ENHANCE UNDERSTANDING

ISHM: June 8 – 15, 2023

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Key Takeaways:

  • Parliament Approves Massive, Controversial Budget Law; Sudani Visits Cairo; Emir Of Qatar Visits Baghdad – On June 12, Iraq’s parliament voted to approve a long-delayed budget worth IQD198.9 trillion (over $152 billion) in annual spending, ending months of disagreements over handling oil exports and revenue sharing between the federal government and the KRG. The budget law covers three years (2023 – 2025) and is based on 3.5 million bpd of oil exports at $70 per barrel. These exports include 400,000 bpd from the Kurdistan region, whose share was set at 12.6%. Revenue from Kurdistan’s oil exports will be deposited in an account overseen by federal officials. Negotiations were also complicated by intra-Kurdish disagreements as the PUK pushed for clauses that give Baghdad new controls over the KDP-dominated regional finances. After the vote, KRG President Nechirvan Barzani welcomed the bill’s passage, but also said it was “unfortunate” that the debate included “wrongful behavior” by some lawmakers towards the region that violated existing agreements. The vote was a lengthy process that took lawmakers four sessions in which they debated and eventually voted to approve the bill, several articles at a time. The new budget appears to ignore warnings, including by the IMF, about the size of Iraq’s bloated public sector. Available information shows the bill includes IQD133 trillion in operational expenses, meant to accommodate nearly 600,000 new hires, and a deficit of IQD64.3 trillion, twice as high as in 2021. On June 12, PM Sudani began an official 2-day trip to Egypt where he had talks with President al-Sisi. During the trip, Iraq and Egypt signed 11 MoUs to promote small and medium enterprises, cooperate on accession to the World Trade Organization, train diplomats and civil servants, and cooperate on tourism, sports, and labor affairs. On June 15, the Emir of Qatar, Tamim bin Hamad Al Thani, arrived in Baghdad on an official visit, and was met at the airport by PM Sudani. A government spokesman said that talks with Al Thani will focus on enhancing bilateral relations, including Qatar’s potential participation in the $17 billion Development Road project, which Baghdad announced last month. more…
  • Popular Mobilization Forces To Get New Bases, Other Benefits – On June 14, PM Sudani said that his government will begin constructing special barracks and bases for the Popular Mobilization Forces (PMF) outside urban areas to help support “the combat role for which they were created.” Speaking at an event marking the 9th anniversary of the PMF’s foundation, Sudani credited the force with “preserving state institutions and the political system in Iraq,” adding that the PMF has become “indispensable” for security, and a “key part of tranquility” in the country. Sudani also mentioned that his government was working to draft a bill that would “guarantee generous retirement [benefits]” for PMF fighters “like their brethren in other security forces.” In other development, on June 11, ISIS militants attacked an Iraqi army outpost near Dibis, in Kirkuk province, killing two army officers and wounding three soldiers. more…
  • Wheat Harvest To Top 4 Million Tons; New Talks With Turkey To Resume Northern Oil Exports Begin Next Week – On June 11, Iraq’s state-owned Grain Trading Company said that Iraqi farmers had delivered more than 2.5 million tons of wheat since the beginning of the current harvest season. Nation-wide deliveries are expected to reach 4.1 million tons, a rebound from last year, when water shortage reduced wheat production to just over 2 million tons. On June 15, a senior Iraqi official said that talks between Baghdad and Ankara to resume oil exports through the Kirkuk-Ceyhan pipeline would restart on June 19. The exports, which originate from oilfields in the Kurdistan region and Kirkuk, have been halted since March 25, when Iraq won an arbitration case against Turkey for allowing unilateral exports from the Kurdistan region. The continued halting of 450,000 bpd in exports impacts Iraq’s ability to realize the revenue needed to support the recently approved national budget and has already cost the Kurdistan region an estimated $2 billion in losses. In other developments, on June 11, Iraq’s Planning Ministry reported that inflation levels during April decreased by 1% from the previous month. Inflation in April was also down 4% compared with the same month in 2022. more…

For more background on most of the institutions, key actors, political parties, and locations mentioned in our takeaways or in the stories that follow, see the ISHM Reference Guide.


Parliament Approves Massive, Controversial Budget Law; Sudani Visits Cairo; Emir Of Qatar Visits Baghdad

On June 12, Iraq’s parliament voted to approve a long delayed budget bill worth IQD198.9 trillion (over $152 billion) in annual spending, ending months of disagreements over revenue sharing, particularly between the federal government and the Kurdistan regional government (KRG). The budget law, which covers three years (2023 – 2025) is based on an oil exports target of 3.5 million barrels per day (bpd) at a sale price of $70 per barrel and exchange rate of IQD1,300 to the U.S. dollar. These exports will include 400,000 bpd from the Kurdistan region, whose revenue would be deposited in a bank account overseen by federal officials. The federal government would then deduct that amount from the region’s monthly allocation and send any excess funds to the KRG, whose share of the budget was set at 12.6%. Budget negotiations were also complicated by intra-Kurdish disagreements. The Patriotic Union of Kurdistan successfully pushed for a clause that will force the rival (and ruling) Kurdistan Democratic Party (KDP) to pay civil servants an amount equal to 10% of their monthly wages to compensate for withholdings made during the region’s economic crisis that began in 2015. Another clause backed by the PUK gives the federal government the power to withhold a portion of the KRG share of the budget if the latter fails to pay public servant salaries for any of the region’s provinces. The amount withheld would be used by the federal government to directly pay that province, bypassing the KDP-dominated KRG. in a statement issued after the vote, KRG President Nechirvan Barzani welcomed the bill’s passage, expressing hope that it would “become a good roadmap for economic development and political stability.” But Barzani also said it was “unfortunate” that the budget debate included “wrongful behavior” by some lawmakers towards the Kurdistan region that violated the principles of the political agreement of the State Administration Coalition. The finalization of the bill was a lengthy process. The full vote took lawmakers four sessions over the weekend in which they debated and eventually voted to approve the bill, several articles at a time. A marked-up copy of the draft that was made public shows numerous edits and objections, as well as proposals by the finance committee that appear to substantially revise entire articles. The new budget appears to ignore warnings about the size of Iraq’s bloated public sector. In May, the IMF warned that: “A significantly tighter fiscal policy is needed to strengthen resilience and reduce the government’s dependence on oil revenues while safeguarding critical social spending needs. Key priorities include diversifying fiscal revenues, reducing the oversized government wage bill, and reforming the pension system to make it financially sound and more inclusive.” Yet available information shows the bill includes IQD133 trillion in operational expenses, meant to accommodate nearly 600,000 new hires, and just IQD49.3 trillion in capital spending, with a planned deficit of IQD64.3 trillion, twice as high as in 2021. Oil sales continued to account for the largest portion of expected government revenue, estimated at IQD117.2 trillion, while non-oil revenue was calculated at IQD17.3 trillion.

On June 12, Iraqi President Abdul-Latif Rashid began a multi-day official visit to Italy accompanied by the first lady and a government delegation including the Minister of Migration and the Displaced, Evan Jabro, and the Minister of Culture, Tourism, and Archeology, Ahmed al-Badrani. Speaking at a press conference, Rashid said that discussions with Italian President Sergio Matarella focused on expanding economic, political, and cultural cooperation between the two countries, adding that there were opportunities for Italian companies to “work in Iraq’s cities and benefit Iraq with their capabilities and expertise.” Later during his trip, Rashid toured industrial facilities in the Emilia-Romagna region, recovered smuggled Assyrian artifacts seized by Italian authorities, met with the leadership of the Italian parliament, and attended memorial services for late Italian premier Silvio Berlusconi, who passed away this week. On Thursday, after concluding his Italy visit, Rashid and his delegation traveled to Switzerland to participate in an international conference about social justice. 

On June 12, Iraqi Prime Minister Mohammed al-Sudani began an official 2-day trip to Egypt accompanied by a delegation of senior government officials. Sudani was received by his counterpart, Mustafa Madbouli, and later had a meeting with President al-Sisi. Sudani and Madbouli later convened a meeting of the joint Iraqi-Egyptian committee, which concluded with the signing of 11 different memorandums of agreement between the two governments. The agreements deal with various issues, including promoting small and medium enterprises, cooperation for accession to the World Trade Organization, cooperation on training diplomats and civil servants, tourism, sports, and labor affairs. Speaking at a press conference with President Sisi after signing the agreements, Sudani emphasized that his government had undertaken economic reforms that created new opportunities for Egypt’s private sector to create partnerships with Iraqi businesses. Sudani also said that recent changes and developments in the region position Iraq and Egypt to play “a central role” in promoting stability.  While in Cairo, Sudani also met with Ahmed Abu al-Ghait, the secretary general of the Arab League.

On June 13, the Iraqi Minister for Migration and the Displaced, Evan Jabro, said that 440 internally displaced persons (IDPs) had returned from the Sharya Camp in Duhok to their districts of origin in Sinjar. The minister added that this was the second group of returnees to leave Sharya for Sinjar since last week, bringing the total number of IDPs who had returned to Sinjar this month to 747 individuals. Officials in the Kurdistan region noted that the number reflects total IDP returns to Sinjar in a full two years, blaming instability and failure to implement the 2020 Sinjar Normalization Agreement for the slow returns. 

On June 15, the Emir of Qatar, Tamim bin Hamad Al Thani, arrived in Baghdad on an official visit. He was met at Baghdad airport by Iraqi Prime Minister Mohammed al-Sudani. An Iraqi government spokesman, Basim al-Awadi, said earlier that Al Thani’s discussions in Baghdad will focus on enhancing bilateral relations, including Qatar’s potential participation in the $17 billion Development Road project, which Baghdad had announced last month. Awadi added that Iraq and Qatar are expected to sign memorandums of understanding (MOUs) to increase bilateral cooperation on investment and projects in the energy sector.

Sources cited in this section include: INA, AP, PUKMedia, Kurdistan24, al-Sumaria, Reuters, Shafaq, IMF, Iraqi president’s office, Mawazin, Iraqi PM’s office, ISHM archives, Rudaw, Nas News. 


Popular Mobilization Forces To Get New Bases, Other Benefits

On June 10, Ninewa police said that unidentified gunmen shot and killed a sheep herder in an attack in the Baaj district, west of Mosul. To the northeast, the police said a young man was killed in the Haj Ali village, near Qayyara, when militants traveling on foot opened fire on him from small arms. 

On June 11, the Security Media Cell reported that ISIS militants attacked an Iraqi army outpost in al-Multaqa subdistrict, near Dibis, in Kirkuk province. The Saturday night attack, in which the militants used “light and medium weapons” killed two army officers (a lieutenant colonel and a first lieutenant) and wounded three soldiers from the army’s 32nd brigade. 

On June 11, security sources in Dhi-Qar province said that unidentified individuals threw a homemade improvised explosive device (IED) at the residence of an employee of the Basra Oil Company. The attack, which occurred in the Rifai district, north of Nasiriyah, caused only material damage to the building. 

On June 14, Prime Minister Mohammed al-Sudani said that his government will begin constructing special barracks and bases for the Popular Mobilization Forces (PMF) outside of urban areas to help support the combat role for which the PMF was created. Speaking at an event marking the 9th anniversary of the PMF’s foundation, Sudani credited the PMF with “not just liberating land” from ISIS, but also “supporting the army in preserving state institutions and the political system in Iraq.” The prime minister added that the PMF has become “indispensable” for security, and a “key part of tranquility” in the country. Sudani also mentioned that his government was working to draft a bill that would “guarantee generous retirement [benefits]” for PMF fighters “like their brethren in other security forces.” Earlier this week, the Popular Mobilization Committee chairman, Falih al-Fayyadh, said the Committee secured approvals to reinstate 30,000 PMF veterans who had previously been discharged, with priority given to wounded veterans. 

Sources cited in this section include: Shafaq, NINA, Iraqi PM’s office. 


Wheat Harvest To Top 4 Million Tons; New Talks With Turkey To Resume Northern Oil Exports Begin Next Week

On June 10, Iraq’s Foreign Ministry said that Minister Fuad Hussein met with U.S. Secretary of State, Antony Blinken while in Saudi Arabia to discuss a number of issues, including the payment of funds owed to Iran in connection with gas and electricity imported by Iraq. In its statement, the ministry said the U.S. has allowed payments to be made to cover the expenses of Iranian pilgrims to Saudi Arabia utilizing Iranian funds held in Iraqi banks. Iranian trade officials said that another part of the funds would be used to pay for other “basic goods” according to reports by Iranian media. According to a report by Reuters, Washington agreed to give Baghdad a waiver from sanctions imposed on Theran to allow Iraq to pay up to $2.76 billion in arrears to its eastern neighbor. 

On June 11, the director of Iraq’s state-owned Grain Trading Company said that Iraqi farmers had delivered more than 2.5 million tons of wheat since the beginning of the current harvest season. The official said that nation-wide deliveries are expected to reach a total of 4.1 million tons for the season, which concludes in most central and southern provinces this week, while demand is expected to be around 4.6 million tons. These harvest figures represent a significant improvement from last year, when water shortage reduced wheat production to just over 2 million tons.  In 2021, the country produced 4.2 million tons, and the year before that, it produced 6.2 million tons, according to official figures. 

On June 11, Iraq’s Planning Ministry reported that inflation levels during the month of April 2023 decreased by 1% from the previous month. The Ministry noted that inflation levels in April were also down 4% when compared with the same month in 2022. According to the ministry, the cost of housing was down 2.2%, while the cost of transportation dropped by 1.1%, and food and beverages costs were down 0.8%. 

On June 12, government documents showed that Iraqi Prime Minister Mohammed al-Sudani had appointed a new president to take charge of the state-owned Trade Bank of Iraq (TBI). According to the document, Mohammed Mohammed Jawad Kaduhm will take over from the terminated Bilal Sabah Hussein. 

On June 13, Iraq’s Water Resources Ministry said it had signed an agreement with a consortium involving two companies, Hydronova of Italy and Concord of Jordan, to update Iraq’s national strategy for lands and water. Work to update the strategy, which covers the period through 2035, will include assessing the impact of climate change and development works in riparian countries on the quality and quantity of water that Iraq will receive.  

On June 15, the Deputy Iraqi Oil Minister for Extraction, Basim al-Abadi, told the official al-Sabaah newspaper that talks between Baghdad and Ankara to resume oil exports through the Kirkuk-Ceyhan pipeline would restart on June 19. The exports, which originate from oilfields in the Kurdistan region and Kirkuk, have been halted since March 25, when Iraq won an arbitration case against Turkey for allowing unilateral exports from the Kurdistan region without Baghdad’s approval. Last month, Iraq’s State Oil Marketing Organization (SOMO) sent official notice to Turkey asking it to resume the export, but unnamed Turkish officials said at the time that Ankara was reluctant to allow exports to resume before it could reach a favorable settlement with Baghdad over the $1.5 billion that arbitration had awarded to the latter as damages. The continued halting of exports impacts Iraq’s ability to realize the revenue needed to support the recently approved national budget, and has already cost the Kurdistan region an estimated $2 billion in losses. 

Sources cited in this section include: INA, Reuters, al-Hurra, Mawazin, AP, ISHM archives, Nas News, al-Sabaah. 


Derived from firsthand accounts and Iraq-based Arabic and Kurdish news sources, the Iraq Security and Humanitarian Monitor is a free publication of the Enabling Peace in Iraq Center.


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