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Creative Accounting:
The Financial Dictatorship In Iraqi Kurdistan

Zhyar Mohammed
For almost three years Iraqi Kurdistan has not passed a regional budget. There have been complaints. But somehow nobody seems able to do anything about the uncontrolled spending or lack of oversight.
21.04.2016  |  Sulaymaniyah
No oversight: The Iraqi Kurdish government has not been accountable for how it spends money. (photo: يوري كورتز)
No oversight: The Iraqi Kurdish government has not been accountable for how it spends money. (photo: يوري كورتز)

According to the law in Iraqi Kurdistan, the government of the semi-autonomous northern region should have been preparing to present a draft of a regional budget to the local Parliament by now.

But it has not. In fact the last time the regional government managed to send a draft budget to Parliament was in 2013. Which means that basically Iraqi Kurdistan has been operating without an official budget for around two years now and, by all accounts, will likely continue to do so.

Many locals say that the official democratic process in Iraqi Kurdistan came to a grinding halt late last year, when feuding over who should be the region’s president saw opposition parties dismissed from a broad-based, power-sharing government, and then banned from entering official government offices. But even before this, no budgets had been presented or passed by the Iraqi Kurdish MPs.

There are no excuses. The government in Baghdad is facing similar challenges to Kurdistan. But they still manage to draft a budget.

The local authorities have given many justifications for the lack of a budget – they have said that declining or fluctuating oil prices and unresolved issues between the federal government in Baghdad and Iraqi Kurdistan are to blame. An agreement between Iraqi Kurdistan and Baghdad to swap oil for sale and a portion of the federal budget lapsed only a short time after it was agreed upon. Both parties blame the other for not fulfilling their side of the bargain. And since then, Iraqi Kurdistan has been selling its oil independently.

There are no reasonable excuses for not presenting a draft budget, says Iraqi Kurdish politician, Ali Hama Salih, a member of the opposition Change movement and former TV host of a show that specialised in uncovering local corruption; Salih now heads the Committee for Finance and Economic Affairs in the Iraqi Kurdish Parliament.

“This is a deliberate move by the government,” says Iraqi Kurdish MP, Soran Omar Saed, a member of the region’s Islamic bloc, who are more often than not in opposition too. “It means there’s no control over how money is being spent. We are approaching our third year without an official budget. But this year, more than ever, we need a budget because of all the austerity measures and reforms. All that should be organized within a budget law.”

The official budget is supposed to denote outgoing and incoming funds. There are also two other bodies in Iraqi Kurdistan that could have some control over regional finances: The Office of Financial Supervision and Iraqi Kurdistan’s Integrity Commission. But as the administrators working in those offices say, nobody pays much attention to them.

“We have sent more than one letter to the Ministry of Finance and to the Cabinet here to comment on the preparation of the budget. But to no avail,” Khaled Jawishly, the head of the Office of Financial Supervision told NIQASH. “Having no budget creates chaos, a lack of standards and limited government responsibility and too much authority within the Finance Ministry. Additionally personal preferences come into play when spending decisions are being made.”

“If a state doesn’t have a budget that means it doesn’t have an economic philosophy, or a political or social one,” argues Ayoub Samaqaei, an economics lecturer at the University of Salahaddin in Iraqi Kurdistan. “The absence of a budget means the absence of a strategy for today, and for the future.”

Additionally, Samaqaei noted, despite what’s going on in the rest of the country and despite the fact that the Iraqi government in Baghdad is facing issues similar to those hurting Iraqi Kurdistan, the Parliament in Baghdad still manages to draft and pass a federal budget.

Asked for their opinion on the lack of a budget, the Iraqi Kurdish Ministry of Finance, which has been without a minister for the past six months because he was a member of the locked-out Change movement, did not provide a comment.

 

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