Fazil Nabi, Iraq’s Deputy Finance Minister.
Neither Baghdad nor Erbil is likely to abide by the 2017 budget bill, said Fazil Nabi, Iraq’s Deputy Finance Minister. “Both are now convinced that it is better for each to financially run itself independently,” he argued.
Rudaw: The Iraqi Parliament passed the country’s 2017 budget bill. You play the role of Iraq’s Finance Minister now. Is this budget bill in favor of the Kurdistan Region?
Fazil Nabi: We, the Iraqi government, settled on the content of the 2015 Erbil-Baghdad agreement for the new budget bill. The agreement was not, however, followed through. I already had a feeling that the pact would not be enforced, although it was followed through until the end of June. The problem was Baghdad’s demand that the Kurdistan Region send 550,000 barrels of oil to Baghdad, including the Kirkuk oil.
A word was fixed in Article 9 of the Iraqi budget bill which addresses the budget share for the Kurdistan Region. This word led to the failure of the agreement. It was phrased as: expenses would be from active expenditures. According to the agreement, Baghdad was bound to send 17 percent of its budget to Kurdistan monthly. But they said that they didn’t have enough cash to send 1.2 trillion Iraqi dinars (IQD) to Kurdistan monthly, claiming that they could only spend 60 percent of the country’s overall budget. They could have sent 640 billion IQD at best.
Did the Kurds not know that this word was that bad? Why was it put there?
The Kurds knew that, but it was unfortunately done anyway. The Kurdistan Regional Government (KRG) should do its own calculations, which is very easy. It can make 800 billion IQD monthly if it sells 550,000 barrels of oil for $40. But it will get 500-550 billion IQD monthly according to the new budget bill if the KRG commits to it.
I don’t think Kurdistan will commit to the new Iraqi budget bill because it is not in its interests.
If the Kurds knew that the word ‘active’ was not in their favor, why did they put it there?
The word does not exist in the version which the Ministry of Finance drafted. It was added to it later.
What are the negative aspects of this new budget bill to the Kurdistan Region?
The budget is perhaps in the interests of Kurdistan under normal economic situations. It is in the favor of Kurdistan if Baghdad can fully deliver on the promises laid out in the budget bill. But Iraq is not in a favorable economic situation to obtain the amount mentioned in the budget bill.
Baghdad has put over 100 trillion IQD in the budget as its annual income. How much do you think it can make for 2017?
I predict that Iraq will be able to make 60-65% of the amount mentioned in the budget bill for 2017.
What minefields are there in the new Iraqi budget bill for the Kurdistan Region?
The budget bill had no minefields for Kurdistan until it reached the parliament. The Kurdistan Region was at liberty to sell its oil independently or reach an agreement with Baghdad on this. It was riddled with minefields at the parliament. I don’t know whether this was done deliberately or out of ignorance. Some people showed themselves to be heroes in this case. But the question is the extent to which they can defend this budget bill.
These heroes have now added Article 10 to the budget bill which stipulates: we will oblige the KRG to send its oil to Baghdad. They should have first figured out whether this budget bill was in favor or against the interests of Kurdistan. What these heroes have done is political maneuvering and entanglement of the KRG.
I am puzzled. I don’t understand how this happened in Baghdad while the Patriotic Union of Kurdistan (PUK) is involved in the current KRG cabinet and Qubad Talabani, the son of its leader Jalal Talabani, is the KRG’s Deputy Prime Minister.
In the presence of knowledge that the budget share dedicated to Kurdistan is not sufficient to pay the salaries of all its employees and that the income Kurdistan is currently making is more than this budget share, how could they oblige the KRG to do something which is not in the interests of its people? Article 10 of the new Iraqi budget bill is not only a minefield. It is a big bomb planted for the Kurdistan Region.
Can the Kurdistan Region choose to not abide by this budget law?
Yes, it can. It would, however, have abided by this new Iraqi budget legislation if the word ‘active’ was not fixed in it. The Kurdistan Region will choose the path that will lead to more income.
Has the previous Iraqi Prime Minister Nouri al-Maliki had a part in drafting this budget bill?
The reality is that al-Maliki is popular within the Iraqi parliament. He can get many things done by the parliament due to his leverage on many Iraqi representatives. Let’s not enter the political arena much. Come back to the economic issues.
You have recently been very close to the Iraqi Prime Minister Haider al-Abadi. What is his opinion about Kurdistan?
His stance on the Kurdistan Region is very good now. President Barzani’s visit to Baghdad and the cooperation between Erbil and Baghdad on the offensive to eject ISIS from Mosul led to many changes between the two.
One of the strong fronts within the Iraqi parliament now is the al-Maliki, al-Jabouri, and the PUK triad. This was very clear when the Iraqi parliament withdrew trust from the country’s former Finance Minister Hoshyar Zebari. This was a political issue, not a financial one. It was done against the Kurdistan Democratic Party’s (KDP) position in Baghdad rather than against Zebari himself. Neither Abadi nor his party’s parliamentary bloc was in favor of removing Zebari. Zebari has filed a lawsuit, and the Federal Court will decide on his case on December 20. He is very hopeful that he will return to his position.
What is Abadi’s current position? What agreement does he want to reach with the Kurdistan Region?
Abadi is smart in economic matters. He is for the 2015 agreement between Erbil and Baghdad. He speaks highly of the Kurdistan Region for about 15 to 20 minutes in current Ministerial Council meetings. His stance has recently been very positive toward the Kurdistan Region, especially since the joint Iraqi-Erbil offensive has been launched against ISIS. The new Iraqi budget bill is, however, not in the favor of Kurdistan.
Does Abadi think this new budget bill is not in the interests of the Kurdistan Region?
Abadi himself knows this. He is very smart. He even takes into account a penny. He is very meticulous. He understands everything in budget matters.
It’s said that neither Baghdad will send this budget share to Kurdistan, nor will Kurdistan hand over its oil reserves to Baghdad. Do you think both sides are now convinced that it is better for each to finance itself independently of the other?
Yes – under the current circumstances. Both are now convinced that it is better for each to financially run itself independently.
According to the new budget bill, which the PUK and the Change Movement (Gorran) support, the Peshmerga budget is fixed within the budget dedicated for the Iraqi Infantry Forces. Can you explain this?
The Iraqi Prime Minister is the commander-in-chief of the country’s armed forces. He knows the amount of the money. His Excellency knows how much the Iraqi Infantry Forces are getting paid. Out of the budget dedicated to the Iraqi Infantry Forces, 38 billion IQD will be given to the Peshmerga forces.
How much money has been dedicated to the Iraqi Hashd al-Shaabi militia in the 2017 budget bill?
$1 billion has been dedicated to the Hashd al-Shaabi salaries alone over the past 10 months. The 2017 budget bill has dedicated 3 trillion IQD to the Hashd al-Shaabi forces whose number is set by the new budget bill to be 122,000 soldiers.
Iraq gets lots of cash from international lending institutions. Do they give anything to Kurdistan?
Iraq gets 19 trillion IQD from these institutions. But they don’t give a penny to Kurdistan.
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