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Area (


24,001,816 (July 2002 est.)


Iraqi dinar (IQD)


Update No: 037 - (30/05/06)

Still wrangling over the cabinet
As the end of May approached, the new Prime Minister Maliki was forced to present a partial cabinet to the parliament, with only interim Interior and Defence ministers. While an agreement had been reached about the appointment of non-factional Ministers of Interior and Defence, which was one of the key demands of the non-Shiite groups in parliament, there is still a difficulty in agreeing on the actual names of the ministers. Moreover, the two Sunni Arab alliances openly stated their unhappiness about the share of power reserved for them and some of their members walked out of the parliament at the time of voting the cabinet. One of the demands of the Sunnis was the post of deputy prime minister, which the Shiites and the Kurds wanted to give to Allawi, leader of the secular block. In the end Allawi was appointed to the newly established National Security Committee, but the Sunnis were still not satisfied. The tension was also high within the Shiite alliance itself over the name of the Oil Minister, one of the positions most sought after for rather obvious reasons. 
This rise in the tension among Shiites happens at a time when the different constituent components of this alliance are fighting over the control of the governorate of Basra. The governor of Basrah is trying to fire the chief of police and the commander of the 10th Division of the Iraqi Army. The relations between the Kurds and the Shiites also keep worsening. In particular, the Sadrist faction of the Shiite alliance, which espouses its own brand of Iraqi nationalism, is adopting an increasingly confrontational attitude towards the Kurds, having even deployed militiamen to the north in order to show their opposition to the Kurds' claim to Kirkuk.

Oil sector crippled
After three years of sabotage, wrong policy choices and ineffective management, the Iraqi oil sector looks in a worse shape than ever. A report issued by an auditor of the Oil Ministry showed that delays in project implementation resulted in only about one third of the work plan for 2005 having been implemented. Some pipelines are in such a bad shape that they would not be able to handle a higher volume of traffic if one day production of oil finally increased. Just over the last 6 months of the last year, 50 million litres of fuel disappeared after having been dispatched from the refineries. Oil products whose worth is estimated at US$4.2 billion were smuggled out of Iraq last year, on top of crude stolen from the pipelines. The prospects for better management in the future look quite dim. Now the Kurds are advancing the idea that they should have their own oil ministry covering the north of the country, which would add to the difficulty of controlling the situation. 

Losing hope?
Although opinion polls might not be worth much in the Iraqi context, those done until last year were showing high levels of confidence among Iraqis that the country was heading in the right direction, despite the violence. Not so anymore. Now most Iraqis think, according to an IRI poll, that the country is heading in the wrong direction. Also, the number of Iraqis who is optimistic about the medium term future (5 years from now) is declining fast. The polls showed also unhappiness about any reform aiming towards the reduction of subsidies. The transition from a subsidies system to something resembling more a modern welfare system has already started earlier this year, with the creation of the Social Safety Net. It pays monthly benefits to unemployed and low-income families, for a total of one million households, but so far the new scheme has failed to take off under the weight of an unmanageable bureaucracy, leading to more discontent about the supposed beneficiaries. 


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