Economic reform in Iraq (1-5)

9/22/2016 0:00

Adnan al-Janabi

Starting today published the "morning" in search of shaped parts of the Deputy researcher economic Adnan al-Janabi.

Find highlights the economic dilemmas in Iraq and propose appropriate solutions in the light of the current reform wave.


Before entering into the description «economic reform» required it must agree on the ultimate goal of the economic system that we want for Iraq.

Article (25) of the Constitution provides as follows: «The State shall ensure the reform of the Iraqi economy according to modern economic bases, in a way that ensures complete investment of its resources, diversifying its sources and encouraging and developing the private sector».

In Article 24, the text of the constitution to ensure freedom of movement of labor, goods and capital.

Word in the Ministry of Trade Act, which began in 2011, that of the duties of the ministry:
«Contribute to the development of the private sector and providing an appropriate environment through the conversion of public sector companies to the private sector in the light of the new orientation of the transition from command economy to a market economy» At the rationale for the legislation of that law refer to targeting the transition to a market economy.

Since the change in 2003 to today there are repeated calls to support the private sector, and the transition to a market economy and economic reform.

Provided the advisers in 2014 «strategic development of the private: 2014-2030 Sector», which is the result of efforts involving the World Bank and the United Nations Development.

The initiation of these studies since 2009. The committees presented at the Council of Ministers similar reports in 2015.

And held various meetings and seminars outside the framework of the state and within it, including contributions to the committees of the House of Representatives, to characterize the desired economic reform, without reaching a unified vision of the ultimate goal of this «reform» or the nature of the economy, which want access to Iraq.

Worse yet, the process steps of this shift are still non-existent, and did not go beyond setting «plans» and talk of «reform».

We have the research center and the Iraqi Studies (creator), and since 2007, a series of seminars and research and studies to arrive at the diagnosis of the following things:

First:the imbalance in the Iraqi economy.
Secondly, ways to overcome imbalance.
Third, the nature of the target economic system.

First: the imbalance in the Iraqi economy:

A dangerous imbalances in the Iraqi economy, which is shared by Iraq with all the rentier states, is caused by distortions stemming from the nature of the rentier state and that the most important features:

● prevailing income of the state is from the proceeds of oil.
Oil rents revenues come from abroad (exports), making the state is in need of a local productive sector Mayweather.
● Do not use the extractive oil sector only a marginal proportion of the workforce.
● The government is to be the recipient of the proceeds of the oil.

All researchers agree that the oil rentier states tend to centralized control (dictatorship) and inflation, state agencies and private agencies of repression, relying on parasitic activities Almatahh the state.

In Iraq, the deteriorating state institutions since the Iran-Iraq war began, and then the period of the siege, and spent the occupation in 2003, the rest of the state institutions in the absence of institutions, rampant corruption and increased the country's dependence on oil revenues, and decreased participation of the productive sectors, industrial and agricultural, in the national income.

B - The problem of Iraq, even after the fall in oil prices, it is not the scarcity of financial resources, but economic mismanagement.

C - it can be considered as the financial and administrative corruption of the worst phenomena resulting from the rentier state, dictatorship and the effects of the occupation of sectarian quotas, political and destruction of state institutions.

T - the new Iraq has inherited an economic system characterized by state capitalism under the socialist banner, which is state-owned companies (SOE) failed economically and state monopoly in the banking sector and inflation state programs for the support of corruption prevail in all its facilities.

It can not be written for economic reform success unless the elimination of financial and administrative corruption, and the liquidation of its resources and tools.

Secondly, ways to overcome imbalance:

States have the rentier representative (Representative) is not made available to the owner and the elders and the dictatorships of the possibility of difficult transition from the rentier state to state collection.

There are a lot of experiments and studies on the rentier income distribution in the form of a comprehensive basic income Universal Basic Income)). The experience of the State of Alaska are known, and the removal of rentier income of the reach of the government in the experience of Norway for example can take advantage Menh.olkn decisive solution and comprehensive is the application of universal basic income principles for all citizens, which has been studied or tested or applied in India, Namibia, Finland, Switzerland and the state of Ontario in Canada and the Netherlands France and others.

In summary, these studies and applications are given a basic income for all citizens equally. It is then possible to impose taxes on citizens according to their income to fund state services. In rentier states are all oil and gas revenues on the distribution of comprehensive income citizens equally essential.

The most important critique of the principle of universal basic income (UBI) is the difficulty of financing. However, the rentier states exceed these difficult by the fact that oil revenues comes from the sale of oil and gas to the outside, and other state resources are not compromised if the allocation of such rents or sections of it directly to all citizens equally.

A principle that stems from the application of Article 111 of the Constitution, which stipulates that the oil and gas belongs to the Iraqi people. And universal basic income guarantee the status of all citizens above the poverty line and concludes the state of corruption in government support programs and stir equation correlation between the rentier state and its inclination to dictatorship.

Third, the nature of the target economic system:

Regardless of nomenclature, there is a general understanding of the need to move from a planned economy to a market economy, the central, which relies primarily on the private sector.

This transition is not through committees of stakeholders in the central system run by the state bureaucracy staff, but in cooperation with the private sector itself and some international organizations.

The first of what it takes this transition is:

● liquidation of state-owned enterprises (.SOE) and other commercial activities such as fuel and stores singular filling stations.
● removing obstacles to private sector, especially the circles Registrar of Companies and the tax collection and classification of companies, and other obstacles.
● develop a comprehensive social security system, and the abolition of all types of government support (the ration card, electricity support, fuel subsidies) and the transition to universal basic income (UBI).