KRG Urges Baghdad to Lift Trade Embargo Amid Economic Strains


 

Aziz Ahmad, deputy chief of staff to Kurdistan Region Prime Minister Masrour Barzani, on Sunday called on the federal government to lift the trade embargo imposed on the Kurdistan Region, warning that the restrictions have severely disrupted commerce, halted oil exports, and exacerbated economic and security challenges in the region.

Ahmed emphasized that the KRG’s position has been consistent: there is only one request — lift the embargo enforced since January 1, which has effectively blocked formal bank transfers for imports. The embargo has forced businesses to rely on informal trade channels, with importers paying premiums of up to 15% on dollars. Commodity and food prices have risen across Iraq, while the KRG’s local non-oil revenues have declined, undermining its capacity to make the monthly salary transfers to public sector employees in the region.

The official highlighted that Erbil has repeatedly offered solutions to Baghdad to safeguard national interests and maximize both trade and oil exports. He added that Prime Minister Masrour Barzani proposed that the KRG adopt federal tariffs at all border crossings and airports while implementing a regional ASYCUDA customs management system.

The system, managed by the KRG Ministry of Finance and Economy, would be hosted locally but share real-time data with Baghdad. An external auditor would verify that federal tariffs are correctly applied and that US dollar transfers correspond to cleared imported goods, addressing federal revenue concerns, Ahmed noted.

Negotiations on Thursday stalled when Baghdad insisted all imports into the Kurdistan Region must pass through the federal ASYCUDA system and have revenues deposited directly into federal coffers — a move the KRG said violates its constitutional rights, according to the KRG official.

Ahmed also cited broader security and economic pressures compounding the crisis. Armed groups operating outside state authority have repeatedly targeted Kurdistan’s energy infrastructure, including oil and gas fields, refineries, and other facilities.

Militant attacks have forced the suspension of production, leaving the region without petroleum products available for export. Recent incidents include the March 11 attack on two oil tankers near Umm Qasr in Basra, which destroyed naphtha cargo and endangered crews. The ongoing US-Israeli-Iran conflict has further heightened regional risks, affecting trade routes and economic stability.

The Kurdistan Regional Government’s Ministry of Natural Resources has previously clarified that Baghdad’s public statements misrepresent the reasons behind halted exports via the Ceyhan pipeline.

According to the ministry, Iraq has imposed a suffocating economic blockade under the pretext of enforcing the ASYCUDA system, while refusing to allow additional time for integration. Meanwhile, federal authorities have failed to confront attacks on KRG energy facilities and, in some cases, funds and weapons provided by Baghdad have reportedly ended up in the hands of the attackers.

Regarding oil exports, Ahmed stressed that the KRG has made no additional demands beyond lifting the blockade. The northern pipeline to Turkey’s Ceyhan port remains a vital outlet for crude produced in Kurdistan and nearby Kirkuk fields, with capacity for up to 300,000 barrels per day. Iraq’s Oil Ministry has sought to increase shipments via Ceyhan to offset disruptions in southern exports caused by tanker attacks and the wider regional conflict.

Ahmed concluded that restoring formal trade channels and banking transfers would provide immediate liquidity, allow Kirkuk oil to flow through the pipeline, and benefit the Iraqi economy as a whole. He reiterated the KRG’s willingness to engage in dialogue with Baghdad while defending the region’s constitutional rights, economic interests, and the security of its population.

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