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Area (


24,001,816 (July 2002 est.)


Iraqi dinar (IQD)



Update No: 021 - (03/02/05)

Successful elections?
The 30 January elections in Iraq turned out to be not as bloody as many expected, not least because of the low turnout in the Sunni heartlands of central Iraq, which deprived the terrorists of obvious targets. In terms of overall turnout, a couple of days after the elections had taken place it was estimated at 57% of registered voters, which would not represent an overwhelming success, but not a failure either. Unsurprisingly, turnout was higher in the Kurdish regions of the north, followed by the Shiite regions of the south. The central Sunni regions lagged well behind. In practical terms, this meant that Kurds might get a 30% or so share of the parliamentary seats, despite accounting for just 20% of the population, and Sunni Arabs as little as 5%, despite being almost as numerous as the Kurds. The remaining 65% would almost entirely go to Shiite Arabs. Early unofficial results suggested that the unified Kurdish list will sweep the board and get all the Kurdish seats, i.e. around 30%. The Sunni Arab vote appears to be split, so that no group will be able to claim the already puny 5% for itself. The Shiite vote appears to have gone mostly to the list of religious parties endorsed by Ayatollah Al-Sistani, but a higher than expected share of the vote appears to have gone to two other lists, the one led by Prime Minister Allawi and the one led by the communists. The indications are that the religious parties got almost two-thirds of the Shiite vote, Allawi 20-25% and the communists around 15%, although these figures might change significantly when the official results are announced. The religious parties triumphed in the large cities, but Allawi did well among the tribes, some of which even supported the communists, who in turn did well in some cities of central Iraq. The main point of contention is whether the Shiite religious list gathered or not a majority of parliamentary seats. While its leaders claim to have succeeded, other observers attribute to them around 45% of the seats. Should the Shiites fail to have an outright majority, their leverage would be significantly reduced, as the three other main groups in the new parliament (Kurds, Allawi and the communists) share a secular point a view. 

Tasks ahead
Whatever the exact outcome of the elections, the new government will have to address a number of issues. The Sunni Arab minority is unlikely to be pleased by the outcome, however easy to forecast it had been. Part of the community will react by seeking an accommodation with the winners and get some positions in the government. Others will feel disenfranchised and humiliated and might consolidate their support for the insurgency, which will make security an even more pressing concern. The new government will also have to provide welfare to its own citizens and ensure that living standards improve, not an easy task given the extent of economic sabotage which is taking place (see below). The most difficult task, however, will likely prove to be rooting out corruption from within the state apparatus itself, which includes the government. According to contractors and businessmen, corruption runs very high in Baghdad and it might become a major issue, especially if security did improve one way or another. 

Some progress in the oil industry
Between the end of December and the end of January the Iraqi government started signing oil deals, which could lead to increased production at some point in the future. Avrasya, a Turkish company, was awarded a US$136 million contract to develop an extension of the Kirkuk oil field. Ironhorse, a Canadian firm, won the bidding for the Hemrin field in northern Iraq, which is estimated to be worth around US$180 million. Another US$185 million contract to raise the output of the Suba-Luhais field is being finalized. The Iraqi Oil Ministry has US$3 billion worth of funds to be invested in the industry and it plans to raise production to 2.9 million bpd by the end of the year. At the same time the government is planning to spend US$2.4 billion to import oil products this year, in order to make up for a shortfall in production. 246 attacks against pipelines took place in 2004, up from just 73 in 2003, resulting in the government's inability not only to meet export targets, but also to satisfy internal demand. Petrol is now being sold on the black market for over US$5 a gallon, about ten times as much as it was priced some months ago. The price of gas has been rising even faster and now a container of propane costs about 20 times as much as its official price. Apart from paying higher prices, Iraqis have to queue several hours before being able to fill the tanks. Moreover, electricity is not available to many houses, because the pipelines to the power stations have been sabotaged.  

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