Zakho’s new Khaboor River waterfront, part of the KRG’s bid to diversify beyond hydrocarbons.
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The Case for Kurdistan’s Financial Autonomy Through an Integrated National Economy |
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I was in Kurdistan in November for the annual Middle East Peace and Security Forum, where one message cut across panels and private conversations: federalism has not addressed the structural historical faults between Erbil and Baghdad. Some participants believed that only complete independence is the ultimate solution; others floated the idea of confederation as an alternative. However, a more practical interim step, one less likely to trigger new conflict, would be a genuinely integrated national economy in which clear rules, not perpetual bargaining, protect Kurdistan’s financial autonomy.
Since Iraq adopted its 2005 constitution, the federal framework has not settled core disputes between the federal government and the Kurdistan Regional Government (KRG): budget allocations, contested territories, outstanding political disagreements, and security coordination. Although the constitution’s architects sought to balance autonomy for the Kurdistan Region of Iraq (KRI) with national unity, uneven and contested application of constitutional provisions has entrenched tension between Baghdad and Erbil and contributed to recurring fiscal instability in the KRI.
Baghdad has consistently pursued highly centralized fiscal governance. Revenue collection and allocation are decided at the center, and provinces that generate substantial national income often see limited corresponding improvements in services and infrastructure. Basra, an economic engine for the country, captures this gap. Despite its outsized contribution to the national treasury, it struggles with basic needs, including inadequate access to clean water, while remaining dependent on central transfers.
In this political economy, the KRI has sought a measure of fiscal latitude to plan public spending, sustain essential services, support investment through energy development, diversify its economy, and strengthen non-oil revenue collection. Over time, however, its de facto fiscal space has narrowed as federal institutions expanded oversight of Erbil’s revenues and used budget transfers as leverage. As a result, the KRI’s fiscal outcomes have become tethered to shifting federal priorities and discretionary decisions.
Interviews and public statements by Kurdish and Arab officials largely converge on a shared diagnosis: current arrangements neither align incentives between Baghdad and Erbil nor provide reliable mechanisms to lock in agreements once reached. The relationship repeatedly reverts to negotiation under low trust. Temporary deals can reduce tensions, but they leave key issues unresolved and encourage unilateral moves. For Baghdad, stopgap arrangements reinforce central control over fiscal and administrative levers; for Erbil, they deepen uncertainty and complicate economic planning.
The economic dimension of the dispute has at least three institutional weaknesses: (1) ambiguous authority over hydrocarbons, (2) discretionary intergovernmental transfers, and (3) weak credibility and enforcement of negotiated bargains.
Ambiguous oil and gas authority. The constitution does not establish detailed rules for allocating authority over hydrocarbon governance between federal and regional institutions. The result has been competing interpretations and parallel policy frameworks. The KRG has signed contracts with international oil companies, invested in production and export capacity, and entered into commercial agreements. At the same time, federal authorities have sought regulatory supremacy through court rulings, administrative measures, and budget tools. In the absence of agreed and enforceable rules, investors face elevated policy risk, and the system remains prone to disruptions in exports, pipeline access, and budget disbursements.
From an institutional standpoint, unclear property rights and contested regulatory authority raise transaction costs and suppress long-term investment. Actors hedge against sudden policy shifts and rely on political influence to protect positions. The predictable outcome is recurrent conflict over production, export routes, and revenue distribution, disputes that ripple through investment decisions, public finances, and broader economic stability.
Discretionary intergovernmental transfers. Iraq’s intergovernmental fiscal system is shaped less by durable, rules-based formulas than by negotiation and administrative discretion. For the KRI, this means budgeting is vulnerable to political bargaining and the decisions of federal officials, creating a power asymmetry. Out of $130 billion since 2014, the KRI has received only $30 billion by 2024. Thus, transfers can be delayed or withheld, depriving the KRI of a critical revenue stream and producing salary arrears, delayed contractor payments, and heightened political and economic uncertainty.
Weak credibility and enforcement mechanisms. Confidence in the durability of intergovernmental bargains remains limited. Institutions that could underwrite credibility, effective constitutional adjudication, an independent judiciary, and binding fiscal coordination bodies are either missing or perceived as biased. Agreements are therefore frequently revisited by the stronger party, and compliance becomes contingent on immediate political conditions rather than institutional obligation. This dynamic increases governance costs in the KRI and constrains the KRG’s ability to deliver services and plan economically, while imposing few comparable costs on the federal government.
Given these conditions, reliance on ad hoc, convenience-driven bargains has not produced durable outcomes; it has often deepened the underlying problems. A shift is needed from discretionary negotiation toward a rules-based framework for economic integration that treats Erbil’s fiscal autonomy not as a threatening factor, but as a stabilizing element of the national system.
An integrated economic framework that enables the free flow of goods and services between the KRI and federal Iraq would improve allocative efficiency and allow prices to be set through competition. Baghdad and Erbil could also coordinate on energy and infrastructure planning; align investment and trade regulations; jointly manage customs and key logistics corridors; and standardize contracts for cross-regional projects to clarify cost- and revenue-sharing. The aim would be to reduce uncertainty by clarifying authority, lowering transaction costs, and creating predictable expectations for public institutions and private investors.
Within this approach, fiscal autonomy would be treated as a practical requirement for budgeting and administration, not as a political concession. Clear national parameters allow the KRI to manage spending and monetize resources while safeguarding federal objectives, including macroeconomic stability and national revenue management. The central question, then, is how Baghdad and Erbil can craft transparent, enforceable arrangements that support an integrated economy, guarantee Kurdistan’s financial autonomy, and reduce incentives for unilateral action.
Yerevan Saeed,
Barzani Scholar-in-Residence
Director of the Global Kurdish Initiative for Peace
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Saeed also joined a private session with SDF Commander Mazloum Abdi, alongside distinguished scholars and researchers, to discuss the future of Rojava and Syria. In additional meetings on the sidelines of the Forum, Saeed engaged with senior Kurdish and Iraqi officials and provided updates on U.S. foreign policy toward Iraq and the broader Middle East.
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Art and Culture: Pedram Baldari |
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"I’m constantly grappling with how to represent my culture, history, and struggles without oversimplifying or exploiting the narrative. The artistic process isn’t just about creating something visually interesting, it’s about the responsibility you take on when you decide to represent a community’s pain, joy, and history."
Pedram Baldari is an interdisciplinary artist, architect, and scholar. Currently, he is an assistant professor at the University of Michigan’s Stamps School of Art and Design. His art explores issues of land and belonging, colonialism, displacement, conflict, and the way a culture of violence creates “reality.”
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Baldari was born in 1981 in Sine (Sanandaj), eastern Kurdistan, Iran. His early years were in the middle of a severely repressive and war-torn time. Therefore, he grew up learning where to run when air-raid alarms sounded and hearing family stories of imprisonment and loss. He majored in architecture at the University of Tehran, rather than a conventional engineering major, and there he found visual, conceptual, and performance art that helped him broaden his language way beyond buildings.
Finding it difficult to communicate his ideas freely in Iran, Baldari decided to study abroad in the United States, where he obtained his graduate degree in Studio Art. He later developed a practice that goes beyond a single discipline, incorporating social research, sound, data, and technology to depict the Kurdish people not only in a sensational way, but also with a sense of their reality. Baldari wants the people to understand the Kurdish culture more deeply and be so kind as to challenge the dominant narratives, after they have come into contact with his art, by acknowledging the Kurdish people’s lasting creativity and aspirations for justice.
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NextGen Voices: Diyar Kurda |
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"For me, the value of journalism lies in informing the public, reporting accurate information, and helping people understand what is happening and why it matters. As someone covering U.S. foreign policy, I know that many people in my region want to understand what is happening in Washington and what it means for them."
Diyar Kurda is Rudaw Media Network’s Washington Bureau Chief and is pursuing a master’s degree in U.S. Foreign Policy and National Security at American University’s School of International Service. He received a Professional Excellence Award at the Association of Foreign Press Correspondents’ 2024 Awards Ceremony at the National Press Club in Washington, D.C., honoring “his fearless coverage of the Middle East.”
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In this interview, Kurda discusses his early interest in journalism, tracing the start of his career to high school in his hometown of Rawanduz, known as the “Grand Canyon of Kurdistan.” Although he studied engineering at the University of Kurdistan-Hawler, his passion was for politics and writing, even as family expectations and local norms made changing fields difficult. In 2015, he joined Rudaw as a Kurdish-to-English translator, expecting a short-term role, but the newsroom became his professional home and he “never left.”
Kurda also shares how his move to Washington, D.C. in 2022 has transformed his work by giving him direct access to U.S. policymakers and allowing him to expand his coverage of U.S. foreign policy and its implications for Kurdish issues across the Middle East. Supported by the Barzani Peace Fellowship, his graduate studies have broadened his understanding of how decisions are made “behind closed doors,” sharpening both his analysis and his reporting. Kurda hopes to stay at the media-policy nexus and urges the public to approach Kurdistan’s history and politics with empathy and a well-informed manner.
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Iraq
The State Department announced on November 25 that Michael Rigas, Deputy Secretary of State for Management and Resources, would travel to Erbil to open the newly established U.S. Consulate General in the capital of the Kurdistan Region. In addition to meeting with Iraqi officials, Rigas will also visit various U.S. diplomatic facilities, including the one in Erbil, which is believed to be among the largest in the world.
On November 18, the President of the Kurdistan Region, Nechirvan Barzani, called for greater unity among Kurdish political parties. He urged them to present a unified front in Baghdad and push for full implementation of the Iraqi constitution, which he saw as being essential to resolving long-standing disputes with the central government.
Last week, Russian oil company Rosneft cut its stake in the Kurdistan Pipeline Company (KPC) to below 50% to protect itself from U.S. sanctions.
Türkiye
On November 24, Turkish lawmakers overseeing the disarmament of the PKK visited jailed leader Abdullah Öcalan in his island prison. The delegation of lawmakers spoke to Öcalan about the PKK’s disarmament and dissolution, as well as the agreement between the Syrian government and the Kurdish-led Syrian Democratic Forces (SDF).
This comes after President Recep Tayyip Erdoğan announced earlier this month that Türkiye has entered a “new phase” in the peace process with the PKK, following constructive talks with leaders of the pro-Kurdish DEM Party, including the proposal that Öcalan might address a parliamentary commission on disarmament. Meanwhile, Ankara is reportedly preparing legislation that would allow thousands of PKK fighters and their families to return to Türkiye from northern Iraq.
Syria
Related to the peace process in Türkiye, SDF commander Mazloum Abdi said he was ready to visit Türkiye to meet with Öcalan to assist the peace talks. Abdi believed that talks are needed between Syrian Kurdish militants and Öcalan, as only Öcalan can answer questions about PKK members and fighters in Syria.
Over the last two weeks, talks between the Syrian government and the SDF have resumed, but progress has remained slow. Syrian Foreign Minister Asaad al-Shibani said there have been five meetings over the past 45 days to implement the March 10 deal, yet no “positive or practical” steps have been taken to integrate SDF structures into the state fully. SDF commander Abdi said on Wednesday that the SDF “poses no threat to anyone,” and that it operates “under the umbrella of the Syrian state."
Iran
Over the past two weeks, Kurdish rights groups in Iran have reported a new wave of arrests by intelligence forces: three Kurdish men, including two former political prisoners, were detained in Divandarreh and Sarvabad on November 13. Meanwhile, a Kurdish rights activist in Sanandaj, Herish Zandi Navgaran, has begun serving a six-month prison term for “propaganda against the state.” In contrast, another Kurdish man from Orumiyeh is being held incommunicado post-arrest.
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The Barzani Peace Fellowship |
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Established in honor of the Kurdish leader Mustafa Barzani, the Global Kurdish Initiative for Peace offers the Barzani Peace Fellowship, a prestigious scholarship for graduate students dedicated to Kurdish affairs. Beyond financial support, it empowers future leaders through academic excellence, professional development, and opportunities to engage directly with the program and its mission for peace.
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