The financial dispute between Erbil and Baghdad has escalated again. On Thursday, both sides traded accusations regarding budget shares and unpaid salaries for the Kurdistan Region’s civil servants.
Tensions rose after the federal government decided to suspend salary payments to KRG employees. Baghdad claimed that Erbil exceeded its federal budget share.
Iraq’s finance minister alleged that the Kurdistan Region surpassed its 12.67 percent share of the national budget. According to Baghdad, the excess totaled more than 13.5 trillion dinars, roughly $10.3 billion. Citing rulings by Iraq’s Federal Supreme Court, the federal ministry stated it could not send additional funds under these conditions.
In response, the Kurdistan Region’s finance ministry rejected the accusations. It argued that the method Baghdad used to calculate the Region’s share violates the Iraqi Constitution. Erbil insisted that budget allocations must be based on actual federal revenue, not on expenditures.
Shortly afterward, Baghdad responded again. It accused the KRG of failing to hand over both oil and non-oil revenues. The Iraqi finance ministry said that since oil exports had stopped and revenues were not transferred, Baghdad could no longer fund the Region’s salary payments for the rest of the year.
The financial dispute between Erbil and Baghdad worsened following the March 2023 halt of oil exports through the Iraq-Turkey pipeline. A Paris arbitration court had ruled that Ankara breached a 1973 pipeline agreement by letting Erbil export oil independently.
In February, Iraq’s top court ordered the KRG to deliver all oil and non-oil revenues to the federal treasury. Erbil responded by expressing willingness to hand over non-oil income, aiming to maintain cash flow and comply with federal laws.
So far in 2025, Baghdad has paid only four months of salaries to KRG employees. This move has drawn sharp criticism from Kurdish political blocs.
Several parties, including the KDP, PUK, New Generation, KIU, and Komal, condemned the suspension of salary payments. In a joint statement, they urged the Iraqi prime minister to intervene and resume payments. They stressed that salaries are constitutional rights, not political tools.
KDP leaders went further, warning of potential withdrawal from the Iraqi government. The party also threatened serious action if May salaries are not paid by June 6.
The financial dispute between Erbil and Baghdad shows no signs of resolution, leaving thousands of public workers in limbo.