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Books on Iraq
REPUBLICAN REFERENCE
Area (sq.km)
437,072
Population
24,001,816 (July 2002 est.)
Capital
Baghdad
Currency
Iraqi dinar (IQD)
President
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Update No: 016 - (26/08/04)
No improvement in sight
Despite the launch of the new Iraqi government in June, the situation in
Iraq showed little sign of improvement throughout August. Although the
government of Prime Minister Allawi earned a significant degree of support among
the middle classes and some tribes, it has been steadily losing support among
the Shiite majority of the population, which was previously rather sympathetic
to the occupation authorities and now feels that it does not have the degree of
representation that it deserves. The violent confrontation with a radical Shiite
cleriq Muqtada al-Sadr led to a polarization between those Iraqis who support
him and those who stand behind the government. As the end of August approached
it was not clear who was gaining the most from it. Significantly, the
authorities of three southern governorates (appointed by the occupation
authorities) threatened to secede from Iraq if the fighting in Iraq was not
halted. Not only has the security situation deteriorated in the central and
southern areas populated by the Shiites, but even if the new government has
brought back to its side many members of the Arab Sunni minority, there remain
enough support for the insurgent activities to continue and prevent the
reconstruction of the country even in the Sunni heartland. The Kurdish parties
remain on the government's side, but tension between them and Baghdad is also
increasing, as the centralization efforts of the central government are not
welcomed in Kurdistan. The latest row emerged in August, when the Iraqi oil
ministry declared invalid the contracts signed by the local Kurdish authorities
for the exploitation of oil fields. The Kurdish parties, of course, are very
keen in establishing their own independent source of revenue.
The outcome of the convening of the national assembly was also seen by many as
disappointing, not so much because of the turmoil caused by the supporters of
Muqtada al-Sadr, who withdrew from it, but because of the failure to
democratically elect the 81 members of the Iraqi National Assembly, which will
act as interim parliament until the future elections. The vote was list-based
and predictably ended with little space being left to smaller political groups
and independent personalities.
Relations with Iran worsen quickly
A string of incidents between the end of July and the second week of August
led to a war of words between the Iraqi and Iranian governments. In July the
Iraqi Interior Minister had accused Iran of being involved in the unrest in
Iraq, while the Defence minister was even more blunt. Teheran reacted by
dismissing the accusations as the product of the "inexperience" of the
ministers involved. The initial controversies were apparently settled when a
spokesman for Iraqi Prime Minister Allawi declared that the views of his
ministers were not those of the government as a whole. At the beginning of
August another row emerged when Iraqi Prime Minister Allawi postponed his visit
to Teheran, alleging the presence in Teheran of a "political
opponent". Furthermore, the Iraqi Defence Minister continued his verbal
attacks on Teheran, asking on 4 August that Iran immediately returns 130 planes
held since Saddam Hussein sent them to Iran in 1991. By mid-August rumours were
circulating in Baghdad that 30 Iranians had been caught fighting with the Shiite
rebels and that Iranian weapons had been found in the hands of the followers of
radical cleric Al-Sadr. Then four alleged Iranian intelligence officers were
arrested by the Iraqi police. Finally, four staff members of the Iranian news
agency (IRNA) were arrested in Baghdad, presumably because of their reporting,
very favourable to al-Sadr and his movement. As the end of August approached the
confrontation between the two governments did not seem about to dissipate, not
least because the Bush administration appeared keen to add fuel to the fire.
Oil industry struggles
Attacks and threat of attacks against the pipelines continued to prevent the
Iraqi oil industry from exporting to capacity. While until this spring the
attacks were mainly concentrated in the north, in recent weeks the disruption
has mostly affected the southern fields, a result of the confrontation with
radical Shiite leader Muqtada al-Sadr. During much of the month exports run at
just half of the 1.8 million bpd planned. The potential for even greater
disruption was certainly there, as each southern oil well produces on average
10,000 bpd and setting on fire even a limited number of them can affect
production significantly. On the positive side, Iraq took a further, if
relatively small, step towards restarting the development of its oil industry by
inviting bids for advice on how to develop the Kirkuk and Rumail oil fields.
Another item of good news was that the Iraqi and Russian governments finally
reached an agreement on how to deal with the oil contracts signed by Saddam
Hussein. Representatives from the two sides will be appointed and will
scrutinize the deals.
Increasing controversy over reconstruction
The Iraqi economy is now forecast by the World Bank to grow by 33% this
year, but this is mainly due to the massive increases awarded to state
employees, which are boosting the trade sector. Even the recovery of the
tertiary sector is now called in doubt as the worsening security in the
previously relatively safe areas of the south is driving down commercial
activity. Little real reconstruction or economic development is taking place.
The faults of the reconstruction program put together by the occupation
authorities are coming under increasing scrutiny. By August the job-creation
schemes were supposed to have delivered 250,000 jobs, but in reality they have
not exceeded 30-60,000. US funds for reconstruction continue to be spent very
slowly, standing at just US$600 million out of US$18.4 billion authorized.
Reconstruction projects contracted so far leave little space to entrepreneurial
Iraqis and the local workforce, privileging instead specialist contractors with
international experience (i.e. mostly US companies).
Private investors are even less keen to come to Iraq and plans for massive
investments are on hold until security will improve. The difficult political
situation also prevents the government from taking steps aimed at improving
labour productivity, which now stands at abysmally low levels. The large
majority of state employees are in fact virtually inactive and often do not even
turn up at work.
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