<article><p class="lead">Relations between Iraq's federal government and authorities in the country's semi-autonomous Kurdistan region are under strain again, threatening to undermine attempts by the two sides to restart northern Iraqi crude exports from Turkey. </p><p>Fresh wrangling has broken out after the Iraqi parliament's finance committee on 25 May made amendments to two articles of the federal budget bill relating to the Kurdistan Regional Government (KRG)'s share. The KRG has criticised the last-minute changes as unconstitutional and a violation of previous agreements. </p><p>The proposed amendments include making Iraq's federal oil marketer Somo responsible for selling Kurdish crude, with the KRG having to hand over 400,000 b/d to the company, and reducing the time Erbil has to pay off its debts to Baghdad from seven to five years. They also stipulate that an account at Iraq's central bank will be created for KRG oil revenues and grant the federal finance ministry the power to authorise the KRG's withdrawals. The KRG currently holds oil revenues in two accounts in Turkey and Lebanon.</p><p>"If the amendments pass, the KRG will lose control over its oil and gas sector," ex-KRG official Lawk Ghafuri told <i>Argus.</i> "The initial agreement gave control to the KRG. A foreign account under its control was to be linked to an Iraqi bank account," he said. </p><p>Despite straying from the "temporary" deal struck in April between Iraqi prime minister Mohammed Shia al-Sudani and his KRG counterpart Masrour Barazani, the KRG has agreed on the new proposed arrangement related to control of the central bank account, a source with knowledge of the matter told <i>Argus. </i>The proposed changes to the budget bill strike at the heart of that <a href="https://direct.argusmedia.com/newsandanalysis/article/2436145">temporary agreement</a>, which was was designed to help facilitate a restart in northern Iraqi crude exports from the Turkish Mediterranean port of Ceyhan. </p><p>The pipeline that transports crude from Iraq's Kurdistan region to Ceyhan for onward delivery to export markets was shut in late March. Turkey ordered the halt after an arbitration court at the Paris-based International Chamber of Commerce ruled Ankara had breached a 1973 bilateral agreement with Iraq by allowing crude marketed by the KRG to be exported without Baghdad's consent. Around 470,000 b/d of Iraq's crude exports have since been shut in, with Turkey holding out on allowing a resumption while it seeks concessions from Iraq regarding the court ruling.</p><h2>Court steps in</h2><p>Further straining relations between Baghdad and Erbil is a federal supreme court ruling on 30 May which declared that a one-year term extension of the Kurdistan region's parliament, decided on in October 2022, was unconstitutional and undermined democracy in the country.</p><p>"The constitution stipulates that the parliament term is four years and anything against that is considered null," supreme court judge Jassim Mohammed Aboud said. All decisions issued by the regional parliament from the date of its term extension in October last year are considered null and void, Aboud said.</p><p>The current Kurdish parliament was inaugurated following 2018 parliamentary elections, with a fresh vote scheduled for 2022 but postponed due to major internal differences between the two main Kurdish parties over the electoral law. </p><p>Erbil has <a href="https://direct.argusmedia.com/newsandanalysis/article/2413219">previously criticised</a> the federal supreme court's "continued unjust and hostile policy towards the Kurdistan region". In February, the court ruled the KRG's oil and gas law unconstitutional and demanded Erbil hand over all production from its oil fields to Baghdad.</p><p>"Leverage is being created over Erbil and if differences persist, crude exports will face further delays," Ghafuri said. </p><p class="bylines">By Bachar Halabi</p></article>
