Tuesday, September 8, 2009

Too Many Costs and Corruption To Develop Iraqi Economy

While on a trip to Ninewa province, Planning Minister Ali Baban said that the government had too many costs and too much corruption to develop the economy. The Minister noted that of the $58.6 billion in the 2009 budget, 80% went to operational costs such as salaries, pensions, and the food ration system, leaving only 20% for investment in infrastructure and development. He said that wasn’t near enough to finance the amount of projects Iraq needed. Another major problem he mentioned was the rampant corruption in the government. This was just seen at the beginning of September 2009 when the Deputy Transport Minister was arrested for trying to extort money from a foreign security firm. The official wanted a bribe to ensure that the company would get its contract renewed, and was caught trying to take $100,000 from them. A government official also told the Azzaman paper in June that $4 billion was unaccounted for in the budget.

Together, the problems of corruption and rising government costs are starving Iraq of the money needed to rebuild after years of wars, sanctions, and occupation. The Planning Minister called on the Iraqi private sector and foreign investors to help, but that’s not likely to happen soon. Iraq’s business sector is very small, and investment is just beginning. The instability and lack of an investment law has kept many foreign firms away as well, although some are slowly entering Iraq. Services and business are likely to suffer as a result, leading to more dependence upon the government and petroleum to keep the Iraqi economy going.

SOURCES

Abdulzair, Kareem, “$4 billion unaccounted for in this year’s Iraqi budget,” Azzaman, 6/25/09

Aswat al-Iraq, “Minister says govt. unable to cover projects, eyes private sector,” 9/3/09

Levinson, Charles, “Leaders have vision of burgeoning Baghdad,” USA Today, 9/9/08
- “Safer Iraq draws foreign investors,” USA Today, 9/9/08

Reuters, “Iraq deputy transport minister arrested for graft,” 9/3/09

Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 7/30/09

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