Kurdistan at a Crossroads: Internal Unity and External Peace Efforts Gain Momentum

ERBIL, 20 January 2026 – The Kurdistan Region of Iraq (KRI) is navigating a period of significant transition on multiple fronts. Domestically, the long-stalled government formation process shows signs of breakthrough as the Kurdistan Democratic Party (KDP) and Patriotic Union of Kurdistan (PUK) move closer to an agreement. Externally, a historic peace process between Turkey and the Kurdistan Workers’ Party (PKK) continues its fragile advance. Meanwhile, the Kurdistan Regional Government (KRG) presses forward with ambitious economic diversification plans to reduce reliance on oil revenues, even as it grapples with persistent financial disputes with Baghdad and documented human rights concerns.

Political Reconciliation: KDP and PUK Edge Towards Coalition

Following the Kurdistan Region’s parliamentary elections in October 2024, which saw a voter turnout surpassing 70 percent, political deadlock between the two dominant parties, the KDP and PUK, prevented the formation of a new cabinet for over a year. The KDP emerged with 39 seats and the PUK with 23. However, recent high-level meetings, including one under the auspices of KDP leader Masoud Barzani, have been described as “positive,” with sources indicating the Kurdistan Parliament could resume sessions within weeks as a first step towards establishing a government.

This rapprochement marks a potential shift from the maximalist demands that followed the election. Analysts from the New Lines Institute noted in a February 2025 briefing that the KRI emerged from the 2024 vote “more divided than ever,” but suggested geopolitical shifts and a pragmatic recalculation by the PUK could lead to a power-sharing agreement, abandoning earlier rhetoric of forming a government without the KDP.

A Fragile Peace: The Turkey-PKK Process

In a development with profound regional implications, a peace process between Turkey and the Kurdish freedom movement, centred on imprisoned PKK leader Abdullah Öcalan, has entered a critical phase. Triggered by a “Call for Peace and Democratic Society” from Öcalan in February 2025, the PKK held an extraordinary congress in May 2025 and announced its dissolution, stating it had “achieved its historic mission.”

The process, however, remains fraught with uncertainty. While a symbolic weapons-burning ceremony was held in July 2025 and the pro-Kurdish DEM Party in Turkey advocates for a parliamentary commission to oversee the process, significant hurdles remain. These include the potential release of political prisoners, constitutional reform in Turkey to recognise Kurdish rights, and the future of Kurdish-led forces in Syria. The success of this initiative could reshape the geopolitical landscape of the Middle East, but analysts caution that its success is “far from guaranteed.”

Key Facts and Figures: The Kurdistan Region of Iraq

Economic Diversification Amidst Fiscal Strain

Facing persistent delays in federal budget transfers from Baghdad, which have led to overdue public sector salaries, the KRG under Prime Minister Masrour Barzani has aggressively pursued economic diversification. The government’s “Vision 2030” aims to reduce dependence on hydrocarbons by promoting industry, agriculture, and tourism.

Notable strides include the approval of 670 investment projects by the Kurdistan Board of Investment and the development of Special Economic Zones (SEZs) in Dohuk, Batifa, Shaqlawa, and Chamchamal. The ninth cabinet has licensed projects worth over $12 billion since taking office, including a major cement plant with daily production of 8,000 tons. Furthermore, the KRG signed multi-billion dollar oil and gas exploration deals with US companies in May 2025, though these remain contentious with the federal government in Baghdad.

The Human Rights Context

Amidst these political and economic developments, international and local human rights organisations continue to report serious concerns. Reports from Human Rights Watch and Amnesty International in 2024 and 2025 highlight issues including restrictions on freedom of expression and assembly, violence against women with inadequate protection systems, and the targeting of LGBTQ+ individuals following a federal law criminalising same-sex relations.

In the KRI specifically, security forces have been accused of using excessive force to disperse protests, often by teachers and civil servants demanding unpaid salaries. Journalists and activists face intimidation, arbitrary detention, and prosecution. A March 2025 report by the Gulf Centre for Human Rights documented attacks on protesting teachers and the sentencing of journalist Omed Haji Baroshki to six months in prison for a social media post.

Frequently Asked Questions

What is the status of the Kurdistan Region’s government?

As of January 2026, the Kurdistan Region has been without a fully formed government since elections in October 2024. However, recent talks between the KDP and PUK have shown positive signs, with expectations that the Kurdistan Parliament will reconvene soon to elect a speaker, a key step towards cabinet formation.

Is the peace process between Turkey and the PKK likely to succeed?

The process is historic but fragile. The PKK’s formal dissolution in May 2025 was a major step, but core issues like constitutional reform in Turkey, the release of political prisoners, and the future of Kurdish groups in Syria remain unresolved. Success depends on sustained political will from both sides and the Turkish government’s ability to deliver tangible reforms.

What are the main obstacles to the KRG’s economic plans?

The primary obstacle is the unresolved financial relationship with the federal government in Baghdad, leading to budget shortfalls and salary delays. Other challenges include bureaucratic inefficiency, the need for greater transparency (particularly in the oil sector), and creating a skilled workforce to support a diversified economy.

How are human rights conditions in the Kurdistan Region?

While the KRI is generally more stable than other parts of Iraq, human rights organisations report significant problems. These include constraints on free speech and assembly, especially for critics of the ruling parties; inadequate protections for women facing violence; and discrimination against minorities and LGBTQ+ individuals. The KRG has adopted a Regional Human Rights Plan, but implementation remains inconsistent.