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In-depth Business Intelligence
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: 024 - (25/04/05)
A president, a prime minister, but no cabinet
The agreement on the names of Talabani as President and Al-Jafaari as Prime
Minister did not resolve the impasse preventing the formation of the first
post-elections cabinet in Iraq. There is also an agreement between the Kurds and
the Shias with regard to the distribution of the cabinet posts among the
ethno-religious groups, which assigns 16-17 seats to the Shias, 7-8 to the Kurds
and 4-6 to the Sunnis, but no agreement on the actual names. During April the
agreement on the name of Jafaari appeared increasingly shaky, as critical voices
emerged against him even from within his own alliance. Both the more moderate or
secular elements, consisting of about 45 members of parliament gathered around
the Shia Political Council, and the more extremist ones, such as Muqtada As-Sadr's
National Bloc (24 members), are threatening to quit the United Iraqi Alliance (UIA).
Ayatollah Al Sistani's influence has so far managed to prevent this from
happening, but his role does not go unchallenged any more. Former Prime Minister
Allawi, who appears to be trying to form an alliance with the moderate elements
of the UIA, implicitly criticised Al-Sistani's role in pushing Iraq towards
clericalism. Allawi has been invited to join the cabinet, presumably in order to
prevent his anti-Jafaari manoeuvre, but he refused and openly stated that his
political programme and that of the UNIA are incompatible. Allawi could also get
the support of the Kurds, who are wary of Jafaari's Shiite fundamentalism, while
the small Sunni bloc (17 deputies) is also angry with Jafaari because the UIA
seems increasingly inclined to concede just 4 ministers to the Sunnis, rather
than 6 as they had for some time been given to expect.
Because March was characterised by relatively low casualties among US troops,
many commentators started wondering whether the armed resistance might be on the
wane. In the first half of April casualties showed signs of increasing again,
although compared to 2004 they remained rather modest. There was a decline in
the number of attacks compared to the peak in late 2004-early 2005, but the
decline in US losses also has to do with the growing role played by Iraqi
government troops.
The oil industry: a double target
While the sabotage campaign against the oil industry showed no sign of
abating during April, Iraq's foremost industry also became the object of a purge
of corrupt elements and of individuals suspected of cooperating with the
insurgents. At least 450 employees have been fired so far, because they were
selling fuel on the black market. This is part of a larger campaign against
corruption in the government, which includes the obligation for state officials
to declare their assets. The oil industry continues to operate in an environment
that it would be an understatement to describe as unfriendly. Only 60% of the
trucks carrying oil products away from the wells reach their destination, while
the other are attacked or hijacked. Smuggling is of course encouraged by the low
internal prices, to the extent that the director of the state oil industry
suggested during April that prices should be increased. The state oil company
maintains that exports in the range of 2 million bpd are easily attainable if
security can be improved, which is of course a big if.
Reconstruction slows down
Whatever the condition of the Iraqi resistance today, the effects of its
rise in power in 2004 are being reflected in the current shift of emphasis away
from reconstruction and towards security. Much of the US$18.4 billion allocated
to reconstruction by the Bush administration has now been re-allocated to the
improvement of security. The treatment of potable water has been affected
particularly hard and no new treatment sites are planned for this year.
Moreover, US$5 billion have been diverted to the Iraqi ordinary budget in order
to make up for a shortfall in revenue, due to lower then expected exports of
oil. Yet another reason for the slower pace of reconstruction is that the US
Department of State has decided to move funds away from large scale projects and
spend more (US$832 million) on immediate job creation and training. Direct and
indirect additional security costs account for another US$1.3 billion. So far
around 2,000 reconstruction projects have started, but only 600 have been
completed.
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