The 18-month suspension of oil exports from Iraqi Kurdistan has cost the state more than $28bn in lost revenue, a senior Kurdish official has said, as the fiscal damage is compounded by security threats that have drawn direct intervention from Washington.

Speaking at a press conference in Erbil on September 8, Safin Dizayee, head of foreign relations for the Kurdistan Regional Government (KRG), outlined the severe economic consequences of the continued shutdown of the Iraq-Türkiye pipeline. “From March 25, 2023, until now, Iraq and the Kurdistan Region have suffered losses of more than 28bn dollars due to the halt in oil exports,” he said, in comments carried by local news outlets including Kurdistan24.

Dizayee criticised the logic behind the stoppage, which was initiated by Baghdad to enforce a $1.5bn arbitration ruling against Türkiye. “Expecting to receive about $1.5bn while a loss of $28bn has been recorded is, from an accounting perspective, an unjustifiable act,” he argued.

The revenue loss is now coupled with a security crisis. Recent drone attacks on oilfields prompted a “strong reaction from America,” Dizayee revealed. He confirmed the US Secretary of State had called the Iraqi government to insist on the protection of American assets in the region. “America desires a strong relationship with Baghdad… but at the same time, it protects its own interests, especially since two of the four targeted companies were American,” he said. “Therefore, it demands that these areas be protected.”

These twin crises are inflaming an already deep political rift between Erbil and Baghdad. The federal oil ministry recently celebrated new development contracts with bp and Chevron, including in the constitutionally disputed territory of Kirkuk. A ministry official hailed the deals as proof of an “attractive investment environment.”

However, the move was condemned by the KRG. Prime Minister Masrour Barzani has labelled the Kirkuk agreement “unconstitutional,” arguing that the future of such areas requires a co-ordinated approach. “Kurdistani territories, as defined by the Iraqi constitution, cannot be unilaterally decided by either Erbil or Baghdad,” Barzani asserted. “We are not against development in principle, but we are against the mechanism.”

Despite the impasse, the KRG is pursuing an independent economic strategy focused on attracting foreign capital. Dizayee confirmed an American investment delegation is currently in the region exploring joint projects, and a Dutch-led economic forum is scheduled for this week. He insisted the Kurdistan Region “has been able to create a strong position for itself in the economy,” positioning itself as an “open market for the private sector.”