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IRAQ

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Area (sq.km)
437,072

Population
24,001,816 (July 2002 est.)

Capital
Baghdad

Currency
Iraqi dinar (IQD)

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Update No: 019 - (23/11/04)

National reconciliation after Fallujah
For a government which in August had seemed to be making efforts to move towards national reconciliation, the November offensive against the resistance stronghold of Fallujah marks a major turning point. The re-incorporation of baathist elements in the administration and security services and the offer of amnesty to rebels not involved in attacks against the civilian population were meant to pacify the Sunni Arabs, who are the main source of support for the insurgency. The assault on Fallujah represents the failure of such efforts. Whatever the military impact of the operation will turn out to be, it is clear that politically it was not a success. The base of support for Prime Minister Allawi among the Sunnis is now lower then ever and the operation was criticised by the main Shiite leaders too. The operation in Fallujah and the backlash to it exposed widespread sympathy for the rebels among Iraqi policemen and the government decided to sack thousands of them for dereliction of duty. The Committee of Muslim Scholars (the largest Sunni clerical association) threatened to call for an electoral boycott if the operation against Falljah was not halted. Moreover, the operation was criticised by the UN Secretary General too, out of fear that it might compromise the plans to carry out general elections at the end of January. 

Turkey in, Iran out
November was marked also by the reopening of the rift with Iran, as the Iraqi Defence Minister accused that country once again of supporting the insurgency and meddling in Iraq's affair. At the same time, the Iraqi government has redoubled its efforts to befriend Turkey, which had lately expressed irritation at the behaviour of the Iraqi Kurds. Turkey has now been promised a share in Iraq's oil projects and has been granted permission to open branches of its banks. 

A more realistic assessment makes way
One positive sign in recent months was that common criminality appears to be declining, although many Iraqis failed to notice due to the activity of politically motivated gunmen. The popularity of the government however continues to decline not only due to the Falluja operation, but also due to its inability to deliver tangible improvements in many key fields. The ministry for electricity for example admitted in November that Iraqis citizens will continue to experience power blackouts till the end of this decade at least. As the US elections are now over, some more realistic assessments of the prospect of economic rehabilitation are beginning to emerge. Now even US officials admit that the oil production target of 3 million bpd, fixed for this year, will not be met until next year. Some analysts believe even this assessment is too optimistic. At present the average production is 2.3 million bpd, according to US Energy Information Administration, that is lower than the 2.8 million claimed by the government and by the US Army. The security forces remain unable to prevent attacks against the oil infrastructure. 250 attacks against the pipelines have taken place so far, including a major one at the beginning of November in the north, which caused a sharp reduction in the supplies towards Iraq's largest oil refinery. Exports through Turkey were disrupted too. 

Tackling the deficit issue
Under pressure from the IMF and the World Bank, the Iraqi government has finally come up with a plan to phase out food and fuel subsidies. At present the Iraqi government spends US$8 billion in subsidies, of which US$2.4 billion is just to import goods that it then distributes. Next year's budget is projected to double to US$30.4 billion, while revenue is projected at US$23.7 billion, which implies a US6.7 billion deficit, hence the urgency to reduce the budget, even if the move will likely prove very unpopular. Oil is expected to contribute 93% of a projected US$19.4 billion revenue, to which international help should add another US$4.3 billion. However, the budget is based on oil at US$26 a barrel, which is a very conservative estimate. The deficit, therefore, might actually disappear if oil prices stay high.

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FOREIGN ECONOMIC COOPERATION

Turkey, Iraq sign memorandum of understanding on economic cooperation

Turkish State Minister, Kursad Tuzmen, and Iraqi Oil Minister, Thamir Ghadban, signed a memorandum of understanding (MoU) after Turkey-Iraq 15th Term Joint Economic Commission (JEC) meeting, Anatolia News Agency reported
Tuzmen said: "This is the first JEC meeting which Iraq attended after the war. Decisions which were taken in this meeting will accelerate bilateral commercial and economic relations. Trade volume with Iraq is increasing each day."
"We have reached consensus with Iraq on security, customs, banking, bilateral cooperation and energy issues," noted Tuzmen. 
Meanwhile, Ghadban said that "the memorandum of understanding will be reflected on economic and commercial cooperation of two countries in coming days and it will also trigger cooperation."
"We have many projects in areas of transportation, service, infrastructure and industry. We will be very pleased to work with Turkish businessmen on these projects," Ghadban said. 
"Turkish business world is not stranger to Iraqi market. Turkish businessmen can contribute to development of Iraq by working together with Iraqi private sector and they can benefit from business opportunities in Iraq," he added.

 

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