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Kurdistan Region, Baghdad Reach Deal on Oil Exports, Payments

FILE - Iraqi Foreign Minister Hoshyar Zebari.

The Iraqi government and the semi-autonomous region of Kurdistan have reached a deal to ease tensions over Kurdish oil exports and civil service payments from Baghdad, Iraq's finance minister told Reuters on Thursday.

Hoshyar Zebari said the central government had agreed to resume payments from the federal budget for Kurdish civil servants' salaries.

Zebari, who is a Kurd, described the step as a “major breakthrough” that would reduce friction between the KRG and Baghdad.

The deal was reached after talks between Iraqi Oil Minister Adel Abdel Mehdi and Kurdish Prime Minister Nechirvan Barzani in the Kurdistan region on Thursday.

Baghdad stopped paying for KRG civil servant salaries in protest against the Kurds' exporting oil to Turkey independently.

Under the agreement, Iraqi Kurdistan will give 150,000 barrels per day of oil exports - equal to around half its overall shipments - to the federal budget.

In Arbil, the Kurdistan Regional Government (KRG) confirmed the agreement.

“What they have agreed is that Baghdad will release some funds - $500 million - and the KRG will give 150,000 barrels per day of oil to Baghdad,” KRG spokesman Safeen Dizayee told Reuters.

He said a KRG delegation headed by the prime minister would travel to Baghdad soon to hammer out a more comprehensive deal and the regional government would not hand over control of exports to Baghdad.

The U.S. State Department welcomed the agreement and urged both sides to work toward a comprehensive deal, spokeswoman Jen Psaki said.

A similar agreement was proposed in April but never advanced to a deal.

In July, then Iraqi foreign minister Zebari said the Kurdish political bloc withdrew from the national government in protest against Prime Minister Nuri al-Maliki's accusation that Kurds were harboring Islamist insurgents in their capital.

The Kurds later rejoined the administration, but tensions persisted.

Maliki, one of the most divisive figures to emerge from the U.S. occupation of Iraq, was later replaced by Haider al-Abadi. He is seen as a moderate Shi'ite capable of cooperating with Sunni Muslims, Kurds and other sects.

Iraqi leaders are under pressure to bury differences in order to counter Islamic State militants who have seized chunks of the country in the north and west.

Most of the Kurds, a minority in Iraq, live in the north, where they run their own affairs, but remain reliant on Baghdad for a share of the national budget.