Iraqi Kurdistan agrees to Baghdad’s oil-for-wages deal

Iraq’s Kurdistan Regional Government (KRG) says it has agreed to an initiative recently put forward by the Iraqi premier that requires the region to halt independent selling of oil in return for Baghdad paying the salaries of Kurdish workers.

In an online statement published on Wednesday, the KRG said it “accepted your Excellency’s proposal of the Iraqi federal government (paying) all the salaries of the employees of the Kurdistan region, who number 400,000 people.”

On Monday, Iraq’s Prime Minister Haider al-Abadi announced that Baghdad could afford the wages of the cash-strapped Iraqi Kurdistan’s employees if the region stopped its independent export of oil.

In exchange, the autonomous region would “hand over all of its oil production to the federal government of Iraq, as is clearly stated in His Excellency’s proposal,” the KRG statement read.

It further estimated that the wages of Kurdish workers stand at IQD 890 billion (USD 747 million) a month.

The KRG, however, cast doubt on Baghdad’s ability to implement the deal, arguing that the federal government was not making enough from oil export to cover the salaries of its own employees.

Iraqi Kurdistan has been independently exporting and selling crude via Turkey since a deal with Baghdad on oil and revenue-sharing collapsed last year.

On Tuesday, the autonomous region said it had made more than USD 3.94 billion from direct oil sales between June and December 2015, compared to USD 1.98 billion it received from the federal government in the first half of 2015.

Falling oil prices have hardly hit Iraqi Kurdistan, which like the capital, Baghdad, heavily relies on oil income to provide the majority of its funds.

The KRG authorities have failed to pay the salaries of public servants working in the region since September 2015.

KRG public employees have held protests to voice their anger at unpaid salaries and wage cuts.