Yesterday’s decision by the Iraqi Finance Ministry to halt KRG public employee salaries comes as no surprise. The trigger was first pulled by KDP leader Masoud Barzani, who has long been engaged in a high-stakes geopolitical chess match with Baghdad—one that often sees him punching above his weight.

Just two months ago, KRG Prime Minister Masrour Barzani praised the Iraqi Prime Minister, expressing optimism about a newfound political will in Baghdad to resolve longstanding disputes with Erbil. For the first time in years, Baghdad agreed to send public sector salaries to the KRG and even accepted a key Kurdish demand: raising the recognized cost of oil production in the Kurdistan Region to $16 per barrel—$10 higher than Iraq’s national average.

However, while salaries were still being transferred—albeit with some delays—Masoud Barzani delivered an unusually harsh speech against Baghdad. It was his most combative rhetoric since the 2017 independence referendum which he spearheaded in 2017, which ultimately led to his resignation as Kurdistan Region President under regional and international pressure. Barzani threatened Baghdad with consequences if salaries weren’t sent on time. The speech clearly wasn’t about salaries, as Baghdad was still sending them despite some delays. Rather, salaries served as a pretext.

Barzani’s pivot following the 2017 referendum was tactical, not strategic. He was always planning to re-escalate against Baghdad once conditions were favorable.

The swift regional changes following October 7, 2023, have upended the regional power equilibrium, which was largely built on a balance of deterrence between Iran and Israel. With the collapse of Iran’s regional axis—a key component of its deterrence strategy—Barzani is capitalizing on this power vacuum to push for greater gains.

While it remains unclear whether Barzani has received concrete guarantees as he enters this new confrontation with Baghdad, several signs indicate he has been preparing for this moment:

His brother, Dilshad Barzani, openly attended an Israeli Newroz reception two months ago—a first—because Barzani knew Baghdad was too weakened by growing pressure on Iran and Trump’s return to retaliate against such attendance.

Barzani also organized a Kurdistan “Breakfast Prayer,” inviting hundreds of evangelicals – Israeli allies – to cement his position within this emerging “Abrahamic alliance.”

Since 2023, Barzani and his family have earned billions of dollars from the KRG’s unofficial oil sales without returning funds to the KRG treasury. Some of this money has been channeled to finance lobbying efforts in the US, building his case against Baghdad.

The US has been pressuring Baghdad to send KRG salaries and accept increased KRG oil production costs, despite Iraq’s budget being under massive strain—a situation increasingly unsustainable.

Barzani’s escalatory speech against Baghdad came just before his son, KRG PM Masrour Barzani, signed two major energy deals in the US. This timing suggests he interpreted these deals as American protection for Kurdistan, given the Trump administration’s explicit backing.

Notably, Bafel Talabani, leader of the PUK—the KDP’s main rival and the other pillar of power in the Kurdistan Region—also appears to be on board. Talabani recently spent 20 days in the United States, a visit that notably overlapped with a parallel trip by his rival, KRG Prime Minister Masrour Barzani. His extended stay and subtle signals, including references to high-level security and intelligence meetings, suggest more than routine diplomacy. Economically, the PUK is also poised to benefit from the same U.S.-backed energy deals signed by Masrour Barzani, further incentivizing alignment. Taken together, these developments imply that this is not merely a Barzani-driven maneuver, but rather part of a broader Kurdish recalibration—likely coordinated with, or at least tacitly supported by, Washington.

Additionally, Barzani has increasingly met with Iraqi Sunni leaders, who have grown more vocal since Assad’s fall in December 2024.

Perhaps most tellingly, there has been a rapid increase in diplomatic engagements with the Kurdistan Region, with Kurdistan in many ways becoming more diplomatically prominent than Iraq as a state.

However, Barzani may be misreading US support, banking more heavily on Israel or the UAE (where his son frequently visits) than warranted. This might be a gamble based on signals rather than guarantees. The signals suggest the US wants to counter Iranian influence by backing certain actors to build a new order in Baghdad, rather than redrawing borders. Strategically, this contradicts Barzani’s aim of creating an independent state and might strengthen Baghdad long-term, albeit a non-pro-Iran Baghdad.

Following Trump’s ambassador to Turkey and envoy to Syria Tom Barrack’s landmark statement—signaling that the Sykes-Picot era of Western-imposed Middle Eastern borders is ending in favor of regional solutions—discussions have intensified. While some Kurds interpret this as heralding regional map redrawing, the statement and ground actions actually suggest a return to some form of regional Sunni order through a Turkish-Saudi axis. Growing signs indicate Israel is being pushed back from its regional map-redrawing plans, though it’s unlikely to abandon them entirely.

As the region remains fluid during this transitional period toward a new regional order, two scenarios emerge for Kurdistan: 1. Renewing the independence referendum as a vehicle to push for independence—a plan likely favored by Israel and the UAE; and 2. The arguably more realistic path, which is the formation of a Kurdish–Sunni bloc within Iraq, backed by Turkey and certain Gulf states.

The coming weeks will offer a clearer sense of which trajectory Barzani and the Kurdistan Region are about to take.