Iraq's top court this week ruled out sending financial entitlements from the federal government in Baghdad to the Iraqi Kurdistan Region.
The Federal Supreme Court said the payments violate the country's budget law for 2021 and claimed that the Kurdistan Regional Government (KRG) has not carried out its duties accordingly.
The Iraqi parliament in March 2021 passed the country's federal budget, allocating a share of these funds to the KRG on condition that it delivers 250, 000 barrels of oil per day, produced in the northern Kurdish region, to Iraq's State Marketing Organization (SOMO). Erbil and Baghdad have both blamed each other for not complying with the law.
Former Prime Minister Mustafa al-Kadhimi's government did send payments of 200 billion IQD ($125 million) per month to the KRG for several months.
Iraq's new PM, Mohammed Shia Al-Sudani, on 11 January approved a payment of 400 billion IQD ($250 million) to the KRG, covering the public sector payroll for November and December 2022.
Wasit Governor Mohammed Mayahi and independent Iraqi lawmaker Mustafa Jabbar Sand have jointly complained against this decision by Sudani sparking the court ruling.
Iraq did not have a budget law for 2022, and so far, Baghdad has not sent the 2023 budget bill to parliament for approval.
The ruling has complicated the Iraqi political process and the task now for Sudani is to find enough support in parliament for seeing the budget bill become law.
Although decisions by Iraq's top court are mandatory for all parts of the country, they are not usually subject to political taunting.
Authorities in the Iraqi Kurdistan region have rejected the court's decision and accused it of "politically motivated" behaviour.
Jutiar Adel, the KRG spokesperson, said in a statement on Wednesday that the authority rejected the court's decision, describing it as "unconstitutional and illegitimate".
The decision is not only against the KRG, but also "against the new Iraqi government and its constituent parties", he added.
Many Kurds in the Iraqi-Kurdistan region, however, welcomed the court’s decision, claiming that even if Baghdad provided the funds the political parties that makeup the KRG "will steal it".
The Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), alongside the smaller Change Movement (Gorran), currently run the KRG.
But Nechirvan Barzani, president of the Kurdistan region, condemned the decision by the Iraqi Supreme Federal Court, describing it as "completely unfair".
Masoud Barzani, president of KDP, also criticised the court's decision, judging it to be "hostile" to the Kurdistan region and accusing the court of "working for a suspicious agenda…similar to the Revolutionary Court under the former Iraqi regime".
"The Federal Court of Iraq acted against the sending of Kurdistan's share of the budget, although the Kurdistan Region Government and the Federal Government agreed upon it earlier within the framework of constitution, law, and mutual understandings," the Judicial Council of Kurdistan Region said in a statement on Wednesday.
The Iraqi Federal Supreme Court ruled in mid-February against the KRG's oil and gas law, passed in 2007 by the local parliament, and regulating the oil and gas sector in the region.
Iraqi Kurdistan started exporting its oil independently, and without the consent of the federal government, in 2014, sparking a confrontation with Baghdad.
The court is expected to make more decisions against the Kurdistan region soon.