Wednesday, 15 August 2012, 04:34 GMT
Kurdistan receives limited share of the Iraqi complimentary budget
By The Kurdish Globe

Since 2007, IQD 8 trillion of payments from Kurdistan's share of budget has been put on hold by Baghdad

A report byf the economic department of the opposition Gorran Movement announced that the Kurdistan Region's share of the 2012 complementary budget of Iraq is only 5.4%.

The complimentary budget is the excess revenues collected through selling oil in the first half of the year.

The report says that the Kurdistan Region is paying the penalty for the excess expenditures of other Iraqi Ministries, and urged Kurdish MPs in the Iraqi Council of Representatives to do their best to oppose such a reality.

The report states that the complementary budget is IQD 9.28 trillion (approximately USD 7.5 billion), in which the operational budget is IQD 7.5 trillion or approximately 82% of the whole budget, and the remaining 18% is set aside for the investment budget, which is IQD 1.68 trillion.

Kurdistan Region's share in this budget is only IQD 418.445 million, i.e. 5.4% of the whole budget.

The supplementary budget is normally prepared in the second half of each year and although it may be distributed in an unbalanced way, i.e. revenues could be less than expenditures, it should still be balanced in the sense that unnecessary expenditures should be minimized, making the financial resources more expensive such as selling stores, material, etc. in a way that the revenues exceed the expenditures.

At the end of the report, it is stated that before the submission of the draft complimentary budget to the Kurdistan Region, it had been prepared and reviewed by the Iraqi Council of Ministers, and the Minister of Finance and the Deputy Prime Minister, who are both Kurds, should have ensured that Kurdistan's share was much fairer than it currently is, and in turn should have prevented the council from submitting it to parliament. But as it is now in the parliament, the onus is on the Kurdish MPs to raise their concerns and prevent its approval in its current format.

On the other hand, a report by the Kurdistan Region's Ministry of Finance and Economy, claimed that over the past 6 years, more than IQD 36 trillion (approximately USD 30 billion) has been allocated as a budget for the Iraqi defense system, out of which 17%, i.e. more than IQD 6 trillion, is intended as the Kurdistan Peshmerga share. However, not a single penny has been spent from that amount for the Peshmarga Forces.

The Peshmarga budget constitutes more than 75% of the total money that Baghdad still owes Erbil.

This defense system budget has been placed within the sovereign budget, which according to the budget law, is the first budget that is allocated, even before calculating the shares of the federal regions like Kurdistan. This means that Kurdistan's 17% share is currently not allocated from the total budget, but rather from the remaining portion after the sovereign budget is deducted, and in this case Erbil is deprived from 17% of the sovereign budget, out of which it is also deprived from the Peshmarga's budget.

According to this arrangement by Baghdad, the Kurdistan Region contributes to the central government's defense system rather than Baghdad contributing to Kurdistan's defense system.

Although, in all the budget laws, the issue of Peshmarga's expenditures has been mentioned, it has never been decided how much should be paid and the mechanisms for that to happen, and all of these points have been left to negotiations and political agreements between Erbil and Baghdad.

In Article 13 of the 2012 budget law, it is mentioned that the expenditures of the Kurdistan Region's Protection Forces (Peshmerga) will be agreed upon between the Iraqi Council of Ministers and the Kurdistan Regional Government (KRG), and it will be for wages, arms and other equipment and necessities.

One of the prerequisites for the KRG to benefit from the Iraqi defense budget was the establishment of 8 brigades, but even after their establishment, their budget has not been paid by Baghdad.

This comes at a time when even in the complementary budget, an extra IQD 1.12 trillion has been allocated for the Iraqi defense system, out which again Peshmerga is deprived of each penny.

Although Najiba Najib, a Kurdish member of the Iraqi Council of Representatives, queried the Minister of Finance about the reasons behind the allocation of this huge budget for the defense system out of the complimentary budget, but the minister refused to give an adequate explanation and answered that the Ministry of Defense know how to spend it themselves.

In the 2012 budget of Iraq, a total of IQD 7 trillion had been allocated for the Iraqi Defense System, and instead of paying part of this to the Peshmarga Forces, who defend the Kurdistan Region and the Iraqi borders with Iran, Turkey and Syria, the Iraqi Army has deployed 110 thousand soldiers to direct their weapons towards the Peshmerga in Zummar.

In addition to the Peshmarga's budget, Kurdistan has been deprived of an additional IQD 2 trillion.

According to the budget law, the central government should pay the cost of fuel used to generate power in Kurdistan, but KRG Finance Minister Bayiz Talabani reiterates that they have not received a penny of that from Baghdad.

Other budgets that Baghdad should have been responsible for include the expenditures for elections, census, support of farmers, social insurance, mine actions and some other issues, but they have not been paid completely by Baghdad.

KRG Finance Ministry and the Kurdistani Bloc in the Iraqi Parliament argue that the chauvinist mentality of some of the officials in the central government is the key factor behind the refusal to pay all these budgets to Kurdistan.

This is at a time when the Gorran Bloc in the Kurdistan Parliament is busy with filing a lawsuit against both the KRG and the central government to find out who is responsible for the prevention of this huge budget from been received by the Region.

MP Kardo Mohammed, head of the Gorran Bloc says that they have not yet filed the lawsuit but are busy working with their legal advisers investigating the issue to decide how best to file the suit and in which court to apply the case.

The objective, according to Mohammed, is to first identify the responsible party and then start investigations and questioning thereafter.

Although until now this issue has not yet been submitted to any court and no court has made a decision about this, this issue has been the reason behind the consequent budget deficits of the KRG.

Every year, the Kurdistan Parliament assumes that the Peshmerga's budget will be allocated by the central government and includes it in its regional budget as a potential deficit, but in the end it turns out to be an actual deficit as Baghdad does not pay the Peshmarga budget.

Last year the deficit was IQD 1.5 trillion and this year it reached IQD 2.44 trillion.3