Iraqi economy blown by political storms

The political stability factor in all societies is an indicator of social and economic stability to a large extent , the political situation in Iraq has led since the fall of the Iraqi capital Baghdad under US occupation in 2003 to a state of insecurity and instability, where all the concepts upon which countries are established in the world have broken down and has become to seek economic growth and development.

Iraq has become after the entry of the US occupation forces into his own country, a country without authority ravaged by the hands of the occupation and the regional powers that are looking for their interests , and this stage produced Iraq without security, and economically collapsed because of the corruption, marginalization and lack of vision and Iraq’s economy does not meet the minimum aspirations of the ordinary citizen.

Here are reports to indicate that Iraq has lost almost 65% of the general budget rates after the collapse of oil prices since the summer of 2014, where as the Iraqi federal budget deficit was estimated by 21 billion, not to mention the confrontations with al Daash in which Iraq lost a large part of its revenue, and the corruption that was estimated by hundreds of billions and more than this , the constant waste of wealth in the Iraqi state institutions and suspicious deals and many others.

Today, Iraq apparently has entered a new phase after the protesters stormed the Green Zone, and the building of the Iraqi parliament, which is a very dangerous stage and is the most dangerous after US troops entered Baghdad in 2003, and portends for a very dangerous slider that may change the rules of the game in Iraq.

This phase established to further escalation in the future even though the demonstrators are moved backward and walked outside the Green Zone, it is a stage of a strong conflict between the parties, movements and even the characters,and split between the components, which are able to challenge the security forces, to reveal that the state and its organs are too weak to stand in the face of this component or that in future.

The economists said that what is happening in Baghdad reflected negatively on the economic reality that the last incident in the Green Zone and the storming of the parliament and the evolution of the security situation in the country prompted many people to withdraw their assets from some Iraqi banks, in anticipation of a possible collapse of the political system if the conditions of this tension continues .

And we saw how the Baghdad Operations Command declared and said in a statement that “all banks and banks in the capital of Baghdad are secured by special security forces in anticipation of any emergency could happen and to prevent the exploitation of the situation by armed gangs and thieves.”

the situations indicates that the capital Baghdad, has seen a lot of disruption of trade and business transactions until further notice waiting the political developments in the country.

Naturally these developments have had implications directly and indirectly on the Iraqi economy, and these events weigh heavily on the shoulders of the economy and the deepening of its crises which is today in the “recovery room” and the situation portends for what is worse.

Iraq has entered since nearly a year of negotiations with international financial institutions in order to gain confidence for loans and budget support under the heavy legacy of the financial obligations and Iraq made a Package for big financial and economic reforms to reduce government expenditures and won the confidence of these institutions and was promised with a financial support for more than five ten billion dollars.

Here, the important question is raised after the recent events, whether Iraq can to maintain this confidence?

The answer is associated with the conduct of security incidents and political tensions noting that Many of development aid may be hampered by the absence of political stability and security, corruption and the absence of reform and transparency in Iraq, and other forms of assistance, to be a new crisis added to the series of crises that kill the exhausted Iraqi economy , which is in dire need of such aid to be able to push the situation in the country forward.

As it is well known, that the approval of the international financial institutions to grant loans and financial aid, such as the International Monetary Fund, the World Bank and international financial institutions are linked for many conditions, including; the face of the deficit of the general budget for Iraq , the return flow of credit to the real estate sector, greater transparency of government operations, restructuring states institutions, expansion in the privatization, encourage foreign direct investment, and fiscal adjustment measures, reducing inflation in the context of efforts to combat inflation .

The watch of an international organization such as the International Monetary Fund to the financial and economic policies of Iraq, and the imposition of harsh requirement on the government may have a negative impact on the ordinary citizen, something which increases the complexity of the issue in the case of emerging sit inns rejecting the economic situation and tightening as a result of these conditions.

All of the above can not be done without the fight against corruption, and the existence of political stability and security, and Iraq today live rapid developments, as we got to expose the fragility of state institutions in imposing security and stability, not to mention the incapability in the face of corruption,

Recently IMF released a report in which IMF said “despite the growth, Iraq will increase the deficit as a result of a lack of oil revenues, which will reduce the government’s ability to spend,” noting that “the deficit will reach to about 4.75% and will reach 7.75% by the end of this year of GDP”

The report continued that “the costs of the war in Iraq, Libya, Syria and Yemen are still high, and the violence caused in the scarcity of food and other necessities and caused damage to infrastructure and institutions and increased inflation and weakened the savings and deteriorated financial centers of these countries.”

The corruption  and the lack of good governance in the Iraqi state institutions have produced to what we see today from a lack of security and political stability, and great popularity protests and lack of trust in the state and its institutions, not to mention the economic situation is grim, which threatens to further decline, which made the Iraqi government in the tight maneuver yard , and the situations may be developed in case of the absence of real guarantees for the people to reform to the dire consequences.

Amer Al-Omran

Rawabet Research and Strategic Studies Center