The United Nations’ Office for the Coordination of Humanitarian Affairs recently released a report on unemployment in Iraq. It surveyed 25,875 families in 115 districts across all eighteen of the country’s provinces. The study found that unemployment was 18%, but that might rise because so much of the economy is dependent upon the government.
The U.N.’s findings on employment were much closer to the official numbers, than many unofficial estimates. The U.N.’s survey found that unemployed was 18%, and underemployment was 10%. The organization stated that those statistics had largely stayed the same since 2004. That was close to the last estimates released by the government. In late January 2009 the Central Agency for Statistics and Information Technology said the unemployment rate was 15% based upon a poll of 18,144 families across the country. In comparison, at the end of the 2008 the Minister of Planning Ali Baban told the Special Inspector General for Iraq Reconstruction that he believed unemployed was 35-40%.
The U.N. found that young men and women were hit the hardest by unemployment. Men between the ages of 15-29 had a 28% unemployment rate. They made up 57% of all the unemployed in the country. That was almost double the government’s statistics of 26% unemployment amongst young people. Women faced an even tougher situation as only 17% were involved in the labor market. Of those, 23% were unemployed and looking for a job. The vast majority that were employed, 80%, were college educated. Only 30% of women with a secondary education were in the labor force, and that dropped to 10% for women that only finished primary school. Iraqi women were much worse off compared to their compatriots in neighboring countries. In Kuwait for example 52% of women worked, 42% in Iran, and 29% in Jordan.
One major cause of these labor patterns was the government. 43% of all jobs in Iraq and 60% of full time work was provided by the public sector. The number of people working for the government doubled from 2005 to 2008. As reported earlier, a breakdown of jobs across Iraq’s provinces found that the government was the largest employer in fourteen of eighteen provinces, and tied for first in one more. In Kurdistan, the local authorities provided 50% of jobs. Wasit had the smallest percentage, but even then was 23%, second only to farming. The government also preferred older men between 45-65, and have hired more of them in recent years. This has distorted the labor market as civil jobs have drawn away the best and brightest from the private sector, while shutting out women and young men.
Public jobs were the most coveted in Iraq because of their security, benefits, and high pay. On average, a family with one government worker has a per capita income 14% higher than a household with one private sector employee. In rural areas that disparity is even higher at 22%. 55% of homes have no one working for the government. That means they are more likely to fall into poverty, especially if they have a female-headed household since women are far more likely to be out of work.
Private employment has declined from 2003 to 2008. In that first year 21% worked part time in the private sector, and 28% were full time. By 2008 25% worked part time for a private business, while 22% had full time employment there. As would be expected more workers moved into the public sector during that period, from 20% with a full time job with the government in 2003 increasing to 31% in 2008. The U.N. found that much of the full time work in the private sector since 2007 has been due to contracts given by the government. The agency warned that unless business grew the 450,000 new workers entering the labor market in 2009 would probably not find a consistent job.
There are many structural impediments to this happening. Private businesses can’t compete with government owned ones that are subsidized. High inflation in recent years has also kept interest rates high, which limits loans. Less than 2% of small businesses surveyed said that they had taken a loan from a bank or government for example. The oil industry also dominates Iraq’s economy, which has led to little diversification. Petroleum is also not labor-intensive meaning there are few jobs in the country’s largest business. Iraq’s laws also do not promote industry. The lack of security has kept international firms from investing and creating new sources of employment as well.
The U.N. warned that Iraq’s economy was heading for a crisis because of the drop in the price of oil. Oil profits account for the overwhelming majority of the country’s revenues. Now that world prices have collapsed, the government will not be able to employ as many workers. In 2009 salaries and benefits account for almost one-third of government expenditures. That will mean Baghdad will have to divert more of its spending to paying employees rather than investing in the future. That in turn means fewer jobs in the long run. That could threaten the future development of the country as their will be more unemployment, especially for the young, that could lead to more social unrest.
The paper ends with some recommendations for Baghdad to follow to try to alleviate this problem over the long term. First the laws have to be changed so that they promote private business. The budget also has to be adjusted so that it can give more contracts to the private sector. The economy also needs to break its dependence upon oil and diversify to create more jobs. More work also has to be created in the private sector for women and young men. The United Nations, World Bank, and Baghdad already have one program running to support business in the country. The U.S. has an Iraq First program to funnel reconstruction contracts to Iraqi owned companies. Much more is needed to solve this problem however. A government information campaign would probably also be necessary to begin changing society’s opinion about women in the work force as well. In the short-term, there is little help for Iraq’s employment situation as oil prices are dropping, and the budget is heading for a deficit. The government’s response has been to push for more oil production and exports, rather than to diversify, showing that the dominant paradigm amongst officials is to stick with what’s proven, rather than trying to forge a new way forward.
SOURCES
Aswat al-Iraq, “Iraqi Unemployment Rate Dropped by 15% in 2008,” 1/26/09
Inter-Agency Information and Analysis Unit, “Iraq Labour Force Analysis 2003-2008,” United Nations Office for the Coordination of Humanitarian Affairs, January 2009
Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
Susman, Tina, “IRAQ: Unemployment bad and getting worse,” Babylon & Beyond Blog, Los Angeles Times, 2/15/09
Wednesday, February 18, 2009
Tuesday, February 17, 2009
How Did The Sadrists Do In The Provincial Elections?
Many commentators and reports before and after the January 2009 provincial elections predicted that Moqtada al-Sadr would do badly in the vote. The results were a mixed bag for his followers. The movement did not say whom it supported until just before the balloting. It lost Maysan the only province that it controlled, and Sadr City as well to Prime Minister Nouri al-Maliki’s State of Law List. The Sadr Trend also did badly in Basra the site of a government crackdown in early 2008. At the same time the Sadrists finished second in four provinces, gained more representation than they had before, and could be forming ruling coalitions with Maliki’s List.
Because of the government’s operations against the Mahdi Army, and the movement’s late announcement of what lists it backed the Sadrists appeared to be at a disadvantage before the provincial vote. Beginning in March 2008 Prime Minister Maliki launched military operations against the Sadrists in Basra, Sadr City, Maysan, and the rest of the south. There was obviously a political element behind these moves, as the Prime Minister has not shied away from using the security forces as a political instrument. In April the political council for national security said that the Sadrists would be banned from the provincial elections if they did not disarm. That led Sadr to announce in June that his followers would not run their own candidates in the vote, but would rather support independents. Who exactly they were was not announced until early January 2009, when Sadr’s office said that they were behind two lists, the Blameless and Reconstruction List and the Independent Trend of the Noble Ones. That left little time for the Sadrists to organize. However, Sadr still controls dozens of local mosques across the country that spread his message, and has been attempting to reform his movement by disbanding the Mahdi Army and creating a new social and religious group the Mumahidoon, Those Who Pave The Way. This gave him a way to get out the vote at the grassroots level. At the same time, he had to compete with the Supreme Islamic Iraqi Council and Maliki who both saw Sadr’s followers as being up for grabs, and made a concerted effort to recruit them.
The Sadrists saw the elections as an important way to regain political influence that they had been losing since 2007, but seemed to realize the limits of their power as well. In the January 2005 elections, Sadr told his followers to refrain from voting, that was only partially heeded. Sadrists won 12.7% of the vote in three provinces, included control of Maysan, and seats in Baghdad and Qadisiyah. In the parliamentary vote, the movement received thirty seats. In 2006 the Sadr movement helped make Maliki prime minister, and received several ministries in return. However after that high point, the Sadrists became more and more political outsiders. In 2007 Sadr pulled his followers from the cabinet to protest Maliki not setting a date for a U.S. withdrawal effectively eliminating any influence Sadr might have over major government decisions. The Supreme Islamic Iraqi Council also convinced the Prime Minister to isolate the Sadrists in parliament, and form a new ruling council with them, the Kurds, and the Sunni Iraqi Accordance Front that excluded Sadr’s followers. During the later half of the Surge, the Mahdi Army also became a major target of the U.S. Maliki’s offensives in 2008 shattered much of the militia as well. During this whole time the movement was also fracturing as more and more leaders began ignoring Sadr’s commands for their own grab at power. The 2009 election therefore was a major way for Sadr to not only get back into politics, but to show that his movement was still relevant. The Sadrists were therefore one of the one of the main voices calling for balloting as soon as possible, over the objections of the Supreme Islamic Iraqi Council and Kurds who wanted to hold onto their positions in the provinces. As the vote finally approached, Sadr’s spokesmen said that they did not expect to win any province except Maysan, but were rather looking to gain enough seats to make sure no party dominated any province. The spokesmen also said that they hoped to gain around one-third of the votes across the south so that they would be part of any ruling coalition that was formed.
In the early election results the Sadrists lost in their strongholds, yet won seats across more provinces than they did in 2005. The Independent Trend of the Noble Ones came in second in four provinces Maysan, Dhi Qar, Baghdad, and Babil, third in Najaf and Wasit, fourth in Karbala and Basra, and fifth in Qadisiyah and Muthanna, and eighth in Diyala. They received 8.1% of the votes across those eleven provinces, far below the 33% Sadrist leaders were hoping for. Their greatest defeats were in Maysan where they lost control of the province to Maliki’s State of Law List, Baghdad where apparently Sadr City voted for Maliki as well, Najaf where Sadr’s main office is located, and Basra, the site of the Prime Minister’s first crackdown. In the capital, although they came in second, they only garnered 9% of the vote, a 29% difference from Maliki’s State of Law List who with 38%. In Basra the Sadrists finished fifth with 5%, and came in third in Najaf with 12.2%. In Maysan the vote was much closer with Maliki’s State of Law winning with 17.7%, but the Sadrists coming in second with 15.2%, only a 2.5% difference. On the positive side in 2005 Sadrist only gained seats in three provinces, but this time will have representation in eleven. They are also apparently forming a ruling coalition with the State of Law List in Baghdad and across the south. Despite Maliki’s offensives against the Mahdi Army, both sides have a mutual animosity towards the Supreme Council. Sadr’s strategy apparently worked on this front. While they did not win any provinces, and lost power in some, they did get votes in new ones, and have the opportunity to join with the winning State of Law List to govern.
Where Moqtada al-Sadr is heading is yet to be seen. Following one setback after another since 2006, his movement finally has something positive to talk about. The election results, while mixed, did give his list enough seats to be players in the ruling coalition if the reports prove to be true. It shows once again that Sadr is a survivor, and that when he appears to be done, his movement is still capable of a comeback. What is not known is if an alliance with the State of Law List will give the Sadrists any real positions of power in the provincial councils, and whether they will be able to delivery on any promises. The seats will give them access to patronage to rebuild their base, and build on before the parliamentary elections scheduled for the end of the year. On the other hand the provinces will have a 50% budget cut, which will limit this capability. In the provincials Shiite voting was down across the country, with many disillusioned with the current ruling elites. That could continue unless the Sadrists, and all the other Shiite parties, prove that they are better than the politicians they are replacing.
Sadrist Finishes In 2005 Provincial Elections
Received 12.7% of vote in three provinces
Maysan: 1st place 31.9%
Qadisiyah: 6th place 4.2%
Baghdad: 6th place 2.0%
Sadrist Early Returns In 2009 Provincial Elections
Received 8.1% of vote across 11 provinces
Maysan: 2nd place 15.2%
Dhi Qar: 2nd place 14.1%
Baghdad: 2nd place 9%
Babil: 2nd place 6.2%
Najaf: 3rd place 12.2%
Wasit: 3rd place 6%
Karbala: 4th place 6.8%
Basra: 4th place 5%
Qadisiyah: 5th place 6.7%
Muthanna: 5th place 5.1%
Diyala: 8th place 3.1%
SOURCES
Abdullah, Muahmmed, “Diyala Sees Early Campaigning,” Niqash, 12/8/08
Agence France Presse, “Iraqi Shiite Factions Intimidation Claims,” 2/5/09
Ali, Sarmad, “Arab Perspective: News for Feb. 4,” Baghdad Life Blog, Wall Street Journal, 2/4/09
Alsumaria, “Iraq elections leaks say Al Maliki ahead,” 2/2/09
- “Iraq parties form alliances after elections,” 2/13/09
- “Iraq Provincial Law causes deep rift,” 3/8/08
Associated Press, “Al-Sadr’s Followers Eye Comeback in Jan. 31 Vote,” 1/20/09
Aswat al-Iraq, “Sadr calls for ‘renewing’ UIA, welcomes alliances,” 2/13/09
- “Sadrist MP fears election rigging,” 1/31/09
Bennett, Brian, “The Perils of Iraqi Lawmaking,” Time, 3/1/08
Bruno, Greg, “Iraq’s Political Landscape,” Council on Foreign Relations, 1/29/09
Cochrane, Marisa, “The Fragmentation of the Sadrist Movement,” Institute for the Study of War, January 2009
Cordesman, Anthony, “The Shi’ite Gamble: Rolling the Dice for Iraq’s Future,” Center for Strategic and International Studies, 4/21/08
Dagher, Sam, “Gunmen Kill Iraqi Cleric Campaigning for Council,” New York Times, 1/17/09
Economist, “The enigma of Muqtada al-Sadr,” 2/14/08
Fadel, Leila, “Assassinations replacing car bombs in Iraq,” McClatchy Newspapers, 10/9/08
Farrell, Stephen, “Election: Preliminary Results,” Baghdad Bureau Blog, New York Times, 2/5/09
Gordon, Michael, “The Last Battle,” New York Times, 8/3/08
Hoge, James, “A Discussion of Iraqi Futures,” Council on Foreign Relations, 9/8/08
International Crisis Group, “Iraq’s Provincial Elections: The Stakes,” 1/27/09
Kahl, Colin, “Bridge On The River Euphrates,” National Interest, 9/2/08
Knights, Michael, “Significance of the Provincial Elections,” Arab Reform Bulletin, December, 2008
Knights, Michael and McCarthy, Eamon, “Provincial Politics in Iraq: Fragmentation or New Awakening?” Washington Institute for Near East Policy, April 2008
Kukis, Mark, “As Iraqi Elections Loom, al-Sadr’s Political Clout Fades,” Time, 1/26/09
Majeed, Alaa, “Iraq Press Roundup,” UPI, 1/8/09
Paley, Amit and Sarhan, Saad, “Powerful Iraqi Cleric Recalibrates Strategy,” Washington Post, 6/15/08
Raghavan, Sudarsan, “For Prominent Iraqi Cleric, a Test of Influence,” Washington Post, 1/31/09
Reuters, “Iraq’s Al-Sadr Ready For Alliances With Al-Maliki,” 2/14/09
Roads To Iraq Blog, “Maliki – Sadr alliance,” 2/11/09
Roggio, Bill, “Sadrist Fared Poorly in Iraq Elections,” The Blog, Weekly Standard, 2/5/09
Rubin, Alissa and Dagher, Sam, “Sadr, Insurgency Icon, Is Silent, but Backers Work Behind Scenes,” New York Times, 1/31/09
Shadid, Anthony, “Despite Discontent and Fragmentation, Islamic Parties Dominate,” Washington Post, 1/19/09
Visser, Reidar, “The Kirkuk Issue Exposes Weaknesses in Iraq’s Ruling Coalition,” Historiae.org, 8/7/08
- “The Sadrist Parliamentary Bloc Confirms Its Support of Two Electoral Lists,” Historiae.org, 1/11/09
Because of the government’s operations against the Mahdi Army, and the movement’s late announcement of what lists it backed the Sadrists appeared to be at a disadvantage before the provincial vote. Beginning in March 2008 Prime Minister Maliki launched military operations against the Sadrists in Basra, Sadr City, Maysan, and the rest of the south. There was obviously a political element behind these moves, as the Prime Minister has not shied away from using the security forces as a political instrument. In April the political council for national security said that the Sadrists would be banned from the provincial elections if they did not disarm. That led Sadr to announce in June that his followers would not run their own candidates in the vote, but would rather support independents. Who exactly they were was not announced until early January 2009, when Sadr’s office said that they were behind two lists, the Blameless and Reconstruction List and the Independent Trend of the Noble Ones. That left little time for the Sadrists to organize. However, Sadr still controls dozens of local mosques across the country that spread his message, and has been attempting to reform his movement by disbanding the Mahdi Army and creating a new social and religious group the Mumahidoon, Those Who Pave The Way. This gave him a way to get out the vote at the grassroots level. At the same time, he had to compete with the Supreme Islamic Iraqi Council and Maliki who both saw Sadr’s followers as being up for grabs, and made a concerted effort to recruit them.
The Sadrists saw the elections as an important way to regain political influence that they had been losing since 2007, but seemed to realize the limits of their power as well. In the January 2005 elections, Sadr told his followers to refrain from voting, that was only partially heeded. Sadrists won 12.7% of the vote in three provinces, included control of Maysan, and seats in Baghdad and Qadisiyah. In the parliamentary vote, the movement received thirty seats. In 2006 the Sadr movement helped make Maliki prime minister, and received several ministries in return. However after that high point, the Sadrists became more and more political outsiders. In 2007 Sadr pulled his followers from the cabinet to protest Maliki not setting a date for a U.S. withdrawal effectively eliminating any influence Sadr might have over major government decisions. The Supreme Islamic Iraqi Council also convinced the Prime Minister to isolate the Sadrists in parliament, and form a new ruling council with them, the Kurds, and the Sunni Iraqi Accordance Front that excluded Sadr’s followers. During the later half of the Surge, the Mahdi Army also became a major target of the U.S. Maliki’s offensives in 2008 shattered much of the militia as well. During this whole time the movement was also fracturing as more and more leaders began ignoring Sadr’s commands for their own grab at power. The 2009 election therefore was a major way for Sadr to not only get back into politics, but to show that his movement was still relevant. The Sadrists were therefore one of the one of the main voices calling for balloting as soon as possible, over the objections of the Supreme Islamic Iraqi Council and Kurds who wanted to hold onto their positions in the provinces. As the vote finally approached, Sadr’s spokesmen said that they did not expect to win any province except Maysan, but were rather looking to gain enough seats to make sure no party dominated any province. The spokesmen also said that they hoped to gain around one-third of the votes across the south so that they would be part of any ruling coalition that was formed.
In the early election results the Sadrists lost in their strongholds, yet won seats across more provinces than they did in 2005. The Independent Trend of the Noble Ones came in second in four provinces Maysan, Dhi Qar, Baghdad, and Babil, third in Najaf and Wasit, fourth in Karbala and Basra, and fifth in Qadisiyah and Muthanna, and eighth in Diyala. They received 8.1% of the votes across those eleven provinces, far below the 33% Sadrist leaders were hoping for. Their greatest defeats were in Maysan where they lost control of the province to Maliki’s State of Law List, Baghdad where apparently Sadr City voted for Maliki as well, Najaf where Sadr’s main office is located, and Basra, the site of the Prime Minister’s first crackdown. In the capital, although they came in second, they only garnered 9% of the vote, a 29% difference from Maliki’s State of Law List who with 38%. In Basra the Sadrists finished fifth with 5%, and came in third in Najaf with 12.2%. In Maysan the vote was much closer with Maliki’s State of Law winning with 17.7%, but the Sadrists coming in second with 15.2%, only a 2.5% difference. On the positive side in 2005 Sadrist only gained seats in three provinces, but this time will have representation in eleven. They are also apparently forming a ruling coalition with the State of Law List in Baghdad and across the south. Despite Maliki’s offensives against the Mahdi Army, both sides have a mutual animosity towards the Supreme Council. Sadr’s strategy apparently worked on this front. While they did not win any provinces, and lost power in some, they did get votes in new ones, and have the opportunity to join with the winning State of Law List to govern.
Where Moqtada al-Sadr is heading is yet to be seen. Following one setback after another since 2006, his movement finally has something positive to talk about. The election results, while mixed, did give his list enough seats to be players in the ruling coalition if the reports prove to be true. It shows once again that Sadr is a survivor, and that when he appears to be done, his movement is still capable of a comeback. What is not known is if an alliance with the State of Law List will give the Sadrists any real positions of power in the provincial councils, and whether they will be able to delivery on any promises. The seats will give them access to patronage to rebuild their base, and build on before the parliamentary elections scheduled for the end of the year. On the other hand the provinces will have a 50% budget cut, which will limit this capability. In the provincials Shiite voting was down across the country, with many disillusioned with the current ruling elites. That could continue unless the Sadrists, and all the other Shiite parties, prove that they are better than the politicians they are replacing.
Sadrist Finishes In 2005 Provincial Elections
Received 12.7% of vote in three provinces
Maysan: 1st place 31.9%
Qadisiyah: 6th place 4.2%
Baghdad: 6th place 2.0%
Sadrist Early Returns In 2009 Provincial Elections
Received 8.1% of vote across 11 provinces
Maysan: 2nd place 15.2%
Dhi Qar: 2nd place 14.1%
Baghdad: 2nd place 9%
Babil: 2nd place 6.2%
Najaf: 3rd place 12.2%
Wasit: 3rd place 6%
Karbala: 4th place 6.8%
Basra: 4th place 5%
Qadisiyah: 5th place 6.7%
Muthanna: 5th place 5.1%
Diyala: 8th place 3.1%
SOURCES
Abdullah, Muahmmed, “Diyala Sees Early Campaigning,” Niqash, 12/8/08
Agence France Presse, “Iraqi Shiite Factions Intimidation Claims,” 2/5/09
Ali, Sarmad, “Arab Perspective: News for Feb. 4,” Baghdad Life Blog, Wall Street Journal, 2/4/09
Alsumaria, “Iraq elections leaks say Al Maliki ahead,” 2/2/09
- “Iraq parties form alliances after elections,” 2/13/09
- “Iraq Provincial Law causes deep rift,” 3/8/08
Associated Press, “Al-Sadr’s Followers Eye Comeback in Jan. 31 Vote,” 1/20/09
Aswat al-Iraq, “Sadr calls for ‘renewing’ UIA, welcomes alliances,” 2/13/09
- “Sadrist MP fears election rigging,” 1/31/09
Bennett, Brian, “The Perils of Iraqi Lawmaking,” Time, 3/1/08
Bruno, Greg, “Iraq’s Political Landscape,” Council on Foreign Relations, 1/29/09
Cochrane, Marisa, “The Fragmentation of the Sadrist Movement,” Institute for the Study of War, January 2009
Cordesman, Anthony, “The Shi’ite Gamble: Rolling the Dice for Iraq’s Future,” Center for Strategic and International Studies, 4/21/08
Dagher, Sam, “Gunmen Kill Iraqi Cleric Campaigning for Council,” New York Times, 1/17/09
Economist, “The enigma of Muqtada al-Sadr,” 2/14/08
Fadel, Leila, “Assassinations replacing car bombs in Iraq,” McClatchy Newspapers, 10/9/08
Farrell, Stephen, “Election: Preliminary Results,” Baghdad Bureau Blog, New York Times, 2/5/09
Gordon, Michael, “The Last Battle,” New York Times, 8/3/08
Hoge, James, “A Discussion of Iraqi Futures,” Council on Foreign Relations, 9/8/08
International Crisis Group, “Iraq’s Provincial Elections: The Stakes,” 1/27/09
Kahl, Colin, “Bridge On The River Euphrates,” National Interest, 9/2/08
Knights, Michael, “Significance of the Provincial Elections,” Arab Reform Bulletin, December, 2008
Knights, Michael and McCarthy, Eamon, “Provincial Politics in Iraq: Fragmentation or New Awakening?” Washington Institute for Near East Policy, April 2008
Kukis, Mark, “As Iraqi Elections Loom, al-Sadr’s Political Clout Fades,” Time, 1/26/09
Majeed, Alaa, “Iraq Press Roundup,” UPI, 1/8/09
Paley, Amit and Sarhan, Saad, “Powerful Iraqi Cleric Recalibrates Strategy,” Washington Post, 6/15/08
Raghavan, Sudarsan, “For Prominent Iraqi Cleric, a Test of Influence,” Washington Post, 1/31/09
Reuters, “Iraq’s Al-Sadr Ready For Alliances With Al-Maliki,” 2/14/09
Roads To Iraq Blog, “Maliki – Sadr alliance,” 2/11/09
Roggio, Bill, “Sadrist Fared Poorly in Iraq Elections,” The Blog, Weekly Standard, 2/5/09
Rubin, Alissa and Dagher, Sam, “Sadr, Insurgency Icon, Is Silent, but Backers Work Behind Scenes,” New York Times, 1/31/09
Shadid, Anthony, “Despite Discontent and Fragmentation, Islamic Parties Dominate,” Washington Post, 1/19/09
Visser, Reidar, “The Kirkuk Issue Exposes Weaknesses in Iraq’s Ruling Coalition,” Historiae.org, 8/7/08
- “The Sadrist Parliamentary Bloc Confirms Its Support of Two Electoral Lists,” Historiae.org, 1/11/09
Monday, February 16, 2009
Mosul – Dangerous Place For Politicians
Mosul remains one of the most violent cities in Iraq. While attacks are down in Ninewa overall from 924 in the months between July and September to 511 from October to December 2008, the province is still the second most dangerous in the country after Baghdad. This has been especially true for political party officials and candidates in the provincial elections. Six have been killed and three attacked in Mosul before and after the vote, more than anywhere else in Iraq.
The first attacks began in December 2008 and have continued up to this month, February 2009. On December 1 two members of the Sunni Iraqi Islamic Party (IIP) were gunned down in western Mosul. The first, Marwan Nazar was a high school teacher who was killed going to work. Abduljabbar Mohammed, another IIP member was killed later that day while driving in the same part of town. On New Year’s Mowaffaq al-Hamdani, a candidate for the Iraq For Us List was shot in a café downtown. Afterwards, the United Nations’ Special Envoy to Iraq condemned all three murders. On January 7, 2009 a Shabak parliamentarian who belonged to the United Iraqi Alliance escaped an assassination attempt. At the end of the month Hazem Salim Ahmed, a Shiite of the Iraqi Unity List, a Tribal Support Council in Ninewa that ran as part of Prime Minister Nouri al-Maliki’s State of Law List, was killed in western Mosul. On February 2 the house of an al-Hadbaa List candidate was blown up south of Mosul. Fortunately, the building was empty and no one was hurt. Ahmed Fathi al-Jabouri of the IIP was not so lucky when he was gunned down after prayers in his mosque in western Mosul on February 11. The next day Abdilkareem al-Sharabi, the deputy head of the Sunni National Dialogue Front was shot in western Mosul. The latest incident occurred February 15 when Talab Muhsin Abbo, a principle at a preparatory school and al-Hadbaa List candidate was wounded when a sticky bomb attached to the bottom of his car exploded in southern Mosul. While the victims of these attacks came from different parties and sects there are some similarities. Of the nine attacks at least six targeted Sunnis. Five also occurred in the western Sunni half of Mosul.
The major cause of the violence in Ninewa is the divide between the Sunni majority and the Kurds who control the province. They were able to come to power due to the Sunni boycott of the provincial elections in 2005. The hope is that the recent vote and the ascendancy of the Arab parties will help quell this simmering conflict. In the last two months of 2008 there was a considerable drop in violence in the province overall. On the other hand more politicians were attacked in Mosul than anywhere else in the country. No one took responsibility for any of the incidents, but the likely candidates are the insurgency since almost all took place in the western half of the city. That points to some rejectionists who still do not want to participate in the political process. The fact that the al-Hadbaa List won the most votes on an explicitly anti-Kurdish ticket also does not bode well for resolution to Ninewa’s problems. The big question is if the newly victorious Arab parties can convince enough of their brethren to make the dispute with the Kurds political or if it will continue to have a large violent component.
SOURCES
Al-Ansary, Khalid, “Election friction flares in Iraq’s violent north,” Reuters, 1/2/09
Aswat al-Iraq, “Candidate assassinated in Mosul,” 1/29/09
- “Election candidate wounded by IED,” 2/15/09
- “Gunmen Blow Up Candidate’s House in Ninewa,” 2/2/09
- “IIP leader gunned down in Mosul,” 2/11/09
- “Local elections candidate gunned down,” 12/31/08
- “NDF member assassinated in Mosul,” 2/12/09
- “Shabaki MP survives assassination attempt in Mosul,” 1/7/09
- “Two IIP members assassinated in Mosul,” 12/1/08
Sabah, Zaid and Mizher, Qais, “Three Sunni Candidates Slain Days Before Elections,” Washington Post, 1/30/09
Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
The first attacks began in December 2008 and have continued up to this month, February 2009. On December 1 two members of the Sunni Iraqi Islamic Party (IIP) were gunned down in western Mosul. The first, Marwan Nazar was a high school teacher who was killed going to work. Abduljabbar Mohammed, another IIP member was killed later that day while driving in the same part of town. On New Year’s Mowaffaq al-Hamdani, a candidate for the Iraq For Us List was shot in a café downtown. Afterwards, the United Nations’ Special Envoy to Iraq condemned all three murders. On January 7, 2009 a Shabak parliamentarian who belonged to the United Iraqi Alliance escaped an assassination attempt. At the end of the month Hazem Salim Ahmed, a Shiite of the Iraqi Unity List, a Tribal Support Council in Ninewa that ran as part of Prime Minister Nouri al-Maliki’s State of Law List, was killed in western Mosul. On February 2 the house of an al-Hadbaa List candidate was blown up south of Mosul. Fortunately, the building was empty and no one was hurt. Ahmed Fathi al-Jabouri of the IIP was not so lucky when he was gunned down after prayers in his mosque in western Mosul on February 11. The next day Abdilkareem al-Sharabi, the deputy head of the Sunni National Dialogue Front was shot in western Mosul. The latest incident occurred February 15 when Talab Muhsin Abbo, a principle at a preparatory school and al-Hadbaa List candidate was wounded when a sticky bomb attached to the bottom of his car exploded in southern Mosul. While the victims of these attacks came from different parties and sects there are some similarities. Of the nine attacks at least six targeted Sunnis. Five also occurred in the western Sunni half of Mosul.
The major cause of the violence in Ninewa is the divide between the Sunni majority and the Kurds who control the province. They were able to come to power due to the Sunni boycott of the provincial elections in 2005. The hope is that the recent vote and the ascendancy of the Arab parties will help quell this simmering conflict. In the last two months of 2008 there was a considerable drop in violence in the province overall. On the other hand more politicians were attacked in Mosul than anywhere else in the country. No one took responsibility for any of the incidents, but the likely candidates are the insurgency since almost all took place in the western half of the city. That points to some rejectionists who still do not want to participate in the political process. The fact that the al-Hadbaa List won the most votes on an explicitly anti-Kurdish ticket also does not bode well for resolution to Ninewa’s problems. The big question is if the newly victorious Arab parties can convince enough of their brethren to make the dispute with the Kurds political or if it will continue to have a large violent component.
SOURCES
Al-Ansary, Khalid, “Election friction flares in Iraq’s violent north,” Reuters, 1/2/09
Aswat al-Iraq, “Candidate assassinated in Mosul,” 1/29/09
- “Election candidate wounded by IED,” 2/15/09
- “Gunmen Blow Up Candidate’s House in Ninewa,” 2/2/09
- “IIP leader gunned down in Mosul,” 2/11/09
- “Local elections candidate gunned down,” 12/31/08
- “NDF member assassinated in Mosul,” 2/12/09
- “Shabaki MP survives assassination attempt in Mosul,” 1/7/09
- “Two IIP members assassinated in Mosul,” 12/1/08
Sabah, Zaid and Mizher, Qais, “Three Sunni Candidates Slain Days Before Elections,” Washington Post, 1/30/09
Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
Sunday, February 15, 2009
U.S. Reports On Iraq’s Economy & Services
In January 2009 both the Defense Department and the Special Inspector General for Iraq Reconstruction (SIGIR) released their quarterly reports to Congress on Iraq. Both included overviews of Iraq’s economy and services. While the Pentagon tends to stress the positives, the SIGIR has some of the most up to date statistics, and gives a much more in depth look at the major sectors of Iraq’s economy. Both found aggregate improvements in the country, but still massive problems that need to be addressed.
Growth
The Iraqi Ministry of Planning recently reported that Iraq’s Gross Domestic Product (GDP) grew 10.9% in 2008. That was above the 9% growth predicted by the International Monetary Fund (IMF). While the improved security conditions has allowed more space for Iraqi businesses, the one major reason why Iraq’s economy grew so much last year was because of the massive increase in the price of oil. With the dramatic drop in the petroleum market, Iraq’s economy can be expected to shrink in 2009. There are also large structural problems. Iraq’s oil sector has been largely stagnant since the U.S. invasion. The violence has kept foreign investors away and hindered local businesses, which has left the state the driving force in the economy. The country needs massive investment to upgrade its infrastructure and provide jobs. Officially the unemployment rate is 15%, but the Minister of Planning Ali Baban and other sources believe it is much higher. The SIGIR thinks that unemployment and underemployment could be as high as 60%. Corruption also affects every part of the government and economy, and takes a large toll.
Oil & Gas
Oil is the main driver of Iraq’s economy. All the oil companies are state-run, and are expected to account for 85% of the country’s revenue in 2009. The drop in oil prices therefore will cause a major crisis for Iraq at least in the short term. Besides that the country has no flexibility in its oil exports to make up for fluctuations in international prices. Oil production in 2008 averaged 2.42 million barrels a day, an almost 15% increase from 2.11 million barrels a day in 2007. However that was below the 2.5 million mark from before the U.S. invasion. Overall, production has been stagnant since 2003, with minor changes up and down. The same thing applies to exports. In the last three months of 2008 Iraq exported 1.79 million barrels a day, a 3% increase from the previous quarter, but a 6% decrease from the same period in 2007.
The U.S. has spent $1.86 billion on the oil and gas industry, but it still needs several billion dollars more in investment. An audit by the SIGIR of work done by Kellog Brown & Root to work on Iraq’s southern oil fields and port found that Iraqis may not be taking care of many of these projects finished by the United States. At the end of 2008 the Oil Ministry also began two rounds of bidding for international companies to invest in nineteen oil and gas fields across the country. By the middle of this year the Ministry hopes to have these contracts completed. They are hoping that these corporations will boost exports to two million barrels a day in 2009, and overall production to 6 million by 2015. Iraq has also signed up a Japanese company to work on improving the port in Basra where the vast majority of the country’s exports flow through. Baghdad is moving ahead with these deals despite the fact that the Hydrocarbon law that will define the role of companies and the government in the oil and gas fields has been deadlocked in parliament for almost two years now.
Despite Iraq’s oil wealth it cannot meet its public’s demand for refined petroleum products. At the end of 2008 it did not meet its benchmarks for production of a range of goods like gas and diesel. By that time it was short 51% of gas needs, 36% of diesel, 24% of liquefied petroleum, and 15% of kerosene demand. The production of these products has gone up, but it is being outstripped by the Iraqis’ desires for more.
Corruption and transparency is also a problem with the industry. In December 2008 the IMF said that Iraq was not doing enough to fight corruption in the oil sector. The IMF and United Nations also both criticized Baghdad for not setting up rules for better accountability with its revenues. The huge amount of money generated by petroleum is obviously a huge attraction to officials hoping to steal, but Prime Minister Nouri al-Maliki has never shown any enthusiasm for stopping it. Instead he sees it as a public relations problem to be solved by simply not talking about it.
Farming
The Pentagon’s report said that farming has the biggest opportunity for growth this year. Agriculture accounts for 6% of GDP, and employs around 25% of the workforce, the second largest private employer in Iraq. Most of it is subsistence however, rather than for profit. The Defense Department listed all the structural impediments to this sector actually improving any time soon. Farming lacks government support, tariffs to keep out foreign competition, modern technology and techniques, electricity and fuel shortages that hinder the use of pumps for irrigation, a system that is broken down throughout the country, credit and investment, markets, and security. For those reasons Iraq imports 50% of its food needs.
In 2008 Iraq was also hit by a drought. It was mostly concentrated in the north affecting the provinces of Irbil, Dohuk, Tamim, Diyala, and Ninewa the worst. As a result wheat and barley production are down 51%, two of Iraq’s three major crops. The Water Resource Ministry reported in January 2009 that rain and snow was again down one third from normal, which could mean another water shortage this year. Kurdistan is working with the U.N. to help relieve the issue, while the Ministry of Agriculture began several assistance programs as well. The U.S. doesn’t think the government’s moves have been very effective however.
State Owned Businesses
As reported before, under Saddam the economy was state-run. After the U.S. invasion, the Coalition Provisional Authority unsuccessfully tried to privatize it, which led to the closing of hundreds of government owned businesses that employed up to 15% of the workforce. In 2006 the Defense Department began a program to revitalize these public industries to create more jobs. Over $100 million has been put into this project. That funding is now coming to an end, and Baghdad will now be responsible for their revitalization. At the end of 2008 the SIGIR did an audit of this effort, but found no reliable data to determine whether it was effective or not. It also found that cash was being given out without invoices, which would encourage corruption.
Debt
One area where Iraq has made a lot of progress has been with its foreign debt. Iraq owes money to two groups, the Paris Club and non-Paris Club countries. Most of this was from the Saddam era. Since 2004 Baghdad has been able to get $74 billion of its debt forgiven. That leaves $50-$75 billion still owed. The Paris Club, which is made up of western industrialized countries holds $7.6 billion in Iraq debt, down from $50 billion. Iraq reached an agreement with them on this remaining amount at the end of 2008. Most of Iraq’s remaining obligations belong to Saudi Arabia, China, and Kuwait. Negotiations with them are on going.
Banking
Banking is another industry the government is hoping will grow in 2009. The Iraqi Central Bank has been able to keep inflation in check. In 2006 it was at 32%, but by September 2008 it was cut to 12.9%. Control over inflation has allowed the Iraqi dinar to appreciate in value. From November 2006 to October 2008 Iraq’s currency increased 20% in value, and stood at 1,172 dinars for one American dollar in December 2008. The low inflation and appreciation has given Iraqis more buying power. The Central Bank is now cutting interest rates to encourage loans.
State owned banks account for 90% of all banking assets in the country. There are seven such enterprises that control 66% of the branches. The two main ones are the Rafidain and Rasheed Banks that have 150 branches each. The Agricultural Cooperative Bank, the Real Estate Bank, the Industrial Bank, the Iraq Bank, and the Trade Bank of Iraq follow those. In total the government has 397 bank branches. The largest private banks are the Al-Qarka Bank for Investment and Funding with 68 branches, the Investment Bank of Iraq with 22, and the Basra International Bank for Investment with nineteen. There are 194 private bank branches overall. Private banks have expanded with the improvement in security with more moving out to the provinces.
Like everything else, Iraq’s banks still have many problems. A December 2008 audit of the Rasheed and Rafidain banks found no business plan, no rules or regulations for workers, no reporting rules, no technology, little risk management, and hardly any services offered. For example, there are no personal accounts, safety deposit boxes, or dealings with foreign banks. More importantly, in late December 2008 two state-run banks ran out of cash, leaving Diyala province with no money to pay for government salaries, pensions, or reconstruction projects. The head of the Rafidain bank told Radio Free Europe/Radio Liberty in January 2009 that if banking were a sign of economic progress, Iraq would be far behind. The entire system needs to be reformed as a result.
This year the government is attempting to solve some of these problems by encouraging foreign banks to do business in Iraq. At the end of January 2009 the Finance Ministry held a conference asking international banks to invest and open branches in Iraq. The Finance Ministry promised them that he could clear any bureaucratic obstacles that they might face. The two-day event was attended by officials from American, English, Turkish, Iranian, Lebanese, Jordanian, and Bahrain owned banks. The Iraq Central Bank had already issued licenses to three foreign banks. JP Morgan Chase and Citibank said they were interested as well.
Stock Exchange
The Iraqi Stock Exchange was opened for business in August 2007. Since then it has sputtered forward. The number of shares traded in 2008 was down from 2007, although there are now more foreign stocks available. In 2007 there were 94 companies listed on the exchange. In 2008 that only increased by two. The number of sessions went up from 119 in 2007 to 139 in 2008, as well as the shares traded, however their value went down from $357 million to $251 million.
Services
American surveys of Iraqis have found mass disappointment with the delivery of services. The Pentagon declared that in 2009 meeting basic needs would be the top issue surpassing security for the first time since the invasion. It should be no surprise than that this was a major issue in the January 2009 provincial elections. While the U.S. has found some improvement in the government’s abilities, supply of essential services still does not meet demand.
Iraqis are generally unhappy with their supply of food, water, electricity, sewage, and health. A survey from the end of 2008 found that only 16% were satisfied with the amount of electricity they received, down from 32% in 2007. 26% said they were happy with their health services, down from 36% in 2007. 31% were satisfied with their drinking water, the same amount as 2007.
Electricity
Electricity production has increased, but it is only meeting 66% of demand. By the end of last year Iraq was producing 4,997 megawatts per day, a record high. That was a 2% increase from the previous quarter. The capacity of Iraq’s generators has increased by around 1,500 megawatts on average. Like the oil industry, the power system needs massive investment to repair and upgrade facilities. Security and fuel shortages also hinder production. Climate changes, like the drought have also cut hydroelectric output.
The U.S. has spent $4.78 billion on Iraq’s electrical system and added 2,683 megawatts. Iraqis have matched this investment. In 2007 they spent $1.4 billion, in 2008 $2.3 billion, and in 2009 the proposed budget sets aside $1.1 billion. The Ministry of Electricity signed a $3 billion deal recently with General Electric to provide generators. The Ministry wants to double production eventually, and match demand. In the meantime, many Iraqis have been forced to rely upon private generators that produce between 2,000-3,000 megawatts. Thankfully, the number of attacks on the system are also down with no major ones since April 2008. Previous ones however have kept four of eleven damaged power lines out of use.
Health
Baghdad is making small steps to provide more health services, but lacks the personnel to be effective. Iraq has 27.5 million people, but only 15,500 doctors. A study said they need about 100,000. Many physicians have left the country due to the violence. The Health Ministry has a large budget, $192 million in 2008, but like the rest of the administration, has not been able to spend most of it. By the end of September 2008 they had only expended $28.5 million, 14.8%. The Ministry did launch a public relations campaign to educate Iraqis about health issues last year, has plans to build six new hospitals and 1,000 health clinics by the end of the decade, and conducted a successful five day polio campaign that vaccinated 97% of Iraq’s five million children. Until Iraq is able to meet its staffing deficit however, it will be hard to do more.
Water
Iraq’s water system is in disrepair. The facilities are operating below capacity because of a lack of maintenance, and problems with operating them. For example, when the U.S. turned over the Nassiriya Water Treatment Plant in September 2007, which cost $278 million to build, it had a capacity to treat 10,000 cubic meters of water per hour. When the SIGIR later looked at it they found that Baghdad wasn’t providing enough power, leaks were not fixed, and the personnel were not trained for their jobs. By the beginning of 2008 when American inspectors went back they found that it was operating at less then a quarter of its capabilities. The U.S. had to sign two contracts worth $1.1 million to save the project, since it felt that Baghdad would not.
As reported before, Iraq suffered a cholera outbreak in 2008 that affected more than half of its eighteen provinces. Besides the incompetence of some provincial officials that used expired chlorine to clean water, the broken down sewage and water system were largely to blame. International organizations have said that Iraq will face annual cholera incidents as a result.
Food Rations
Iraq has the largest food ration system in the world. It took up 8% of the 2008 budget. It is looked at as a basic indicator of how well the government can provide services. For 2009 there are plans to cut wealthy families from the program because of the budget crisis caused by the drop in oil prices. Less money is also going to be appropriated for it overall.
Transportation and Communication
Iraq’s Ministries of Transportation and Communication have not been able to spend most of their 2008 budgets. Transportation only spent $55 million by the end of September 2008 of its $322 million, 17%, while Communications expended $28 million of its $315 million budget, 8.8%. Iraq’s roads are in need of repair, but the lack of spending by the government means that will not be taken care of. The Ministry of Transportation does have a plan to revitalize the country’s railway system. It is opening a plant at Abu Ghraib to manufacture railroad ties at a cheaper price than imports.
Conclusion
Overall, Iraq’s economy is too dependent upon oil, and its management by the government is inefficient and corrupt. Petroleum is the only thing that makes Iraq’s economy grow, since its other industries are small and underdeveloped. The legacy of Saddam’s system still resonates, as Iraq’s bureaucracy does not function without orders from the top officials. There is little to no individual initiative. Many ministers have to sign for everything even down to hiring people. The government is also paper based, which makes things move at a snail’s pace. Many of the country’s best and brightest have left the country and are not coming back. That has led to a massive talent deficit. The lack of transparency and accounting has allowed large-scale corruption to occur largely unencumbered by any real government effort to stop it. The lack of tariffs has meant that many private businesses have suffered from cheap foreign imports. Fuel and electricity shortages, and the lack of security have increased costs. Iraqis have also shown a general lack of willingness to maintain their infrastructure, which leads to breakdowns and plants operating at less then capacity. The one positive is that security has improved, which could allow foreign companies in oil, gas, electricity, and banking to finally invest in Iraq. The lack of competent bureaucrats could negatively affect that as well as they could give foreigners too much control over Iraq’s resources, deter companies from coming because of bad contracts, or provide new avenues for graft and bribes. Still foreign know how, technology, and money is desperately needed. It will be a long and hard struggle to overcome Iraq’s many problems, and create a diversified economy that can meet the needs of its public. There is no guarantee that it will ever happen.
SOURCES
Abouzeid, Rania, “Mismanaging Iraq: No Cash to Carry,” Time, 12/29/08
Associated Press, “Iraqi official appeals to foreign banks to invest,” 1/28/09
Aswat al-Iraq, “GDP higher by 10.9 % in 2008,” 2/11/09
- “Iraqi Unemployment Rate Dropped by 15% in 2008,” 1/27/09
Chon, Gina, “Western Bank Giants Prepare to Revamp Iraq’s Financial System,” Baghdad Life Blog, Wall Street Journal, 1/28/09
Department of Defense, “Measuring Stability and Security in Iraq,” December 2008
O’Hanlon, Michael and Campbell, Jason, “Iraq Index,” Brookings Institution, 11/20/08
Radio Free Europe/Radio Liberty, “Official: Iraqi Banking System Needs Overhaul,” 1/13/09
Al Sabah, “Iraq faces massive water shortage, Water Resources said,” 1/21/09
Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 10/30/09
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
El-Tablawy, Tarek, “Official: 80 percent of Iraq pipelines damaged,” Associated Press, 2/11/09
Growth
The Iraqi Ministry of Planning recently reported that Iraq’s Gross Domestic Product (GDP) grew 10.9% in 2008. That was above the 9% growth predicted by the International Monetary Fund (IMF). While the improved security conditions has allowed more space for Iraqi businesses, the one major reason why Iraq’s economy grew so much last year was because of the massive increase in the price of oil. With the dramatic drop in the petroleum market, Iraq’s economy can be expected to shrink in 2009. There are also large structural problems. Iraq’s oil sector has been largely stagnant since the U.S. invasion. The violence has kept foreign investors away and hindered local businesses, which has left the state the driving force in the economy. The country needs massive investment to upgrade its infrastructure and provide jobs. Officially the unemployment rate is 15%, but the Minister of Planning Ali Baban and other sources believe it is much higher. The SIGIR thinks that unemployment and underemployment could be as high as 60%. Corruption also affects every part of the government and economy, and takes a large toll.
Oil & Gas
Oil is the main driver of Iraq’s economy. All the oil companies are state-run, and are expected to account for 85% of the country’s revenue in 2009. The drop in oil prices therefore will cause a major crisis for Iraq at least in the short term. Besides that the country has no flexibility in its oil exports to make up for fluctuations in international prices. Oil production in 2008 averaged 2.42 million barrels a day, an almost 15% increase from 2.11 million barrels a day in 2007. However that was below the 2.5 million mark from before the U.S. invasion. Overall, production has been stagnant since 2003, with minor changes up and down. The same thing applies to exports. In the last three months of 2008 Iraq exported 1.79 million barrels a day, a 3% increase from the previous quarter, but a 6% decrease from the same period in 2007.
The U.S. has spent $1.86 billion on the oil and gas industry, but it still needs several billion dollars more in investment. An audit by the SIGIR of work done by Kellog Brown & Root to work on Iraq’s southern oil fields and port found that Iraqis may not be taking care of many of these projects finished by the United States. At the end of 2008 the Oil Ministry also began two rounds of bidding for international companies to invest in nineteen oil and gas fields across the country. By the middle of this year the Ministry hopes to have these contracts completed. They are hoping that these corporations will boost exports to two million barrels a day in 2009, and overall production to 6 million by 2015. Iraq has also signed up a Japanese company to work on improving the port in Basra where the vast majority of the country’s exports flow through. Baghdad is moving ahead with these deals despite the fact that the Hydrocarbon law that will define the role of companies and the government in the oil and gas fields has been deadlocked in parliament for almost two years now.
Despite Iraq’s oil wealth it cannot meet its public’s demand for refined petroleum products. At the end of 2008 it did not meet its benchmarks for production of a range of goods like gas and diesel. By that time it was short 51% of gas needs, 36% of diesel, 24% of liquefied petroleum, and 15% of kerosene demand. The production of these products has gone up, but it is being outstripped by the Iraqis’ desires for more.
Corruption and transparency is also a problem with the industry. In December 2008 the IMF said that Iraq was not doing enough to fight corruption in the oil sector. The IMF and United Nations also both criticized Baghdad for not setting up rules for better accountability with its revenues. The huge amount of money generated by petroleum is obviously a huge attraction to officials hoping to steal, but Prime Minister Nouri al-Maliki has never shown any enthusiasm for stopping it. Instead he sees it as a public relations problem to be solved by simply not talking about it.
Farming
The Pentagon’s report said that farming has the biggest opportunity for growth this year. Agriculture accounts for 6% of GDP, and employs around 25% of the workforce, the second largest private employer in Iraq. Most of it is subsistence however, rather than for profit. The Defense Department listed all the structural impediments to this sector actually improving any time soon. Farming lacks government support, tariffs to keep out foreign competition, modern technology and techniques, electricity and fuel shortages that hinder the use of pumps for irrigation, a system that is broken down throughout the country, credit and investment, markets, and security. For those reasons Iraq imports 50% of its food needs.
In 2008 Iraq was also hit by a drought. It was mostly concentrated in the north affecting the provinces of Irbil, Dohuk, Tamim, Diyala, and Ninewa the worst. As a result wheat and barley production are down 51%, two of Iraq’s three major crops. The Water Resource Ministry reported in January 2009 that rain and snow was again down one third from normal, which could mean another water shortage this year. Kurdistan is working with the U.N. to help relieve the issue, while the Ministry of Agriculture began several assistance programs as well. The U.S. doesn’t think the government’s moves have been very effective however.
State Owned Businesses
As reported before, under Saddam the economy was state-run. After the U.S. invasion, the Coalition Provisional Authority unsuccessfully tried to privatize it, which led to the closing of hundreds of government owned businesses that employed up to 15% of the workforce. In 2006 the Defense Department began a program to revitalize these public industries to create more jobs. Over $100 million has been put into this project. That funding is now coming to an end, and Baghdad will now be responsible for their revitalization. At the end of 2008 the SIGIR did an audit of this effort, but found no reliable data to determine whether it was effective or not. It also found that cash was being given out without invoices, which would encourage corruption.
Debt
One area where Iraq has made a lot of progress has been with its foreign debt. Iraq owes money to two groups, the Paris Club and non-Paris Club countries. Most of this was from the Saddam era. Since 2004 Baghdad has been able to get $74 billion of its debt forgiven. That leaves $50-$75 billion still owed. The Paris Club, which is made up of western industrialized countries holds $7.6 billion in Iraq debt, down from $50 billion. Iraq reached an agreement with them on this remaining amount at the end of 2008. Most of Iraq’s remaining obligations belong to Saudi Arabia, China, and Kuwait. Negotiations with them are on going.
Banking
Banking is another industry the government is hoping will grow in 2009. The Iraqi Central Bank has been able to keep inflation in check. In 2006 it was at 32%, but by September 2008 it was cut to 12.9%. Control over inflation has allowed the Iraqi dinar to appreciate in value. From November 2006 to October 2008 Iraq’s currency increased 20% in value, and stood at 1,172 dinars for one American dollar in December 2008. The low inflation and appreciation has given Iraqis more buying power. The Central Bank is now cutting interest rates to encourage loans.
State owned banks account for 90% of all banking assets in the country. There are seven such enterprises that control 66% of the branches. The two main ones are the Rafidain and Rasheed Banks that have 150 branches each. The Agricultural Cooperative Bank, the Real Estate Bank, the Industrial Bank, the Iraq Bank, and the Trade Bank of Iraq follow those. In total the government has 397 bank branches. The largest private banks are the Al-Qarka Bank for Investment and Funding with 68 branches, the Investment Bank of Iraq with 22, and the Basra International Bank for Investment with nineteen. There are 194 private bank branches overall. Private banks have expanded with the improvement in security with more moving out to the provinces.
Like everything else, Iraq’s banks still have many problems. A December 2008 audit of the Rasheed and Rafidain banks found no business plan, no rules or regulations for workers, no reporting rules, no technology, little risk management, and hardly any services offered. For example, there are no personal accounts, safety deposit boxes, or dealings with foreign banks. More importantly, in late December 2008 two state-run banks ran out of cash, leaving Diyala province with no money to pay for government salaries, pensions, or reconstruction projects. The head of the Rafidain bank told Radio Free Europe/Radio Liberty in January 2009 that if banking were a sign of economic progress, Iraq would be far behind. The entire system needs to be reformed as a result.
This year the government is attempting to solve some of these problems by encouraging foreign banks to do business in Iraq. At the end of January 2009 the Finance Ministry held a conference asking international banks to invest and open branches in Iraq. The Finance Ministry promised them that he could clear any bureaucratic obstacles that they might face. The two-day event was attended by officials from American, English, Turkish, Iranian, Lebanese, Jordanian, and Bahrain owned banks. The Iraq Central Bank had already issued licenses to three foreign banks. JP Morgan Chase and Citibank said they were interested as well.
Stock Exchange
The Iraqi Stock Exchange was opened for business in August 2007. Since then it has sputtered forward. The number of shares traded in 2008 was down from 2007, although there are now more foreign stocks available. In 2007 there were 94 companies listed on the exchange. In 2008 that only increased by two. The number of sessions went up from 119 in 2007 to 139 in 2008, as well as the shares traded, however their value went down from $357 million to $251 million.
Services
American surveys of Iraqis have found mass disappointment with the delivery of services. The Pentagon declared that in 2009 meeting basic needs would be the top issue surpassing security for the first time since the invasion. It should be no surprise than that this was a major issue in the January 2009 provincial elections. While the U.S. has found some improvement in the government’s abilities, supply of essential services still does not meet demand.
Iraqis are generally unhappy with their supply of food, water, electricity, sewage, and health. A survey from the end of 2008 found that only 16% were satisfied with the amount of electricity they received, down from 32% in 2007. 26% said they were happy with their health services, down from 36% in 2007. 31% were satisfied with their drinking water, the same amount as 2007.
Electricity
Electricity production has increased, but it is only meeting 66% of demand. By the end of last year Iraq was producing 4,997 megawatts per day, a record high. That was a 2% increase from the previous quarter. The capacity of Iraq’s generators has increased by around 1,500 megawatts on average. Like the oil industry, the power system needs massive investment to repair and upgrade facilities. Security and fuel shortages also hinder production. Climate changes, like the drought have also cut hydroelectric output.
The U.S. has spent $4.78 billion on Iraq’s electrical system and added 2,683 megawatts. Iraqis have matched this investment. In 2007 they spent $1.4 billion, in 2008 $2.3 billion, and in 2009 the proposed budget sets aside $1.1 billion. The Ministry of Electricity signed a $3 billion deal recently with General Electric to provide generators. The Ministry wants to double production eventually, and match demand. In the meantime, many Iraqis have been forced to rely upon private generators that produce between 2,000-3,000 megawatts. Thankfully, the number of attacks on the system are also down with no major ones since April 2008. Previous ones however have kept four of eleven damaged power lines out of use.
Health
Baghdad is making small steps to provide more health services, but lacks the personnel to be effective. Iraq has 27.5 million people, but only 15,500 doctors. A study said they need about 100,000. Many physicians have left the country due to the violence. The Health Ministry has a large budget, $192 million in 2008, but like the rest of the administration, has not been able to spend most of it. By the end of September 2008 they had only expended $28.5 million, 14.8%. The Ministry did launch a public relations campaign to educate Iraqis about health issues last year, has plans to build six new hospitals and 1,000 health clinics by the end of the decade, and conducted a successful five day polio campaign that vaccinated 97% of Iraq’s five million children. Until Iraq is able to meet its staffing deficit however, it will be hard to do more.
Water
Iraq’s water system is in disrepair. The facilities are operating below capacity because of a lack of maintenance, and problems with operating them. For example, when the U.S. turned over the Nassiriya Water Treatment Plant in September 2007, which cost $278 million to build, it had a capacity to treat 10,000 cubic meters of water per hour. When the SIGIR later looked at it they found that Baghdad wasn’t providing enough power, leaks were not fixed, and the personnel were not trained for their jobs. By the beginning of 2008 when American inspectors went back they found that it was operating at less then a quarter of its capabilities. The U.S. had to sign two contracts worth $1.1 million to save the project, since it felt that Baghdad would not.
As reported before, Iraq suffered a cholera outbreak in 2008 that affected more than half of its eighteen provinces. Besides the incompetence of some provincial officials that used expired chlorine to clean water, the broken down sewage and water system were largely to blame. International organizations have said that Iraq will face annual cholera incidents as a result.
Food Rations
Iraq has the largest food ration system in the world. It took up 8% of the 2008 budget. It is looked at as a basic indicator of how well the government can provide services. For 2009 there are plans to cut wealthy families from the program because of the budget crisis caused by the drop in oil prices. Less money is also going to be appropriated for it overall.
Transportation and Communication
Iraq’s Ministries of Transportation and Communication have not been able to spend most of their 2008 budgets. Transportation only spent $55 million by the end of September 2008 of its $322 million, 17%, while Communications expended $28 million of its $315 million budget, 8.8%. Iraq’s roads are in need of repair, but the lack of spending by the government means that will not be taken care of. The Ministry of Transportation does have a plan to revitalize the country’s railway system. It is opening a plant at Abu Ghraib to manufacture railroad ties at a cheaper price than imports.
Conclusion
Overall, Iraq’s economy is too dependent upon oil, and its management by the government is inefficient and corrupt. Petroleum is the only thing that makes Iraq’s economy grow, since its other industries are small and underdeveloped. The legacy of Saddam’s system still resonates, as Iraq’s bureaucracy does not function without orders from the top officials. There is little to no individual initiative. Many ministers have to sign for everything even down to hiring people. The government is also paper based, which makes things move at a snail’s pace. Many of the country’s best and brightest have left the country and are not coming back. That has led to a massive talent deficit. The lack of transparency and accounting has allowed large-scale corruption to occur largely unencumbered by any real government effort to stop it. The lack of tariffs has meant that many private businesses have suffered from cheap foreign imports. Fuel and electricity shortages, and the lack of security have increased costs. Iraqis have also shown a general lack of willingness to maintain their infrastructure, which leads to breakdowns and plants operating at less then capacity. The one positive is that security has improved, which could allow foreign companies in oil, gas, electricity, and banking to finally invest in Iraq. The lack of competent bureaucrats could negatively affect that as well as they could give foreigners too much control over Iraq’s resources, deter companies from coming because of bad contracts, or provide new avenues for graft and bribes. Still foreign know how, technology, and money is desperately needed. It will be a long and hard struggle to overcome Iraq’s many problems, and create a diversified economy that can meet the needs of its public. There is no guarantee that it will ever happen.
SOURCES
Abouzeid, Rania, “Mismanaging Iraq: No Cash to Carry,” Time, 12/29/08
Associated Press, “Iraqi official appeals to foreign banks to invest,” 1/28/09
Aswat al-Iraq, “GDP higher by 10.9 % in 2008,” 2/11/09
- “Iraqi Unemployment Rate Dropped by 15% in 2008,” 1/27/09
Chon, Gina, “Western Bank Giants Prepare to Revamp Iraq’s Financial System,” Baghdad Life Blog, Wall Street Journal, 1/28/09
Department of Defense, “Measuring Stability and Security in Iraq,” December 2008
O’Hanlon, Michael and Campbell, Jason, “Iraq Index,” Brookings Institution, 11/20/08
Radio Free Europe/Radio Liberty, “Official: Iraqi Banking System Needs Overhaul,” 1/13/09
Al Sabah, “Iraq faces massive water shortage, Water Resources said,” 1/21/09
Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 10/30/09
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
El-Tablawy, Tarek, “Official: 80 percent of Iraq pipelines damaged,” Associated Press, 2/11/09
Saturday, February 14, 2009
Review of 2008 Attack Statistics In Iraq
The last two quarterly reports to Congress by the Special Inspector General for Iraq Reconstruction (SIGIR) contained statistics on the total number of attacks from April to December 2008. For the beginning of that year, the reports contained a different metric using average daily attacks instead. As reported before, last year saw a steady decline in the number of deaths in Iraq. The casualties, depending upon the source dropped to 2003 or 2004 levels. According to the January 2009 SIGIR report, Iraqi civilian deaths are down 80% from June 2007 to December 2008. Iraqi security forces' casualties dropped 84%, and Coalition deaths are down 88% for that same time period. Attacks also declined 86% to around the same amount as 2003. From April 1 to September 30, 2008 the average number of attacks per month stayed almost the same at just over 1,700. From October 1 to December 31 however attacks dropped to approximately 1,100. The fact that was an almost 90% drop from the middle of 2007 shows just how massive the conflict in Iraq was. Attacks are now largely based upon the struggle for power rather than sect, and are nowhere near what they were in recent years. The country remains an extremely dangerous place, but has a new post-sectarian war status quo.
Southern Iraq and Kurdistan were the most peaceful parts of Iraq, while the Sunni and mixed sect-ethnic provinces accounted for the vast majority of violence. Most of the conflict in the south was between the feuding Shiite parties the Supreme Islamic Iraqi Council and the Sadrists. Prime Minister Nouri al-Maliki became involved when he sent forces to crackdown on the Mahdi Army in early 2008. That has largely ended leading to few acts of violence there now. In Kurdistan the tight control over the entry of non-Kurds has largely deterred attacks. Muthanna, Karbala, and Najaf all had single digit attacks from April to December 2008. The three Kurdistan provinces of Dohuk, Irbil, and Sulaymaniya only had 12 for that time period, followed by 33 in Qadisiyah, 45 in Dhi Qar, 51 in Wasit, and 94 in Maysan. That last province was the only one that had an increase in attacks from April to December because of the government's move against the Sadrists there. Basra had 145, but that was because of the end of the security operation against the Mahdi Army there as well that started in March 2008. From April to July there were 108 attacks there, but that quickly dropped to 26 from July to September, and eleven from October to the end of the year. Babil was the one southern province that had a large number of attacks consistently for the reporting period with 197 total. The remaining six provinces was the scene of most of the attacks in the country. Anbar had 646 where insurgents still carry out attacks against the Awakening tribes. Tamim with 677 contains the disputed city of Kirkuk, which has split Arabs, Kurds, Turkmen, and Christians there. Diyala had 1,321 attacks from April to December. It is ruled by Shiites, but has a Sunni majority. The Sons of Iraq there have also been a target of insurgents, and the Kurds desire to annex northern strips of the province. Salahaddin with 1,573 attacks is a largely Sunni governorate, but the provincial council is run by Kurds. Ninewa with 3,801 attacks is ethnically divided between Sunnis, Shiites, Kurds, Christians, and other smaller minority groups, and also has Kurdish leadership. Finally, the capital Baghdad has always had the most attacks with 3,801 as it is the seat of power.
Total Number of Attacks In Iraq From April 1-December 31, 2008
Province | Total Attacks 4/1/08-7/1/08 | Total Attacks 7/1/08-9/30/08 | Total Attacks 10/1/08-12/31/08 |
Muthanna | 2 | 1 | 1 |
Karbala | 1 | 4 | 0 |
Najaf | 4 | 1 | 2 |
Kurdistan (Dohuk, Irbil, Sulaymaniya) | 3 | 6 | 3 |
Qadisiyah | 17 | 7 | 9 |
Dhi-Qar | 17 | 21 | 7 |
Wasit | 34 | 8 | 9 |
Maysan | 12 | 43 | 39 |
Basra | 108 | 26 | 11 |
Babil | 81 | 54 | 62 |
Anbar | 275 | 209 | 162 |
Tamim | 248 | 245 | 184 |
Diyala | 537 | 533 | 251 |
Salahaddin | 717 | 482 | 374 |
Ninewa | 1,041 | 924 | 511 |
Baghdad | 2,221 | 867 | 713 |
TOTALS: | 5,318 | 3,431 | 2,338 |
Avg. Per Month | 1,772.6 | 1,715.5 | 1,169.0 |
SOURCES
Special Inspector General for Iraq Reconstruction, "Quarterly Report to the United States Congress," 10/30/08
- "Quarterly Report and Semiannual Report to the United States Congress," 1/30/09
Friday, February 13, 2009
Iraq’s Anti-Corruption Agencies
Iraq’s anti-corruption agencies continue to struggle with their job. The Minister of Planning Ali Baban told the Special Inspector General for Iraq Reconstruction (SIGIR) that he thought corruption was worse now than under Saddam. He said that corruption was rampant throughout the government, and that Baghdad had failed to stop it. The investigative group Transparency International supports Baban’s claims. They look into corruption in governments across the world. In 2003 they ranked Iraq 113 out of 133 governments on its annual corruption index with one being the best and 133 the worst. By 2008 Iraq was tied as the second most corrupt government in the world out of 180 nations. According to SIGIR’s evaluation, of Iraq’s three anti-corruption agencies only one was doing its job.
Iraq has three offices that are tasked with stopping corruption. Those are the inspector generals, the Board of Supreme Audit, and the Commission on Public Integrity. The Coalition Provisional Authority (CPA) created the inspector generals in 2004. They were fashioned after the investigative bodies that work in the United States government. There is one inspector general for each Iraqi ministry and agency. The Board of Supreme Audit is run by Dr. Abdul Basit, and looks into the government’s finances. It is similar to the American Government Accountability Office. The third agency is the Commission on Public Integrity led by Judge Raheem al-Ogaili. It was created by the CPA as well, and is an independent group that is tasked with investigating corruption throughout the government.
Prime Minister Nouri al-Maliki declared 2008 the year of fighting corruption, but SIGIR found little evidence of that. SIGIR said that the Board of Audit was the only reliable anti-corruption agency, and provided the best information. The inspector generals are caught in the middle of a controversy. Since 2008 six have been fired, but only a few of those have been replaced, leaving those agencies and ministries with no real oversight. The government claims they were not doing their job, but critics claim Prime Minister Maliki removed them for political reasons. Judge Ogaili of the Public Integrity Commission was definitely a political appointee. He took over from Judge Radhi Hamza al-Radhi who actively pursued corruption cases, but was constantly foiled by ministers, Maliki, and sometimes by the United States. In 2007 Judge Radhi fled Iraq due to threats. His successor was Judge Ogaili. He has been in office for over a year but has never been confirmed by parliament. The judge has said that corruption gives Iraq a bad image. His response has been to keep all the work of the Commission secret. He said his agency would only discuss cases after people have been found guilty. That rarely happens in Iraq. In 2008 only 300 officials were charged with corruption, and out of those 87 were found guilty. All were low-level officers. No high-level officials have ever had to go to court. That’s largely because of Article 136, a hold over from the Saddam period that allows ministers to stop any case from going to trial. This has consistently been used to stop corruption investigations. The Amnesty Law passed in 2008 that was supposed to foster reconciliation between Shiites and Sunnis has also been used to stop hundreds of corruption cases. The Commission on Public Integrity said it had to drop half of its investigations as a result of the law. By the end of 2008 the Prime Minister pardoned 1,023 government workers. Those included a group of Interior Ministry officers that were collecting salaries of 50,000 fake policemen, and Defense Ministry officials that skimmed money off of arms sales to Iraq. Maliki’s position is that corruption is all the result of Saddam Hussein, and would like to have the issue quietly disappear.
The International Monetary Fund (IMF) has also criticized Iraq’s fight with graft and fraud. The IMF has an agreement with Iraq to reduce its debt that includes better accounting of its oil profits. In 2008 the IMF said that Baghdad had not moved forward on this, and did not have a plan on how to create greater transparency. In December the organization said that Iraq had not done enough to fight corruption in the petroleum sector as a result.
The U.S. has often said it is committed to fighting corruption in Iraq, and has several programs to do so, but that appears to be more rhetoric than reality. The U.S. embassy in Baghdad has an anti-corruption coordinator, but there have been ten of those since the office was created. On average they have only served six months in Iraq, with the latest one just arriving in the country. That provides no continuity in effort. In May 2008, two State Department officials who worked in Iraq on this task said that the U.S. was never committed to the fight. The Americans have also stopped some investigations because of political concerns. A U.S. official told Reuters in December 2008 that if the U.S. or Baghdad really went after corruption, it could bring down the government because of the high officials that would be implicated.
Corruption has taken a great toll on Iraq. The former head of the Public Integrity Commission said that $13 billion had been lost in the reconstruction effort. The agency found oil workers in Basra stealing up to 500,000 barrels of oil a day in early 2008. No one of standing has been held accountable for these crimes. Instead, Prime Minister Maliki has attempted to silence the investigations fearing the bad image it creates for his country. That hinders development in a country that has mass unemployment and poverty despite its oil wealth, and undermines the public’s belief in the government. This was seen in the recent January 2009 provincial elections where corruption was a major issue. With no leadership from either the United States or Baghdad, this problem will continue to fester.
SOURCES
Adhoob, Salam, “An Inside View of the ‘Second Insurgency’: How Corruption and Waste Are Undermining the U.S. Mission in Iraq,” Senate Democratic Policy Committee Hearing, 9/22/08
Aswat al-Iraq, “Iraq among countries with highest levels of corruption – report,” 9/23/08
Brinkley, Joel, “Iraq quietly tackles rampant corruption,” San Francisco Chronicle, 1/24/09
Flahert, Anne, “Ex-officials: Bush admin. ignored Iraq corruption,” Associated Press, 5/13/08
Glanz, James and Mohammed, Riyadh, “Premier of Iraq Is Quietly Firing Fraud Monitors,” New York Times, 11/18/08
Human Rights Watch, “The Quality of Justice, Failings of Iraq’s Central Criminal Court,” December 2008
O’Hanlon, Michael and Campbell, Jason, “Iraq Index,” Brookings Institution, 11/20/08
Ryan, Missy, “U.S. Says Iraq Fails to Tackle Corrupt High Officials,” Reuters, 12/19/08
Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 10/30/08
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
U.S. Embassy, “Review of Anticorruption Efforts in Iraq Working Draft,” 2007
Iraq has three offices that are tasked with stopping corruption. Those are the inspector generals, the Board of Supreme Audit, and the Commission on Public Integrity. The Coalition Provisional Authority (CPA) created the inspector generals in 2004. They were fashioned after the investigative bodies that work in the United States government. There is one inspector general for each Iraqi ministry and agency. The Board of Supreme Audit is run by Dr. Abdul Basit, and looks into the government’s finances. It is similar to the American Government Accountability Office. The third agency is the Commission on Public Integrity led by Judge Raheem al-Ogaili. It was created by the CPA as well, and is an independent group that is tasked with investigating corruption throughout the government.
Prime Minister Nouri al-Maliki declared 2008 the year of fighting corruption, but SIGIR found little evidence of that. SIGIR said that the Board of Audit was the only reliable anti-corruption agency, and provided the best information. The inspector generals are caught in the middle of a controversy. Since 2008 six have been fired, but only a few of those have been replaced, leaving those agencies and ministries with no real oversight. The government claims they were not doing their job, but critics claim Prime Minister Maliki removed them for political reasons. Judge Ogaili of the Public Integrity Commission was definitely a political appointee. He took over from Judge Radhi Hamza al-Radhi who actively pursued corruption cases, but was constantly foiled by ministers, Maliki, and sometimes by the United States. In 2007 Judge Radhi fled Iraq due to threats. His successor was Judge Ogaili. He has been in office for over a year but has never been confirmed by parliament. The judge has said that corruption gives Iraq a bad image. His response has been to keep all the work of the Commission secret. He said his agency would only discuss cases after people have been found guilty. That rarely happens in Iraq. In 2008 only 300 officials were charged with corruption, and out of those 87 were found guilty. All were low-level officers. No high-level officials have ever had to go to court. That’s largely because of Article 136, a hold over from the Saddam period that allows ministers to stop any case from going to trial. This has consistently been used to stop corruption investigations. The Amnesty Law passed in 2008 that was supposed to foster reconciliation between Shiites and Sunnis has also been used to stop hundreds of corruption cases. The Commission on Public Integrity said it had to drop half of its investigations as a result of the law. By the end of 2008 the Prime Minister pardoned 1,023 government workers. Those included a group of Interior Ministry officers that were collecting salaries of 50,000 fake policemen, and Defense Ministry officials that skimmed money off of arms sales to Iraq. Maliki’s position is that corruption is all the result of Saddam Hussein, and would like to have the issue quietly disappear.
The International Monetary Fund (IMF) has also criticized Iraq’s fight with graft and fraud. The IMF has an agreement with Iraq to reduce its debt that includes better accounting of its oil profits. In 2008 the IMF said that Baghdad had not moved forward on this, and did not have a plan on how to create greater transparency. In December the organization said that Iraq had not done enough to fight corruption in the petroleum sector as a result.
The U.S. has often said it is committed to fighting corruption in Iraq, and has several programs to do so, but that appears to be more rhetoric than reality. The U.S. embassy in Baghdad has an anti-corruption coordinator, but there have been ten of those since the office was created. On average they have only served six months in Iraq, with the latest one just arriving in the country. That provides no continuity in effort. In May 2008, two State Department officials who worked in Iraq on this task said that the U.S. was never committed to the fight. The Americans have also stopped some investigations because of political concerns. A U.S. official told Reuters in December 2008 that if the U.S. or Baghdad really went after corruption, it could bring down the government because of the high officials that would be implicated.
Corruption has taken a great toll on Iraq. The former head of the Public Integrity Commission said that $13 billion had been lost in the reconstruction effort. The agency found oil workers in Basra stealing up to 500,000 barrels of oil a day in early 2008. No one of standing has been held accountable for these crimes. Instead, Prime Minister Maliki has attempted to silence the investigations fearing the bad image it creates for his country. That hinders development in a country that has mass unemployment and poverty despite its oil wealth, and undermines the public’s belief in the government. This was seen in the recent January 2009 provincial elections where corruption was a major issue. With no leadership from either the United States or Baghdad, this problem will continue to fester.
SOURCES
Adhoob, Salam, “An Inside View of the ‘Second Insurgency’: How Corruption and Waste Are Undermining the U.S. Mission in Iraq,” Senate Democratic Policy Committee Hearing, 9/22/08
Aswat al-Iraq, “Iraq among countries with highest levels of corruption – report,” 9/23/08
Brinkley, Joel, “Iraq quietly tackles rampant corruption,” San Francisco Chronicle, 1/24/09
Flahert, Anne, “Ex-officials: Bush admin. ignored Iraq corruption,” Associated Press, 5/13/08
Glanz, James and Mohammed, Riyadh, “Premier of Iraq Is Quietly Firing Fraud Monitors,” New York Times, 11/18/08
Human Rights Watch, “The Quality of Justice, Failings of Iraq’s Central Criminal Court,” December 2008
O’Hanlon, Michael and Campbell, Jason, “Iraq Index,” Brookings Institution, 11/20/08
Ryan, Missy, “U.S. Says Iraq Fails to Tackle Corrupt High Officials,” Reuters, 12/19/08
Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 10/30/08
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
U.S. Embassy, “Review of Anticorruption Efforts in Iraq Working Draft,” 2007
Thursday, February 12, 2009
Government Still Dominates Iraq’s Economy
In the recent quarterly report to Congress by the Special Inspector General for Iraq Reconstruction (SIGIR), there is an interview with Planning Minister Ali Baban. He noted that because Iraq lacks a strong business sector, and foreign investment has stayed away due to the violence, Baghdad plays the central role in the growth and development of the economy. This is despite the lofty goals of the Coalition Provisional Authority (CPA) that wanted to privatize Iraq and usher in free market reforms after the U.S. invasion. Saddam ran the country on a centralized, socialist model, so the effects of the CPA’s program was to shut down state run businesses and leave thousands of Iraqis out of work. Since then the government is still the largest employer in the country.
Lack of jobs remains a massive problem in Iraq today. Minister Baban said that unemployment stood at 35-40%. The SIGIR estimates that with underemployment that figure could rise to 60%. A 2008 United Nations’ survey of Iraqis from the end of 2007 found that the government still dominated the job market as a result because it is the only source of a steady paycheck. Unfortunately, many of these positions were obtained through bribes, party affiliation, and patronage. There are often reports of Iraqis having to pay to join the police for example. The Tribal Support Councils formed by Prime Minister Nouri al-Maliki are a huge patronage system as each council is given the power to hire people for the organization as well as into the local security forces.
Below is a breakdown of jobs in fifteen of Iraq’s provinces plus Kurdistan based upon the U.N. survey. In all but three provinces, Babil, Ninewa, and Wasit, the government was the largest employer. In Najaf public sector jobs were a tie with self-employment in a non-farm industry. In Muthanna, Anbar, Dhi Qar, Basra, and Kurdistan the government provided 40% or more of the jobs with Kurdistan at the top with 50%. Self-employed but not on a farm was the second largest job source in eleven provinces and Kurdistan, followed by farming in three governorates. In Muthanna unskilled workers was the second source of work.
Two Largest Employers By Province
Kurdistan: 50% work for governmet, 20% self-employed non-farm
Basra: 46% work for government, 24% self-employed non-farm
Dhi Qar: 43% work for government, 29% self-employed non-farm
Anbar: 40% work for government, 22% self-employed non-farm
Muthanna: 40% work for government, 23% non-skilled labor
Salahaddin: 38% work for government, 32% self-employed farming
Baghdad: 38% work for government, 28% self-employed non-farm
Qadisiyah: 37% work for government, 15% self-employed non-farm
Karbala: 36% work for government, 34% self-employed non-farm
Tamim: 36% work for government, 30% self-employed non-farm
Maysan: 34% work for government, 25% self-employed non-farm
Diyala: 33% work for government, 20% self-employed non-farm
Najaf: 29% work for government, 29% self-employed non-farm
Babil: 33% self-employed farming, 26% work for government
Ninewa: 28% self-employed non-farm, 24% work for government
Wasit: 26% self-employed farming, 23% work for government
SOURCES
Cave, Damien, “Nonstop Theft and Bribery Stagger Iraq,” New York Times, 12/2/07
Fairweather, Jack, “Iraqi state enterprises warily reopen,” Financial Times, 6/16/08
Middle East Online, “Iraqi professionals forced to take small jobs,” Middle East Online, 2/21/08
Rubin, Alissa, “Maliki Pushes for Election Gains, Despite Fears,” New York Times, 1/26/09
Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 10/30/08
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
Lack of jobs remains a massive problem in Iraq today. Minister Baban said that unemployment stood at 35-40%. The SIGIR estimates that with underemployment that figure could rise to 60%. A 2008 United Nations’ survey of Iraqis from the end of 2007 found that the government still dominated the job market as a result because it is the only source of a steady paycheck. Unfortunately, many of these positions were obtained through bribes, party affiliation, and patronage. There are often reports of Iraqis having to pay to join the police for example. The Tribal Support Councils formed by Prime Minister Nouri al-Maliki are a huge patronage system as each council is given the power to hire people for the organization as well as into the local security forces.
Below is a breakdown of jobs in fifteen of Iraq’s provinces plus Kurdistan based upon the U.N. survey. In all but three provinces, Babil, Ninewa, and Wasit, the government was the largest employer. In Najaf public sector jobs were a tie with self-employment in a non-farm industry. In Muthanna, Anbar, Dhi Qar, Basra, and Kurdistan the government provided 40% or more of the jobs with Kurdistan at the top with 50%. Self-employed but not on a farm was the second largest job source in eleven provinces and Kurdistan, followed by farming in three governorates. In Muthanna unskilled workers was the second source of work.
Two Largest Employers By Province
Kurdistan: 50% work for governmet, 20% self-employed non-farm
Basra: 46% work for government, 24% self-employed non-farm
Dhi Qar: 43% work for government, 29% self-employed non-farm
Anbar: 40% work for government, 22% self-employed non-farm
Muthanna: 40% work for government, 23% non-skilled labor
Salahaddin: 38% work for government, 32% self-employed farming
Baghdad: 38% work for government, 28% self-employed non-farm
Qadisiyah: 37% work for government, 15% self-employed non-farm
Karbala: 36% work for government, 34% self-employed non-farm
Tamim: 36% work for government, 30% self-employed non-farm
Maysan: 34% work for government, 25% self-employed non-farm
Diyala: 33% work for government, 20% self-employed non-farm
Najaf: 29% work for government, 29% self-employed non-farm
Babil: 33% self-employed farming, 26% work for government
Ninewa: 28% self-employed non-farm, 24% work for government
Wasit: 26% self-employed farming, 23% work for government
SOURCES
Cave, Damien, “Nonstop Theft and Bribery Stagger Iraq,” New York Times, 12/2/07
Fairweather, Jack, “Iraqi state enterprises warily reopen,” Financial Times, 6/16/08
Middle East Online, “Iraqi professionals forced to take small jobs,” Middle East Online, 2/21/08
Rubin, Alissa, “Maliki Pushes for Election Gains, Despite Fears,” New York Times, 1/26/09
Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 10/30/08
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
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