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Minister Hawrami: New Iraq needs power-sharing and adherence to constitution to avoid further chaos

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The key to Iraq’s unity is power-sharing, revenue-sharing and the implementation of the Constitution, Dr Ashti Hawrami, the Kurdistan Regional Government’s Minister of Natural Resources, told a London conference yesterday.

Dr Hawrami, speaking at the CWC Iraq Petroleum conference, outlined the disputes between Erbil and Baghdad on the KRG’s budget, which Baghdad has unilaterally cut this year, the under-delivery of domestic fuel to the people of Kurdistan, which was 3.4% last year when it should have been 17%, and differences over the Constitution on oil production and exports.

“The policies of centralisation and discrimination have put Iraq’s future at risk,” said Dr Hawrami.‎ “As of last week (following the crisis in Mosul) there is a new Iraq. Iraq needs power-sharing, revenue-sharing and adherence to the constitution. Otherwise we will have more chaos in Iraq.”

Dr Hawrami explained that the federal budget law in 2013 had introduced a minimum export requirement of 400,000 barrels per day by the KRG, but this figure was unrealistic and had been inserted into the budget without consultation with the KRG. He said that the KRG should have received $6 billion as its budget so far this year; instead, it had received $900 million. The KRG has been forced to borrow $3 billion locally and internationally, and it will be able to overcome the budget shortfall by exporting up to ‎250,000 bpd from July, with the aim of increasing to 400,000 bpd by the end of the year.

The minister said that Kurdish oil sales would continue through the Ceyhan port in Turkey and that two tankers of oil had already been sold, with a further two tankers expected to load this week for their agreed buyers.  He outlined that international oil companies have already invested $15 billion in the energy sector so far, and they are required to invest $10 billion more in the next two years. The Minister explained that the oil and gas sector, including services, employs about 33,000 people in Kurdistan, 87‎% of whom are locals.

Dr Hawrami reiterated the articles in the Iraqi Constitution that give the KRG the authority to export oil. He also said that the KRG now had the necessary pipeline infrastructure in place to enable the resumption of export from the Kirkuk oilfields, which have seen no exports since March due to persistent sabotage attacks on export infrastructure outside the KRG controlled area.

He concluded by saying, “Despite all the unfair treatment and discrimination, the KRG reaches out to Iraq and is ready to cooperate, to work together to resolve these problems.”

Click here to see Dr Ashti Hawrami’s presentation at the CWC Iraq Petroleum conference 2014.

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UAE assures project implementation in Kurdistan

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The United Arab Emirates Deputy Minister of Economy and Trade, Abdullah Saleh, visited the Kurdistan Region this week to attend the 2014 TradeUAE Iraq conference in Erbil.

The conference included 115 Emirati companies specializing in a wide range of sectors, including energy, the food industry, petrochemicals, construction, as well as companies offering banking and communications services.

Deputy Trade Minister Saleh said that the UAE remains committed to its investment projects in the Kurdistan Region, clarifying that they have not been halted. He attributed delays to minor obstacles, which include bureaucratic issues common in most countries in the region. He said, “The UAE is committed to contribute to the economic growth of Kurdistan, where we have been among the pioneers.”

The Deputy Minister added that business and investment opportunities continue to expand and that this has led to increased opportunities for potential investors in various sectors. He emphasized that the UAE remains committed to investing in Kurdistan as well as expanding its operations and activities, stating that the UAE is not under pressure from the federal government in Baghdad regarding its investment projects in the Kurdistan Region.

Deputy Minister Saleh also said that UAE companies are looking to establish heavy industrial projects to serve the Kurdistan Region as well as Iraq as a whole. He reaffirmed that last year’s conference, the first TradeUAE conference held in Iraq, was also a success and that Erbil will be the gateway for UAE investment. He pointed out that the volume of bilateral trade between Iraq and the UAE exceeds $13 billion, $4 billion of which is invested in Kurdistan, with the majority, $3 billion, dedicated to Erbil.

UAE Consul General Rashid al-Mansouri said that there are more than 120 Emirati companies operating in the Kurdistan Region. He said, “The UAE is committed to strengthening relations with the Kurdistan Region politically and economically, and we will work together towards a strong, strategic relationship.”

The Consul General added, “The UAE will continue to bolster its presence in the Region. We will increase the number of flights, and the Abu Dhabi Islamic Bank will open in the near future. Large Emirati companies, such as Taqa and Maydan for housing and construction, as well as a number of state-owned companies will begin work here after the requisite legal procedures are finalized.”

Mr Rashid Al-Jarwan, Executive Director and Board Member of Dana Gas, told KRG.org that Dana Gas has been able to extract more than 100 million barrels of oil suitable for local consumption since it began operations in Kurdistan in 2007. He added that Dana Gas extracted more than 340 million cubic feet of natural gas in the Khormor field. The gas has been used to generate electricity through a 180-kilometre pipeline, and the Kurdistan Region currently produces 1600 megawatts of electricity per day from this supply of gas.

Al-Jarwan said that Dana Gas remains committed to its production level targets and hopes to increase those levels in the coming years. He added that TradeUAE Iraq 2014 provides opportunities for large Emirati companies to contribute to the successful implementation of projects in Kurdistan, which will also enhance the confidence of new investors. He stated that disputes between Baghdad and Erbil have not affected the UAE’s economic activities in the Kurdistan Region, and that the UAE plans to increase its trade volume with Iraq and with the Kurdistan Region in particular.

The conference was attended by Head of the KRG Department of Foreign Relations Minister Falah Mustafa, Governor of Erbil Nawzad Hadi, President of the Kurdistan Region Chambers of Commerce Dara Khayat, UAE Deputy Minister of Economy and Trade Abdullah Saleh, UAE Consul General Rashid al-Mansouri, and a number of KRG and UAE government officials and private sector representatives.

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Nechirvan Barzani and Qubad Talabani tasked to form 8th Cabinet

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Kurdistan Region President Masoud Barzani has signed an order tasking Prime Minister designate Nechirvan Barzani and Deputy Prime Minister designate Qubad Talabani to form the eighth Cabinet of the Kurdistan Regional Government.

Prime Minister Barzani will continue in his role in the same capacity, while Minister Talabani will move from his current role as Head of the KRG Department of Coordination and Follow-up to Deputy Prime Minister.

According to Kurdistan’s laws, the cabinet must be formed within 30 days of the issuance of the President’s order. This decision signals the final step in the government formation process, and paves the way for an eighth cabinet coalition to include a number of political parties.

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Prime Minister Barzani addresses Kurdistan Parliament

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The Prime Minister yesterday addressed the Kurdistan Parliament at length regarding the Region’s financial situation, disputes with Baghdad, natural resources, and other matters. An excerpt of his address is below:

“The Kurdistan Region’s policy from the beginning has been based upon solving outstanding issues with Baghdad. We want to find a solution and reach an agreement. Baghdad’s policies are, however, not reasonable. We have recently made several visits to Baghdad, and since 2005 we have made every effort to reach an agreement regarding budget distribution, but we have not yet reached a resolution…

Regarding oil, we have just begun exporting. This step has been taken after two years of negotiation with Turkey in which an agreement has been signed that permits the Kurdistan Region to export its oil. We are thankful to our Turkish counterparts for reaching such an agreement and for implementing it to the fullest…

Regarding the federal budget, we had only been receiving 10% instead of the 17% to which the Kurdistan Region is entitled. We have continuously taken initiatives to solve these financial problems, and have made several visits to Baghdad…

We are abiding by the Article in Iraq’s Constitution which states that the oil and gas are owned by all the people of Iraq. We are ready to cooperate with Baghdad and SOMO regarding the export of oil, including monitoring volumes so that they know precisely how much oil is being exported. We have suggested working with SOMO in both the tendering process, the selling process and in order to ensure transparency. We will work together in this, but we will not cede control to SOMO…

As for their request for transparency, we are open to include SOMO in every stage of the process and whatever they request under the condition of our receipt of 17% of the budget share. Again, what we are receiving is only 10%. What the KRG is offering in terms of delivery to its citizens differs [from the rest of Iraq]; therefore, today our people have higher expectation from their government and this is their right…

America is aware of the details of the outstanding issues between our Region and Baghdad. In fact, I believe that the American policy reflects the fact that the United States encourages both parties to reach an agreement that is suitable for both Baghdad and Erbil. This is our expectations of America – that they remain neutral. And this how they have acted so far…

According to Iraq’s budget law, the Federal Iraqi Government was supposed to provide the budget on a monthly basis to all of Iraq’s provinces and to the Kurdistan Region. From the start of this year until today, the Federal Government of Iraq has sent money to all of Iraq’s provinces except for the Kurdistan Region. From the beginning of the year, Iraq has sent only one trillion dinar to the Kurdistan Region. We would like to thank those local companies who have provided us with loans. In addition, we have borrowed from some foreign banks, and we also thank them. The government in Baghdad is supposed to have sent six trillion additional dinar which they have not and are not willing to provide to the Kurdistan Region…

Today I would like to say that the policy of the Kurdistan Region Government is to never take a step backwards. We want to reach resolutions with Baghdad through dialogue, but if we do not arrive at any resolutions then we have other alternatives and we will take them. We will not stop here. Why have we started selling oil? This is so that Baghdad understands full well that we are able to do this. In their eyes the KRG is overstepping its rights, and is unable to reach a point where we can openly sell our oil. But we have proved to them that we are capable of doing so…

The Kurdistan Region will soon be able to export 250,000 barrels per day. This economic independence is vital for the Kurdistan Region. We have achieved many gains through the policies that the KRG has implemented. Without the support and backing of you, the Members of Parliament, and the public, then undoubtedly we will fail. Baghdad cannot defeat us, but if we are not united in supporting these policies, then we will face crisis…

We will continue selling our oil through the Ceyhan port in Turkey to the international market, and we will try to reach an agreement with Baghdad. Our doors are always open for negotiations. Our process of selling oil has in every respect been in accordance with the policies and mechanisms also used by SOMO, without any shortcomings. We have been very careful to avoid causing any problems during the process and we will continue to pay strict attention to transparency, because the disputes are significant and are sensitive to both sides. We will work as hard as possible to ensure that our oil export process remains transparent. This is in order for the Kurdistan Region to avoid any liabilities or accusations. This process has supporters but also has its detractors. We do not want to face any problems with this issue…

It is with confidence that I tell you that we have started exporting oil and we believe we will reach a milestone at the end of the year, at which time we will able to export up to 500,000 barrels per day.”

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KRG officials and businessmen discuss Kurdistan’s economy at MEED event

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Today marked the conclusion of Kurdistan Projects, a three-day event organized by MEED which successfully attracted a large number of international companies pursuing investment and business opportunities.

Attendees heard from senior KRG officials, government experts, and leading private sector representatives on a wide range of topics. This is the third year MEED has hosted a conference in Erbil, with the Kurdistan Projects event highlighting four key themes: sustainable long-term growth, improvement of building standards, improvement of workforce capacity, and the latest economic developments of the Region.

KRG Spokesperson Minister Safeen Dizayee discussed the development of the Kurdistan Region over the last decade as well as current political issues. He said, “The KRG was dismayed by the decision taken in Baghdad to unilaterally and illegally cut the Kurdistan Region’s budget. Despite this, the KRG remains open to dialogue and partnership, but so far the dialogue has not been very fruitful.” In response to a question, the Minister pointed out that Baghdad owes the KRG more than $6 billion and has not received any budget at all for months. At the same time Minister Dizayee assured investors that despite outstanding disagreements with Baghdad, the investment climate in Kurdistan remains bright, businesses continue to thrive, and the KRG is fully committed to promoting private sector development.

Head of the KRG Department of Foreign Relations Minister Falah Mustafa discussed the government’s vision for the future, emphasizing the importance of foreign direct investment. He said, “We firmly believe in our ability to develop a diversified and robust economy, focusing on essential improvements in health, education, infrastructure, and a dynamic private sector that can provide our citizens with job opportunities.”

Commenting on the conference, MEED Events Chairman Edmund O’Sullivan said, “We are delighted to work with the Kurdistan Regional Government and major private sector investors on this ground breaking conference set to reveal opportunities across key sectors, including: oil & gas, power, real estate, industry, hospitality & tourism, water & agriculture, and banking & finance.”

A number of speakers from various KRG ministries and boards also informed the audience of the government’s activities and plans in their areas of expertise. One such topic was food and water security, with various directors-general addressing the attendees and briefing them on infrastructure projects that are currently underway or are in the planning stage. Director-General Akram Rasul from the Ministry of Agriculture and Water Resources highlighted the importance of water security. He said, “Water is more important than oil and gold; there is no alternative to it. It is a security matter which the Kurdistan Regional Government takes very seriously.”

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Pope Francis hails President Barzani’s role in protecting Iraqi Christians and Syrian refugees

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Pope Francis commended Kurdistan Region President Masoud Barzani and the citizens of the Region for their protection of Christians fleeing violence in other parts of Iraq and the safe haven provided for Syrian refugees.

In a formal meeting held at the Vatican, the Pope explained that he was aware of the tragic history of the Kurds and the current situation in Kurdistan. He lauded the KRG’s policy of tolerance and acceptance of religious and ethnic minorities and extended his wishes for prosperity and safety to the people of the Kurdistan Region.

President Barzani also highlighted the principle of tolerance and emphasized that it is an integral part of Kurdish culture, which is based upon peaceful coexistence. In Kurdistan people of different religions have made sacrifices together in the past and now live side by side in peace.

The President said that he views support for Syrian refugees and persecuted Iraqi Christians as a humanitarian obligation, and he explained that the people of the Kurdistan Region would do their best to provide protection and assistance. He added that citizens are entitled to live freely within their country, and it is unacceptable that Christians should have to flee their homes in Iraq because of violence or discrimination.

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Prime Minister Barzani addresses Kurdistan Parliament’s Oil & Gas and Legal Committees

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Prime Minister Nechirvan Barzani yesterday conducted a lengthy meeting with the Kurdistan Parliament regarding natural resources policy and budgetary matters.

Kurdistan Parliament Speaker Dr. Yousif Mohammed, heads of the parliament’s political blocs, the Oil & Gas Committee, and the Legal Affairs Committee all participated in the session. The Prime Minister, Minister of Natural Resources Dr. Ashti Hawrami, and KRG Council of Ministers Legal Advisor Dr. Amanj Raheem answered questions from Members of Parliament and discussed oil export and the road forward.

An excerpt of the Prime Minister’s address is below, as well as his response to two questions from Members of Parliament.

Prime Minister’s address

“The issue of energy is highly important to us. It has no relations to party politics, nor is it a personal matter. It is related to the Kurdistan Region in general and in reality it is quite a sensitive issue and it is essential that the Parliament, in its role as the legislative institution, be fully informed on the details of this issue. Our policy has been created within the framework of the laws that have been established by the Kurdistan Parliament and hence the parliament should be privy to all the details related to this issue.

“The big question is: ‘who will control the oil’? Counterparts in Baghdad did not identify ‘right’ or ‘wrong’ KRG actions – they just wanted to control the issue completely. We do not view this issue as a path towards Kurdistan’s independence, but rather as the expression of our constitutional rights. These rights are the constitutional principles upon which we agreed when we returned to Iraq in 2003 and 2004, and they have to be implemented in Iraq.

“If Baghdad today agreed with us upon the issue of oil revenue sharing, one of Iraq’s most important laws, it would lead to the resolution of a number of obstacles related to this issue. However if I speak frankly, Iraq’s federal government increases the sovereign expenditures year after year without the Kurdistan Region’s knowledge, and this is reduced from Kurdistan’s share of the Iraqi budget.

“At a time when Baghdad regularly increases its sovereign expenditure, the burden placed upon the KRG increases and citizens’ expectations of the government, in terms of services, are considerable. This is the right of citizens, and they are fully entitled to these demands. In addition, we have a large number of civil servants on the government payroll in Kurdistan. For your information, 850 billion Iraqi dinars per month are spent on the salaries of civil servants. This is a very large figure and it needs to be addressed. It cannot continue in this way.

“In order to reach international standards…we need more than $US 31 billion to meet the demands for infrastructure in Kurdistan such as highways and roads, bridges, schools, hospitals and other essential needs.

“We are determined to carry out our constitutional rights and to ensure that we receive from Baghdad the full 17% of the Kurdistan Region’s share of the budget.

“In last week’s session we provided solid clarifications. And today we have come here because without doubt esteemed Members of the Kurdistan Parliament, as members of the legislative institution in Kurdistan, have many questions that they would like to see answered. The aims of Members of Parliament are to determine whether the KRG’s oil policy will be successful or not, as well as to understand the government’s future plans. This includes the manner in which the KRG plans on spending the revenue we receive.

“We want to address these questions openly and transparently in Parliament today so that we can reach a mutual consensus regarding the energy issue in Kurdistan. And just as Speaker of Parliament Dr. Yousif explained, we want energy to be a national issue and to resolve doubts about its transparency. We are ready to answer these questions in front of the Kurdistan Parliament, as it is our legislative institution, and so we are ready to attend any time to be questioned and to be held accountable.

“We fully believe that the achievements of the KRG are in the best interest of the Kurdistan Region, and are in accordance with the Iraqi Constitution. We are confident. But the task is not easy; in fact, is it quite difficult.

“The main requirement for the success of this process is a united stance among all of Kurdistan’s political parties on this issue.”

Responses to questions from Members of Parliament

In response to questions from Members of Parliament regarding the position of the United States, Prime Minister Barzani stated that the policy of the United States is and has been to support both Baghdad and Erbil in efforts to reach an agreement, as has been reiterated by American diplomats on every occasion. The KRG wished that, when considering the oil issue, the United States had pointed to Baghdad’s unilateral and unconstitutional decision to cut the Kurdistan Region’s share of the budget. The KRG resorted to exporting oil following Baghdad’s decision to cut the budget of the Region, an act that has affected the payment of salaries of civil servants. The KRG has been forced to pursue a solution because of this action.

In response to questions regarding the agreement between the Kurdistan Region and Turkey, the Prime Minister stated, “We should not view this issue as political. We have held meetings with our Turkish counterparts over a lengthy period of time, and it culminated in a protocol for long-term cooperation on energy issues and is subject to extension. The agreement was a result of a long series of meetings. We do not consider this to be a political move to divide Iraq. That is not the case.”