March 16, 2018 | Policy Brief

Iraq’s 2018 Budget Deadlock Deepens Tensions Ahead of Elections

March 16, 2018 | Policy Brief

Iraq’s 2018 Budget Deadlock Deepens Tensions Ahead of Elections

On March 3, the Iraqi Parliament adopted a budget of about 104 trillion Iraqi dinars ($88 billion) for 2018, the first since the country declared “full victory” over the Islamic State. However, both Kurdish and pro-Popular Mobilization Forces (PMF) Shiite factions have sharply criticized the new budget.

Kurdish lawmakers boycotted the March 3 vote after the budget slashed the semi-autonomous Kurdistan Regional Government’s (KRG) allocation from 17 percent to 12.67 percent. Erbil said in a statement that the budget violated the constitution since it was prepared without KRG participation and no longer recognizes the Kurdistan region as an entity. In addition, the 2018 budget did not include allocation for the Kurdish Peshmerga, nor did it increase the allocation for the Shiite-dominated PMF; both helped Iraqi forces in the war against the Islamic State.

The KRG claims it has already lost almost half of its revenues from crude oil sales following the central government’s takeover of Kirkuk and its oil fields after the September 2017 referendum on independence for the Kurdistan region.

In reaction to the adoption of the budget, KRG Prime Minister Nechirvan Barzani condemned its passage as “a blow to regional partnership.” Massoud Barzani, former president of the Kurdistan region and leader of the Kurdistan Democratic Party, dubbed the reduction as “a clear violation of the principles of partnership and consensus” and called for a “united stance” against the federal budget. Some Kurdish officials and MPs went further, calling for a withdrawal from the entire political process until their demands are met.

Meanwhile, Shiite lawmakers and PMF leaders denounced the parliament and government for their failure to provide the 150,000-strong PMF with salaries equivalent to members of the regular military. The leader of Asaib Ahl al-Haq, an Iranian-backed Shiite militia, deemed the move a “real betrayal” of the PMF fighters who made sacrifices to defeat the Islamic State, and the spokesman for Al-Fath al-Mubin – an electoral coalition largely dominated by PMF factions – threatened to go to the Federal Court to demand the full rights of PMF members.

In an attempt to placate the PMF, Prime Minister Haidar al-Abadi, who faces pressure from abroad to dismantle all militias and is seeking reelection in May, responded promptly to Shiite criticisms and issued a decree formalizing the inclusion of the PMF into the state security forces, even though leading PMF groups are proxies of Iran. While PMF leaders cautiously hailed the decree, some see it as a move to curb the influence of Iranian-backed leaders, since it seeks to enhance the prime minister’s control over the militias.

In a move that may increase tensions between Shiites and Kurds, Iraq’s President Fuad Masum, a Kurdish politician who holds a largely ceremonial role, refused to approve the 2018 budget because of numerous alleged “legal and constitutional violations” and returned it back the parliament. In response, Shiite lawmakers criticized Masum’s “biased” decision, saying that the budget would be adopted after 15 days if it remains unsigned. Iraqi Parliament Speaker Salim al-Jabouri, a Sunni politician, also deemed Masum’s refusal to approve the budget “unconstitutional.”

With new parliamentary elections scheduled for May 12, Iraqi leaders and politicians need to prioritize dialogue, or else the country can easily fall back into another round of conflict and terrorism. None of this will be easy, but the U.S. can encourage an open and honest process to resolve disputes in line with the constitution. Only through dialogue, not intimidation, will Iraqis be capable of eliminating the remnants of the Islamic State, fighting rampant corruption, and rebuilding damaged infrastructure.

Romany Shaker is an Arabic-language research analyst at the Foundation for Defense of Democracies. Follow him on Twitter @RomanySh.

Follow FDD on Twitter @FDD. FDD is a Washington-based, nonpartisan research institute focusing on national security and foreign policy.