to 45 dollars per barrel Brent averages), then this means that they have to forfeit 396 million dollars of oil revenues per month, in addition to about three quarters of their non-profit revenues.

In other words, the Kurdistan Regional Government’s income will drop from $ 764 million per month ($ 268 million in federal transfers, $ 396 million in oil revenues, and $ 100 million in non-oil revenues) to $ 293 million per month ($ 268 million in transfers. Federal government, plus $ 25 million in residual non-oil income).

He pointed out that the “Kurdistan Regional Government” is currently facing a severe but manageable monthly deficit of 30% (meaning $ 764 million of income against the nominal spending of $ 1.08 billion), but with reducing this monthly income to $ 293 million, the law will cause What is new is the increase in the default of the Kurdistan Regional Government to a staggering 73% and leaves Kurdish officials largely unable to fulfill their most important obligations: the monthly payments for salaries and social security of $ 710 million.

Therefore, insisting on immediate implementation is an economic suicide dose for the "Kurdistan Regional Government."

According to the researcher, "the Kurdistan Region" has a higher percentage of civil servants per capita compared to the rest of the country (whose private numbers are already high). Therefore, this region must be subject to economic reforms. However, the new law guarantees that the Kurds will not be able to pay salaries. Their government employees for the remainder of the year, even when this law guarantees that Baghdad will be able to continue to pay non-KRG employees without interruption.

This basically does not strike a balance, as it forces a portion of Iraq - and one ethnic group - to suffer from immediate and overwhelming austerity, while protecting the rest of the country's benefits. "

The researcher emphasized that "if the Kurdistan Regional Government" is financially crushed in the near term, it may become more vulnerable to pressure from the pro-Iranian political blocs on a wide range of issues critical to US interests, including the selection of the next prime minister and the future American presence in Iraq.

Indeed, this moderate camp in the country - Al-Kazemi, the Kurds and some Arab blocs - may collapse over this issue of deficit financing just months before the next election campaign in 2021. A decade ago, Tehran advised the then prime minister, Nuri al-Maliki, to monopolize a second term. "By riding the wave of sectarianism before the 2010 elections, and today the pro-Iran bloc is following the same rules of the game, fueling ethnic hatred to divide its opponents."

The researcher concluded his article by saying, "Finally, to ensure internal unity among the Kurds on this issue, the United States and its partners must urge the Barzani family leadership in the Kurdistan Regional Government to increase decentralization in government decision-making."

ANHA