Following the halt of KRG salaries by Iraq’s Finance Ministry, behind-the-scenes efforts have been underway to find a temporary solution, specifically, to send May’s salary allocation as a loan. However, these efforts have hit a setback, as the Federal Supreme Court is unlikely to convene before the end of the Eid holiday, which runs until June 10.

Context: The Finance Ministry justified its decision by citing the KRG’s failure to meet its obligations under the federal budget law and its receipt of funds exceeding its 12.67% budget share for both 2023 and 2024. However, the underlying motive appears to be political. The move followed high-profile energy agreements signed by the KRG in the United States and inflammatory rhetoric from KDP leader Masoud Barzani, who warned Baghdad of consequences if salary transfers were delayed.

Implications: KDP officials have intensified their confrontational rhetoric against the Iraqi government. Hoshyar Zebari, a KDP official and uncle to Masoud Barzani, warned that the KRG salary cuts “won’t go unanswered” and that those responsible for the decision will face “punishment.” Meanwhile, Fares Issa, the KRG’s representative in Baghdad and a KDP member who coordinates Erbil-Baghdad relations, claimed the KRG has “multiple options” and insisted it has met all its obligations. Meanwhile, Barzani’s spokesperson Khalida Khalil likened the Iraqi government to regimes that starve their populations, stating that such regimes are “destined to fall.”

Today, the KRG Cabinet held a meeting to discuss the crisis, though Finance Minister Awat Sheikh Janab did not attend. In a televised interview with Rudaw, Sheikh Janab asserted that the KRG has fulfilled its obligations and framed Baghdad’s decision as politically motivated. Meanwhile, the Finance Ministry in Baghdad has continued releasing data on the KRG’s oil and non-oil revenues, some of which has been circulated by Kurdish MPs in the Iraqi Parliament.

Barzani and the KDP have issued a clear ultimatum: if May’s salary is not disbursed by Eid, they will pursue escalatory measures following the holidays. However, two key Barzani initiatives have fallen significantly short, exposing the limitations of his threats. First, his call for a broad meeting of all Kurdish parties to present a unified front against Baghdad failed outright. No major opposition parties agreed to participate, and the PUK sent only lower-ranking officials, forcing the meeting to be downgraded and ultimately producing no concrete results. Second, the much-publicized KDP central leadership meeting, expected to produce a strong stance against Baghdad, also ended inconclusively, merely calling for continued dialogue. Not only did Barzani fail to rally Kurdish parties, but signs of division within the KDP itself have emerged. Nechirvan Barzani—KDP deputy president and president of the Kurdistan Region—declined to attend, reportedly due to his opposition to the current escalation strategy. He is said to favor a more measured, institutional approach and was also reportedly displeased that the broad party meeting was not held at the Kurdistan Presidency, even though the issue directly concerns public sector salaries. Nechirvan likely views this as yet another attempt to sideline his already diminished role. Ironically, he remains the most diplomatically successful Barzani, having met a record number of world leaders over the past year.

Barzani’s plan to send a letter to Prime Minister al-Sudani via his close confidant Fuad Hussein, Iraq’s foreign minister, has also encountered setbacks. Al-Sudani reportedly refused to discuss the KRG salary issue during a recent cabinet session, prompting Hussein and Construction Minister Bengin Rekani (both from the KDP) to boycott the meeting. However, the two other Kurdish ministers, both from the PUK, attended as usual. This further underscores a key weakness in Barzani’s position: none of the other Kurdish parties, including the PUK and other non-KDP factions, which together hold the majority of Kurdish seats in the Iraqi Parliament, are willing to adopt his confrontational stance or withdraw from Baghdad.

Deputy Speaker of Parliament Shakhawan Abdullah later stated that he and the two KDP ministers had met al-Sudani separately to deliver Barzani’s letter urging the prompt resumption of salary payments. Al-Sudani, however, reiterated that the decision must be made by the Federal Court. He gave the same response in a separate meeting with the Kurdistan Islamic Union faction, stressing that he does not have the authority to authorize the payments unilaterally.

As previously noted, al-Sudani is navigating a difficult political landscape ahead of elections. Reversing his decision would expose him to populist criticism from political rivals who could frame any concession as weakness or favoritism toward the Kurds. Conversely, maintaining his stance invites sustained pressure from the KRG. Referring the issue to the judiciary allows al-Sudani to deflect responsibility and preserve political cover.