Amendments to the Federal Budget Bill an Assault on Iraqi Federalism, Constitution, and Kurdistan

This week, the Iraqi Council of Representatives will vote on a three-year federal budget bill for 2023, 2024, and 2025. Iraq did not have a federal budget law in 2022 due to uncertainty following the 2021 election, making this vote highly anticipated. While this federal budget bill was approved by the Council of Ministers in March, it has been held up in parliament due to several disagreements related to the Kurdistan Regional Government (KRG). The Finance Committee of the Council of Representatives has made several amendments to Articles 13 and 14 of the bill. The amendments include:

1. A requirement that the Kurdistan Regional Government use 10 percent of its federal budget to supplement the cuts made to public sector employees in 2016: a step the KRG had taken to overcome the economic issues in the region caused by Baghdad’s lack of budget.  
2. A condition that the Kurdistan Region deliver 400,000 barrels per day to federal authorities, along with some other revenues, before it can receive its share of the federal budget. 
3. The stipulation that Kurdish oil revenues be deposited in an account belonging to the Iraqi Finance Ministry at the Iraqi Central Bank.

These amendments violate several articles of the Iraqi Constitution, precedent Federal Court decisions, and Federal Financial Management Law No. 6. 

As it stands now, the Prime Minister is not fulfilling his obligation to his political program, for which he won confidence from the Council of Representatives under the authority of Constitutional Article 76/4. The current government, led by Mr. Mohammed Shia Sudani, was formed based on several political agreements, including provisions aimed at resolving issues with the Kurdistan Regional Government (KRG). This program was approved by the Council of Representatives, making it the responsibility of Mr. al Sudani’s government to implement it. However, he risks failing to do so if he is incapable of reaching a consensus with the Kurdistan Region on the budget. 

Article 80 grants the Council of Ministers the power to plan and execute the general policy of the State, including preparing the draft of the general budget. While, as laid out in Article 62 of the Constitution, the Council of Representatives has the authority to transfer sections of the budget or change the total amount, it should not deviate from the general framework laid out by the Council of Ministers. The amendments made to the budget by the Council of Representatives are counter to the spirit and procedure of this law. 

Articles 62 and 80 provide specific procedures for enacting the budget law. In Iraq, which has a recent history of authoritarian rule, there are serious implications for straying from the letter and spirit of the law. These articles aim to protect all of the citizens, including those in the Kurdistan Region and decentralized provinces by ensuring that the draft budget law is submitted by the Council of Ministers, as outlined in the Constitution.

1. Article 109 states that federal authorities must protect the unity, integrity, independence, sovereignty of Iraq and its federal democratic system. 
2. Article 115 establishes that all powers not stipulated in the exclusive powers of the federal government belong to the authority of the regions and provinces. With regards to shared powers, or in the case of a dispute, regional law takes precedence. 
3. Article 116 recognizes Iraq as a federal state, consisting of regions such as the Kurdistan Region, governorates, the decentralized capital, and local administrations.
4. Article 117/1 universally recognizes the Kurdistan Region and its current powers as a federal region. This includes the recognition of the region’s institutions and their legitimacy. When the Kurdistan Regional Government rejects an unfair law from the federal government, this rejection is constitutional.
5. Article 120 states that regional authorities (Kurdistan Region) have the right to draft their own constitution determining the scope of their powers. This article reinforces the idea that the existing powers of the Kurdistan Region cannot be modified or amended without the approval of the Kurdistan Regional Government.
6. Article 121 grants regional authorities the right to exercise legislative, executive, and judicial powers within the limits of the Constitution, except for those belonging to the federal government. The amendment to the Financial Budget Bill states that the KRG should allocate 10 percent of its share from the federal budget to pay back salary cuts to employees of the Kurdistan Region is unconstitutional, as this power lies with the KRG. 
7. Article 121/2 states that the Kurdistan Regional Government has the right to amend the implementation of federal law within the region if there is a conflict or contradiction with regional law on matters not within the federal government’s powers. This reinforces the special powers of the Kurdistan Regional Government to manage the affairs of the region.

Regarding the Federal Financial Management Act No. 6:

1. Article 11 states that the Council of Ministers considers, approves, and submits the draft general budget law to the Council of Representatives.
2. Article 12 allows the Council of Representatives to transfer, reduce, or increase the budget and pass it before October 15 of each year.
3. Article 14 states that the general federal budget is implemented through occasional funding based on the assessment of the Ministry of Finance. The Council of Representatives does not have the right to determine how the budget is implemented or make conditions for the distribution of the budget between the federal government, the Kurdistan Regional Government, and provincial governments.

Federal Court decisions have upheld the constitutional and legal provisions mentioned above. The Court has already ruled that the Council of Representatives cannot make substantive amendments to the draft budget submitted by the government in Decision No. 25 of 2021, emphasizing that the budget and its implementation are the responsibility of the Council of Ministers. The amendments made to the budget bill, which, if passed on Thursday, will go into effect for three years, violate the 2005 Constitution and Federal Financial Management Act.

 Dr. Kamal Kirkuk is the former Speaker of the Kurdistan Region Parliament.

Disclaimer: The views expressed here represent those of the author and not necessarily those of the WKI.