«Foreign Affairs» Repair Bgdad..hl can the Iraqi economy to come back again?

April 23, 2016 in the media center

«Foreign Affairs» magazine dealt with in a report published by the economic conditions in Iraq, which is suffering in difficult conditions at the momentAnd he wondered what the American Journal of whether the country who has been a US invasion in 2003, was able to return the country 's economy to its previous status again or not.

Bleak future

The report said «touted expectations about Iraq's future as bleak; Vankhvadat oil prices devastated the financial sector in the country, which had already collapsed because of the war against the organization of the Islamic State (Daash) and a flood of refugees internally displaced persons».

The report continued by saying that despite the fact that the Iraqi security forces and its subsidiaries had regained strength against the Daash, the uprooting of the organization entirely will be a long and expensive task. This comes at a time when all of Iraq's vital oil pipelines and infrastructure exposed to damage, and in some cases total destruction. This has contributed to reduced domestic fuel supply and reduce oil exports.

However, according to the report, there is a greater threat threatens the stability and long-term prosperity in Iraq, a public sector bloated and inefficient. While devouring the Iraqi bureaucracy, the bulk of the country's resources, but it has failed to provide basic services and infrastructure or creating real economic development.

To demonstrate, the report monitored some statistics that indicate that it was spending 70% of the country's budget on the salaries of state employees who do not provide few services. According to the appearance of Saleh, an economic adviser to Iraqi Prime Minister «Haider al-Abadi», the workers in the public sector, the production of an average of only 15 minutes per day. The state-owned factories, which have outdated equipment, but does not have good services for maintenance, producing only a little, although they outsource more workers are greater than their need.

The specter of bankruptcy

The report went on saying «that in more prosperous times, served the state well-being of the Iraqi good enough for all, despite the lack of effectiveness. By giving Iraqi government jobs, and food rations, and Energy supported include fuel and electricity ».

At the same time, the political elites have used patronage system to enhance their strength, but in the light of the current economic crisis, this system no longer exists. Without serious reform, it could bankrupt the government sector to the country soon, the report warned.

The report also pointed out that the welfare states accustomed to economies based on resources, Iraq's financial problems are known widely, but it is surprising that the current challenges are innumerable in Iraq, have created a unique window for meaningful reforms to cut government waste, and the stability of state revenue and to promote private sector growth, and promoting productivity, and thus put the country on a long-term path of economic health.

Unlike governments that rely primarily on tax revenues, the report stated that Iraq had some of the controls on excessive public spending. The majority of operating income in Baghdad come from the oil industry, and during periods of high oil prices, the demand for low-spending reforms.
But now, after having collapsed the global oil market, it has exceeded spending gains, making the calls for a more robust reform.

In 2015, Iraq has suffered a budget deficit of $ 21 billion, and the deficit this year could reach $ 26 billion. And forced interest in issuing bonds in the international market, Baghdad to close the budget gap currency reserves.

It was the Ctaattiyat- monitored according to the report figures - fell from $ 75 billion in May 2014 up to $ 61 billion in October (October) 2015, and is expected to drop to $ 43 billion by the end of 2016.

Abadi and opportunities for reform

The report considered that the dire financial situation in Iraq gives the opportunity of reform measures to be more substantial and effective.

The report said «the urgent need to put Iraq's current offer cover for Ebadi to act quickly, decisively; to address the imbalance of government, rather than just superficial reforms that weaken partisan interests without permanent consequences».

The report said that the cessation of government waste in Iraq is more likely to continue politically than ever; the popular support is strong for reform comes on a large scale.

The protests against the absurdity of the government, is not new in Iraq, but it has taken more importance in recent times, partly due to the support of influential religious figures, such as «Muqtada al-Sadr» who personally led a sit-in in the Green Zone in Baghdad in late March Abbadi calls for more efforts to fight corruption.

Even the «Grand Ayatollah Ali al-Sistani», which was not accustomed to comment on the affairs of state, the government has encouraged the public to make more effort to combat corruption.

Can the Iraqi prime minister, the report said, to use public pressure and political cover from the religious leaders, to help in the marketing of wider reforms of the government sector to the Iraqi public. Reforms comes as a «bitter medicine» which must be swallowed Iraq in order to cure the rampant corruption of the treatment.

International loans

At another point, the report said, «The financial problems in the Iraqi government to give international financial institutions more power to enforce the terms of aid and rescue packages, have committed to the International Monetary Fund has already short-term-funded $ 1.2 billion, and has the approval of the preliminary arrangements backup amounted to $ 15 billion over the next three years. This funding will be linked to strict and concrete terms supervised by staff monitoring program of the International Monetary Fund. »

For all these reasons, the report considered that the conditions necessary for reform are good despite the difficulties in Iraq.

The report suggests that calculates the Iraqi government that it tried to implement austerity measures, but they were not sufficient at all yet.

Government salaries reduced by only 3%. The report described the recent Baghdad experience with import duties ranging from 5-35% a failure. In fact, the daily customs revenues at the border crossing between Iraq and Kuwait declined from 500 thousand dollars to zero.

Diversified economy

While the report described the conversion nervous statist regime in Iraq to a diversified vibrant economy, the big task, he said he can do the job. The report said «It can Ebadi to use the enormous public pressure and political cover from religious leaders; to market, not just anti-corruption measures, but also the reform of the public sector more broadly. Iraqi people may find these measures bitter medicine, but the fate of the country depends on it».

According to the report, the Iraqi cumbersome bureaucracy does not encourage businessmen and investors inside and outside the country. Valibde in (or close) the company is costly and time consuming, as is the process of getting visas for workers or foreign investors seeking opportunities. The Iraqi capital structure is flexible. And cost, and uncertainty associated with the projects for making government work more attractive, and comes to reduce this cost, and uncertainty as catalysts proposed by the report is to reduce the government sector.

The report called for Iraq to follow up minor amendments to the 2007 law firms in the country. As the government can also do more to encourage entrepreneurship. Emerging companies and investment firms have begun in the early stage of prosperity throughout the Middle East.

Functional rehabilitation

At the same time, the report called on the Iraqi government to follow up the largest investment in its people, Years of isolation from the rest of the world, left the Iraqis less skilled, and the current policies have artificially increases the number of jobs that go to the Iraqis, but the final impact of these measures backfire.

Companies are required to hire less-skilled Iraqi workers and high cost. As a result, companies pay eventually overvalued for Iraqis in functions, such as security. And the added cost of these employees pass ultimately to the customer: the Iraqi government.

Therefore, the report noted that instead of wasteful spending on jobs that require low skills, should be on the Iraqi government to launch a program of human development designed to give citizens the good jobs administrative skills that will prepare them for the real economy in the world.

Finally, the government can at least work to get the best of the spending on the salaries of its staff returns by investing in infrastructure assets.

The Iraqi government, as the report pointed out, is struggling to implement large-scale projects, such as building power plants, oil refineries, but can the trend toward smaller initiatives and more feasible in all parts of the country.