Iraq Kurds say will accept Baghdad’s oil for salaries deal

but cast doubt on the federal government’s ability to implement the proposal.

Iraqi Prime Minister Haider al-Abadi said earlier this week that he would pay the salaries of the cash-strapped northern region’s employees if it halted the oil sales, which Baghdad considers illegal.

The Kurdistan Regional Government (KRG) said it “accepted your Excellency’s proposal of the Iraqi federal government (paying) all the salaries of the employees of the Kurdistan region, who number 400,000 people.”   
Their salaries amount to 890 billion Iraqi dinars a month, it said in an online statement, or more than $747 million at the 1,190 dinars per dollar exchange rate used by Iraqi banks.

In exchange, the region would “hand over all of its oil production to the federal government of Iraq, as is clearly stated in your Excellency’s proposal,” it said.

In saying they accept, the Kurds put Abadi in the position of either finding a way to follow through or risk being blamed for the failure of the proposal.

The Kurdish authorities appeared skeptical about the chances of a working agreement actually materializing, listing various occasions on which they say Baghdad has failed to follow through on financial commitments, and questioning the state of federal finances.

The region said that Baghdad was not even making enough from oil export revenues, which have been slashed by plunging crude prices, to cover the cost of its own employees’ salaries, though the federal government has said they will continue to be paid.

Iraqi Kurdistan has been independently exporting and selling crude from northern territory it controls via Turkey since a deal with Baghdad on oil and revenue-sharing collapsed last year.

The region said on Feb. 16 that it had made over $3.94 billion from independent sales from June 24 to December 31, 2015, compared with $1.98 billion it received from the federal government over the first half of the year.

The KRG is facing a financial crisis despite the substantial oil revenues, and has announced that its employees will not be paid their full salaries until further notice and that months of wage arrears will be considered loans to the government.

The Kurdish austerity measures have sparked widespread anger among regional government employees, some of whom have protested or gone on strike.

Massud Barzani, the region’s de facto president, has said that the “time has come for a referendum on independence, but Kurdistan’s financial woes effectively rule out a viable state for now.