Public officials, tradesmen and Peshmerga forces of KRG have endured the greatest difficulties following a non-binding independence referendum, as the Iraqi central government, Iran and Turkey put economic pressure on the semi-autonomous region.
Following the Kurdish Regional Government’s (KRG) non-binding referendum to break up with Iraq on September 25, the Iraqi central government immediately closed the airspace for planes in and out of airports in the KRG-controlled territories.
The move was followed by neighbouring Turkey and Iran. Tehran went further and shut down its border with the KRG temporarily and Turkey increased scrutiny on its border gates. The moves have added more uncertainty to already existing harsh conditions for the people in KRG-controlled areas in northern Iraq.
KRG hadn’t expected such strong cooperation between Ankara, Tehran and Baghdad before they voted in favor of independence for the semi-autonomous region that was established in 1992 but recognised by Iraq in 2005.
During a press conference in mid-June, KRG Prime Minister Nechirvan Barzani said Turkey's reaction against referendum preparations was normal. “There is nothing in [Turkey's statements] that could cause concerns.”
The ongoing political crisis finally cost the political career of KRG President Masoud Barzani, who threw himself under the tracks by ignoring warnings from his allies to not to hold the referendum.
Following his letter to the parliament – in which he said he wouldn’t extend his term – Iran announced the reopening of its border with the KRG. Turkey never shut down its border with the KRG but had warned that it considered doing so.
Recent events have led the KRG to hand over border gates with Turkey and Syria to the Iraqi army. The people of northern Iraq, who were already facing financial problems, felt the greatest effect.
“It doesn’t matter that all the border gates are open since people here don’t have money to spend because public officials haven’t been paid their salaries for the last two months,” said Diyari, a Kurdish textile exporter who is doing business in Erbil.
“Economy was already bad before the independence referendum, but things are much worse now,” he said.
According to the New York Times, the region was nearly $20 billion in debt.
The KRG has been struggling to pay officials and its employees since 2014, following a dispute about oil-sharing revenue that led Baghdad to stop payments as a political move to push the KRG to the wall.
Iraq’s capture of oil region Kirkuk from Peshmerga forces added more financial difficulties to the KRG, halving its oil income.
However, Iraqi Prime Minister Haider al Abadi on Tuesday said they plan to pay the salaries of the Kurdish civil servants and the Peshmerga soon.
"We will soon be able to pay all the salaries of the Peshmerga and the employees of the region," Abadi told reporters.
The process of handing over border gates to the central Iraqi government still goes on, as Iran reopened its border with the KRG.
The strong economic links between Ankara and the KRG did not stop Turkey from closing its airspace like Tehran and Baghdad did. Turkish companies have helped build KRG’s infrastructure, including constructing a $550 million airport in Erbil, and about 1,300 Turkish companies operate out of the semi-autonomous region.
“People who want to fly outside of Iraq have to go to Baghdad first and then take another plane out,” said Savas Avci, the chairman of the Turkmeneli Human Rights Association.
Avci said that the main problem people have in the KRG-controlled areas is the need of money, accusing Barzani of inept distribution policies.
“Less than five million people live in the KRG-controlled areas. The income from Kirkuk oil and border gates would have been enough for all of them, but Barzani could not manage it,” he said, adding people are now hopeful after Abadi’s statement on Tuesday.
Masoud Barzani left office on Wednesday. His nephew Nechirvan Barzani, the Prime Minister of the KRG has to reconcile with Baghdad, Ankara and Tehran, as well as rival Kurdish parties after a failed referendum on independence.
Nechirvan Barzani will now be the main authority figure in the executive branch of the KRG.