Iraqi Kurds in the face of financial crises ... and confidence!

Mir Rostom (Iraq) : At the foot of a rugged hill, 55 kilometers northeast of Erbil, the largest city in Iraqi Kurdistan, where the town of Mir Rostom extends over a vast area, vineyards of ripe grapes are ready for harvesting as a source of income for the northern region mired in economic crisis.

The inhabitants of the autonomous region returned to dependence on agriculture, which decreased work in it after the fall of Saddam Hussein's regime in 2003, when a government was formed, and the region was allocated with a large budget, so the majority of the population went to state jobs to secure monthly salaries.

Abdullah Hassan, a farmer in the town of Mir Rostam, asserts that it is "the first time" in years that grapes were picked from the town's farms, which were a major source of livelihood during the siege that was imposed on Iraq and ended with the US invasion of the country and the overthrow of Saddam Hussein.

According to the World Bank, this year Iraq faces an economic downturn due to the country's budget dependence on oil exports.

Regarding Kurdistan, which is witnessing persistent disagreements with the Baghdad government over the region's budget due to the sharp drop in oil prices and the outbreak of the Covid-19 epidemic, the situation has become more difficult.

The World Bank warns that "weaknesses that already exist in Iraq may lead to an economic collapse and a new wave of violence" in the country.

The economist Bilal Saeed believes that everything that happens from the collapse of the Kurdistan economy today is caused by the region’s authorities not relying on a viable economic system in order to ensure long-term prosperity.

Said says, told Agence France-Presse that "substantial financial resources have been achieved (for Kurdistan): a budget allocated by the (government) of Baghdad and revenues from the border crossings with Turkey and Iran."

"However, instead of investing in agricultural, industrial, health and tourism infrastructure, the regional government focused on developing the oil sector only," he added.

As with the central government, the creation of jobs in the public sector, albeit a large number of them to no avail, has led to inflation.

Today, in the Kurdistan region, where there are five million people, there are 1.2 million government employees, forty percent of whom are members of the army and the police. Their salaries cost more than $ 725 million a month.

Since last January, the territorial government has paid only six monthly salaries for civil service employees, and decided in June to reduce by up to 21% of salaries that exceed $ 250.

This means a decrease in the salary bill to 591 million dollars, but the accumulations are still continuing despite the region receiving 260 million dollars from the central government every month. And government employee salaries have become a problem for the central government in light of the lack of approval of the budget yet.

Civil servants in the regional governments and Baghdad have been receiving salaries for years in light of an escalating economic crisis, but the resources on which the country depends are in danger of running out, according to the London Institute of Economics.

A report issued by the institute indicated that "the dominant political parties (of the country) reward their loyalists with salaries, and use project contracts to enrich businessmen close to them. In the end, the ministries' budgets are being stolen to achieve partisan and personal gains."

"We are rich when the price of oil is high and poor when it is low," said the head of the investment committee in the Kurdistan region, Muhammad Shukri, adding, "I do not call this a healthy economy."

"In order to correct this, the committee granted 60 licenses to investors, worth 1.5 billion dollars, mostly in the agricultural and industrial sectors," he said.

Meanwhile, the authorities make promises to improve economic conditions and build large projects such as dams, roads and railways, and have called on foreign investors to participate in the projects.

At this time, the patience of local industrialists who are facing intense daily competition in the face of products flooding the market arriving from Turkey and Iran, the two neighbors whose currencies are constantly depreciating while the Iraqi dinar is still maintaining its value against the dollar.

Barz Rasoul, the owner of a steel company whose production reaches fifty thousand tons per month, calls for imposing an "increase in customs taxes and border control" to limit the flow of goods into the country, pointing to the need to support the agricultural sector.

Rasul, who recently dismantled 50 greenhouses, says, "It costs me 21 cents to produce a kilogram of cucumbers, while a kilogram of Iranian or Turkish cucumbers is sold for 13 cents in the markets of Erbil."

The Kurdistan Regional Parliament has not voted on a budget since 2014. Consequently, it is impossible to know the revenue from the border crossings, oil, or taxes, nor even the cost of expenses.

As an indication of the deteriorating economic situation, the Prime Minister of the region, Masrour Barzani, in early October addressed Parliament in this regard, for the first time since the formation of his government in July 2019.

He stressed that the debt reached 28.4 billion dollars, including 9 billion dollars, which is the value of unpaid salaries since 2014.

https://elaph.com/Web/Economics/2020/10/1308326.html