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Iraq, Kurds Agree On Deal Over Oil Exports, Budget

Iraqi Finance Minister Hoshyar Zebari announced Tuesday that the Iraqi government and the Kurdistan region have started implementing a deal under which Baghdad resumes funding Kurdish civil servant salaries in return for a share of Kurdish oil exports. Ali Abbas/EPA /LANDOV hide caption

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Ali Abbas/EPA /LANDOV

Iraqi Finance Minister Hoshyar Zebari announced Tuesday that the Iraqi government and the Kurdistan region have started implementing a deal under which Baghdad resumes funding Kurdish civil servant salaries in return for a share of Kurdish oil exports.

Ali Abbas/EPA /LANDOV

Iraq's government and Kurdish regional authorities have announced a deal that could end a dispute between them over oil exports and the budget.

Under the deal, announced by Iraqi Finance Minister Hoshyar Zebari, a Kurd, the Kurds will release 300,000 barrels per day of oil from Kirkuk. Another 250,000 barrels per day would be exported from the semiautonomous Kurdistan Region through Turkey.

In return, Baghdad said it would release 17 percent of the budget allocated to the Kurdish region, and would also give an extra $1 billion to Kurdish peshmerga who are fighting the Islamic State militant group.

The Associated Press reported that Iraq's Oil Minister Adel Abdul-Mahdi said joint committees will follow up on the implementation of the deal.

NPR's Leila Fadel, who reported on the deal for our Newscast unit, says, "The increased oil production could alleviate some pressure on the central government, which is facing an economic crisis, but also alleviate pressures in the Kurdish north where regional authorities have been having trouble paying government employees and the Kurdish security forces."

But there is skepticism about the agreement.

Ben Lando, editor in chief of the Iraq Oil Report, a trade publication that tracks oil deals in Iraq, told us in an email that though the agreement does give reason for optimism, "key areas of contention [between the two sides] have yet to be resolved."

Lando notes that issues such as Kurdistan's right to independently export and sell oil, Baghdad's claims that Kurdistan's contracts are illegal, and the control over fields that Kurdistan took from Baghdad in July have yet to be resolved.

"When it comes down to it, all of this must be codified in a national budget, which Iraqi politicians have been unable to approve on time each year, or at all such as 2014, leaving room for dispute still over how [international oil companies] will be paid, for example," Lando said. "The agreement is full of hope, but it is fragile, as any disagreement or outright lack of adherence — not unthinkable in Iraq — could bring it crashing down."