The looming Iraq (economic) disaster

Written on May 9th, 2015 in politics Comments Off

Published on Al-Ahram weekly online, by Salah Nasrawi, May 7, 2015.

As Iraq remains bogged down with the war against IS, another catastrophe could be on the horizon.

The Iraqi government is considering a set of measures to deal with the crushing financial crisis, which many fear could lead to economic collapse and accelerate the breakup of the divided and war-torn country.  

Under the plans to stave off default, the government of Haider Al-Abadi will seek foreign loans, issue bonds and sell parts of Iraq’s huge oil reserves. It also plans to overhaul the economy and get rid of the socialist-era sectors inherited from Saddam Hussein’s era.

But doubts abound that an emergency fund based on international credits or a government bond-selling programme would ease the burden on the Iraqi economy, hard hit by lower oil price

Selling the country’s national resources could also trigger popular resentment against the government’s oil policies and gives credence to claims that Iraq’s invasion in 2003 was to improve Western access to Iraqi oil.

Falling oil prices since last year has wrecked Iraq’s state finances. Iraq’s 2015 annual budget has projected a deficit of some $25 billion and forced the government to struggle to balance and fund its public spending and stabilize the national currency.

Under the budget law the government is to meet part of the deficit by introducing new taxes, levies and duties. Obligatory saving accounts are also to be opened for senior government officials to deposit part of their salaries. The government also decided to turn to the Central Bank reserves.

Iraq’s government, however, has not disclosed full details about its plans to deal with the financial crisis. Prime Minister Al-Abadi has even been insisting that Iraq is not facing a default but only financial difficulties due to plummeting oil prices … //

… At the same time, Iraq’s bill for paying foreign companies operating in Iraq under service contracts regime, created by the US occupation authority following the 2003 invasion, based on a fixed dollar fee per unit, has ballooned just as its oil revenues fall.

The Iraqi financial crisis is widely seen as largely the result of the massive corruption and economic mismanagement of its political elite and not the plunge in oil prices.

While Iraq remains mired in sectarian strife, an economic crash will be detrimental to the country’s future. There would likely be ramifications that would significantly impact the war against IS and the country’s unity

(full text).

Links:

UK general elections:

Greece Says It Will Make IMF Payment Next Week As Stalemate Continues, on naked capitalism, by Yves Smith, May 8, 2015: a brief update on the negotiations between Greece and its creditors …;

Why Occupy? on Dissident Voice, by Edward Martin and Mateo Pimentel, May 8, 2015: First in a four-part series;

Belvedere Management and its $16Bn: Now Looking More Like a Huge Collapsing Scam, on naked capitalism, May 8, 2015: back in March, Offshore Alert made some very aggressive but plausible-looking claims …;

Published on Al-Ahram weekly online, May 7, 2015:

  • Workers’ rights, by Khaled Dawoud: a court ruling criminalising strike action because it contravenes Islamic law is denounced as an attack on constitutional guaranteed rights;
  • Attack on Aden, by Medhat Al-Zahed: a ground offensive in conjunction with the aerial and naval operations in Yemen is underway but uncertainties remain;
  • Redrawing the map, by Dina Ezzat: where the Saudi-Iranian tug of war is taking the region. The proxy war between Saudi Arabia and Iran escalated on Tuesday afternoon when Iranian backed Yemeni Houthis attacked the Saudi border town of Najran;
  • Islamic State Inc, by Bassel Oudat in Damascus: many Syrians now view the Islamic State as a company whose shareholders include the Syrian regime, writes Bassel Oudat in Damascus;

Skeletons of the Past, Helping Europe’s War Dead Find a Final Resting Place, on Spiegel Online International, by Alexander Smoltczyk, May 7, 2015 (Photo Gallery): with excavations of Europe’s killing fields still unearthing the mortal remains of thousands of fallen soldiers, World War II still isn’t over for the people who find them, identify them and give them a proper burial;

Iceland considers withdrawing EU application – PM, on Russia Today RT, May 6, 2015;

Von und mit Andreas von Bülow:

US State Dept. sued over Henry Kissinger phone records, on Russia Today RT, March 5, 2015: Kissinger warns of West’s ‘fatal mistake’ that may lead to new Cold War.

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