Introduction
Every day truck drivers set off from Erbil carrying goods and commodities destined for Sulaymaniyah, and vice versa. Along the way, they travel on narrow and broken roads that make these journeys time consuming, physically taxing, and dangerous. Large segments of the roughly 200-kilometer journey are poorly maintained, single-carriageways with only one lane in each direction. They lack basic safety features such as proper lane markings, traffic signs, and lighting systems. The heavy passenger and commercial traffic, which includes trucks from Iran, Turkey, and the rest of Iraq, causes heavy congestion at chokepoints and damages the road surface, leaving it full of potholes.
The implications are far-reaching: Inadequate transport links between the two largest economic centers in Iraq’s Kurdistan Region—Erbil and Sulaymaniyah—prevent the meaningful economic integration of the semi-autonomous zone.[1] It represents a glaring gap in the Kurdistan Regional Government’s (KRG) record. Yet, what explains the lack of government attention to this critical infrastructure issue? Why has the KRG continued to struggle to complete the Erbil-Sulaymaniyah highway while similar projects elsewhere in the Kurdistan Region have progressed? This report will argue that the KRG’s revenue distribution model has incentivized the emergence of subregional transport networks that correspond with PUK and KDP zones of control.
As part of the agenda of the KRG’s Ninth Cabinet, we have placed significant emphasis on building roads and highways as crucial elements of the Kurdistan Region’s economic infrastructure. We have already implemented such projects across all areas of Kurdistan and plan to continue with more.
- KRG Prime Minister, Masrour Barzani
Indeed, other road networks in the Kurdistan Region have benefitted from considerable investment. During a September 2022 ceremony to mark the start of construction on the Khalifan-Spilk highway in Erbil governorate, KRG Prime Minister Masrour Barzani explained the improved road would enhance connectivity and economic growth.[2] “As part of the agenda of the KRG’s Ninth Cabinet, we have placed significant emphasis on building roads and highways as crucial elements of the Kurdistan Region’s economic infrastructure. We have already implemented such projects across all areas of Kurdistan and plan to continue with more,” he said.[3] There are numerous other examples of successful projects that are roughly equivalent in scope and purpose to the Erbil-Sulaymaniyah highway. For instance, the KRG completed a dual carriageway connecting Erbil and Duhok, the Kurdistan Region’s third-largest city, in 2021.[4] It was hailed as one of the regional government’s major achievements, providing greater safety for travelers and facilitating increased trade and tourism. However, this highway is entirely within the KDP’s zone.
Overview of the Argument
Recent debates on economic dynamics in the Kurdistan Region largely focus on disagreements between the KRG and the federal government in Baghdad over budget sharing and oil. KRG officials tend to blame their economic woes on the suspension of oil exports via Turkey—halted since March 2023—and the region’s inconsistent access to the national budget. What is often missing from policy discussions is a frank examination of the KRG’s uneven record of addressing the fundamentals of trade and economic growth, including transport networks. Improving transport infrastructure is crucial for strengthening economic activity within the region, alleviating the pressure on livelihoods, and enhancing the wellbeing of both citizens and businesspeople.
This report analyses the problematic transport linkages between Erbil and Sulaymaniyah as a case study for the broader economic infrastructure challenges facing the Kurdistan Region. The old and narrow roads between the region’s two largest provinces fail to support efficient trade transportation and pose significant risks to travelers’ safety. With no alternative transportation options, trucks carrying oil and other trade goods—including food, petrochemicals, and construction materials—must use these inadequate roads. This not only slows down transportation, but also contributes to the rising number of car accidents and traffic fatalities.[5]
So why has the KRG neglected this obvious issue, which affects the region’s economic health and puts its citizens at risk? To put it simply, the KDP leverages government financing to develop roads within its core territorial zone (Erbil and Dohuk), while the PUK does the same within its areas of control (Sulaymaniyah). Territories in politically ambiguous zones like those through which Erbil-Sulaymaniyah links travel are left out of this revenue equation, as are the government agencies technically responsible for spearheading region-wide construction projects.
Poor roads and protests
Citizens and businesses across the Kurdistan Region are affected by the poor road conditions between Erbil and Sulaymaniyah. However, protests have centered on Koya, which is situated one hour east of Erbil city on the way to Sulaymaniyah.[6] Angry at the traffic and road damage, residents regularly block the main route through their town by creating sand barriers to prevent heavy vehicles from using the road. A leading protestor from Koya said during an interview:
Along with the people of Koya, we have blocked the road many times because many people from our town have lost their lives in car accidents on this road. Numerous lorries and tanker trucks travel through this narrow, old road every day, increasing the risk of accidents and fatalities. We want those trucks to use an alternate route.[7]
Why doesn’t the KRG complete the highway between Erbil and Koya? Are we not part of this region? Haven’t we sacrificed for Kurdistan and the Kurdish cause?
- An activist from Koya
With a population of over 95,000, [8] Koya is administratively part of Erbil governorate, which as a whole is dominated by the KDP, but the town itself sits in a sliver of the governorate that is within the political zone of influence of the PUK. This political and administrative positioning leads to inadequate public services in Koya and a pervasive sense of marginalization among many residents. The dangerous drive from Erbil to Koya exacerbates feelings of government neglect and fuels demands for better services. An activist from Koya remarked, “Why doesn’t the KRG complete the highway between Erbil and Koya? Are we not part of this region? Haven’t we sacrificed for Kurdistan and the Kurdish cause?”[9]
Erbil is only an hour's drive from Koya and is the main hub for education, business, medical, and social activities in the area. For residents of Koya, the lack of a proper highway to Erbil is not only a safety risk, but also a barrier to economic opportunities. A Koya resident with an undergraduate degree in engineering said in an interview that “there have been many job opportunities for me in Erbil, but I had to turn them down because of the risks associated with traveling on the old and narrow highway. I would rather forgo a well-paying job than risk my life in a car accident.” [10]
While the effect of not having a safe and efficient highway is most visible in Koya, the impact is felt across the Kurdistan Region. A truck driver said that “there are no roads we can use. Find us a solution. The Haft-Goond road, Shaqlawa road, and this current road [between Koya and Erbil] all are no longer available to us.”[11] Truck drivers reported that driving times have increased threefold due to poor road conditions, government-imposed restrictions on commercial vehicles, and protests. Both truck drivers and businesspeople noted that the constant delays slow trade and increase transportation costs, as moving goods now takes more time and requires more fuel.[12] Indeed, truck drivers have organized their own protests and blocked highways to voice their anger about the deficient road network.[13]
The highway between Erbil and Koya.
The continuing failure of the Erbil-Sulaymaniyah highway project
The highway system under examination is a critical piece of infrastructure in the Kurdistan Region. It plays a vital role in trade and commerce by linking Erbil, the region’s major economic hub, with Sulaymaniyah, a key population center and crucial transit route for trade with Iran. The current route can be broken down into three interlinked segments:
(1) Starting from Sulaymaniyah and heading west, travelers face few challenges on the first section of the highway, which stretches 67 kilometers between Sulaymaniyah and the town of Dukan. This portion is a dual carriageway with adequate safety features.
(2) After Dukan, travelers transition to a narrow single carriageway. Expansion work is already underway to upgrade this section to a dual carriageway in the parts inside the PUK’s zone of influence, specifically from Dukan to the Raparin administration area.
(3) Once the road reaches the vicinity of Koya district, any signs of meaningful construction progress cease. This segment of the highway between Koya and Erbil (known as the “Erbil-Koya highway”) remains a narrow single carriageway, slowing down traffic and posing safety risks to commuters. It is here that the road enters the KDP’s zone of control.
Between 2011 and 2014, the KRG proposed the construction of a wider and more suitable highway between Erbil and Koya. The KRG’s Ministry of Construction and Housing (MoCH) initiated this project as part of the KRG’s 2010 master plan to upgrade all major roads that were still single carriageways to dual carriageways.[14] Covering 61.7 kilometers, the project’s total cost was estimated at 427.897 billion IQD. After securing funding from the KRG’s budget, the MoCH divided the project into five sections and awarded construction contracts to local companies and international contractors from Romania, Turkey, and Iran.
However, work stopped in 2014, with just a fraction of the route completed. Since then, the project has been abandoned entirely. (See Table 1 for details on the assigned companies, completed portions, and amounts spent on the project).[15] The KRG had already spent over 92 billion IQD on the project by the time it was abandoned. Officials at the MoCH estimated that an additional 360 billion IQD is needed to complete the job.[16] Yet there are no serious plans to resume work.
| Sections of the project | Contractor | Length of the section (Kms) | Cost of the section in billion (IQD) | Fund spent on the section in billion (IQD) | Completed part of the section |
|---|---|---|---|---|---|
|
First section (highway) |
Romanian Delta (was later given to a Turkish contractor) |
20.6 |
94.622.795.000 |
48.023.229.000 |
51% |
|
Second section (highway) |
Sink (local company) & Yousash (Turkish company) |
16.26 |
69.749.328.000 |
19.605.688.000 |
28% |
|
Third section (highway) |
Iranian Abad Rahan Pars |
11.586 |
44.762.275.000 |
7.59.811.000 |
16% |
|
Forth section (highway) |
Iranian Abad Rahan Pars |
13.25 |
58.875.935.000 |
7.570.015.000 |
13% |
|
Fifth section (Haibat Sultan Tunnel) |
Iranian Stratos |
4.6 Road & Tunnel |
159.886.844.319 |
10.072.871.170 |
6.3% |
|
Total |
|
61.696 |
427.897.177.319 |
92.331.614.170 |
|
Table 1: Progress on Erbil-Koya highway [17]
KRG officials argued that their inability to complete the project was caused by the region’s economic woes, which they attribute to the compounding effects of the ISIS war, Erbil-Baghdad budget disagreements, and the suspension of oil exports. Current KRG MoCH Minister Dana Abdulkareem Hamasalih explained during an interview that: "We view the Erbil-Koya highway as a strategic project and a crucial component of the road network connecting Erbil to Sulaymaniyah. Since 2019, it has been one of our ministry’s top priorities, and we have repeatedly requested the KRG’s Council of Ministers to allocate funds for its completion. However, the Council has failed to respond positively, citing a shortage of funds due to the persistent financial crisis."[18]
However, pointing to a “financial crisis” as the main justification for not completing the highway project does not hold up under scrutiny. Over the past decade, similar projects have been completed or are currently underway elsewhere in the region. Since 2019, the current KRG cabinet has reportedly implemented 624 road projects across the region, costing approximately 3 trillion IQD.[19] An activist from Koya said, “We know the government allocates funds to build roads and highways in other parts of the region. The government should stop this discrimination and allocate funds here as well to complete the Erbil-Koya highway.”[20] (See Table 2 for the distribution of road projects—both completed and under construction—across the Kurdistan Region under the current cabinet).
| Governorates & independent administrations | Number of completed road projects | Cost in billions (IQD) | Number of ongoing road projects | Cost in billions (IQD) |
|---|---|---|---|---|
|
Erbil governorate |
160 |
473 |
49 |
615 |
|
Duhok governorate |
47 |
386 |
29 |
205 |
|
Sulaymaniyah governorate |
137 |
202 |
55 |
420 |
|
Halabja governorate |
13 |
1.761 |
12 |
130 |
|
Soran administration |
19 |
2 |
13 |
10 |
|
Raparin administration |
16 |
30 |
22 |
30 |
|
Zakho administration |
4 |
66 |
-- |
-- |
|
Garmian administration |
26 |
13 |
18 |
207 |
Table 2: Completed and ongoing road projects in the KRI (2019- 2024)[21]
The repeated and convenient employment of rhetoric pointing to a “financial crisis” is highly debatable, particularly for the 2019 and 2023 period. One could argue that the current KRG cabinet, formed in 2019, experienced a period of relative financial stability. During this time, the KRG still had access to petrodollars and other funding sources, including but not limited to revenues from independent oil exports (which were halted in March 2023), the KRG’s sizable share of the federal budget, domestic revenues from taxation, and customs revenues at international border crossings with Iran and Turkey.
From a purely procedural standpoint, the path forward is clear. The decision to allocate and spend the remaining 360 billion IQD necessary to complete the Erbil-Koya highway rests with the KRG’s Council of Ministers, which is dominated by the KDP and the PUK. Specifically, Prime Minister Barzani, who is a senior member of the KDP, and Deputy KRG Prime Minister Qubad Talabani, of the PUK, are key figures in this decision-making process.[22] Why has PUK-KDP consensus on this project remained so elusive? Below, two possible explanations are considered in greater detail: (1) the security and strategic calculations of the PUK and KDP and (2) flaws in the broader revenue-sharing arrangement between the two parties.
Strategic calculations
A widely held viewpoint in both Erbil and Sulaymaniyah is that security considerations are largely to blame for the poor state of infrastructure between the two governorates. In interviews, citizens and truck drivers pointed to the strategic sensitivity of the area as a reason for the KRG’s reluctance to allocate funds for completion of the Erbil-Koya highway. This is reasonable from a historical perspective. By the end of the bloody civil war between the PUK and KDP in the 1990s, the territory west of Koya had emerged as a de facto buffer that separated the two parties’ zones of military control. The deepening divides between the PUK and the KDP following the KRG's failed independence referendum in 2017 likely intensified inter-party security fears and distrust.[23] Given these heightened tensions, it is not unreasonable to conclude that party leaders want to maintain physical barriers—such as the narrow and outdated roads—between their respective zones of influence. Under this explanation, the leadership of both parties have chosen to forgo the economic benefits of a modern highway to avoid giving a military advantage to the other side.
We view the Erbil-Koya highway as a strategic project and a crucial component of the road network connecting Erbil to Sulaymaniyah. Since 2019, it has been one of our ministry’s top priorities, and we have repeatedly requested the KRG’s Council of Ministers to allocate funds for its completion. However, the Council has failed to respond positively, citing a shortage of funds due to the persistent financial crisis.
-KRG MoCH Minister, Dana Abdulkareem Hamasalih
Given the region’s complex military history and the ongoing security division, the strategic-military dimension should not be dismissed, but, at the same time, it should not be overstated. The mayor of Koya, who is a PUK member, discounted this explanation: “The PUK and the KDP are not engaged in a civil war. They are competing economically, with each party using the revenues under its control to develop its own zone.”[24] Indeed, the more plausible explanation for the delay in completing the highway has to do with how funds are distributed across party lines.
A flawed revenue distribution mechanism
The government entity technically responsible for constructing the Erbil-Koya highway is the KRG MoCH. While it has the technical capacity to complete complex road projects, the ministry does not control how it is funded. Put simply, the KRG’s finances are controlled by the PUK and the KDP. According to an agreement between the two parties in 2019, [25] the region’s revenues are allocated as follows: 57% to the KDP-controlled areas of Erbil and Duhok and 43% to the PUK-controlled area of Sulaymaniyah.[26] This arrangement incentivizes politically motivated allocations of funds, enabling the parties to channel resources into projects within their home areas. Koya’s administrative and political ambiguity—as a zone administratively under Erbil, but politically under the PUK—puts it outside the core interests of either party.
Highway construction between Sulaimaniyah and Germian administration within PUK zone. (Photo: KRG facebook page)
An advisor at the MoCH explained in an interview that “the KDP uses its revenues to construct roads and highways in Erbil and Duhok, while the PUK focuses on similar projects in Sulaymaniyah.”[27] Consequently, the MoCH lacks the financial capacity to undertake major projects deemed crucial for the region’s overall economic interests, such as the Erbil-Koya highway. The advisor added that “the budget allocated to the MoCH by the PUK and the KDP, which the ministry can access without Council of Ministers' approval, is so minimal that it can only cover minor construction projects and road maintenance.”[28] The lack of financial transparency in the Kurdistan Region further complicates funding for projects that are not considered politically advantageous by the ruling parties. Minister Hamasalih elaborated in an interview that: "The KRG's Ministry of Finance is only aware of some formal sources of regional finances. Financial affairs are divided between two KRG entities, each aligned with either the PUK or the KDP. We lack a budget law, and financial matters are opaque. As a result, funds are allocated to certain construction projects while others, like the Erbil-Koya highway, are neglected."[29]
The Erbil-Koya highway project remains a casualty of a financial arrangement that caters to partisan interests and is further complicated by the intensifying political rivalry between the PUK and the KDP.[30] Lacking clear justifications for their refusal to fund the highway’s completion, PUK and KDP leaders deflect attention from the failed project by engaging in mutual recriminations. A PUK politburo member claimed in an interview that “KDP-affiliated officials at the top of the KRG are withholding finances from Sulaymaniyah to undermine our party.”[31] A KDP leader responded that “the PUK wants to siphon off revenues from Erbil and Duhok, while hoarding finances generated in Sulaymaniyah. This is unacceptable to us.”[32] Bogged down in this rhetorical fight, the two parties have ignored how some critical infrastructure projects in the region can only be built if they cooperate.
Meanwhile, citizens directly affected by the ongoing failure to complete the highway remain skeptical about the parties' claims and counterclaims. One activist from Koya remarked that, "if the two parties can collaborate to sell oil via tanker trucks, why can’t they work together to use the revenue from that oil to complete the highway between Erbil and Koya?”[33]
Since the suspension of the KRG’s oil exports via the KRG-Turkey pipeline, the KRG has transitioned to exporting oil using tanker trucks to Turkey and Iran. A significant portion of this oil is reportedly exported through Iran, with tanker trucks traversing the old and narrow roads between Erbil and Sulaymaniyah.[34] The regional authorities have failed to provide clear information about where the oil revenue is being allocated, leading activists and opposition figures to accuse the PUK and the KDP of misappropriating the funds.[35]
Policy Implications
The emergence of separate road networks that align with the political spheres of the KDP and the PUK—and the neglect of areas in between—threatens both economic growth and the overall continuity of the Kurdistan Region. The leaders of both political parties make every effort to dismiss the notion that the KRG is reverting back to the era of separate administrative areas and reject claims that the region’s internal cohesion has deteriorated to the point of no return. Officials insist that the lack of progress on Erbil-Sulaymaniyah transport linkages are simply a matter of money, or the so-called “financial crisis.” This justification is contradicted by the facts. Road construction has continued in many areas that are more central to the respective economic and political interests of the two parties.
The highway connecting Erbil to Sulaymaniyah is a crucial infrastructure project. The lack of progress, particularly on the segment between Erbil and Koya, not only undermines the Kurdistan Region’s economic growth, but also jeopardizes the safety of its citizens. Both the PUK and the KDP must make a concerted effort to overcome the political and financial obstacles impeding its progress. Ultimately, the leaders of both parties must reconfigure the current 57-43 revenue distribution arrangement, which has incentivized the emergence of increasingly separate economic regions with poorly connected road networks. Public finances must be allocated towards infrastructure projects that support the broader economic interests of the region and its people. Otherwise, continuing with the current financial arrangement will further entrench divisions along party lines and undermine state-society relations in the Kurdistan Region.
This article will be included in the tenth edition of the Iraq Economic Review.
