The Kurdistan Region of Iraq has vast proven oil and gas resources; however, mismanagement, corruption and ruling parties’ monopoly on power have brought the region to the brink of financial collapse amid longstanding controversies with the Iraqi government over the region's share of federal budget.

Following extensive negotiations, the Kurdistan Regional Government (KRG) announced Nov. 27 that a final oil-for-budget deal with the Iraqi federal government had been reached in which the KRG agreed to submit 250,000 barrels per day of crude oil to Iraqi State Oil Marketing Company in return for receiving a fair share of the country’s budget for 2020. The KRG currently produces 500,000 barrels per day, and has been exporting most of its oil independently through Turkey since 2013.

Two days later, Iraqi Prime Minister Adel Abdul Mahdi said he would step down in response to wide public protests. Iraq's parliament approved his resignation Dec. 1.

“The current government cannot sign any agreement either with the KRG or others, since it’s a caretaker government and does not have the authority to make deals, especially on oil and the federal budget,” said Mansur Al-Baeji, a lawmaker from former Prime Minister Nouri al-Maliki’s State of Law Coalition. He said that the next prime minister will have the authority to sign agreements with the KRG, and that the coalition would not allow the agreement between Erbil and Abdul Mahdi to pass the Iraqi parliament.