Ashti Hawrami, the natural resources minister of the Kurdistan Regional Government (KRG), says that Kurdish peshmerga fighters battling the Islamic State (IS) cannot be paid until Baghdad gives KRG overdue oil money.
In December 2014, the Iraqi government reached an oil deal with the KRG, which said that the KRG could export over half a million barrels per day (bpd) that would flow through Iraq's State Organisation for Marketing of Oil (SOMO), and the KRG would receive 17% of the country's national budget in return.
However, the Iraqi government and the KRG clashed on unspecified parts of the agreements and Hawrami said that the current payment from the Iraqi government does not even cover civil services, which include financing the Kurdish army.
"The fight against IS across several thousand kilometres of front line cannot happen if you don't have the economic means to do it," Hawrami said at the Iraq Petroleum 2015 conference in London.
He said peshmergas had not been paid for almost three months, making it very hard to keep up the fight against the IS.
"We can't keep saying to oil companies: 'Give us one more month.' Eventually this will collapse around us. We need more money."
Hawrami hinted that the KRG would like to find another way to co-ordinate the deal if Baghdad could not pay their part of the deal. The capacity of the Kurdish-owned oil plants is expected to exceed 1 million bpd.
Iraqi officials agreed with the KRG that both sides have to sit down and resolve misunderstandings regarding the oil deal. Director general of Iraq's SOMO, Falah Alamri, said at the conference: "The financial situation is a misinterpretation. The KRG needs to sit with the government to resolve this issue."
Deals concerning oil have been a major point of disagreement between the Iraqi government and the KRG, which has had a direct impact on the battle against IS.