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Why the Peshmerga, key ally against ISIS, are broke

Since the Islamic State overran much of Iraq in 2014, Kurdistan and its Peshmerga militia have been waging a long battle for freedom; today, they are a top ally in the fight against ISIS. But constant warfare and government instability have left the region teetering on the edge of economic catastrophe, and aid is slow in coming. Special correspondent Jane Ferguson reports.

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    The crash in global oil prices and two years of war are having a real effect on the economic stability of the Kurdistan region of Northern Iraq, a main U.S. ally in the fight against ISIS, just as the battle for the ISIS stronghold of Mosul begins.

    Special correspondent Jane Ferguson reports.


    The fortunes of people living in the shadow of Irbil's ancient Citadel have fluctuated dramatically over the centuries. Nowadays, times are tough. The economy in Kurdistan is in freefall. Government salaries have stopped, and other work is hard to come by, as foreign investors have fled.

    In this tea shop, men spend their days discussing the crisis, waiting for things to improve.

    Dawood Madhi was a civil servant. He has family on his mind.

  • DAWOOD MADHI, Retired Civil Servant (through interpreter):

    I have three sons who don't have work. Also, I used to have a small pension, which was not even enough to buy medicine for my illness. I receive about $150 a month. I am 66 years old and I am retired. I am not able to do another job.


    Those protecting these lands are also not getting paid. Kurdish fighters, called Peshmerga, who defend the semiautonomous region, saw their wages stop four months ago.

    Since ISIS overran swathes of Iraq in 2014, Peshmerga forces have pushed them back from Kurdish lands. They are now holding a lengthy front line against the group, aided by us airstrikes and intelligence. They are America's strongest ally in the fight against ISIS.

    And Senators John McCain and Lindsey Graham are pushing to find emergency funds for the Kurds. So far, that money hasn't arrived, and the Peshmerga are broke.

    Kurdistan's regional government spokesman, Safin Dizayi, fully admits this is a crisis.

  • SAFIN DIZAYI, Spokesman, Kurdistan Regional Government:

    Definitely, the Peshmerga are fighting a war which is a matter of life and death. They will continue to fight even if they are — if they continue to be unpaid. But while they are fighting and they are very vulnerable to attack of ISIL in every form, their families have to survive. Their kids have to go to school.


    Peshmerga forces are woefully underequipped, says the government here.


    When we have international delegations and senior people coming to Kurdistan, they go to the battlefront. They speak very highly of Peshmergas. They pat on the back, and, unfortunately, sometimes, we have been patronized. We can do without the patronizing.

    What we need is some more assistance, particularly for the Peshmergas. And this war, if this war needs to be won — often, people say that Peshmergas are fighting for — on behalf of the international community and the free world. If that is the case, then there has to be more assistance. Yes, we do appreciate what has been provided so far, but this is not sufficient.


    The economy here has largely depended on oil exports in recent years. Oil revenues and foreign investors made Kurdistan a booming success story from 2003. Since then, a crash in oil prices and a war with ISIS have pushed that boom into a bust.

    After disputes over oil exports, the Baghdad government has frozen payments to Kurdistan from the country's national budget. Legally, Kurdistan is entitled to 17 percent of all oil revenues from Baghdad's annual budget. Since those were cut in 2014, it is estimated Baghdad owes Kurdistan around $20 billion.

    The oil economy had funded an oversized bureaucracy that included excessive amounts of government jobs. That has become unsustainable. Construction projects were the most visible evidence of the oil boom. Until the crisis, foreign investors had great confidence in Kurdistan. Most construction sites we saw in Irbil had halted. Half-finished highways circle the city.

    For local businessman Rizgar Kadir, whose construction company has a contract to build a Kempinski Hotel, business has been affected by ISIS.

  • RIZGAR KADIR, Businessman:

    When ISIS started — took over the Mosul, some Indian workers has been kidnapped by them. The Indian government decided to take back all the employees. They opened an office in Irbil and they took back Indians. We lost around 800 employees. Now we have around 200 or so of them back. We are working on the project, but very slow.


    As the sun falls over Irbil, the city's streets become busier. Young men gather in this market. Many are put off marriage and a family until times get better. At least here, they can meet friends and enjoy a cheap meal.

    Rivan is a teacher who hasn't been paid in four months. Yes, it's tough, he says, but people here believe if their military can fight ISIS," or Da'esh, as they call the group, without a salary, they should be just as stoic.

    So you haven't received a salary for four months?

  • MAN:

    Four months, yes.


    How do you survive?

  • MAN:

    Yes, what shall we do? We are just living. And we have armed forces, Peshmerga. They battle Da'esh without any money. Yes, we have to live without money.


    It's a time of survival and sacrifice for everyone here, testing the endurance of Kurdistan itself.

    For the "PBS NewsHour," I'm Jane Ferguson in Irbil, Northern Iraq.

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