Kurdistan region, Baghdad reach deal on oil exports and payments

BAGHDAD/ERBIL — The government of Iraq and the semi-autonomous region of Kurdistan have reached a deal to ease tensions over Kurdish oil exports and civil service payments from Baghdad, Iraq's finance minister told Reuters on Thursday.

Hoshiyar Zebari said the central government had agreed to resume payments from the federal budget for Kurdish civil servants' salaries.

Zebari, who is a Kurd, described the step as a "major breakthrough" that would reduce friction between the Kurdistan Regional Government (KRG) and Baghdad.

The deal was reached after talks between Iraqi Oil Minister Adel Abdul Mehdi and Kurdish Prime Minister Nechirvan Barzani in the Kurdistan region on Thursday.

Baghdad stopped paying for KRG civil servant salaries in protest against the Kurds' exporting oil to Turkey independently.

Under the agreement, Iraqi Kurdistan will give 150,000 barrels per day of oil exports — equal to around half its overall shipments — to the federal budget.

In Erbil, the KRG confirmed the agreement.

"What they have agreed is that Baghdad will release some funds — $500 million — and the KRG will give 150,000 barrels per day of oil to Baghdad," KRG spokesman Safeen Dizayee told Reuters.

Exports still under control of Kurds 

He said a KRG delegation headed by the prime minister would travel to Baghdad soon to hammer out a more comprehensive deal and the regional government would not hand over control of exports to Baghdad.

A similar agreement was proposed in April but never advanced to a deal.

In July, then Iraqi foreign minister Zebari said the Kurdish political bloc withdrew from the national government in protest against Prime Minister Nouri Al Maliki's accusation that Kurds were harbouring Islamist insurgents in their capital.

The Kurds later rejoined the administration. But tensions persisted.

Maliki, one of the most divisive figures to emerge from the US occupation of Iraq, was later replaced by Haider Al Abadi.

He is seen as a moderate Shiite capable of cooperating with Sunni Muslims, Kurds and other sects.

Iraqi leaders are under pressure to bury differences in order to counter Islamic State militants who have seized chunks of the country in the north and west.

There are about 5 million Kurds in majority Arab Iraq, which has a population of more than 30 million. Most live in the north, where they run their own affairs, but remain reliant on Baghdad for a share of the national budget.