I do not know precisely where the flaw lies: is it in the way financial agreements between Baghdad and Erbil are drafted, or in the failure to clearly set their dates, durations, and mechanisms of expiration from the moment they are signed? And why, after every financial agreement, do we not see a publicly announced document specifying the start and end dates of the agreement, and how figures are reviewed and settled?
This question sometimes seems more important than the number itself.
The 120 billion dinars that the Kurdistan Regional Government (KRG) is committed to transferring to Baghdad monthly is no longer just a financial figure; it has become the title of a broader dispute concerning how the financial relationship between the Federal Government and the Regional Government is managed, and the way in which temporary settlements turn into ongoing obligations.
Why 120 billion dinars specifically? How was it calculated? Is it a percentage of actual non-oil revenues or a fixed amount? What duration did the two parties agree upon? And when does the obligation to pay it end?
When returning to the July 2025 agreement, a point emerges that warrants a pause. The 120 billion dinars was not presented as a final figure, but rather as an estimated advance payment for the federal treasury’s share of non-oil revenues, subject to auditing and settlement by the competent financial and regulatory authorities.
In other words, the figure at its inception was not the end of the accounting, but the beginning of it. Therefore, any financial agreement requires clear start and end dates, as well as a public mechanism for review and settlement, so that a temporary figure does not turn into a permanent obligation.
However, the accounting between Baghdad and Erbil does not begin and end with what Kurdistan pays.
The region’s share of the federal budget is not confined to civil service salaries; it is linked to current expenditures, investment projects, and sovereign/governing expenses. Hence, the counter-question arises: if Baghdad demands the revenues that should enter the federal account, Kurdistan has the right to ask about its full entitlements. How much was allocated to it? How much was actually released? And what was implemented versus what remained unfulfilled?
The accounting must be a two-way street.
There is also an important variable that has entered the equation: population.
Following the General Census of Population and Housing in November 2024, the Kurdistan Regional Government announced that the region’s population share of Iraq’s total population stands at 14.14%, whereas the Federal Government dealt with a figure of 12.68%. This difference directly impacts the discussion regarding the region’s entitlements in the 2027 budget.
The dispute here is not merely statistical if the population count factors into calculating certain allocations and services. Consequently, the question becomes legitimate: how can accurate revenue figures be adopted while the population figure—which affects a key portion of entitlements—remains a matter of dispute?
Added to this is the fact that over past years, the region has hosted more than 850,000 refugees and internally displaced persons (IDPs). This translates into additional strain on schools, health centers, water, electricity, roads, services, and infrastructure. Data from the region shows that the number of registered refugees alone reached approximately 274,700 in August 2026, alongside the numbers of IDPs.
Therefore, financial accounting cannot look at revenues alone; it must take into account the scope of responsibilities and expenditures borne by the region’s institutions.
When preparing the 2027 budget, the most crucial question becomes: how was Kurdistan’s entitlement calculated? What population count was adopted? What is its share of operational expenses, investment projects, and sovereign/governing expenditures? What was actually released? Conversely, how much did non-oil revenues amount to? How much of that should go to the federal treasury? And what was paid and settled?
Only here can the 120 billion be placed in its proper context within the accounting, rather than treating it as though it represents the entire balance sheet.
This does not imply a rejection of the principle that the region should contribute to the federal treasury or a rejection of auditing revenues. The issue concerns transparency in both directions: what is due from the region according to the law, and what is due to it according to the law and the constitution.
This becomes even more critical in light of the conditions Iraq and the region have experienced, from regional escalations and attacks targeting oil facilities and fields, to impacts on energy, trade, investment, border crossings, and revenues.
Then came a new moment.
On September 30, 2026, the U.S. military withdrawal from Iraq was completed, and the mission of the International Coalition against ISIS ended, with continued cooperation in training and intelligence. Iraq found itself entering a phase where its national institutions and forces assume a greater security responsibility.
Yet this new phase is not solely about security. Iraq needs to resolve the financial and constitutional dilemmas that have recurred year after year. As security responsibility shifts more heavily to state institutions, the need becomes more urgent for a clear and stable federal relationship governed by fixed constitutional and financial rules—not temporary settlements renegotiated with every crisis.
The files of the budget, oil and gas, the powers of the Federal Government and the Region, and the disputed territories are not separate issues; they are parts of a federal relationship that requires clear rules and mechanisms for execution and settlement to which both parties can turn.
The region is directly concerned with this phase. The Ministry of Peshmerga Affairs warned of the sensitivity of the security situation, citing missile and drone attacks targeting the region, while emphasizing that the region’s airspace is part of Iraqi airspace and that the responsibility for protecting it rests primarily on the Federal Government.
The U.S. withdrawal does not alter the constitution, but it alters the environment in which the constitution operates. For this reason, security, financial, and constitutional stability must proceed along a single path.
Ahead of the 2027 budget, perhaps the greatest need is not for a new agreement on a figure, but for a clear agreement on the method of accounting: start and end dates, a review mechanism, transparent auditing, and a final settlement that leaves no figures hanging unresolved from one year to the next.
After September 30, Iraq entered a new phase, while the regional environment remains unstable and major constitutional and financial issues still await clear solutions.
In such a phase, agreeing on a number is not enough.
We need to know where the number came from, for what duration, and what corresponds to it on the other side of the ledger.
The 120 billion dinars can be calculated, but the true accounting is the accounting of all of Iraq: what it owes Kurdistan, and what Kurdistan owes it.
Note: This text is translated from the original Arabic version… Read the Arabic version:Click here
