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Area (

24,001,816 (July 2002 est.)


Iraqi dinar (IQD)


Update No: 020 - (01/01/05)

The rocky road to elections
While there is no doubt that the Bush Administration is genuinely convinced that holding elections in Iraq in January must be a key part of any pacification strategy, delivering elections which could be widely recognised as fair and legitimising is no small task. The increased pace of US military operations in the Sunni heartland of Iraq has so far failed to deliver greater security and its only short term achievement has been the even greater alienation of the Sunni Arab minority. It is now clear that even some parties which used to support the interim government, like the Islamic Party, are going to boycott the elections. Moreover, the orderly running of the elections in the Shia provinces of the centre and south cannot be taken for granted, since Muqtada Al-Sadr continued to maintain an ambiguous attitude and as late as December was railing against parliamentary democracy. Although his movement will field a number of candidates in the elections, its commitment to parliamentary democracy is clearly less than full. 
Some 217 political groups and parties have so far registered for the elections, but the formation of coalitions and alliances has proceeded rapidly and it now appears that there will be three or four main contenders in the elections. The main Kurdish parties have formed their own block, which is likely to attract a number of Arab or all-Iraqi secular parties, among which the most prominent is the Communist party. The Shia religious parties, on the other hand, have formed their own alliance, which is widely tipped to win a majority. However, although this alliance seems to include even supporters of Al-Sadr, who would run as independents as his movement has not been registered, and some non-religious groups, 38 other smaller Shia parties refused to join it and will presumably form a separate list. They accused the dominant groups in the Shia alliance of having offered them too few candidate slots, possibly because these 38 parties are mostly secular ones. While these smaller parties have little support in Iraq, if they launch their own alliance or join other lists they could still weaken the chances of the grand Shia alliance to win an outright majority. The list currently being promoted by interim President al-Yawer, also a Shiite, is the one most likely to attract the dissident shiites. The list is expected to draw support mainly among al-Yawar own tribe, the Shamar, even if he is trying to enlist support nationwide. Finally, Prime Minister Allawi is also trying to put together his own list. 

Final deal on debt
Russia's objections to the proposal to slash Iraqi debt by 80% were finally removed in December and a final agreement was reached. Iraq's debt towards the Paris Club will be cancelled in three stages between now and 2008 and will fall from the current US$38.9 billion to US$7.8 billion. It is believed that Russia finally agreed to the deal having received assurances concerning its Iraqi oil contracts. 

Talk of recovery
The World Bank now recognises that this year the Iraqi economy has just reached the prewar output levels and that per capita income is still under US$800, but it also believes that in 2005 the economy will finally start growing quickly. Recovery will of course mostly depend on the oil industry. The Iraqi government now plans to invest more than US$1 billion in the industry next year, aiming to increase output by 15% to 3.25 million bpd. Its current capacity of 2.8 million bpd is 0.2 million bpd short of the original target for 2004. Actual production, of course, was significantly lower than that, due to widespread sabotage. Not only the pipelines are constantly attacked, but many oil wells are being set on fire too. So far the government has been trying to enlist the help of local tribes to protect the oil infrastructure, but this proved ineffective. Tribal rivalries led to even more attacks and now the already thinly spread National Guard is being deployed to improve the security of pipelines and wells. 
Whether the economy will grow next year and by how much, remains to be seen, but for the moment, what is growing is the cost of living for ordinary Iraqis. The benefit of increasing salaries months ago is being eroded by spiraling prices of commodities and most importantly rent, especially in the capital Baghdad, where the population is rapidly growing. It is estimated that rental prices increased by at least 300% compared to the early months of the occupation and many families have been priced out of the market. 

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Iraqi PM encourages Russian firms to take part in reconstruction

Iraq is prepared to cooperate with Russia and to sign any contracts, Iraqi Prime Minister, Iyad Allawi, said in an exclusive interview with ITAR-TASS News Agency.
Allawi said that on 7 December he had meetings with Russian businessmen who represent various sectors of industry, and the oil sector, in particular. "In the course of these meetings I spoke about the need for Russian companies to take part in the reconstruction of Iraq," Allawi said. 
He said that his visit to Moscow "presents a wonderful opportunity to meet the Russian people who have a friendship with Iraq that goes back over a long time." Allawi said that he had had very productive meetings and stressed the importance of his meeting with Russian President, Vladimir Putin, at which prospects for developing bilateral relations were discussed. 

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