Erbil, Kurdistan Region – The Iraqi federal government has intensified political, economic, and financial pressure on the Kurdistan Region in recent years, imposing severe sanctions that have crippled public sector salaries and blocked vital oil exports, despite the Region’s critical role in Iraq’s stability and security.

For over a decade, Baghdad has systematically reduced the Kurdistan Region’s budget and delayed salary payments to public employees, citing various pretexts. Despite a Federal Court ruling mandating the immediate disbursement of salaries, the federal government has continued its withholding policy.

In response, the Kurdistan Regional Government (KRG) implemented reforms, including a digital payroll system (Payroll) and compliance with Iraq’s unified retirement law, to ensure transparency. However, the federal government has still failed to send full salary payments, with only 4 trillion dinars out of the Region’s 13 trillion dinar budget share for 2025 delivered so far.

In a controversial move, the Federal Ministry of Finance recently announced it would withhold the remaining eight months’ salaries for 2025, further exacerbating financial distress for Kurdish civil servants.

Since March 25, 2023, Baghdad has suspended the Kurdistan Region’s oil exports, costing Iraq an estimated $25 billion in lost revenue. A subsequent agreement on April 4, 2023, required the KRG to hand over 11 million barrels of oil to the federal State Organization for Marketing of Oil (SOMO). However, the federal government has refused to cover production costs, while also taking 50% of the Region’s non-oil revenues.

Despite budget approvals for 2023, 2024, and 2025, Baghdad’s 11-year budget blockade has stalled infrastructure and investment projects across the Kurdistan Region. Additionally, the federal government has failed to compensate victims of chemical attacks and the Anfal genocide, violating Article 132 of the Iraqi Constitution.

The KRG has repeatedly affirmed its commitment to Iraq’s constitutional framework, including Articles 111 and 112, which recognize the Region’s right to manage its energy resources. Contracts between the KRG and international oil companies have been upheld in Iraqi courts, yet the federal government continues to block exports, preventing economic recovery.

Analysts suggest Baghdad’s policies aim to weaken the Kurdistan Region’s autonomy and force financial dependence, reminiscent of the 2014 budget crisis.

The KRG has called for dialogue and adherence to legal and constitutional resolutions, but Baghdad’s punitive measures persist. The blockade has drawn sharp criticism from Kurdish and Iraqi political parties, the Iraqi Parliament’s presidency, and international observers, who view the sanctions as politically motivated.