Halting Region's Oil Exports Has Caused $28 Billion in Losses to Iraq, Says KRG Official

ERBIL (Kurdistan24) – The prolonged halt of the Kurdistan Region's oil exports has inflicted staggering financial damage on the Iraqi state, amounting to more than $28 billion in lost revenue since March 2023, according to Safin Dizayee, the Head of the Kurdistan Regional Government's (KRG) Department of Foreign Relations.

In a press conference held on Monday, Dizayee described the situation as an "unjustifiable act" from an accounting perspective, while also revealing that recent drone attacks targeting oil fields in the region have elicited a strong reaction from the United States, which is demanding Baghdad ensure the security of American interests.

Speaking on Monday, Dizayee provided a stark assessment of the economic consequences stemming from the cessation of oil flow through the Iraq-Türkiye pipeline. 

"Regarding the issue of oil exports, unfortunately, this process has taken a very long time," he stated. "From March 25, 2023, until now, Iraq and the Kurdistan Region have suffered losses of more than 28 billion dollars due to the halt in oil exports."

He contrasted this colossal loss with the federal government's original motivation for the stoppage, which was to enforce an international arbitration court ruling from Paris. "While Iraq, by the decision of the Paris court, intended for Türkiye to compensate it, Türkiye has not yet implemented this decision," Dizayee explained. "Expecting to receive about one and a half billion dollars while a loss of 28 billion dollars has been recorded is, from an accounting perspective, an unjustifiable act."

He affirmed that discussions are ongoing to resume the region's oil exports as soon as possible and to provide assurances to international oil companies that they will receive their financial dues.

The immense financial drain on the Iraqi economy is compounded by a deteriorating security situation that has now drawn high-level international attention.

Dizayee confirmed that recent drone attacks on the region's oil fields have prompted a "strong reaction from America." He revealed that the U.S. Secretary of State had directly intervened, expressing clear disapproval in a phone call with the Iraqi government and stressing the imperative of protecting security and stability in the region. 

"America desires a strong relationship with Baghdad and calls for resolving the issues, but at the same time, it protects its own interests, especially since two of the four targeted companies were American," Dizayee stated. "Therefore, it demands that these areas be protected."

These twin crises of economic paralysis and security threats are unfolding against a backdrop of deep-seated and escalating political tensions between Erbil and Baghdad over constitutional authority and resource management.

The federal government's recent actions have only exacerbated this divide. Just today, the Iraqi Ministry of Oil in Baghdad celebrated the signing of major new contracts with international energy giants, including British Petroleum (BP) and Chevron, to develop oil fields in southern Iraq and, most contentiously, in the constitutionally disputed territory of Kirkuk.

While Baghdad's Oil Ministry Undersecretary, Bassem Mohammed Khader, hailed these agreements as a "clear message to all regional countries and investors that Iraq has been able to create an attractive investment environment," the deal in Kirkuk is viewed in an entirely different light in the Kurdistan Region.

As reported by Kurdistan24, Kurdistan Region Prime Minister Masrour Barzani has unequivocally labeled the unilateral BP deal as "unconstitutional." Speaking at the World Economic Forum in Davos shortly after the deal was signed, the Prime Minister asserted that the future of such territories cannot be decided by Baghdad alone.

"Kurdistani territories, as defined by the Iraqi constitution, cannot be unilaterally decided by either Erbil or Baghdad," Prime Minister Barzani stated, calling for a trilateral, coordinated approach. "We are not against development in principle, but we are against the mechanism."

For the KRG, this move is not an isolated commercial transaction but is seen as the "economic spearhead of a renewed and systematic campaign of Arabization" targeting Kurdish communities on their ancestral lands. This perspective is informed by a painful and ongoing struggle on the ground, where Kurdish farmers in Kirkuk and other disputed areas face relentless pressure from settlers who are often backed by state security forces and armed with defunct Ba'ath-era land contracts.

This on-the-ground conflict is the direct result of the federal government's persistent failure to implement Article 140 of the constitution, a provision designed specifically to reverse the demographic changes enforced by Saddam Hussein's regime. The leadership of the Kurdistan Region has consistently condemned these actions, with President Masoud Barzani warning that the harassment of Kurdish farmers "remind us of the Anfal, chemical attacks, and genocide committed against our people."

Despite these profound obstacles and what Dizayee termed the "impediment" of unresolved issues with Baghdad, he emphasized that the Kurdistan Region remains steadfast in pursuing its own economic development and strengthening its foreign relations.

He presented a vision of the Kurdistan Region as a dynamic and open economy, noting that it "has been able to create a strong position for itself in the economy and has made significant progress." Dizayee stressed that the KRG's core policy is to prioritize the private sector in order to diversify its economy and attract foreign capital. "The Kurdistan Region is seen as a large and open market for the private sector," he said, adding that a "good investment law" is in place to facilitate this.

This proactive economic diplomacy is yielding tangible results. Dizayee announced that an American investment delegation is currently in the region, working with their counterparts to "find ways of cooperation and develop joint projects between the region and American companies in all fields." These intensified efforts at joint cooperation are aimed at seizing new investment opportunities.

Further underscoring the region's international engagement, he noted that the Dutch Consul is organizing an important economic forum in Erbil on Monday evening. Dizayee highlighted that the KRG has consistently benefited from "the experience of other countries to develop its economy."

Ultimately, Dizayee's press conference painted a picture of a government navigating a complex and perilous landscape.

On one hand, the Kurdistan Region is facing immense pressure from the devastating economic impact of the oil export halt, escalating security threats that now involve American interests, and a federal government whose unilateral actions in disputed territories threaten the very fabric of the Iraqi constitution.

On the other hand, the KRG is actively forging an independent economic path, strengthening ties with international partners, and positioning itself as a stable and attractive hub for investment, determined not to let the political impasse with Baghdad derail its long-term vision for prosperity and development.