Baghdad and Erbil Reach 'Temporary' Oil Agreement Amid Deep Constitutional Rift, Says Iraqi FM

ERBIL (Kurdistan24) – Iraqi Foreign Minister Fuad Hussein has revealed that a "temporary" agreement has been reached between the Kurdistan Regional Government (KRG) and the federal government in Baghdad concerning the handover of the Kurdistan Region's oil, a breakthrough in one of the most contentious and persistent disputes plaguing relations between the two capitals. However, in a wide-ranging and detailed interview with Al-Shams channel, the Foreign Minister, who is also a senior member of the Kurdistan Democratic Party (KDP) Politburo, framed the deal as a short-term fix that fails to address the profound and systemic constitutional disagreements over federalism, revenue sharing, and regional authority that continue to define the Erbil-Baghdad dynamic.

Speaking to the broadcaster, Hussein meticulously unpacked the complex layers of the ongoing negotiations, offering a rare and candid perspective from one of Iraq's most senior diplomats and a key Kurdish political figure.

While confirming the existence of a new understanding on oil, he underscored its fragility and limited scope, suggesting that the fundamental ideological clash between a centralist Baghdad and a constitutionally federalist Erbil remains the primary obstacle to a lasting and stable relationship. His remarks also included a pointed critique of the Federal Supreme Court's recent interventions in the KRG's internal affairs, arguing that such actions violate the very principles of the federal system enshrined in the Iraqi constitution.

A Precarious Pact on Oil and Revenue

The most immediate and significant disclosure made by Foreign Minister Hussein during his interview with Al-Shams channel was the confirmation of a temporary solution for the oil handover issue, which has been directly linked to the payment of salaries for the Kurdistan Region's public sector employees. He was quick, however, to contextualize this development, stressing that the linkage between oil exports and salary payments is not a new phenomenon.

"The issue of handing over oil and linking it to salaries is not new," he stated. "The budget bill that was prepared during the time of Prime Minister Haider al-Abadi, when I was the Minister of Finance, was passed at that time and stipulated that the Region must hand over oil, and the federal government, in return, would pay the employees' compensation, meaning their salaries. This means that linking oil to salaries has always been present in specific laws, especially the budget law, whether this current one or previous ones."

Building on this historical precedent, Minister Hussein detailed the nature of the current accord. "There is now a clear understanding to reach a solution for the oil handover issue," he explained, before immediately qualifying the statement.

"It is a temporary solution. This solution is until the end of the year, meaning a solution until the end of this year." He further clarified that this stopgap measure is built upon two distinct and, at times, conflicting legal foundations: the current federal budget law and the recent decisions issued by the Federal Supreme Court. This dual reliance highlights the complex legal and political tightrope that negotiators from both sides are walking. Critically, the Foreign Minister emphasized that this arrangement is not a blueprint for the future, stating unequivocally that "next year it will have to be resolved differently."

The same dynamic of temporary resolution and underlying disagreement applies to the equally contentious issue of non-oil revenues. Hussein highlighted a fundamental divergence in constitutional interpretation that lies at the heart of this dispute. "There is a misunderstanding here that goes back to the constitution and the laws," he told Al-Shams channel.

"In Baghdad, the understanding is that all revenues must be returned to the federal government, and this is what is being discussed. In the Region, there is an understanding that there are internal revenues that belong to the Region and other revenues that belong to the federal government." Acknowledging the impasse, he indicated that here, too, a temporary fix is the only viable path forward for now. "We must solve this issue temporarily and we will try to resolve it within a legal framework in the future," he added, signaling that this core issue has been deferred rather than definitively settled.

Federal Court Overreach and the Sanctity of Regional Powers

Moving beyond the specifics of revenue, Foreign Minister Hussein articulated a forceful defense of the Kurdistan Region's constitutional authorities, particularly in the face of what he characterized as judicial and governmental overreach from Baghdad. He argued that the Federal Supreme Court's recent decisions, which have effectively allowed the federal government to directly manage the payment of KRG employee salaries, represent a dangerous violation of federal principles.

"In a federal system, it is not acceptable for the federal government to interfere in which employee receives a salary and what their full name is," he asserted. "This is the job of the regional government. Overt interference in this matter is not right."

While expressing respect for the judiciary, Hussein traced the origin of the court's intervention back to internal Kurdish political disputes, which he lamented were exported to Baghdad, creating an opening for the federal court to act. "I respect the Federal Court's decision on this matter, which resulted from an intra-Kurdish conflict. These conflicts were transferred to Baghdad and the Federal Court, and the Federal Court issued this decision," he explained. Despite this context, he maintained that the decision stands in opposition to the constitutional framework. "Constitutionally and legally, in reality, the federal government hands over the Region's share to the Kurdistan Regional Government, and the KRG is responsible for this."

Looking ahead, the Foreign Minister insisted that this encroachment on the KRG's powers must be rectified in future legislation. He deemed it necessary that "in the upcoming budget law, there should be a specific allocation (Takhsis) for the Kurdistan Region." He further stressed that the KRG's autonomy and accountability structures must be respected. "The Kurdistan Regional Government is accountable to its own people. Because the KRG has a parliament, it has authority, it has constitutional powers that must not be violated. So, this will be resolved."

The Enduring Struggle: A Centralist Culture Clashes with a Federal Constitution

In the most analytical portion of his interview, Hussein broadened his scope to diagnose what he sees as the foundational problem underpinning all Erbil-Baghdad disputes: a deep-seated philosophical and cultural conflict between federalism and centralism.

He positioned the Kurdish political movement as a historic champion of democracy and decentralization. "The Kurdish people have struggled for democracy because they saw the solution to the Kurdish issue through democracy," he said. "This led to a positive outcome, where federalism was established through the constitution. Federalism, in reality, means that the Iraqi system must be a federal system, meaning the division of power and wealth between the center and the regions."

This constitutional reality, however, clashes with the prevailing political culture in the federal capital. "In Baghdad, I deal with centralism daily," the Foreign Minister candidly stated. "The culture that exists in Baghdad is a centralist culture; I am talking about the culture, not the individuals. The laws are also centralist, and here we see the major problem."

He then laid out a compelling argument explaining how this centralist inertia has been legally sustained despite a federal constitution.

The core of the issue, he explained, is a massive legislative failure. "The Kurds, in their analysis, have relied on the constitution, and in the constitution, federalism and decentralization are clear. In Baghdad, they rely on laws. Do you know why? Because in the constitution, there are more than 50 constitutional articles that need to be turned into laws," he revealed. "As a result of not legislating these articles, which is a problem of the parliament, a legal vacuum has been created."

This vacuum, he continued, has dire consequences, as it triggers a constitutional provision that reverts to pre-existing legislation. "And when there is a legal vacuum, there is a constitutional article that says when there is a legal vacuum for a constitutional article, we must refer back to the old laws. The old laws are all centralist laws, and most of them originated from the Ba'ath Party ideology. Here lies the conflict." This systemic flaw means that Baghdad can legally operate on a centralist basis, using outdated laws, while the Kurdistan Region operates on the basis of an unimplemented federalist constitution, creating two parallel and conflicting legal realities.

Broken Promises and Legislative Paralysis

This legislative failure is not an accident but a product of political paralysis, according to Hussein. He referenced the political agreement forged by the State Administration Coalition to form the current government of Prime Minister Mohammed Shia al-Sudani, which included specific commitments to pass key legislation to activate the constitution's federalist articles. "We proposed that several key articles of the constitution be turned into laws," he recounted. "For example, we proposed the oil law, and in the political agreement for the formation of this government, we said the oil law must be passed within six months, but it was not passed."

He also highlighted the failure to establish the Federation Council, a second parliamentary chamber explicitly mandated by the constitution to represent the regions and provinces.

"We had proposed the passage of the Federation Council law. In fact, the constitution emphasizes that there are two councils, the Council of Representatives and the Federation Council, and the Federation Council would be the main council for the regions and provinces, but it was not established," he stated. This failure, he argued, leaves the regions without their designated voice at the federal legislative level.

Hussein attributed this lack of progress to a combination of governmental inaction and a dysfunctional legislature, describing the "situation in parliament" as "disastrous." Ultimately, he sees the only path forward in a renewed commitment to lawmaking, but one that requires a fundamental shift in mindset. "I see the solution in the parliament starting to pass these laws in the coming period, but passing these laws also requires a constitutional culture, which unfortunately is weak, and the centralist culture is dominant in Iraq."

When pressed on the possibility of the KDP withdrawing from the political process in Baghdad over these unresolved issues, a threat alluded to by President Masoud Barzani, Hussein remained diplomatic but confirmed the seriousness of the discussions. "These issues that President Masoud Barzani has publicly spoken about have also been discussed in the Politburo meetings," he acknowledged. "There is a clear discussion on this issue there... I cannot tell you. This is an internal matter and pertains to the KDP leadership." His cautious response left the door open, signaling that while dialogue continues, the patience of the Kurdish leadership is not limitless.