CONTEMPORARY EURASIA VOLUME VI (1) Contemporary-Eurasia-VI-1-engl | Page 32

CONTEMPORARY EURASIA VI (1)
Financial difficulties
In recent years Iraqi Kurdistan also faces economic and financial
crisis. The main reason of it is the high dependence on oil revenues
which have plunged more than twice since 2014. Another problem is
contradictions with central government in Baghdad, which often does
not fully pay 17% of oil revenues fixed in the Iraqi constitution 10 .
Baghdad uses this lever against Iraqi Kurdistan to halt their separate
oil policy. On the other hand, the KRG had to allocate additional
finances for the war against Islamic State and sheltering hundreds of
thousands refugees fleeing from other parts of Iraq and Syria.
A decade-long economic boom in the autonomous region came to a
sudden halt in 2014 when Baghdad slashed funding to the Kurds after
they built their own oil pipeline to Turkey and began exporting oil
independently 11 .
That left the KRG struggling to meet a bloated public payroll of
875 billion Iraqi dinars ($800 million) per month. The KRG has tried
to make up the shortfall by increasing independent oil sales to around
600,000 barrels per day, but at low prices the region is still left with a
monthly deficit of 380-400 billion Iraqi dinars ($717 million). The
war against the Islamic State and an influx of more than a million
people from the other parts of Iraq has deepened the crisis even
more 12 .
Public officials in the Kurdistan region of Iraq have been forced to
bear a 75% cut in salaries as the region struggles with an economic
crisis. The salaries of the region's highest paid employees were
reduced by up to 75%, while the salaries of low wage earners ranging
from 100 thousand to 200 thousand dinars were reduced by 15% 13 .
The current Iraqi constitution adopted in 2005 secures for the KRG
around 17 percent of Iraq's national budget annually after certain
sovereign and governance expenses were deducted. That amounted to
10
See Iraqi Constitution, Article 112
Protests intensify in Iraqi Kurdistan Amid Economic Crisis, 09.02.2016,
https://www.reuters.com/article/us-mideast-crisis-iraq-protests/protests-
intensify-in-iraqi-kurdistan-amid-economic-crisis-idUSKCN0VI11X
12
lbid
13
‫الموظفين‬
‫رواتب‬
‫تبتلع‬
‫االقتصادية‬
‫العراق ‬
‫كردستان‬
‫أزمة‬,
05.02.2016,
https://www.alarabiya.net/ar/aswaq/economy/2016/02/05/.
11
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