Mr ‘Abadi says that unless the Kurdistan Regional Government (KRG) honors Baghdad’s claim – thought to be around $9bn – this will result in the loss of the KRG’s share of federal government spending in Iraq’s 2014 draft budget. Mr ‘Abadi, a leader in the coalition of Iraqi Prime Minister Nuri al-Maliki, says that the budget will collapse if the state continues to pay the 17% allocation of total revenues to the semi-autonomous Kurdistan region, while the Kurds retain the proceeds of their independent oil exports, which are slated to ramp up this year with the start of commercial flows through the KRG’s newly-completed independent export pipeline (MEES, 17 January).

Even with revenue from 400,000 b/d of oil exports from the KRG in 2014, as allocated in the proposed budget, the deficit is forecast at around $18bn, Mr ‘Abadi says. ‘Abd al-Muhsin al-Sa’dun, a Kurdish MP in the federal parliament, told local newspaper al-Zaman last week that under the draft budget Baghdad is demanding that the KRG settle arrears of $9bn for exports of 400,000 b/d of crude in the past two years, before it would agree to continue the KRG’s 17% allocation into the 2014 budget. He adds that this is a political issue aimed at consolidating federal control over the KRG oil resources, a matter which contravenes the constitution. (CONTINUED - 1398 WORDS)