Iraq's Kurdish region rejects ruling imperiling oil sector

BAGHDAD (AP) — Iraq's semi-autonomous Kurdish region rejected on Thursday a ruling by the Supreme Court in Baghdad that ordered it to end its oil sector's de facto independence.

Regional Prime Minister Masrour Barzani told reporters that the surprise Feb. 16 decision to annul Kurdish oil and gas law was “political” and violated the country's constitution.

Defiant of Baghdad’s wishes, the Kurdish region manages its oil sector independent of the federal government, signing contracts with foreign companies and collecting revenues that it does not share.

The Supreme Court decision essentially struck down the legal justifications for that oil policy, calling into question the future of the region’s main source of funds. The federal government has not taken any action to implement the court ruling.

“We will continue with our oil policy,” Barzani said. “We will not implement this decision in the Kurdistan region.” He also called into question the legality of the court itself.

The timing of the ruling — based on a complaint filed by the federal government in 2012 — was unclear. It came at a sensitive time, with political parties struggling to form a government.

The week prior to the ruling, another decision from the Supreme Court disqualified Hoshyar Zebari, the presidential candidate from the Kurdistan Democratic Party — the Kurdish-region’s main ruling party of which Barzani is a member.

The suspension was a blow to the ambitions of Moqtada al-Sadr, who's party gained the most votes in the October federal election, to push through a government that excludes Iran-backed Shiite rivals.

If implemented, the court ruling could cripple the Kurdish region. Barzani said his administration only benefitted from 41% of oil revenue of the region's 450,000 barrel per day market, after debts and other payments were deducted.

Defending the region's decision to export oil independently via Turkey, Barzani said with little income from the federal government trickling in, the region had no other choice. “What were we supposed to do?” he said.

The region depends on budget transfers from Baghdad to pay salaries for public employees and other government expenditures. These payments have routinely been delayed due to frequent cash shortfalls. Barzani said these now would be delayed again due to lack of revenue.

___ Kullab reported from Kabul.