KRG Salary Crisis Peaks During Eid al-Adha as Baghdad Files Lawsuit Over US Gas Contracts

The budget crisis between Baghdad and the Kurdistan Regional Government reached acute levels during Eid al-Adha (May 26–30), with approximately 1.2 million KRG civil servants, pensioners, and welfare recipients unable to receive holiday payments after Baghdad suspended Kurdistan's May budget transfer. The freeze was triggered by the KRG's May 19 signing of two major natural gas development contracts — HKN Energy's $40 billion Miran gas field deal and WesternZagros's $70 billion Topkhana-Kurdamir contract — totaling up to $110 billion in lifetime project value. Baghdad's Federal Ministry of Oil declared the contracts 'null and void,' citing Federal Supreme Court rulings (cases 59/2012 and 110/2019) and Articles 111–112 of the Iraqi Constitution granting federal exclusive control over oil and gas. The Iraqi government filed a lawsuit at al-Karkh commercial court against both HKN Energy and WesternZagros seeking cancellation. The Erbil Chamber of Commerce described the salary freeze as 'collective punishment' and 'starvation,' calling it 'a calculated political maneuver' that coincided with the holiday to maximize political pressure. The KRG described it as 'oppression and injustice,' called on UN agencies and foreign consulates to intervene, and invoked precedent: between 2023–2025, Baghdad sent only 41% of Kurdistan's legally approved budget entitlements (24.3 trillion IQD of 58.3 trillion IQD owed), leaving civil servants with an estimated $21 billion in cumulative arrears.