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Books on Iraq

Update No: 062 - (30/06/08)

Maliki resurgence continues
Prime Minister Maliki appeared to be still gaining popularity in June, as his crackdown on illegal militias continued to achieve successes. Even the Sadrist leadership supported the effort to rein in their own rogue elements and Maliki reciprocated by ordering the army not to target Sadrists indiscriminately. There are increasingly some signs that Maliki might be able to start a virtuous cycle on the strength of his recent achievements; for example the main Sunni bloc, happy to see the Shiite militias reduced, is now ready to rejoin the government, of course in exchange for a number of ministerial appointments. At the same time however, on a number of other fronts Maliki’s leadership still appears far from being decisive. About half of the cabinet posts are still vacant, as he avoids appointing replacements in order not to start quarrels with the different factions which support him. The government is still filled with incompetent party men, whom Maliki uses to buy support in parliament among the factions. Even within his own party, Maliki has to please several different factions, which prevents him from getting competent administrators in the jobs and therefore from delivering an improvement in the quality and quantity of services delivered to the population. 

A display of skill
The issue with Maliki’s successes is whether they are sustainable or not. The militias have not really been crushed, instead deals have been negotiated and they are now lying low. 

Maliki is nonetheless aware that in order to consolidate the improvements achieved over the last several months he will have to improve the lot of the population. The plan is to spend significant portions of oil revenue to stabilise the areas that have been taken away from the militias. Maliki has already moved in this direction, by investing heavily in containing inflation. Although inflation has now reached 16%, up from 11% in January, it is believed that it would have been much worse if the government had not intervened. Maliki was quite skilful in having the central bank buy dinars to push the value of the national currency up, in order to limit prices increases. The dinar gained 20% to the dollar, after the bank spent US$1-1.5 billion each month to support it. 

Even in the course of the ongoing negotiations over a US-Iraq security pact, Maliki is showing considerable skill. He firmly opposed US demands, which include the right to arrest and detain Iraqi civilians as well as immunity from Iraqi prosecution for US soldiers, and instead is trying to get guarantees from the Americans that they will protect Iraq against any external and internal threat, which might be more of what Washington is ready to promise. His unwillingness to be accommodating with Washington’s long-term plans for Iraq only strengthens American distaste for him – he was never their first choice of Prime Minister, but he is now strengthened by the successes against the militias and can claim to have started delivering some goods to the Americans.

Oil exports rise
For the first time since the American invasion, Iraqi oil exports exceeded 2 million bpd in May. This is mainly due to the decline in sabotage of the oil infrastructure, with attacks falling from an average of 30 a month last year to just 4 in May. The benefit of increasing oil exports at a time of high prices is obvious. The plans of the Oil Ministry are however much more ambitious. The government is about to assign contracts for the maintenance of existing oil fields, hoping to boost production by 600,000 bpd. Rumours suggest that among the winners will be BP, ExxonMobil, Total, Chevron and Royal Dutch Shell. Each contract is worth a modest US$0.5 billion, but the winners will then be well positioned for more lucrative deals once the new oil law is finally approved.

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