KRG salaries crisis continues, dispute between Baghdad and Erbil over responsibilities

Shafaq News/ The ongoing salary crisis in the Kurdistan Region has once again brought tensions between Baghdad and Erbil to the forefront. As 2025 begins, unresolved payment of salaries for December 2024 has sparked widespread public discontent and intensified calls for a definitive solution.

Despite the Federal Supreme Court's insistence that employee salaries should remain outside political disputes, accusations persist that political factions within the Shiite Coordination Framework, a key part of Prime Minister Mohammad Shia Al-Sudani's government, are deliberately stoking crises to pressure the Kurdistan Regional Government (KRG).

Strikes Escalate Amid Economic Crisis

In a further escalation, a coordination committee representing protesting teachers and employees in the Kurdistan Region announced a general strike beginning last Sunday. The move aims to exert pressure on the concerned authorities to address their concerns over delayed wages.

This strike comes at a time when the Kurdistan Resion is experiencing a severe economic crisis, with many teachers and employees still awaiting salaries for December 2024 and January 2025. The protests are raising concerns about the government’s ability to find practical solutions to the ongoing salary issue while ensuring the continuity of work in educational and public service institutions.

The Region has seen continuous protests for months, involving various employee sectors, all sparked by delays in salary payments due to the financial crisis. The roots of the crisis lie in the political and financial tensions between the KRG and the federal government, compounded by the repercussions of falling oil prices on the national budget.

Allegations of Fake Crises

Political analyst Yasin Aziz has accused influential parties within the Coordination Framework, which holds sway over the federal government, of creating "artificial crises," including with the Kurdistan Region, particularly concerning the budget, salaries, and the resumption of oil exports. Aziz argued that the aim is to exert political pressure on the KRG, despite the Federal Supreme Court's call for salaries to remain free of political manipulation.

Aziz explained to Safaq News that these political factions “have exploited their control over the federal government, particularly after the Sadrist movement's withdrawal from parliament, using their influence in both the executive and legislative branches to create obstacles in any efforts for rapprochement between Erbil and Baghdad.”

On January 12, 2025, KRG President Nechirvan Barzani visited Baghdad and met with several government and political officials, including members of the State Administration Coalition, to find solutions to outstanding issues, particularly the salary crisis. The coalition emphasized that the issue of employee salaries should be resolved on a technical level through dialogue, without resorting to media escalation.

Roots of the Crisis

Kazem Al-Shammari, a member of the Iraqi Parliament’s Economic Committee, provided a different perspective on the conflict between Baghdad and Erbil, explaining that the disagreement stems from the KRG’s failure to deliver the required amount of oil to the State Oil Marketing Organization (SOMO), as agreed in previous agreements. The issue arose as the Iraqi Parliament sought to amend the 2025 budget law.

Al-Shammari clarified to our agency that Baghdad has requested that the KRG deliver all of its oil production to “SOMO” [State Organization for Marketing of Oil], which would be deposited into the national treasury. This revenue would then be used to pay employee salaries in the Region and cover the cost of oil production. However, the KRG insists that it should pay the production costs and salaries before delivering the oil to SOMO.

Al-Shammari also called for respect of two key principles: “first, that Iraq’s natural resources belong to all Iraqis, whether in Erbil, Basra, or elsewhere; and second, that employees' wages should not be used as a tool for political pressure or coercion, and should be paid in all circumstances.”

In mid-January, the Iraqi Parliament’s Financial Committee formed a special subcommittee to follow up on the KRG’s financial entitlements for 2024 and 2025. This committee is investigating the distribution of funds to the Kurdistan Region by meeting with officials from the Ministry of Finance, the Federal Audit Bureau, and the Central Bank.

This move came in response to a January 11 request by the KRG, urging the federal government to guarantee the full payment of public sector salaries in the Region for the current year.

Responsibility for the Salary Crisis

Financial and banking expert Mustafa Hantoush pointed out that the KRG is primarily responsible for the salary crisis, rather than Baghdad. He noted that the Region had been paying its employees through its own oil revenues until 2020 when the price collapse triggered by the COVID-19 pandemic led Erbil to request assistance from Baghdad. Hantoush added that the KRG had submitted unrealistic lists of employees and retirees, causing delays in the disbursement of funds.

“The KRG refused to abide by the Federal Court's decision to deposit salaries in banks, as well as its rejection of a request from Baghdad to open accounts for employees, compounded the problem,” he told Shafaq News, emphasizing that Baghdad had provided substantial support, transferring over 11 trillion dinars to the KRG in 2024 and that the solution to the crisis lies in directly depositing salaries into employees’ accounts, arguing that Erbil should remove non-governmental entities from its payrolls and pay their salaries independently.

Earlier, KRG Prime Minister Masrour Barzani asserted that Baghdad’s treatment of the Region is “unacceptable and not in line with the treatment of a federal Region.”

KRG Proposes Solutions to Salary Crisis

Wafaa Mohammad Karim, a member of the Kurdistan Democratic Party (KDP), highlighted the recurring delays in salary payments every year, despite the Region’s commitment to transfer half of its revenues, especially in the fourth, fifth, and sixth months, as well as handing over full control of the oil file. This continued delay persists even though the Federal Court has stressed that salary issues should not be politicized.

In an interview with Shafaq News, Karim explained that while “the Region received 10.26 trillion last year, it needed 11.56 trillion dinars to cover employee salaries. To date, the salaries for December 2024 and January 2025 remain unpaid, indicating the urgent need for a new agreement.”

Karim disclosed that the purpose of the KRG’s economic delegation’s visit to Baghdad was to seek a resolution. Should this not occur, the KRG government is prepared to take a firm stance. He proposed two solutions: first, the KRG could transfer all internal revenues to Baghdad in exchange for receiving the full 12.67% share of the national budget; second, the Region could deliver half of its revenues as per Article 114, with Baghdad covering the salaries.

While the KRG views the salary issue as non-negotiable, Baghdad insists that it is tied to a broader set of entitlements, including the delivery of oil revenues, customs revenues, and border crossings to the federal government. As the standoff continues, questions remain about how and when a resolution can be reached to address the salary crisis and restore stability to the Region.