Bluffing Through a Budget Agreement in Baghdad

Iraqi and Kurdish officials have resumed negotiations over a budget deal, but there might not be much relief in sight for the cash-strapped Kurdistan Regional Government (KRG). Though a deal with Baghdad would work to Arbil's advantage, at least in the oil market's current state, Baghdad's own financial constraints might prevent the deal from solidifying. An oil producer itself, Iraq has not been immune to the damage low oil prices are causing; Baghdad has already accrued huge budget deficits and is in the midst of negotiations with the International Monetary Fund for an emergency bailout. And so, while it might make sense for the KRG to pursue a money-for-oil deal with Baghdad in the short term, it is unlikely that the same can be said for the Iraqi government. ...