UPDATE 2-Iraq parliament passes budget despite Kurdish boycott

Thu Mar 7, 2013 12:46pm EST

By Aseel Kami

BAGHDAD, March 7 (Reuters) - The Iraqi parliament passed the country's 2013 budget on Thursday despite a boycott by Kurdish members in protest at the amount allotted to pay oil companies operating in the autonomous north, lawmakers said.

Iraq's cabinet approved the 138-trillion-Iraqi-dinar ($118.5 billion) budget in October, but differences between Shi'ite, Sunni and Kurdish factions repeatedly thwarted attempts by lawmakers to pass the draft legislation in parliament.

Kurdish lawmakers boycotted the vote on Thursday, but 168 members of parliament were present, ensuring the budget was passed, according to a statement released by the parliament. A quorum is 163.

"We didn't attend the meeting," Kurdish MP Rawaz Khoshnaw said. "None of our demands were included in the budget. This is a very dangerous and alarming sign of what's coming in Iraq".

The standoff over the budget opened a new front in a long-running feud over land and oil rights between the central government and Iraq's Kurdish region, which in recent years has signed contracts on its own terms with international oil companies.

Kurdistan says it is owed more than 4 trillion Iraqi dinars, or $3.5 billion in total to cover the costs accumulated by oil companies operating there over the past three years, but Baghdad rejects those contracts as illegal.

The 2013 budget allocates 750 billion Iraqi dinars ($644.33 million) for oil companies operating in the northern Kurdish enclave, which include majors such as Exxon Mobil, Russia's Gazprom Neft and Chevron Corp.

Some lawmakers from the Sunni-backed Iraqiya Bloc also boycotted the session, saying that passing the budget without the Kurds on board would lead to bigger problems.

"Today we laid the foundation stone in the project of dividing Iraq, because to ignore one's partner and not listen to his demands will push him to seek other options," said Jaber al-Jaberi, an Iraqiya MP among those who boycotted the session.

"I expect the Kurds will go to the federal court to disrupt the budget".

The Kurds say the right to dictate their own oil policy is enshrined in the country's federal constitution.

Kurdish crude used to be shipped to world markets through a Baghdad-controlled pipeline running from Kirkuk to the Turkish port of Ceyhan, but exports via that channel dried up in December due to the payment row.

The 2013 budget is based on oil price of $90 and average exports of 2.9 mln barrels per day.

New legislation to govern the world's fourth largest oil reserves has been caught up for years in parliament, which has been all but paralysed since U.S. troops withdrew from Iraq over one year ago.

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