Bolg #3: Iraq’s Oil Based Economy

IRAQ

This is the Iraq fact-book page from the Central Intelligence Agency. It contains all the basic information about Iraq like history, geography, population, and so on. A notable fact for example is the high percentage of people under 14 years old which is 39.88%, just like must Arab countries, Iraq has a youth majority. Unfortunately, those youths are unable to enjoy their early years due to two major facts, lack of security, and shaky economy.

When we take a look at the Middle East region, it is hard to see a country that suffered more than Iraq. Since its independence from Britain in 1983, they Iraqis have always encountered hardships and instability. For instance, between 1980 to 1988, Iraq, under the dictator Saddam Hussein, engaged in a costly war with the Islamic Republic of Iran. Only two years after the end of the Iran-Iraq war, Saddam decided to invade another neighboring country which was Kuwait. The US-led UN coalition forces intervened and forced the Iraqi troops to leave Kuwait ending what was called the Gulf War which lasted for about seven months. As a consequences of the government continues violence at that time, it was not until 2011 when the US forces withdraw from Iraq. In terms of economy, the abundance of oil in Iraq allowed it to dominate the economy for decades. However, oil is also a major cause of conflict between the Iraqi Government and autonomous Kurdistan Regional Government (KRG) in Iraq’s Kurdistan region. The internal disagreement disabled many improvement plans from the two sides as the foreign energy companies hesitate to sign contracts with any of the two governments, and if they did, they tend to leave shortly after they discover the unpleasant work environment. Moreover, Foreign direct investment is believed to be among the Iraqi government objectives, however, many obstacles Impede achieving such goal such as the weak political system, corruption, and the lack of security and societal stability.

 

Reflection:

Obviously, Iraq is a member of the organization of Petroleum Exporting Countries (OPEC) as one of the largest oil reserves in the world. However, taking a look at its poverty level would not give such indication, I think during Saddam’s era things were better economically and politically, however his tyranny destroyed the country, and the curse of history shall follow him forever. I always wondered from the large numbers of Iraqi migrants all around the world, starting from Saddam’s government in 1979, if not before, many Iraqis where forced to leave their countries due to economic, or political reasons like those who were exiled due to their religious or political affiliation. Nowadays, ISIS is forcing them to flee from the occupied cities as well, if not from the country as whole. I know some Iraqis who migrated, forcibly or voluntarily, to countries like Germany, UK, and the U.S since the ba’athist regime era and never have the chance to return home until now because the situation has changed from bad to worse. When trying to consider what is causing Iraq to be in such situation, I could not find any other answer that is more convincing than oil. Oil curse has an existence in Iraq with an additional dimension, it is triggering the greed of others like ISIS now and the U.S before them. I think without oil, Iraq might have been better off.

Iraq’s Economic Outlook- Spring 2016

This outlook from the World bank Organization explains the trends of the Iraqi economy in the fiscal year 2016. It gives details about some key economic indicators like the percentage of GDP growth and the inflation rate. It also compares 2016 to the previous two years as well as the first half of this year which shows negative outcomes so far.

The global oil price shock, and the rise of ISIS are two major events that have impeded the economy in Iraq starting from 2014. Many economical consequences emerged in the same year, such us the minimized governmental spending, especially on investment projects. Approximate contraction of 8.8% happened to the non-oil sector in that year while oil continued to show a notable rise produced by the southern oil fields that were far from ISIS hands. Moreover, with the increased political instability emerged the necessity to increase security-related expenditure which worsen the situation and added up to the fiscal deficit. Poverty doubled and is estimated to have reached 41.2% as a direct result. The next few years are expected to show more positive economic trends only under two conditions, if ISIS continued to loss power and control, and if the global oil prices recovered.

Reflection:

I just watched a clip from president Trump interview when he was talking about Iraq and said several times that the U.S is going to take the Iraqi oil because they are not a sovereign country in his opinion. What is distinctive about Mr. Trump is that he talks with absolute honest, I do not think that taking over the Iraqi oil is a new idea for the American government, indeed, it is the first time to be declared in such explicitly. I only wonder by what logic should we accept that, if it is a paycheck to the American occupation that overthrown Saddam, then we should look at the result, does it really created a better present and future for the Iraqis? I doubt it, but “to the victor belongs the spoil” as the current U.S president is suggesting.

Trump Iraqi oil

 

 

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