Peregraf
As public sector workers in the Kurdistan Region anxiously awaited the arrival of their May salaries, a wave of frustration and despair swept through the region following an unexpected announcement from Baghdad: not only will the salaries for May not be transferred, but the salaries for the remaining eight months of 2025 are also in danger.
The Iraqi Minister of Finance, Taif Sami, has formally notified the Kurdistan Regional Government (KRG) that the 12.67% share of the federal budget allocated to the region has been fully spent. In her letter, Sami explained that based on the oil and non-oil revenues collected from the Kurdistan Region for the years 2023, 2024, and 2025 — along with the amounts sent monthly to pay salaries — the KRG has already received more than the funds legally allocated under the federal budget.
According to Sami, "The Kurdistan Region has exceeded its allocated share of 13 trillion and 547 billion Iraqi dinars. Continuing any further transfers would violate the federal budget law and the decisions of the Federal Supreme Court." She further criticized the KRG for failing to implement the salary banking system known as Tawtin, a long-standing demand from Baghdad.
This decision has sparked outrage among Kurdish officials, who accuse the federal government of using financial tools as political leverage. The timing of the letter has raised particular concern, coming just ten days after the KRG signed a historic $110 billion oil and gas deal with U.S. companies. Many Kurdish officials see Baghdad's move as retaliatory.
"This letter is not about accounting or legal rules," said Dr. Narmin Ma’roof, a Kurdish member of the Iraqi Parliament’s Finance Committee, after visiting the Ministry of Finance. "It is a clear political message, not a legal calculation. The way Baghdad has calculated the region's share has no legal or accounting basis, and it contradicts the Federal Supreme Court’s Decision No. 224."
Former Deputy Minister of Finance Rebaz Hamlan also condemned the move. "This is not an administrative or financial issue — it is part of Baghdad’s political pressure campaign against the KRG," Hamlan said. "Despite court decisions, Baghdad has never fully paid the KRG’s budget share. For 2025, 11.5 trillion dinars were allocated to the region for salaries, yet only 3.8 trillion have been disbursed."
Hamlan warned that this approach harms not only the KRG but also 1.25 million public employees and pensioners in the region who depend on monthly income. "What’s happening is an attack on the people of Kurdistan. Baghdad must stop using salaries as a weapon."
Soran Omar, a member of Iraq’s Parliament, echoed these concerns. "Last year, a similar issue happened in October. This year, it has happened as early as May, which shows a dangerous acceleration in the dispute," he told Peregraf. "Eight months of unpaid salaries would be a humanitarian disaster for the region."
The crisis comes at a time of heightened political and economic tensions between Erbil and Baghdad. On May 18, the KRG signed two massive energy deals in Washington with U.S.-based HKN/Onex Group (under Miran Energy) and Western Zagros. The contracts, signed under the supervision of KRG Prime Minister Masrour Barzani, bypass the Iraqi federal government and focus on developing the Miran and Topkhana oil and gas fields.
"These billion-dollar agreements prove the Kurdistan Region’s commitment to peace and economic development," Prime Minister Barzani said at the signing ceremony, promising that the projects would provide 24-hour electricity for the Region and allow the export of surplus power to other Iraqi provinces.
The fields are estimated to hold 13 trillion cubic feet of natural gas and 9 million barrels of oil. KRG officials project production of 50 to 70 million cubic feet of gas per day within 18–20 months—potentially bridging a significant gap in power generation. Despite an installed capacity of 8,189 megawatts, the Region currently produces only around 4,500 MW.
The contracts, however, are structured under a profit-sharing model — a framework long rejected by Iraq’s Oil Ministry, which insists that all oil dealings must be centralized through Baghdad.
On the same day Taif Sami’s letter was issued, two Iraqi lawmakers, including MP Maliki, filed a complaint with the Federal Supreme Court calling for an immediate halt to the implementation of the KRG’s new energy contracts. "We demand that the court suspend these contracts and declare them invalid," Maliki said in a press conference. "They violate national sovereignty and bypass federal institutions."
Three sources told Reuters that the Iraqi Oil Ministry had already filed a legal case against the KRG regarding the contracts. While the lawsuit's exact location remains undisclosed, a document seen by Reuters confirms its submission.
Despite the legal threats, the United States has expressed support for the KRG’s energy deal. On May 28, U.S. Secretary of State Marco Rubio held a phone call with KRG President Nechirvan Barzani. According to a statement from the KRG presidency, the two leaders discussed U.S.-KRG cooperation in energy and the wider economic relationship between Erbil and Washington. "The United States continues to support the stability and prosperity of Iraq, including the Kurdistan Region," the statement said.
State Department Spokeswoman Tammy Bruce added that Secretary Rubio congratulated the KRG for strengthening economic partnerships with American companies and promoting energy independence for Iraq as a whole. "We are pleased to see U.S. firms expanding investment in the Kurdistan Region," Bruce said, adding that Washington encourages continued dialogue between Erbil and Baghdad.
The deepening crisis over salaries highlights the longstanding rift between Iraq’s federal and regional governments. Disagreements over oil policy, budget allocations, and constitutional authority have persisted for more than a decade, often leaving ordinary citizens in the crossfire.
While the Federal Supreme Court has previously ordered Baghdad to release salaries to the KRG under specific conditions, implementation has been inconsistent. Many public servants and pensioners in the region now face a grim future without guaranteed income.
"The people of Kurdistan cannot live on promises and political disputes," Ahmed Ali, a schoolteacher in Sulaymaniyah who has not received her salary, told Peregraf. "We need a solution — not speeches."
Calls for Kurdish unity are growing. Hamlan and other officials have urged Kurdish parties to set aside political differences and form a united front to defend the region’s financial rights.
With tensions escalating and no immediate resolution in sight, the budget deadlock threatens to spark further instability — both economically and politically — at a time when the region can least afford it.