For current reports go to EASY FINDER



In-depth Business Intelligence

Books on Iraq


Area (


24,001,816 (July 2002 est.)


Iraqi dinar (IQD)



Update No: 025 - (27/05/05)

A government finally
After months of negotiations, the Shiite and Kurdish alliances managed to reach an agreement on a list of cabinet ministers. The controversy, however, was far from over, as the role of Sunni Arab politicians remained to be defined. Only four Sunni ministers were initially appointed to the cabinet, although it was agreed that a fifth, the minister of defence, would be appointed later. While five ministers would represent a fair proportion of the cabinet (out of 35 cabinet members) compared to just 17 Sunni Arab members of parliament, the number is widely seen by Sunni Arabs as thoroughly insufficient to represent the Sunni Arab population as a whole, which is generally reckoned to account for 20% of all Iraqis. The Sunni politicians had asked for 9 cabinet positions, which if achieved would have been a rather generous concession on the part of the Shiites and Kurds. The Turkomans too received just one cabinet position, rather than the two they had bargained for. Moreover, the two alliances, and more specifically the Shiites, also had to accommodate the demands of several internal factions, of which four major ones exist only within the Shiite alliance. The dissatisfaction of the Sunni minority was stimulated, amongst other things, by the defection of three Sunni parliamentarians from the predominantly Shiite alliance, after complaints that they had been sidelined by their Shiite colleagues. At the same time, a number of Sunni notables have sprung into action and started negotiating with the occupying US forces and the government a deal, according to which at least part of the insurgency would give up the fight and more Sunni Arabs would be incorporated into the cabinet. Although this move was soon undermined by a series of raids by the security forces against Sunni clerics, this development suggests that the dominant Shiite and Kurdish alliance might succeed in splitting the opposition. Another example of the politicians' thirst for power might be playing in the hands of the two main factions and be used to divide the opposition is the split which occurred within the Turkoman front. After their electoral defeat, part of it decided to ally with the Kurds leaving the pro-Turkish faction to play a nearly irrelevant role. 
In recent months American involvement in Iraqi politics has necessarily increased rather than decreased, as it should have been according to the plans. US diplomats and officials are worried that the Iraqis might not be able to establish a stable government on their own and have been pushing the Shiites and the Kurds to compromise with the Sunni Arabs. 

Budget trouble
From the point of view of financial management, the new cabinet seems to be heading for a bad start, as it emerged in May that it is likely that the new budget deficit for 2005 will reach US$4.4 billion, out of a total expenditure totalling US$23.6 billion. Such a large deficit is the result of lower then expected revenue, which in turn was due to the failure to boost oil production, but even more of expenditure exceeding expectation. The increase in the tax collection, from a paltry US$31 million to a meagre US$82 million had a very limited impact. Such a deficit would represent a major change over the previous year, when it had not exceeded US$611 million. The fact that just US$6 billion out of US$33 billion of pledged aid have effectively been received also contributes to compound the problem. Iraq also continues to import US$200 million a month of gasoline, because consumption keeps increasing. Since the US invasion, it jumped from 15 million litres a day to 23 million litres. Initially, the US was paying for the imports, but now the Baghdad government does. Because prices are heavily subsidized at US$0.02 per litre, of the 9 million litres imported every day 3 to 4 are re-exported illegally to countries such as Jordan and Turkey were the price is around US$1 per litre.
The social impact of economic recovery appears to have been limited so far. A survey published in May by the planning ministry showed that 85% of households still have no reliable electricity supply, 46% have no access to clean water and that unemployment is at 20%.

 « Top  

« Back


Published by 
Newnations (a not-for-profit company)
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774