ERBIL, Kurdistan Region of Iraq - A technical delegation from the Kurdistan Regional Government (KRG) arrived in Baghdad on Monday to negotiate an agreement with the relevant authorities in the federal government on outstanding financial disputes between the two sides, well-informed sources told The New Region.

Erbil and Baghdad have stepped up efforts to find a grassroots solution to the financial disputes, as civil servants on Erbil’s payroll have borne the brunt of the crisis.

The New Region understands that intensified talks between Erbil and Baghdad have seen significant progress. However, a KRG official dismissed claims that Erbil has agreed to hand over all oil produced in the Kurdistan Region to Baghdad.

“The news that the Kurdistan Region will hand over all the oil to Baghdad is untrue, and has no basis whatsoever. The Kurdistan Regional Government will keep part of the produced oil for domestic use,” a KRG source told The New Region.

The KRG delegation’s visit to Baghdad comes a day after Iraq’s Parliament Speaker Mahmoud al-Mashhadani visited Erbil, where he met Kurdistan Region President Nechirvan Barzani, Prime Minister Masrour Barzani, and Masoud Barzani, leader of the ruling Kurdistan Democratic Party (KDP) and former president of the Kurdistan Region. Discussing mechanisms to resolve the Kurdistan Region’s civil servants’ salaries was Mashhadani’s “top priority” during his one-day Erbil tour. 

A recent suspension of Kurdistan Region’s civil servant salaries has sparked outrage among the Region’s public, as well as among officials and politicians, who have slammed the decision as “political.”

The move has led civil servants from the Kurdistan Region to file a complaint with the Iraqi Federal Supreme Court, demanding uninterrupted funding of their salaries on their scheduled dates, as per a previous court ruling.

In a letter addressed to Erbil in late May, Iraqi Finance Minister Taif Sami said Baghdad was “unable to continue funding the Region,” for the rest of the year, arguing that Erbil has already exceeded its share of the annual budget.

Spokesperson of the KRG, Peshawa Hawramani, said on Wednesday that funding the salaries of the Region’s employees by the federal government depends on an agreement between international oil companies (IOCs) and Baghdad for the resumption of Erbil’s exports.

“The ball is now in Baghdad’s court,” Hawramani said. “The fate of one million employees awaits a signature” from Iraq’s Prime Minister Mohammed Shia’ al-Sudani.

Years of conflict, unresolved issues between Erbil and Baghdad, and economic sanctions and pressure on Erbil by federal authorities have forced employees in the Region to live paycheck to paycheck.