Shafaq News/ The financial crisis between Baghdad and Erbil is in a vicious circle, and unless a solution is reached; any agreement would be quickly broken.. it is not secret any more since most of the differences between the federal government and Kurdistan are of financial and economic origin.

The Kurdish-Arab relationship has transformed after 2003.. Baghdad and Erbil's financial problems have continued to intensify almost since Nouri al-Maliki's government in its second session. Haider al-Abadi's government cut the employees' salaries and stopped Kurdistan's budget due to a dispute over Kurdistan's oil, and the independence referendum amid the Iraqi government's opposition.

The financial crisis increased with the outbreak of COVİD-19.. the pandemic hit the oil prices –on which the Iraqi budget depends almost entirely. The oil prices decreased drastically, prompting Mustafa Al-Kadhimi's government to ask for borrowing on more than one occasion –and then settle on it as an alternative law for the 2020's budget.

The crisis between Baghdad and Erbil intensified after the Iraqi parliament voted on the borrowing law -without including Kurdistan's employees' salaries. Although the two parties reached an agreement last August, stipulated Baghdad sending 320 billion dinars monthly to Kurdistan -to cover part of the staff's expenses until a final agreement on differences between the two sides is reached.

After a series of unfinished tours between Baghdad and Erbil, the two sides yet have to reach a solution.

Official talk from Baghdad indicates that Erbil has not fulfilled its budget obligations of delivering 250,000 barrels of oil to the federal government.. The accusation was denied by Kurdistan's Regional Government (KRG).

KRG's PM, Masrour Barzani, sent a letter to Iraqi PM, Mustafa al-Kadhimi, calling for compliance with their agreement that includes Baghdad sending 320 billion dinars monthly to Kurdistan.

Barzani said that Kurdistan did not receive any amount for the months May, June, July, and October 2020; in addition to the Peshmerga's dues and salaries -despite their inclusion in the ministry of defense's allocations.

In a development of this complex issue; KRG's delegation to Baghdad announced the agreement to comply with the provisions of the financial deficit law (the borrowing low) –relating to Kurdistan, after a round of negotiations with the federal government.

"We have received a letter from the Federal Ministry of Finance stating that they are committed to implementing the provisions of the Fiscal Deficit Act. KRG has responded by agreeing to abide by all that has been stated in the law", said The Head of the Delegation, Kurdistan's Minister of Finance and Economy, Awat Janab Noori, at a press conference with members of the negotiating delegation.

"We announce that it is now the federal government, Kurdish deputies, and the Iraqi parliament's turn to implement the decisions contained in the financial borrowing law after Kurdistan has shown its full commitment to the provisions contained in it", the Minister said.

"There is no longer any legal or political justification that blocks the disbursement of Kurdistan's financial dues", said Khalid Shawani, Kurdistan's Affairs' Minister, and a member of the delegation.

In this regard, a source informed on talks rounds told Shafaq News agency about the dispute's details and described it as unenthusiastic to reach a comprehensive solution soon.

"During one of the recent meetings, Iraqi Finance Minister, Ali Allawi, assured Kurdistan's delegation that the latter had fulfilled all their legal obligations.. and in principle, there is no problem in releasing Kurdistan's share", the source said.

"After meeting with Prime Minister Mustafa Al-Kadhimi, Kurdistan's delegation said that the problem goes beyond its technical aspect and is purely politically controversial. Al-Kadhimi confirmed that the main Shiite parties threatened to dismiss him if he released the full financial share. President Barham Saleh is not actively opposed to the Shiite position", the source added.

"KRG is now working to keep pace with the issue to reach a temporary solution -especially with the delay in the payment of Kurdistan's employees' salaries. There is no real solution on the ground until an agreement is reached with Baghdad. Kurdistan's capacity does not exceed the payment of less than half of the salaries for the next three months –apart from the share sent from Baghdad", the source concluded.