Key Reform Areas:

• Public Sector Overhaul: Introduction of biometric registration systems to eliminate ghost employees and ensure payroll accuracy.
• Anti-Corruption Measures: Reinforcement of oversight mechanisms through empowered institutions such as the Supreme Audit Divan and the Commission of Integrity.
• Digital Transformation: Launch of digital initiatives to modernize government operations and improve service delivery.
• Economic Transparency: Enhanced disclosure and regulation in key economic sectors, particularly in oil revenue management, to promote accountability and public trust.
• Healthcare and Food Safety: Establishment of a Food and Drug Administration under the Council of Ministers to align health standards with international benchmarks.
• Judicial Independence: Structural reforms aimed at safeguarding the judiciary from political and social interference.
• Tax System Reform: Implementation of legal frameworks to combat tax evasion and ensure a more just and transparent taxation system.
• Promotion of Fair Trade: Development of regulations to combat monopolistic practices and foster a competitive market environment.
• Parliamentary Oversight: Strengthened commitment to institutional checks and balances, including respect for parliamentary opposition and adherence to internal regulations.

In response to the multifaceted crises of 2014, including the suspension of budget transfers from Baghdad, the emergence of ISIS, mass displacement, and the global collapse in oil prices, the Kurdistan Regional Government launched a comprehensive economic reform program. 

Strategic Partnership with the World Bank

At the core of the KRG’s reform agenda was a strategic partnership with the World Bank, which provided technical assistance in identifying key vulnerabilities and crafting a reform roadmap. This collaboration underscored the KRG’s commitment to transparency, modernization, economic diversification, and citizen-centered governance.

Modernization of the Ministry of Economy and Finance (MOEF):
 The KRG has restructured the MOEF into a forward-looking policymaking body capable of leading the Region’s fiscal strategy. Key reforms have included improved budget preparation, enhanced debt management, digitization of financial systems, and increased public financial accountability. Investments in information technology infrastructure have accelerated the transition toward automated and transparent financial processes.

Biometric Registration of Public Sector Beneficiaries:
 To improve payroll accuracy and reduce fraud, the KRG implemented biometric registration for civil servants, pensioners, and benefit recipients. This initiative has eliminated ghost employees, duplicate payments, and ineligible claims. It has also enabled the introduction of e-payments and the development of a modernized civil service database, significantly streamlining public expenditures.

Electricity Sector Reform:
 Acknowledging the fiscal burden of energy subsidies and inefficiencies, the KRG has implemented sweeping reforms to ensure sustainability in the electricity sector. These efforts include shifting to natural gas-based generation, deploying combined-cycle gas turbine (CCGT) technology, and renegotiating contracts with independent power producers. These measures have yielded an estimated annual savings of $1.5 billion. A medium-term strategy is also being developed with international partners to modernize tariffs, reduce technical losses, and attract private investment in the power grid.

Enhancing Transparency and Accountability in the Oil and Gas Sector:
 A hallmark of the reform program has been the introduction of third-party audits of the Kurdistan Region’s oil and gas sector. International audit firms were contracted to review export data, domestic sales, and payments to oil companies. Civil society observatories have been established to monitor the audit process and disseminate findings, reinforcing public trust and promoting responsible resource governance.

Social Protection Reform:
 The KRG is in the process of developing a comprehensive social protection strategy aimed at strengthening the labor market, expanding social insurance programs—including unemployment insurance—and reforming existing safety nets. A central goal is to shift eligibility criteria for non-contributory programs from affiliation-based to need-based, thereby reducing poverty and promoting social equity.

Key Initiatives:

• Transportation Infrastructure: Over 1,000 road and transportation projects launched to improve regional connectivity.
• Revenue Diversification: Promotion of agriculture, manufacturing, and other non-oil sectors to build a more resilient economy.
• E-Government Services: Progress toward full digitization of public services by 2025, aimed at reducing bureaucracy and improving citizen access.

Key Environmental Initiatives:

• Ronaki Electricity Project: A landmark initiative aimed at expanding and stabilizing the Region’s electricity supply through increased production capacity and modernization of the power grid, contributing to energy security and economic development. Aimed at providing 24/7 electricity throughout the Region by the end of 2026- the first for all of Iraq.
• Erbil Water Supply Emergency Project: Implemented to address critical water shortages in the capital, this project secured emergency funding and infrastructure upgrades to ensure a reliable and sustainable water supply for Erbil’s growing population. Construction of more than 100 rainwater collection ponds to support agriculture and mitigate flood risks. 

Impact of the Iraq–Turkey Pipeline Closure

In March 2023, the Kurdistan Region experienced a severe economic setback following the suspension of crude oil exports via the Iraq–Turkey Pipeline (ITP), which previously transported approximately 450,000 barrels per day. The halt, resulting from an international arbitration ruling in favor of Baghdad, eliminated the KRG’s primary independent revenue stream. Since then, the Region has lost an estimated $4 billion in revenue, severely affecting its ability to pay public sector salaries, fund services, and maintain reform momentum.

The prolonged closure has also disrupted foreign investment, constrained private sector growth, and deepened the Region’s fiscal dependency on federal budget transfers from Baghdad. Although negotiations continue among Erbil, Baghdad, and Ankara, political complexities have stalled progress. The KRG continues to call for the prompt resumption of oil exports to restore financial stability and support economic recovery.

Foreign Investment and Economic Diversification

Despite these challenges, the KRG remains committed to economic diversification. Efforts are underway to promote investment in agriculture, tourism, manufacturing, and information technology through regulatory reform, infrastructure development, and targeted incentives. The Kurdistan Board of Investment has streamlined licensing procedures and promoted public-private partnerships, with a particular focus on renewable energy, industrial production, and construction.

Future Outlook

The KRG is resolute in its commitment to completing its reform agenda and reducing dependency on oil revenues. Strategic priorities moving forward include:

• Unifying revenue collection mechanisms
• Promoting small and medium-sized enterprises (SMEs)
• Strengthening the financial and banking sector
• Advancing a knowledge-based economy through innovation and education

The experiences of the past decade have affirmed a fundamental principle: that transparency, diversification, and inclusive governance are essential to achieving sustainable economic development and sovereignty. While significant challenges persist, the KRG’s reform program reflects a determined and forward-look

Security

The security of the Kurdistan Region is maintained by its own armed forces- the Peshmerga, meaning “those who face death.” Deeply rooted in Kurdish history and struggle, the Peshmerga are both constitutional and symbolic defenders of the Region, playing a vital role in protecting its people from dictatorship, terrorism, and regional instability.

Since 2003, not a single U.S. service member has been killed in territory administered by the Kurdistan Regional Government (KRG), underscoring the Region’s reputation as a stable and reliable security partner in the Middle East.¹

Legal Framework and Historical Role

The Peshmerga operate under Article 121(5) of the Iraqi Constitution, which grants the KRG the right to maintain its own internal security forces. This authority was institutionalized through a series of laws enacted in 2007, defining the structure, service regulations, and retirement systems of the force.²

Having evolved from guerrilla fighters to a structured military institution, the Peshmerga have played a pivotal role in global counterterrorism, particularly in the war against ISIS. After the fall of Mosul in 2014, the Peshmerga defended a 650-mile front line, not only securing the Kurdistan Region but also preventing ISIS from advancing deeper into Iraq. Their sacrifices were profound: more than 1,800 fighters were martyred, and over 10,000 were wounded in the fight against ISIS.³

Reform and Unification

Recognizing the changing security landscape, the KRG has undertaken a comprehensive reform and unification initiative to professionalize the Peshmerga and enhance operational effectiveness. Historically divided between the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), the forces are now being integrated under a single command within the Ministry of Peshmerga Affairs, with strong leadership from the Kurdistan Region Presidency.⁴

As of 2025, 14 out of 18 brigades have been unified, with ongoing efforts to complete the process.⁵ The reform initiative, supported by the United States, United Kingdom, Germany, and the Netherlands, includes strategic advisory support, training, and modernization through the Peshmerga Reform Program. 

Key objectives of the reform include:

• Depoliticization of the force to ensure allegiance to the people and constitution, not political entities
• Biometric registration to eliminate “ghost soldiers” and improve payroll transparency⁶
• Retirement planning for veterans and improved recruitment standards
• Acquisition of modern equipment to enhance combat and defense capabilities
• Creation of specialized units in counterterrorism, cyber defense, rapid response, and border security

Leadership and Strategic Vision

President Nechirvan Barzani has been a leading key proponent of Peshmerga reform, consistently emphasizing the need for a unified, non-partisan force as the cornerstone of the Region’s security. During his presence at several security forums , he affirmed that “the Peshmerga are the foundation of Kurdistan’s security and dignity” and must remain loyal to the people and constitution above all else.⁷

Regional and International Cooperation

The KRG remains a committed partner in regional security frameworks. In coordination with the Iraqi Security Forces (ISF) and the Global Coalition to Defeat ISIS, the Peshmerga continue to conduct joint operations in disputed territories where remnants of ISIS still pose a threat. Joint Coordination Centers have enhanced intelligence sharing, crisis response, and operational planning.⁸

Internationally, the Peshmerga have earned a reputation as one of the most capable and effective ground forces in the fight against terrorism. Former U.S. Secretary of Defense Ash Carter lauded them as “among the very best partners” in the anti-ISIS campaign.

In April 2025, the Kurdistan Regional Government officially launched the Peshmerga Medical Force Readiness Initiative, a groundbreaking program aimed at enhancing the medical capabilities of the Peshmerga forces. This initiative is the result of a strategic partnership with the nonprofit Spirit of America and is strongly supported by the U.S. Consulate General in Erbil.

Looking Ahead

Despite ongoing fiscal challenges and regional uncertainty, the Kurdistan Regional Government remains steadfast in its commitment to transforming the Peshmerga into a modern, professional, and internationally recognized force. Through continued reforms, strong leadership, and enduring partnerships, the Peshmerga will remain a pillar of security for the Kurdistan Region and a contributor to broader regional stability.

Footnotes

1. Security – Department of Information Technology, Kurdistan Regional Government, 2024.
2. KRG Peshmerga Legislation Overview, Ministry of Peshmerga Affairs, 2007.
3. KRG-US: The Role of the Peshmerga in Defeating ISIS, 2024.
4. Unifying the Peshmerga: Challenges and Progress, Kurdistan24, January 2025.
5. U.S. Department of Defense, “Kurdish Peshmerga Continue Partnership to Fight ISIS,” 2025.
6. Peshmerga Reform Program Status Report, U.S. Consulate Erbil and Coalition Partners, 2024.
   President Nechirvan Barzani Speech, Kurdistan National Security Forum, October 2024.
7. Joint Coordination Centers for Counterterrorism Operations, KRG-Iraqi Federal Government Framework Agreement, 2023.

Humanitarian crisis

The Kurdistan Region of Iraq has long served as a sanctuary for individuals fleeing violence, persecution, and instability. Since 2003, and particularly during the emergence of ISIS in 2014, the Kurdistan Regional Government (KRG) has consistently demonstrated its commitment to humanitarian principles by opening its borders and extending critical support to those in need.

During the height of the ISIS conflict, over 1.8 million internally displaced persons (IDPs) and refugees- comprising Yezidis, Christians, Turkmen, Shabak, and Iraqis from across the country- sought refuge in the Kurdistan Region. In the face of immense logistical and financial pressure, the KRG responded swiftly and compassionately, providing shelter, healthcare, education, and public services.

The Kurdistan Region continues to host approximately 900,000 displaced individuals, including 631,174 IDPs and 269,293 refugees from Syria, Iran, and Turkey. Notably, an estimated 70% of these individuals have integrated into host communities, while the remaining 30% continue to reside in camps distributed across the Region¹.

The humanitarian effort places a substantial burden on the KRG, costing an estimated $842 million USD annually². These challenges have been compounded by fiscal constraints, including budget reductions from the federal government in Baghdad and the loss of independent oil revenues. Despite these pressures, the KRG remains resolute in its humanitarian obligations and continues to uphold its commitment to voluntary, safe, and dignified returns in accordance with international standards.

President Nechirvan Barzani has played a pivotal role in championing the rights and welfare of displaced populations. Under his leadership, the KRG has reinforced the foundational Kurdish values of coexistence, tolerance, and protection for vulnerable communities and principles that have shaped the Region’s identity and response to the crisis.

The KRG’s humanitarian strategy is supported by a robust network of local and international partnerships. The Barzani Charity Foundation (BCF), currently manages 13 camps in coordination with the Erbil Joint Crisis Coordination Centre. The Foundation delivers essential services ranging from food distribution and shelter to healthcare³. Kurdistan Save the Children (KSC) has also been instrumental in providing child protection, education, and health services for displaced children and families across the Region⁴.

Despite these efforts, serious challenges remain. The Iraqi federal government’s decision to close displacement camps has raised widespread concern, particularly among Yazidi survivors of the Sinjar massacre, about premature returns to areas still lacking basic infrastructure, security, and essential services⁵.

The KRG continues to advocate for enhanced international support to sustain its humanitarian response. It calls upon the global community to share the burden and help ensure durable solutions for displaced populations.

Amid continued instability in the region, the Kurdistan Region stands as a beacon of hope, a testament to its enduring humanitarian ethos and unwavering commitment to protecting those fleeing violence and persecution.

For reports and publications on the humanitarian situation in the Kurdistan Region please click here.

Footnotes

¹ Kurdistan Region – A Beacon of Hope for Displaced Persons and Refugees, Kurdistan Regional Government, March 2024.
 ² The Humanitarian Burden: KRG’s Efforts and Challenges, Kurdistan Chronicle, 2024.
 ³ Barzani Charity Foundation – Organizational Profile, 2024.
 ⁴ Kurdistan Save the Children – Organizational Profile, 2024.
 ⁵ The Guardian, “Iraq’s Displaced Fear Forced Return as Camps Close,” June 2024.