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24,001,816 (July 2002 est.)


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Update No: 035 - (24/03/06)

Still no government
Four months after the parliamentary elections, Iraq still did not have a new government. Reciprocal vetoes continued throughout the first two thirds of March to prevent a deal among the political groups. In fact, President Talebani's hostility to Jafaari only seem to have increased, judging from his public statements. The Kurds, the Sunni and the Allawi bloc all oppose Jafaari as Prime Minister, but in reality they do not agree on an alternative candidate either, as the Kurds and Allawi might accept Mahdi, the other main figure within the Shiite alliance, while the Sunni absolutely oppose him. The relationship between the Americans and the Shiite is rapidly deteriorating, as the Shiites clearly believe that the US has engineered this alliance against them. Even moderate elements within the Shiite alliance are now talking tough and hinting that a new insurrection might become a necessity. While this is unlikely to happen anytime soon, an increase in insurgent activities in the south has been a
reality for several months now. Muqtada al Sadr, who still sticks to his agenda of expelling the "crusaders", is gaining consensus within the Alliance. At the same time, the Sunni groups in parliament are still far from trusting the US, not least because they feel that US armed forces have not tried very hard to intervene in the inter-community clashes which happened throughout February and March. Although all the main players are clearly aware that many sectarian killings are engineered by groups which want to create chaos, they disagree on whether their counterparts have been doing enough to contain them. While the Shiite complain that the US are effectively easing them out of any influence over the security services and armed forces, the Sunnis complain that not enough is being done. The Shiite alliance, in order to break its isolation, is making attractive offers to the Kurds, including the repatriation of Kurds to Kirkuk, in exchange for their support for Jafaari. Several attempts are being made to break the impasse, including one by the irrepressible Ahmed Chalabi, who, despite his crushing defeat in the parliamentary elections, is still intent on recovering a role. His mediation has not achieved much, but now his name is being touted as a possible compromise candidate prime minister. The fact that he does not have a power base of his own could at this point be seen as an advantage.

Slow recovery of oil industry
After touching the bottom in December last year, with just 1.1 million bpd exported, the oil industry is slowly climbing back. In January exports were still at 1.1 million bpd, but in February they rose to 1.42 million and this despite the fact that after having declined for some time, sabotage attacks against the oil and electricity industries are on the increase again, even if they have not reached the high levels of 2004. However, because Iraq has established a reputation of being an unreliable supplier, it has to sell its oil at a significant discount in order to attract buyers. The delays in forming a new government are having demoralising effects on the staff of the Oil Ministry, which also suffers badly from rapid turnover in the top positions. The State Oil Marketing Organisation is suffering from the same problem, having already experienced five leadership changes since the beginning of the occupation. The rumours of yet another change looming do not help the consolidation of authority within it. The financial resources allocated to purchases of fuel for 2006 are only half those allocated during 2005 and unless the government moves to make more funds available, soon the ministry will no longer be able to import fuel. At least in March the Iraqi government managed to settle its debts with Turkey and avoid a crisis in the availability of fuel, much of which is imported, among else from Turkey. 

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