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Can Iraq Avert Economic Disaster?    DinarDailyUpdates?bg=330099&fg=FFFFFF&anim=1

Can Iraq Avert Economic Disaster?

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Can Iraq Avert Economic Disaster?    Empty Can Iraq Avert Economic Disaster?

Post by Ponee Mon Nov 16, 2015 10:09 am

Can Iraq Avert Economic Disaster?    Iraqi_women_shuck_corn_for_bread_in_the_village_of_Al_Kahn_in_Kirkuk_Iraq
The rise of the Islamic State (ISIS, ISIL, Daesh) certainly represented a failure of the Iraqi military, its intelligence service, and the state more broadly. But even at the worst of times, Iraqis were confident that they would eventually push back and eventually defeat the Islamic State. While Iraqis celebrate recent victories on the Ramadi front and Kurds have taken the town of Sinjar and cut the highway between Raqqa and Mosul, many months of fighting remain.

There are already discussions inside Iraq about how to reintegrate territories recaptured by the Islamic State. In Baghdad, I met by chance Sunni tribal representatives from Al-Anbar, who were returning to make their case for a temporary council to manage Al-Anbar prior to special elections.

But Iraq now faces a problem as daunting as that represented by the Islamic State, but one that will be far harder to solve. When the United States invaded and occupied Iraq in 2003, the country was home to slightly more than 25 million people. Today, its population is more than 35 million. By 2025, it will be more than 45 million. Not all Iraqi women work (although many do) and so, in essence, this means that Prime Minister Haider al-Abadi’s government must not only address the economic reconstruction of those territories liberated from ISIS, but also plan to add more than 15 million new jobs to the economy.

Traditionally, it wasthe dream of every Iraqi family to send their child to the university and then have them find a job as a civil servant somewhere in Iraq’s huge, bloated bureaucracy. In many ways, that’s still the culture of the country. During the U.S. occupation, Coalition Provisional Authority administrator L. Paul Bremer sought to promote free market reforms. He was right, but he could not accomplish his goals.

Iraqis blamed Saddam Hussein for freezing them in time, but few had any concept of just how far the rest of the world advanced. Protectionism and state control of industry was simply too embedded in Iraqi culture. Add resentment about occupation (and the short period of that occupation), and it was a bridge too far.

When Bremer appointed Ayad Allawi to be interim prime minister, and subsequently under elected Prime Ministers Ibrahim Jafaari and Nouri al-Maliki, the high price of oil undercut the prerogative for reform. Prime Minister Haider al-Abadi has a much better grasp of economic and technocratic issues and understands fully the need to reform the economy. He also understands that he has no choice. The forthcoming year’s budget is being calculated at an assumed oil price of $45/barrel, not the $100+ that Maliki enjoyed. Abadi is being undercut, however, by factionalism within the Da`wa Party. While Maliki could rule with a largely unified block, Abadi must contend with parliamentarians who owe their seats to Maliki. Even if Maliki is not able to stage a comeback, his machinations are enough to undercut Abadi’s efforts. Abadi also missed a chance to capitalize on momentum in the wake of protests for reform in Baghdad, and Grand Ayatollah Ali Sistani’s call likewise.

Herein lies the challenge for the United States: Iraq is desperate for business and investment. It is working closely with the World Bank and the International Monetary Fund to reform its systems, and processes that took months and reams of paper can now, in theory, be completed online in 15 minutes. Corruption remains a problem but it is less severe than in Iraqi Kurdistan. And while security is a problem in Baghdad, southern Iraq is safe and secure.

And while Americans can debate whether or not it was wise to withdraw in 2011, four years after the U.S. departure, Iraqis are anxious for a renewed partnership absent the shadow of occupation. Iraqi manufacturers resent greatly Iran’s tendency to dump cheap and inferior products into the Iraqi market, thereby undercutting their own development.

The Chinese are entering in greater numbers, having recognized what Americans do not: there is real opportunity. The Iraqis, however, are wise to how the Chinese have operated in Africa and elsewhere, bringing in their own labor, exporting profits, and leaving little structural improvement behind. Not surprisingly, Baghdad wants alternatives. And, while the Shi’ites in southern Iraq especially would welcome Russian businessmen, they too have their hand extended to the United States as well. There is profound frustration with the White House for turning its back on any real partnership with the country.

That Obama is disinterested in Iraq is a simple fact at this point, privately admitted by people within his own administration. President Bush spoke with the Iraqi prime minister on a weekly basis. Iraqis suggest that direct engagement with Obama occurs far less frequently.

The populist Republican candidates like Obama seem to want to ignore Iraq, and even those who say the right thing will likely not want to involve themselves too deeply in what their political advisors will tell them can only hurt and not help their poll numbers. That said, perhaps they should consider what will happen if Iraq cannot produce one million new jobs a year for the next decade. The reverberations of failing on that front will reverberate widely.


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