Agreement will see share of military budget given to peshmerga fighters and boosts hopes of closer cooperation against jihadists

Iraq’s government and the autonomous Kurdish region have reached an agreement resolving a longstanding dispute over the budget and oil, a move seen as a key step in improving cooperation against jihadists.

A statement from the Iraqi prime minister Haider al-Abadi’s office on Tuesday said the deal, which comes in to effect next month, was approved during a cabinet meeting also attended by the Kurdish prime minister, Nechirvan Barzani.

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