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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: 029 - (27/09/05)
The new constitution: a tool of pacification?
The presentation of the final draft of the new Iraqi constitution did little
to pacify the country. Instead, it appeared to set it for increased trouble. As
predicted, the Sunni Arab community was very unhappy about the shape taken by
the new constitution, despite claims by its Shiite and Kurdish counterparts that
a serious attempt to address the concerns of the Sunni community had been made.
The issue of federalism and the purge of former Baathist members were the main
controversial points. However, even within the Shiite alliance there is
disagreement about the constitution. The followers of the ambitious Muqtada Al-Sadr
are the main opponents of the constitution among the Shiites and declared that
the process of its elaboration has been led by the occupying forces and their
collaborators. After coming closer to the mainstream Shiites in the months
immediately before and after the elections, the Sadrists are now moving again
towards a spoilers' position. Tension among the Shiites led to violent clashes
in several southern town and cities during late August. The Sadrists count on
the support of at least 21 members of parliament and two ministers, who
threatened to resign in protest for the attack against an office of Al-Sadr in
Najaf.
In the meanwhile, the most extremist jihadist groups decided that the
dissatisfaction of the Sunnis offered them an opportunity to mobilise the
population behind them and announced the start of an all-out war against the
Shiites. Even if the mainstream Sunni organisations condemned the declaration, a
new campaign of terror was unleashed in Baghdad and elsewhere. On the Shiite
side, even those who do not sympathise with Muqtad Al-Sadr are beginning to lay
the groundwork for demanding the departure of US forces in a couple of years or
so. A report prepared by a committee of the National Assembly stated that there
will be no effective sovereignty until "occupation forces" are in
Iraq. The report is the first sign that mainstream Shiite groups are beginning
to snipe at the occupation forces. The report asked the government to repeal the
immunity from prosecution by Iraqi courts granted by the Coalition Provisional
Authority to foreign nationals. Only the Kurds do not seem keen on seeing the
Americans off.
Oil industry exits stagnation?
The Iraqi Oil Ministry showed new signs of optimism in September, as a
110,000 bpd increase in exports was expected compared to August. By the end of
the year, another 200-400,000 bpd are expected to be added, bringing total
exports to 1.8-2 million bpd. Although sabotage of the oil infrastructure
continued, the northern oil fields managed to export 3 million barrels in
September. Production is also increasing in the south, where sabotage is more
limited. However, the reluctance of the US government to guarantee strong legal
protection to foreign companies working for the oil industry meant that none of
them accepted to work on the improvement of existing oil wells. KBR oil, a
subsidiary of Halliburton, had won the contract, but later renounced it. The
US$37 million contract has now been awarded to an Iraqi state company, Iraqi
Southern Oil, which does not have the expertise. Its staff will have to be
trained, resulting in additional delays. The project is now expected to increase
production by 500,000 bpd, a figure which has been revised downwards from an
earlier assessment of 1,000,000 bpd. To ordinary citizens, the good news of
increased exports was overshadowed by the decision of oil Minister Chalabi to
order half of the country's cars off the road every day, in an effort to spare
fuel and limit imports. Iraq's refineries cannot produce enough car fuel, in
part because much of it is illegally exported due to its very low and heavily
subsidised prices.
Reconstruction or war?
It has finally been admitted by US officials that much of the reconstruction
funds allocated to Iraq have been diverted to security. For example, in the case
of water sanitation, half of the US5.2 billion budget has been diverted. Water
projects worth US$200 million have been completed so far, but even a quarter of
them no longer work properly because of looting, inadequate staffing and other
problems. The result has been a surge in dehydration and diarrhea cases among
children and the elderly. The production of electricity is another area where
reconstruction is doing very badly.
On a positive note in September the first phase of the restructuring of Iraq's
debts was completed. The negotiations on the first US$750 million ended with 78%
of the claimants accepting the offer (10.25% of the original debt plus due
interests), while just 2% rejected it altogether. Most of the restructuring is
still to come, with another over US19$ billion of commercial claims, which
themselves are just 15% of total outstanding debt.
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