By James Reinl

NEW YORK—The UN has warned of a relationship breakdown between Iraq’s Kurdish leaders and the federal government in Baghdad as the nation grapples with Islamist extremists who have overrun swathes of territory.

Nickolay Mladenov, the UN’s top envoy in Iraq, warned of rows over oil revenues, the status of the Kurdish Peshmerga forces and this year’s controversial national budget. He said the “impasse between Baghdad and Erbil must be solved immediately”.

As he briefed the UN Security Council in New York on Wednesday, the Islamic State of Iraq and Syria (ISIS) continued to threaten Iraq’s capital, Baghdad, having won stretches of northern Iraq during a lightening advance from Syria in June.

“Relations between Baghdad and Erbil have further deteriorated due to exchanges of harsh statements between their political leaders,” Mladenov, head of the UN Assistance Mission in Iraq (UNAMI), told the 15-nation body via video-link.

“This has led to Kurdish ministers suspending their participation in the Council of Ministers of Iraq. I call on all political leaders to refrain from radical statements and accusations that may further complicate the situation.”

This month, the autonomous Kurdish region announced plans for a referendum on independence and has begun independently selling oil on the international markets to make up for budget shortfalls amid a row with Baghdad over Iraq’s 2014 budget, Mladenov said.

“As part of the ongoing dispute, the Kurdish regional government has not received its anticipated budget allocation since March, this has led to the inability of the regional government to pay public sector salaries,” added Mladenov, Bulgaria’s former foreign minister.

Meanwhile, Kurdish regions have been “overwhelmed” by an influx of refugees from the Islamist-controlled territories in a country that now has more than 1,600 refugee camps and around 1.2 million refugees, the UN says.

The Christian community of Mosul has fled to the Kurdish autonomous region in recent days, ending a presence stretching back nearly 2,000 years, after Islamic State militants set them a deadline to pay a religious tax, convert to Islam or leave.

“The picture emerging is highly concerning,” Mladenov said. “The governorates of the Kurdistan region of Iraq now host over 300,000 newly-displaced and their capacity to respond has been overwhelmed. This new influx joins the more than 225,000 Syrian refuges who sought protection in the three Kurdish provinces in Iraq.”

Iraq’s UN ambassador, Mohamed Ali Alhakim, urged UN members to renew UNAMI’s mandate by one year.

Rudaw