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MPs question Prime Minister and Deputy Prime Minister on key economic, political and reform issues

Kurdistan Parliament MPs on 5 October questioned Prime Minister Masrour Barzani, Deputy Prime Minister Qubad Talabani and Finance Minister Awat Sheikh Janab in a lengthy sitting on the state of the region and the government’s policies.

The Kurdistan Regional Government Prime Minister and his colleagues presented to MPs on the state of the economy, reforms, negotiations with Baghdad, combating the Coronavirus pandemic, and the situation in the Kurdistani areas outside the KRG administrative area. Mr. Barzani said that soon the Council of Ministers will give Parliament a detailed report on the progress made in implementing the Reform Law.

After ten hours of presentations by the government and 450 questions from 98 MPs, Parliament Speaker Dr. Rewas Faiq closed the sitting by thanking Prime Minister Barzani and his team and saying, "We have had a ten-hour discussion at this sitting. I hope this will be a great beginning to the correct relationship between the executive and legislative authorities, and that we can hold similar sittings in the future."

Speaker Faiq presided over the discussions along with Deputy Speaker Hemin Hawrami and Secretary Muna Kahveci, in the 8th ordinary sitting of the autumn session.

At Prime Minister Barzani’s request, he together with Deputy Prime Minister Qubad Talabani and Minister of Finance and the Economy Awat Janab, presented to MPs on the following areas:

1) The steps and the progress made in implementing reforms, especially the Law on Reform of Salaries, Allowances, Benefits, Privileges and Pensions in Kurdistan Region - Iraq (Law no. 2 of 2020)

2) The state of the economy and payment of government employees' salaries

3) Negotiations with the Iraqi Federal Government

4) The situation in the Kurdistani areas outside the KRG administrative area

5) The Coronavirus pandemic and containment measures.

The Prime Minister gave a lengthy update on implementation of reforms and the KRG’s specific reform projects. He said that the reform process is ongoing and covers all the sectors.

Prime Minister Barzani said, "I consider myself fortunate to come to the Kurdistan Parliament today to present some issues that are of importance to Parliament and the public. The Kurdistan Parliament as a high constitutional body has always been valued and respected. Our Government has built a strong relationship with Parliament and other authorities of the Kurdistan Region, which has been beneficial for this current KRG cabinet’s implementation of our policies and plans.”

“Compared with previous terms of Parliament and government, this current cabinet’s ministers have attended Parliament sittings and met with Parliament’s committees much more frequently, to ensure transparency. It is our duty to give the public the facts, and to continue with reforms without hyperbole.”

Mr. Barzani also pointed out that the Coronavirus pandemic, the decline in oil prices, and the Iraqi government’s failure to send the Kurdistan Region’s share of the budget have set back the KRG’s plans and programs.

"The extremely difficult health and financial situation should be taken into consideration in evaluating the performance of the Kurdistan Regional Government," he said.

On the reform process, Mr. Barzani said, "We have been working on reforms from the outset, but reform is a continuous process and is not easy to accomplish, nevertheless we will continue and will include all sectors. We have begun reforms at different levels, in both financial and administrative areas.”

The Prime Minister explained that to review taxation in Kurdistan Region, the KRG formed a high committee in the Council of Ministers, then approved and began to put into action all of the committee’s recommendations, such as taxes on the communications sector and investment projects. So far the Ministry of Transport and Communications has sent warnings about tax obligations to 49 companies in (mobile and internet) communications, as well as Iraqi air travel and communications firms, and has filed charges in court against seven companies for their tax liabilities.

He also said that the government has taken steps to reduce bureaucracy in order to provide easier and faster services to businesses and the public, and is digitalizing systems at the customs border gates and airports in order to improve income collection and quality control.  

Mr. Barzani said that a biometric system will be used for payment of government salaries, benefits and allowances, which will eliminate those unlawfully receiving two salaries. Kurdistan Region’s debts amount to almost 28.5 billion dollars (28,476,650,000 dollars), and national income was more than 4 billion dollars. So far the government has been able to pay 12 salaries, and was unable to pay two months’ salaries. He said, "Faced with a financial crisis brought about by the drop in the oil price and the Coronavirus outbreak, we were forced to reduce government salaries by a percentage," he said.

Prime Minister responds to MPs’ questions

The heads of each Parliamentary party criticized and gave their comments on the Prime Minister’s points and asked many questions over several hours.

In response, Masrour Barzani said "We the Kurdistan Regional Government, are more aware and concerned about the situation in Kurdistan than anyone, and we want to improve people’s lives above all else.”

He added, “The biggest threat to Kurdistan as a constitutional entity is disunity and disloyalty among ourselves. Whatever fantasies one has, Kurdistan’s constitutional status should not be used as a political football. Those who spoke of separating from Kurdistan and becoming a province of Iraq, I tell them that we should look to a better experience, not a worse one. Today Kurdistan is in every way doing better than any other part of Iraq.”

He added, “Most nations are dealing with the Coronavirus pandemic and the resulting economic crises, just as we are, and we need both the government and the opposition to work together and have one strategy in order to preserve our constitutional entity.”

Mr. Barzani noted that the government put administrative decentralization on its agenda from the outset, and that his cabinet has given more powers to the governorates than any previous cabinet has.

He said, “Unfortunately we are still dealing with the consequences of the system of two separate KRG administrations of many years ago, and with Deputy Prime Minister Talabani and our colleagues in the cabinet we are trying to get clarity which is being resisted, and as I explained in my report there are commercial transgressions at the customs borders, but we have formed the necessary committee to deal with this and we will not allow these transgressions to continue. We ask Parliament to follow up and scrutinize this issue.”   

He continued, “Our sources of incomes are oil revenue, other internal income, and our share of the Iraqi budget, but unfortunately at many times Baghdad has failed to fulfill its financial obligations to Kurdistan, and twice the oil price dropped dramatically. The previous KRG cabinet faced three simultaneous crises – the war against ISIS, the oil price drop, and Baghdad’s withholding of our budget; and our current cabinet is also facing three crises – the Coronavirus pandemic, the oil price drop, and Baghdad’s withholding of our budget.”

On the unlawful Arabization of the Kurdistani areas outside the KRG administrative area, the Prime Minister said. “We completely reject these actions, and I ask the honourable parliamentarians to work on this. The Iraqi federal government and some parties want to divert our attention away from the issue, and think that our share of budget and government salaries are our only concern. We care about the Kurdistani areas, national identity, and land. The budget is only one of the issues, but they want to divert our attention away from the other problems. Historically and in the past few years we have worked to resolve this issue. So far we have been working with the Iraqi government on the forced change of demography and Arabization, which need to be stopped.”

He added, “Just last night I spoke with the Iraqi premier and also with Deputy Prime Minister Talabani and my colleagues, we have predict two strategies for these areas: One is to provide security in the disputed areas where Iraqi security forces have not provided the necessary security and where the Peshmerga are not present, where Kurds as well as others living in fear for their lives. And yesterday we had another meeting where we asked that the Peshmerga jointly with other Iraqi security forces provide security. We have demanded that the Iraqi government implement Article 140 of the Iraqi Constitution as the only real solution, and they have not refused so far; we feel that this Iraqi government has better intentions.

In response to a question from MPs regarding government jobs, Masrour Barzani replied, “If you stop your propaganda and hyperbole and really want a responsible answer to your question, let me tell you this: Is giving everyone who asks to be employed in government jobs a successful policy? In no advanced economic system in the world do people expect to automatically get a government sector job. I ask the honourable MPs, if they want to support our citizens, to help the government to implement the process that we have already started, of have a bigger and stronger private sector and more public-private partnerships, which will lead to fewer demands for government jobs. When the government is in a financial position to do so, we can open the door to government hiring.”

Regarding the KRG’s cutting of government salaries by 50% and 21% for different salary levels in response to the financial crisis, he said, “The government are extremely unhappy that we have been forced to cut any government employee’s salary. We have cut government spending in other areas as much as possible in order to pay as much of employees’ salaries as we can.”

On negotiations with Baghdad, the Prime Minister said that the KRG is optimistic and has always made every effort to reach an agreement, and has made some progress. Failing to implement the outcomes of talks cannot be blamed on the KRG, he said, as the Iraqi government has been unstable and has changed and Iraq has had serious economic and political problems. He added that the KRG insists on the provisions of the Iraqi Constitution as the basis for an agreement and rejects any attempt to violate Kurdistan’s Constitutional rights.

On the reform process, he said, “As I already mentioned in my update, we will give Parliament a detailed factual report. Some parts of this reform process are hard to measure immediately because they are ongoing, but we are absolutely determined to continue it and some of the results are already clear. For example, previously electricity was provided for 7 or 8 up to 11 hours a day. This cabinet has reduced government expenditure on electricity, increased government income from electricity, and we are working on improving the system, so that now we have been able to provide 21 hours. We did not spend more to achieve this.”

In answer to questions on oil sales, the Prime Minister said that in previous years Kurdistan enjoyed an economic boom from oil sales and this income built the foundations of Kurdistan’s economy. Iraq has failed to pass an oil and gas law, still uses the old centralized Ba’ath government system and despite our legal and constitutional rights they want to prevent us from selling our oil on the free market. They have threatened, banned and attacked companies that buy Kurdistan’s oil, which is one of the reasons why Kurdistan’s oil has to be sold at a lower price. We have tried many times to reach an agreement on oil with Baghdad, but Iraq sets prohibitive and excessive preconditions that are completely against the interests of the people of Kurdistan.”

Mr. Barzani pointed out that the KRG’s 27-28 billion dollars of debt is in fact not all debt, some of it is KRG lending and some is Iraq’s debts to the KRG, which was also pointed out by a Member of Parliament. He called on MPs to demand from the Iraqi government why they have failed to fulfill their financial obligations towards the people of Kurdistan.

On the KRG’s failure to send the budget to the Kurdistan Parliament for passage, he said, “If we don’t have a continuous and constant income, we can’t prepare a budget. Rest assured that we will certainly prepare and send you the budget if and when Kurdistan is in a position to prepare one.”

The Prime Minister asked MPs to support the government’s efforts to root out corruption, which he said is a big challenge that the current government is combating much more seriously than any previous cabinet. He said that the KRG is trying to monitor smuggling and illegal commercial activity at customs borders and tackle the problem of unofficial trading borders. The Council of Ministers has formed a committee to look at what investment is needed to improve customs control, and which parts of it should be managed by the government and private sector. 

He added that one possibility is, together with the Peshmerga and Interior ministries, to limit unofficial trading borders as much as possible, which also needs the help and responsiveness of the local administrations to the KRG’s instructions.

Prime Minister Barzani was questioned about persons arrested unlawfully, he replied that they were arrested lawfully under court charges and did not only protest about government salaries which is their right; they were guilty of offences.

On the Ministry of Natural Resources, the Prime Minister said that as he is currently the acting minister for that portfolio it has been very useful to get a deep understanding of the challenges, and that there are currently two candidates for the position. Once he has chosen a candidate, they will come to Parliament to gain MPs’ vote of confidence and be sworn in.

Regarding highways in Kurdistan Region, Mr. Barzani said that the government has fallen short of its plans because of the financial crisis but has nevertheless been able to improve and start some highway construction, with the private sector making investments.  

Deputy Prime Minister Talabani briefs MPs on negotiations with Iraqi Federal Government

Deputy Prime Minister Qubad Talabani briefed MPs on the progress so far in the KRG’s negotiations with Baghdad and Iraq’s financial crisis. He said, “Only one day after this cabinet was sworn into office [in July 2019], the Prime Minister, some of our colleagues and I went to Baghdad and gave them a very clear message that we want to put the past behind us and have a new relationship, and our message was warmly welcomed.”

He pointed out that the demonstrations in Iraq that began in November 2019 led to a long break of several months in the negotiations and set them back considerably. He said, “Afterwards the KRG was able to draft a strategic agreement with Baghdad, which the KRG hoped would be the basis for agreeing on Kurdistan’s share of the 2020 general budget law, but three days later the Iraqi government resigned under pressure from the demonstrations. The dramatic events of early 2020 negatively affected Iraq’s political, economic and security situation, along with the Coronavirus outbreak, all leading to a legislative vacuum that prevented the passage of the budget law, because at that time the interim Iraqi government put all its efforts into forming a new cabinet.”

He continued, “Only a day after interim Prime Minister Mustafa Kadhimi and his cabinet were sworn in, we met with him to show our intention to not only reach an agreement on our outstanding issues, but also to help solve Iraq’s problems generally.”

“After many meetings with Iraq’s negotiating team, we have reached a temporary agreement. But even if Iraq makes a full agreement with the Kurdistan Region it will not be a magic solution, because at the moment Iraq cannot solve its own problems.”

Deputy Prime Minister Talabani said, "We are a part of a country that is in a profound political, economic and security crisis. Iraq's crisis is much deeper than only oil revenues and customs border points, so Iraqis have realized that there is no option but to reform Iraq's executive and financial systems and to take on more debt to fill the income shortfall."

He said that the Iraqi government and parliament continue to be at odds with each other on some legislation, and some parties completely refuse to pass it, because they want to prevent the Iraqi government from borrowing further.

Mr. Talabani added, "I am optimistic that there is the will to achieve a good agreement between Erbil and Baghdad, but it needs more efforts that cannot be made by the government alone, which is the executive and technical arm.”

He said, “Some of our problems are political, because some parties have deliberately misled the Iraqi people to believe that Kurdistan is a source of Iraq’s problems, that Kurdistan takes Iraq’s share as well as its own share, and unfortunately some Kurdish politicians in Baghdad are responsible for sowing these thoughts among Iraqis.”

Finance Minister Awat Sheikh Janab explains government salaries and debts

The KRG Finance and Economy Minister Awat Sheikh Janab said, "The Kurdistan Region’s income on its own has not been enough to provide the budget and pay employees’ salaries in full, and this year Iraq has tried to claw back its own budget deficit by refusing to pay Kurdistan Region’s government employees and Kurdistan’s share of the budget.”

Minister Sheikh Janab also pointed out that when the new KRG cabinet entered office in July 2019, it inherited 27 billion dinars of debt and debtors and no financial savings, and Baghdad failed to send three months of government employees’ salaries the year before.

"Because the KRG does not have a central bank and is not a state, it has not been able to take loans from international banks to fill the budget shortfall," he explained.