Iraq will set up a parliamentary committee to resolve disputes with its Kurdish region including control over border crossings and sharing of oil revenue, a member of prime minister Haider Al Abadi's ruling bloc has said.

“The two sides are about to form a seven-member committee, including five members from Baghdad and two others from Kurdistan. The committee will review all controversial issues between the two sides,” an MP of the Shiite National Alliance told the pan-Arab newspaper Asharq Al Awsat.

“We expect the committee to produce fruitful results, that can solve the crisis between Baghdad and Erbil,” the source said.

Relations between the the central government and the semi-autonomous Kurdish region deteriorated after the Kurdish Regional Government (KRG) held a non-binding independence referendum in September. Baghdad said the vote, which saw an overwhelming response in favour of secession, was against the constitution.

Baghdad responded by halting all international flights to and from Iraqi Kurdistan and sending troops to retake disputed areas outside the region that were held by Kurdish forces. The measures have left the KRG in Erbil grappling with an economic and political crisis.

Baghdad has so far refused to hold direct talks with the KRG, but remarks by Kurdish and Iraqi officials this week suggest moves are being made to resolve the standoff. On Thursday, a delegation representing several Kurdish parties met Mr Al Abadi, the prime minister's office said.

Renas Jano, spokesman for the Kurdistan Democratic Party, said on Wednesday that the crisis was “likely to be resolved soon, in case the central government showed flexibility”.

On Tuesday, a KRG spokesman said Baghdad had shown interest in starting dialogue.

“There was interest to send a delegation of the Iraqi government to the Kurdistan Region, to form a joint committee and to hold talks about border points, airports, the region’s dams,” Safin Dizayee said.

Ihsan Al Shamri, an adviser to the Iraqi prime minister, said on Monday that the government was expected to decide on several issues before holding talks with Erbil.

He said the talks would include the "taking over of Kurdistan’s border crossings with Iran and Turkey, and forming a committee to regulate land ports, customs and airports”.

In response, Mr Dizayee rejected handing over border management to the central government, saying “the law states joint administration” over border control.

The need for talks between Baghdad and Erbil was raised during a meeting between Iraqi president Fuad Masum and US ambassador to Iraq, Douglas Silliman, on Tuesday. They discussed the importance of establishing a “serious dialogue to resolve all outstanding issues between the federal government and the Kurdistan region on the basis of the Constitution,” the president's office said.

Mr Masum has repeatedly called for the federal government and the KRG to hold talks.

The KRG is also seeking to mend ties with Turkey and Iran, which threatened to close their borders to oil exports from the Kurdish region over the independence vote. Iran this week reopened three border crossings with the Kurdish region that had been shut after the vote. The Kurdish prime minister is also seeking to visit Turkey, according to the Turkish foreign minister.

“Ankara received a visit request from Kurdistan region’s prime minister Nechirvan Barzani," Mevlut Cavusoglu said on Wednesday. "We want to be certain of some things. The request is being evaluated.”

The KRG has no choice but to reconcile with neighbouring countries. The region is facing an economic crisis after losing revenue from oilfields in Kirkuk, a disputed area that was retaken by Iraqi government forces in October, and has a high rate of unemployment.

Mr Cavusoglu said Ankara would play an “effective role” in resolving the dispute between Baghdad and Erbil.

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