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Thursday, June 5, 2025
Oil vs. Salaries: KRG-Baghdad feud pushes Iraq to the brink
Shafaq News/ As the Kurdistan Region's salary crisis resurfaces, alarms grow louder over the broader ramifications. The economic tension carries a potent political undertone that, if left unresolved, could destabilize Iraq’s political framework.
The dispute between Erbil and Baghdad reignited after the Kurdistan Region accused the federal government of "discrimination" in salary disbursement. The Region pointed to repeated delays in receiving dues despite earlier agreements. Baghdad countered by citing the Kurdistan Regional Government’s failure to deliver oil and non-oil revenues as stipulated in the federal budget law.
To contain the escalating crisis, the federal government is expected to dispatch a financial advance to the Kurdistan Region within two days to ensure employees receive their salaries before Eid al-Adha (June 6-9). However, nothing has changed so far.
Economic War
Kurdish political analyst Mohammed Zangana describes the allocation of funds as “not charity toward the people of Kurdistan, but a constitutional and legal right.” He references the tripartite budget law (2023–2025) and a 2024 Federal Court ruling mandating salary payments from the federal treasury to the Kurdistan Region.
Zangana characterizes the ongoing situation as an “economic war waged by Baghdad against the region since 2014,” urging for a simple resolution: “separate the salaries of Kurdistan’s employees from political bickering and disputes.”
The agreement stipulates that the Kurdistan Region must send 400,000 barrels of oil daily to federal depots in exchange for employee salaries. However, those depots can handle no more than 80,000 barrels per day. “Even the amount sent hasn’t yielded a single cent,” Zangana notes, adding, “no agreement has been reached on the price per barrel.”
On the Kurdistan Democratic Party's threat to withdraw from the political process, Zangana believes the Coordination Framework (CF), a predominantly Shiite group that controls the Iraqi government, fully grasps the danger posed by such a move. “This is a warning to the Framework,” he asserts.
Zangana also highlights a “lack of will” from Baghdad to pass an oil and gas law, explaining that such legislation would grant provinces and regions constitutional autonomy under Articles 112 and 121 of the Iraqi Constitution. He foresees only temporary solutions ahead: “There won’t be any radical remedies—just patchwork until the elections.”
Financial Strain
Parliamentarian Mukhtar al-Mousawi, a senior figure in the Badr Organization, a movement within the Framework, expects the two sides to reach a “mutual understanding.”
“The Region’s recurring threats to withdraw from the political process whenever it faces liquidity issues and pressures the federal government—that’s not a sound approach,” he states in remarks to Shafaq News, urging the Region to “reorganize its affairs according to its own budget.”
Al-Mousawi explains that Iraq is currently navigating a financial crunch, and the 2025 budget has yet to reach Parliament. “Meanwhile, the Region resists accountability on how it manages oil and gas export revenues.”
Constitution and Oil & Gas Law
Ibrahim al-Sikani, a member of the State of Law Coalition led by Nouri al-Maliki, another CF group, strikes a balancing tone. “The Constitution governs all national matters from north to south, especially Kurdistan Region salaries and the ongoing oil and gas issues,” he tells Shafaq News.
He places the responsibility for salary payments squarely on Prime Minister Mohammed Shia al-Sudani. “The Coordination Framework is blamed because the shortfall comes from its nominee, Al-Sudani, but the Framework won’t tolerate any failure from the government toward the Iraqi people—north or south.”
Al-Sikani also discloses that the Framework has resolved to form a delegation to visit the Kurdistan Region and negotiate solutions, emphasizing that passing the Oil and Gas Law would eliminate recurring disputes.
He calls on Parliament to act, urging sessions to approve the law and the budget—still stalled in the Prime Minister’s office— “despite its direct impact on the lives of the Iraqi people.” “I urge al-Sudani to hold a parliamentary session to lay all the facts bare before the public.”
In this context, political analyst Aed al-Hilali appeals to all political blocs to engage in frank and direct dialogue with Kurdish representatives. “The salary issue is no longer bearable, especially with the Kurdistan Democratic Party threatening to boycott the political process, which could lead to the collapse of Iraq’s political system,” he cautions.
Still, al-Hilali voices cautious optimism, “The salary crisis may soon be resolved, but fundamental solutions remain necessary,” He outlines key steps forward—revisiting the Constitution and amending certain articles that “may help achieve lasting resolutions.”
FIREFLY: They're saying the exchange rate reform is officially enabled
Frank26
[Iraq boots-on-the-ground report]
FIREFLY:They're saying the exchange rate reform is officially enabled. This is on TV...They said the first step one was the closing of the gap between the official rate and the street rate...
They're telling us the official rate and the street rate are now getting close and that was the first phase.
Then they started to talk about...two more phases...
The second phase will deal with the IMF and double-checking to make sure the Iraqi dinar has met all the global standards and the final step...will be engagement.
They are not giving us a date or details just the plans on currency rates plans...
FRANK: This education is now at the point where it's ready to show you what they have been talking to you about. You are so close. This currency report blew me out of the water. It's outstanding!
The Liquidity Problem: Between the Central Bank's Response and the Effects of the Rent Model
The Liquidity Problem: Between the Central Bank's Response and the Effects of the Rent Model
Dr. Haitham Hamid Mutlaq Al-Mansour
Macroeconomic policy faces a liquidity and financing problem that directly impacts various aspects of economic and living life. The roots of this problem lie in accumulated structural imbalances that make it difficult to achieve sustainable financial stability. The declining capacity of the productive base has limited the accumulation of fixed capital and the contribution of real non-oil sector output, favoring near-total reliance on oil revenues, which constitute more than 90% of state revenues, to pay for imports.
Because Iraq's traditional economic equilibrium cycle is virtually non-existent, liquidity management will be constrained by oil revenues. This situation makes the general budget's performance vulnerable to the shocks of fluctuating global oil prices, causing immediate financial crises manifested in the difficulty of financing projects and delayed payments for operational expenditures.
In the face of this challenge, the Central Bank's efforts to address it stand out through steps to reform the banking system and enhance banks' ability to manage liquidity by promoting financial inclusion, increasing banking sector productivity, creating a healthy competitive environment, and strengthening the banking system's ability to address risks.
To sustainably address the liquidity and financing shortages at the strategic level, real technical reforms and an investment-attractive climate are required. The future of liquidity, therefore, depends on the ability of macroeconomic policy to unshackle rents, implement radical reforms in financial management, stimulate productive sectors, and direct spending.
Therefore, the liquidity shortage represents a complex phenomenon that goes beyond a temporary shortage of liquidity. It reflects deep structural imbalances in the financial and monetary structure, which requires an analysis that explores its structural roots, as follows:
The expansion of government spending in multiple directions, the most dangerous of which is the continued and clearly flabby employment within government institutions, and the failure to control, rationalize, and discipline spending within the constraints of basic budget items. This requires a genuine boost to private sector growth and freeing it from the "crowding-out effect."
The rentier nature of the economy, its overwhelming reliance on rentier revenues in the general budget, and the limited diversification of revenue sources outside this sector have reinforced the budget's dependence on fluctuating revenues from this sector, leading to a persistent government deficit.
The banking system's reduced flexibility in stimulating savings and deposits, which in turn reduces the ability of Iraqi banks to absorb liquidity from individuals in the form of deposits and savings.
The limited stability of the investment environment due to bureaucracy and legal gaps discourages investors from investing in important sectors, particularly infrastructure projects, which can generate external savings for investment activity, increase real GDP growth rates, and raise the level of fixed capital formation.
Implications of the growth of the informal economy: The informal economy is estimated to represent approximately 34% of GDP in the parallel currency market, controlling approximately 40% of dollar transactions. This increases the leakage of liquidity outside the formal economy's income cycle, which is targeted by budget allocations.
Iraq's 2023 budget amounted to approximately 198.9 trillion dinars, with a deficit of 65 trillion dinars, while the 2024 budget reached 211.8 trillion dinars, with a deficit of 84 trillion dinars. The 2025 budget was allocated due to the decline in global oil prices. Iraq exports approximately 100 million barrels of oil per month, and its price fluctuates, ranging between $68 and $72 last year. During the first 11 months of 2024, oil revenues amounted to 119 trillion dinars, at a monthly rate of approximately 10 trillion dinars, which was used to cover operating expenses. This exacerbated the growing government deficit, which is reflected in limited liquidity to cover budget expenditures, leading to an increase in government debt as the deficit grows.
It can be concluded from the above that technical measures, despite their importance and rapid response in the monetary and financial sectors to address the liquidity problem, remain limited as a long-term strategy for sustainable financing unless they are accompanied by deep, gradual reforms in the financial and real sectors that address the roots of the structural crisis and create a new formulation for the development financing approach. This approach works to develop a path for generating added value for the non-oil GDP and planning policies to develop this sector, increasing its productivity and exports while reducing imports by the same percentage.
The future of long-term development financing in Iraq depends on the economic system's ability to recover from a "rentier model" to a "diversification model." link
EXCERPTS FROM MARKZ: We are trained and ready!!
EXCERPTS FROM MARKZ
MZ: I’m going to tell a bank story but won’t give details so I don’t get anyone in trouble. This is from a Credit Union. The source is someone I know in my personal life.
MZ: “Yesterday I got a call from a credit Union in Tennessee. They let me know they are a Redemption Center for all currencies except for Russian.
I asked her “when”? and she said “soon”
She said That is why we called you now to let you know we are trained and ready.
I specifically asked if the dinar and dong are included and she said “yes” .
At the end of the conversation I asked if all we were waiting for is 800 numbers to make an appointment? She said Yes- I know you are. Her excitement was amazing”
MZ: A couple of folks that work for Credit Unions have made the comment that they were recently trained
The Central Bank signs a training agreement with the British Council.
The Central Bank signs a training agreement with the British Council.
The Central Bank of Iraq announced today, Wednesday, the signing of a training agreement with the British Council.
Al-Yenk said in a statement followed by Al-Masry, “Under the patronage of the Governor of the Central Bank of Iraq, Ali Mohsen Al-Alaq, the Central Bank of Iraq signed a training cooperation agreement between the bank and the British Council, in the presence of the British Ambassador to Iraq, Irfan Siddiq.
The agreement was signed on behalf of the Central Bank by the Director of the Human Resources Affairs Directorate, Falah Salim, and on the British side by the Director of the British Council, Ben Luton, and the Country Director of the British Council.”
He pointed out that "this agreement comes within the framework of enhancing joint cooperation between the two parties, aiming to develop the capabilities of Central Bank of Iraq employees in the field of the English language, through organizing specialized training courses in cooperation with the British Council, which contributes to raising linguistic proficiency and enhancing professional communication at the regional and international levels." link
Evening News with MarkZ. 06/04/2025
Evening News with MarkZ. 06/04/2025
Some highlights by PDK-Not verbatim
MarkZ Disclaimer: Please consider everything on this call as my opinion. People who take notes do not catch everything and its best to watch the video so that you get everything in context. Be sure to consult a professional for any financial decisions
Member: Good Evening- Oh boy are the boards lit up with rumors!!!
Member: I am afraid to look away because I might miss something!
Member: TNT Tony said the new rate was announced from two sources in the Masques tonight $1.38 in country
MZ: Unfortunately none of my sources in the country agree with that. But, I hope he’s right.
Member: I had a local bank in Oklahoma City say they could exchange the money they send it out. It takes six weeks. Sounds funny to me.
MZ: I’m going to tell a bank story but won’t give details so I don’t get anyone in trouble. This is from a Credit Union. The source is someone I know in my personal life.
MZ: “Yesterday I got a call from a credit Union in Tennessee. They let me know they are a Redemption Center for all currencies except for Russian. I asked her “when”? and she said “soon” She said That is why we called you now to let you know we are trained and ready. I specifically asked if the dinar and dong are included and she said “yes” . At the end of the conversation I asked if all we were waiting for is 800 numbers to make an appointment? She said Yes- I know you are. Her excitement was amazing”
MZ: A couple of folks that work for Credit Unions have made the comment that they were recently trained.
Member: I love a good bank story
MZ: Seeing the tellers and staff in regional banks and CU’s being trained makes me excited.
Member: My Credit Union has a sign saying “We have blockchain”
Member: I wonder if all the little local credit union banks in small towns know about the QFS now ??????
Member: My credit union and my Chase Branch both said they are prepared for the new currency to roll out.
MZ: They have a bunch of different names for it. But I have yet to hear a bank specifically refer to it as a QFS. QFS is a term we came up with. Keep in mind banks may call it something different.
Member: If it happened this weekend like bond contacts think, when would groups get paid?
Member: I wonder if lower notes are coming out of the ATMs in Iraq yet?
Member: If they are- I would think we would know.
MZ: “ PM advisor: Iraq’s natural resources are worth more than $16 trillion” They are laying the ground work for a revaluation with the public.
Member: Could it be banks not being ISO20222 compliant is part of our hold up? I read that somewhere around 75% are struggling to get compliant.
Member: Why do you think we haven't heard anything from the Fort Knox audit?
Member: Maybe there is no gold in there?
Member: So excited for things to shift for us all. Could this be our week? I have the feeling it could..
THE CONTENT IN THIS PODCAST IS FOR GENERAL & EDUCATIONAL PURPOSES ONLY&NOT INTENDED TO PROVIDE ANY PROFESSIONAL, FINANCIAL OR LEGAL ADVICE. PLEASE CONSIDER EVERYTHING DISCUSSED IN MARKZ’S OPINION ONLY.
The Central Bank directs banks not to suspend their work except by a decision from the Federal Government
The Central Bank directs banks not to suspend their work except by a decision from the Federal Government
The Central Bank of Iraq directed banks and financial institutions not to suspend their work except by a decision from the federal government, not by holidays granted by local governments.
Shafaq News Agency obtained a document signed by the acting deputy governor, Ammar Hamad Khalaf, and addressed to all authorized banks and non-banking financial institutions, which stated: “Based on Board of Directors Resolution No. (105) of 2025, it was decided that you (the general administration and branches) are committed to the official holidays determined exclusively by the federal government
In order to ensure the smooth flow of banking and financial services provided to citizens, and due to the nature of the connection between the work of various financial institutions and the work of this bank.”
Under this decision, all banks and financial institutions must adhere to official working hours when there is a holiday granted by the local governments in Baghdad and other provinces. link
CLARE: Iraq is moving closer to WTO membership
Clare
Article: "Iraq is moving closer to WTO membership after completing comprehensive technical responses."
Quote: "Trade Minister Atheer Al Ghurairy revealed that Iraq has made significant progress on its path to joining the World Trade Organization,
affirming Baghdad's serious commitment and transparency in meeting the requirements of this important international process."
Economist: The Decline In The Dollar Exchange Rate Reflects The Strength Of The Iraqi Dinar
Economist: The Decline In The Dollar Exchange Rate Reflects The Strength Of The Iraqi Dinar
Time: 2025/06/04 Reading: 1,920 times {Economic: Al Furat News} Economic expert, Duraid Al-Anzi, confirmed that the recent decline in the dollar exchange rate is an indicator of the strength of the Iraqi dinar and means that prices may fall, but this decline is modest and fluctuates between rising and falling.
Al-Anzi told Al Furat News Agency, "The government, in general, does not impose its control over prices, as they vary from one region to another without government intervention."
He added, "The recent decline in the dollar was not due to practical economic reasons or any action by the government or the Central Bank to lower the dollar price, but rather due to market exchange."LINK
WALKINGSTICK: IRAQI BANKING FRIEND UPDATE
Walkingstick
[Iraqi banking friend update]
AKI: If I knew the date I still wouldn't tell you.
But I can tell you this, that all of the meetings we are having everyday with the US Treasury, IMF and the USA people is telling us,
from our understanding of these meetings, that it is happening now.
FRANK26: "SUDANI WANTS THE SALARIES, BUT THE SALARIES WANT THE NEW EXCHANGE RATE"
KTFA
FRANK26: "SUDANI WANTS THE SALARIES, BUT THE SALARIES WANT THE NEW EXCHANGE RATE"....F26
Al-Sudani and Rashid discuss resolving the salary crisis between Baghdad and Erbil in accordance with the constitution.
5/31/2025
President Abdul Latif Jamal Rashid discussed with Prime Minister Mohammed Shia al-Sudani, on Saturday, finding radical solutions regarding the financial obligations between the federal government and the Kurdistan Regional Government, in accordance with the constitution, the budget law, and the Federal Court's decision.
According to a statement from the Presidency's media office received by Shafaq News Agency, Rashid and Al-Sudani's meeting in Baghdad reviewed the general situation at the national level, political and economic developments, and the progress of government programs.
Regarding the salary crisis between Baghdad and Erbil, the statement indicated that "the need to find radical solutions within the framework of the constitution and the law regarding the financial obligations between the federal government and the Kurdistan Regional Government, as stipulated in the constitution, the budget law, and the Federal Court ruling, and the importance of enacting the oil and gas law, was emphasized."
The meeting also highlighted, according to the statement, "the importance of unifying national ranks to enhance security and social stability across the country, and preparing for the upcoming parliamentary elections as a fundamental pillar of the democratic process, with the results reflecting the will and choice of the Iraqi people and contributing to supporting the process of construction, reconstruction, and development in a secure and stable Iraq."
An informed political source revealed to Shafaq News Agency on Saturday that the main Kurdish parties are considering withdrawing from the political process in Iraq if what they describe as "financial and political pressure" from the federal government in Baghdad against the Kurdistan Region continues.
He pointed out that "Hadi al-Amiri, leader of the Fatah Alliance, will make an upcoming visit to the Kurdistan Region, during which he will meet with Kurdish party leaders, with the aim of defusing the crisis and seeking an urgent settlement to the tense financial situation between the central government and the region."
Earlier, informed sources told Shafaq News Agency that federal Prime Minister Mohammed Shia al-Sudani expressed his willingness to pay the salaries of Kurdistan Region employees for May, under two conditions: that the payments be made as a temporary loan rather than as dues, and that a joint high-level committee be formed with Erbil to find solutions to the backlog of salaries before Eid al-Adha.
An expanded meeting called by the Kurdistan Democratic Party (KDP) began Saturday morning in Erbil, attended by representatives of a number of Kurdish political parties and forces. The meeting aimed to discuss the repercussions of the federal government's decision to halt funding for the salaries of Kurdistan Region employees.
These developments come amid an escalating financial crisis between Baghdad and Erbil, following the federal government's announcement that it would halt payments to the salaries of the region's employees. The decision was justified by Kurdistan's failure to meet its constitutional budget allocation and to release oil and non-oil revenues.
In contrast, the regional government believes Baghdad is "using the financial issue as a political bargaining chip," accusing it of violating Federal Court rulings that stipulate direct payment of salaries to employees and not linking them to political disputes.
This crisis coincided with a visit by Kurdish leaders to Washington and the signing of massive investment agreements with American companies. Baghdad considered this a violation of economic sovereignty, while Erbil maintains that it is exercising its right to develop the region and attract foreign investment.
In a statement to Shafaq News Agency, the US State Department called for an expedited settlement of the payments issue, considering that resolving the crisis reflects Iraq's commitment to the interests of its people, sends a positive message to investors, and paves the
way for the resumption of the Kirkuk-Ceyhan pipeline.