Iraqi Prime Minister Mohammed Shia al-Sudani denied there is a crisis between Baghdad and the Kurdistan Regional Government (KRG) at Al-Monitor/Semafor’s Middle East Global Summit on Wednesday, and said the solution to any disputes must come from within the country.

“The solution is in Baghdad. It doesn't come from outside, and this is very important to note,” said Sudani during an interview with Al-Monitor President Andrew Parasiliti. “There is no political crisis.”

Tensions between the Iraqi federal government and the KRG have risen considerably recently over budgetary allocations, oil sales and disputed territories, including Kirkuk. The situation prompted KRG Prime Minister Masrour Barzani to write to US President Joe Biden earlier this month asking him for help, Amberin Zaman was first to report in an exclusive for Al-Monitor on Sept. 12

On Sunday, Iraq said it would send $1.6 billion to the KRG in three installments to help the autonomous government pay salaries, following Barzani’s visit to Baghdad on Sept. 14. On Wednesday, Barzani instructed the KRG Ministry of Finance and Economy to start paying July salaries upon receiving a deposit, according to a KRG press release.  

Sudani said the two sides “found a solution” following Barzani’s visit. There is no crisis, but merely “financial and legal problems,” he added.

Relations between the KRG and Baghdad have been further complicated by the monthslong stoppage of oil exports from the Kurdistan Region to Turkey. Ankara halted the exports of roughly 400,000 barrels per day (bpd) of Kurdish crude as well as 75,000 bpd from Kirkuk following the International Chamber of Commerce ruling in March that Turkey must pay $1.5 billion to Iraq for receiving unauthorized oil exports from the Kurdistan Region. 

The Iraqi federal government has long contended that the exports from the autonomous region through Turkey’s Ceyhan port are illegal. Despite subsequent agreements between the KRG and Baghdad on the issue, the oil flows remain stopped.

Sudani did not give a timetable for the resumption of oil flows in the interview. “We are only waiting for a notification from the Turkish side,” he said. “We have been losing 470,000 barrels of oil every day because of lack of ability to export. This is a very significant number that affects our revenue hugely.”

Sudani also discussed Iraq’s desire to receive more American investment, as well as Iraq’s efforts to develop its natural gas sector, which trails its oil sector by a wide margin.

Iraq’s governance is improving and the country is more attractive for American investors as a result, according to the prime minister.

“There is a new Iraq emerging, an Iraq that is based on institutions — not persons. An Iraq that is based on a diverse economy and a real fighting of corruption,” said Sudani. “This is the right time for you guys to come to the Iraqi market, particularly the energy market.”

Relatedly, in July, Iraq and France’s TotalEnergies signed a deal for a gas project.

Sudani also addressed Iraq’s difficulties navigating relations with neighboring Iran and the United States.

“We always face this question about the relationship between Iraq, Iran and the United States as if we are the only country in the world that has relations with Iran,” he said. “In order to be friends with the United States, you have to talk badly about Iran and vice versa.”

Both relationships are important to Iraq, Sudani said. He mentioned Iraq’s shared border with Iran, as well as the “religious component” — a reference to the majority Shiite Muslim populations in both countries. On the other hand, he described the United States as a “partner” to Iraq, including in the fight against the Islamic State. 

“Why can't Iraq have that balance of relations?” he said.

Iraq should be a mediator in the region, according to Sudani, mentioning the role his country played in brokering the agreement to resume relations between Saudi Arabia and Iran.

"That's the role that Iraq should play,” he said. “Iraq should not be a field to settle accounts at all.”

Al-Monitor