The Kurdish Regional Government is bypassing the federal pipeline to export oil to Turkey, thus avoiding payments to the central government. Without Kurdish oil revenues, Iraq's economy is in danger of collapsing. Iraqi oil minister threatens legal action against Ankara.

Baghdad (AsiaNews/Agencies) - The agreements between Iraqi Kurdistan and Turkey on oil exports bypassing Baghdad are against the constitution and could bring down the Iraqi economy.

The warning comes Haider al-Abadi, head of parliament's treasury committee, who said that the country's draft budget projected a deficit of about US$ 18 billion and could "collapse". Abadi slammed the Kurds who do not contribute to the federal budget but still receive their 17 per cent share.

In recent years, public spending has gone up due to an increase in pensions, minimum wages, family allowances and incentives for students, whilst Kurdistan's missed export targets cost Iraq US$ 9 billion in lost revenue.  

According to the central government in Baghdad, Kurdistan has violated the constitution and a UN Security Council resolution that requires Iraq to coordinate its oil policies with the United Nations, which can charge 5 per cent of its revenue to pay for damages caused during the 1990 invasion of Kuwait.

The clash between Baghdad and Erbil on how to manage and share Iraq's energy resources began in January 2013 when Kurdistan started exporting directly crude oil to world markets via Turkey.

The dispute has intensified this month when the Kurdish Regional Government (KRG) and Turkey agreed to export oil through a pipeline outside of federal control.

In 2012, the Kurds exported 61,000 bpd of crude via the Baghdad-controlled pipeline to Turkey, so the revenue went automatically to the central government.

In 2013, exports rose to 250,000 barrels per day, but payments were blocked due to a legal dispute over the payment of oil and gas companies operating in the north of the country.

With the new oil pipeline that bypasses federal controls, the Kurdish region will be able to export up to 400,000 barrels of crude oil per day.

Last week, Abdul Kareem Luaibi, Iraqi Oil Minister threatened legal action against Ankara and foreign companies involved in what he called the "smuggling" of Iraqi oil.

"Turkey must consider its commercial ties and its interests in Iraq," he said. "Turkey should know this issue is dangerous. It touches the independence and unity of Iraq."

For his part, Kurdistan's Prime Minister Nechirvan Barzani arrived in the Iraqi capital on Sunday to pursue talks on an issue that has bedevilled relations between Nuri al-Maliki's Shia-controlled Iraqi government and minority Kurds.

• kurdistan
• iraq
• turkey
• oil
• exports
• revenues
• clash