Increased tensions between Iraq’s central administration in Baghdad and the Kurdish regional government in the north have heightened, stemming from a lengthy disagreement over the division of oil revenues. The central government alleges that Kurdish authorities are engaged in illegal agreements and oil smuggling activities. In response, Baghdad has suspended funding for public sector salaries in the Kurdish region before the Eid al-Adha festival, a move labeled as “collective punishment” by Kurdish representatives, who warned of possible retaliation.
A prolonged conflict has reignited tensions between Baghdad and Irbil, the Kurdish regional capital, involving the sharing of oil revenue. The conflict dates back to 2014 when the Kurdish authorities began independently exporting oil via a pipeline leading to Turkey’s Ceyhan port. Baghdad condemns Irbil’s actions, citing their bypass of the Iraqi national oil company, and taking Turkey to the International Court of Arbitration for allegedly breaching the 1973 Iraqi-Turkish pipeline agreement. Following a court ruling in favor of Baghdad, Iraq ceased oil transfers through the pipeline in March 2023. Efforts to resume these exports have repeatedly failed.
In a significant move last month, Masrour Barzani, the Prime Minister of the Iraqi Kurdish regional government, visited Washington to sign two notable energy agreements with U.S. companies. In response, Baghdad filed a lawsuit in an Iraqi court, claiming that these agreements violated the procedure of involving the central government.
The Iraqi Finance Ministry recently declared its decision to stop financing the salaries of public employees within the Kurdish region. This decision has incited significant discontent and opposition in Irbil. According to a ministry statement, this step resulted from the Kurdish administration’s inability to deliver both oil and non-oil revenues to the federal treasury, as required by federal budget regulations. Any future funds will only be disbursed if the region ensures “transparency and financial accountability.”
The federal Ministry of Oil has criticized the Kurdish region for not handing over crude oil from its fields, intended for export through the state’s SOMO company, causing monumental financial losses. Furthermore, the ministry added that non-compliance continues to harm Iraq’s international standing and obligations, forcing the federal government to slash production in other areas to adhere to Iraq’s OPEC quota, which factors in Kurdish production regardless of its legality.
Baghdad has also leveled accusations at Irbil for illegally transporting oil outside the nation. An Iraqi official, who preferred to remain anonymous, said the government had documented 240 instances of illegal border crossings from the Kurdish area into Iran, aiming to smuggle oil derivatives between December 25, 2024, and May 24, 2025. The Kurdish Ministry of Natural Resources dismissed these allegations as an attempt to deflect from rampant corruption elsewhere in Iraq. It claims the Kurdish region allowed its oil sales through SOMO and complied with financial obligations, yet Baghdad neglected its financial commitments.
Additionally, Kurdish authorities argue that Iraq’s lawsuit in 2023 led to Turkey halting oil exports, even though they met their obligations by delivering over 11 million barrels of oil to Baghdad without receiving compensation. The Kurdish government accuses Baghdad of constitutional violations and employing a strategy of economic punishment and deprivation against its people by withholding salary funds.
Barzani equated the salary withholding to a “policy of mass starvation,” reminiscent of Saddam Hussein’s historical atrocities against the Kurds, labeling the decision as “unjust and oppressive.” He praised the Kurdish community for enduring tyranny with resolve, emphasizing their historical resilience.
Amidst the turmoil, residents of the Kurdish region find themselves caught in the relentless political conflict. Saman Ali Salah, a teacher from Sulaimaniyah, states the salary suspension has compounded his difficulties, as his daughter was recently injured and remains hospitalized. He faults both the Baghdad and Irbil leadership for their predicament, expressing frustration at the inability to cover living expenses. “I don’t know what to do,” he stated, hopeful for divine justice against those in power.