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Update No: 098 - (26/05/11)

From pipedreams to a more realistic assessment
After pretending for many months that Iraq’s very ambitious oil production targets were somehow realistic, during May even the officials of the oil ministry started coming to terms with reality and admitting that because of constraints in the pipeline and terminals infrastructure, the 12 million bpd in six years target is not achievable. In fact, Iraq is already near the limit of its export capacity and increasing that in the future to the levels planned would require an unprecedented level of infrastructural investment. Shahristani, the deputy Prime Minister for Energy, now says that even achieving half that target would be a remarkable success. It is believed now that Iraqi oil officials will soon start discussing a new, more realistic target with their partners in the oil industry. Moreover, political trouble is never very far away from Iraq’s oil fields. In May oil workers were striking against alleged salary discrimination by oil multinational like BP, who pay Iraqi oil workers much less than foreigners. BP has succeeded in increasing the production of the Rumaila oil field, but a wider presence of foreign investors could be politically very problematic in a country where oil nationalism has been a political staple for many years.

Managing the mess
The government is now thinking of a plan to take three zeros away from the national currency, almost aligning it to the dollar (it would be 1 dinar = 0.85 dollars). However, some economists have doubts about the ability of the country’s monetary authorities to handle such a transition successfully, there is a fear of corruption and of an inflationary impact. In fact for the immediate future the Iraqi government faces additional challenges, as opposed to start sorting out the accumulated mess. The relative improvement of the situation in Iraq has not attracted back too many Iraqi refugees abroad, probably because of the still difficult economic situation and of the continuing violence. However, developments in neighbouring Syria might achieve this result: if the situation were to deteriorate further, it is expected that many refugees in Syria would come back, imposing a major burden on the Iraqi state. Here are an estimated 1.9 million Iraqis in neighbouring states, mostly Syria and Jordan.

While Maliki seems to have managed to contain unrest among Iraq’s Arabs, the situation in Kurdistan remains more fluid. One of the consequences of the debate over democratic reform in Kurdistan is that the unified Kurdish group in the Iraqi parliament has now split, with the Change list going its own way and the Kurdish islamists also apparently on the verge of separating from the main body. This results in an even more complicated situation to manage for Maliki in the parliament.

Bye America
The killing of Bin Laden has barely left a sign whatsoever in Iraqi politics; even the local Al Qaida has barely made an effort to commemorate the dead leader with an intensification of violence. Eventually Prime Minister Maliki made public his decision not to ask to Washington to leave troops in the country, stating that he is keen on military ties with Washington but that politically it would not have been feasible to have the Americans stay. The Iraqi air force is acknowledged to be particularly in need of continued American support, but according to Maliki even any kind of direct support to the air force would have to be approved unanimously by the parliament, which does not seem very likely. In reality probably a majority of Members of the Iraqi Parliament would like to see the Americans stay longer in order to consolidate the gains in security, and to stabilise the polity. However, few of them dare say that in public.

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