Baghdad reaches agreement in oil dispute with Arbil
Iraq's government and the autonomous Kurdish region on Tuesday announced an agreement on resolving their longstanding disputes over the budget and oil exports, boosting prospects of closer cooperation against jihadists.
Iraqi Prime Minister Haider al-Abadi's office said the deal was approved during a cabinet meeting also attended by Kurdish Prime Minister Nechirvan Barzani.
Under the deal, due to come into effect at the start of 2015, 250,000 barrels per day (bpd) of oil will be exported from the autonomous region and 300,000 from the disputed province of Kirkuk.
"We have reached an agreement with the Iraqi government which will benefit both parties and whereby we will export 250,000 bpd of regional oil and help the federal government export the Kirkuk oil," Barzani told reporters.
The deal would see oil from the Kurdish region or claimed by its leadership exported via Kurdish pipelines but through the federal oil company.
In return, Baghdad will release the Kurdistan Regional Government's share of national revenue, which had been frozen for more than a year in retaliation for Arbil's efforts to export oil unilaterally.
It will also give a share of its military budget to the Kurdish peshmerga fighters.
"The federal prime minister has expressed his readiness to guarantee one billion dollars from the Iraqi budget for the peshmerga forces," Barzani said.
Abadi's office simply said the Kurdish military would get a percentage of the federal armed forces' budget.
The peshmerga have played a key role in the counter-offensive against the Islamic State (IS) jihadist group which controls parts of Syria and in June conquered swathes of Iraq.
The jihadist fighters have exploited the dispute between Baghdad and Arbil to establish a presence in disputed regions along the borders of the Kurdish region.
When the federal army collapsed and retreated in the face of the jihadist advance in June, Kurdish troops took over federal areas it had long claimed -- including the oil hub of Kirkuk.
The move infuriated Baghdad but two months later, IS fighters made a fresh push and seized some of those disputed areas from the peshmerga, moving within striking distance of the Kurdish capital Arbil.
Relations improved when Abadi took over from Nuri al-Maliki as prime minister.
IS was ousted from two towns in eastern Iraq last month in joint operations which saw peshmerga forces move in from the north and federal troops backed by Shiite militia push up from the south.
The deal announced Tuesday is an interim agreement and some outstanding issues remain to be ironed out between Baghdad and the Kurdistan government.
"We will work on a strategy to reach a comprehensive deal covering all problems with Baghdad," Barzani said, adding that the "negotiations may take six months or more."