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Update No: 095 - (26/02/11)

Fear of Egypt
The Iraqi political establishment was clearly impressed by the Egyptian and Tunisian developments and has been taking measures to highlight how it is more responsive to the need of the men in the streets. Demonstrations in Iraq started in February and on some occasions turned violent, even if they did not attract anything like the crowds seen in Egypt. The cities of Kut, Diwaniya, Basra, Anbar have been affected. In some cases the demonstrators raised issues of ‘freedom of expression’ and civil liberties, as well as of corruption, but the poor quality of public services was the dominant concern. One of the key grievances was the lack of electricity and the fact that government officials are privileged in its distribution. The Shiite clergy has been demanding that the political class listen to the demands of the crowds. For the time being, the measures taken have been mostly symbolic: the salaries of government officials have been reduced by up to 50%, as in the case of Maliki himself. In reality, everybody knows that Iraqi politicians have sources of income beyond their salaries. The estimated savings coming with these measures are a paltry US$19 million; it is unlikely that they will either contribute to reduce the level of corruption, or improve the efficiency of the government.

A more substantial measure taken in response to the Egyptian events and the riots in Iraq was in February the decision to postpone the acquisition of F-16 fighter jets and increase instead the amount spent on ‘food subsidies for the needy,’ from US$3 billion to US$4 billion. The budget deficit remains at US$13.3 billion; 6 million Iraqis are on the take. Another concession is the decision to grant 1,000 Kwh of free electricity to every Iraqi family, (that is if they have access to electricity at all). Finally, Maliki has reassured those who see him as an aspiring Mubarak if not as an aspiring Saddam Hussein, that he will not seek a third term.

Maliki’s progress
Maliki has been making progress in the formation of his government; 8 of the 10 positions not filled in December have now been filled. Only the key ministries of Interior and Defence are still vacant. The controversy is over the names: Iraqiya, Maliki’s uneasy coalition partner, had its own candidate for the Defence Ministry but the Prime Minister does not want him and is instead trying to find somebody acceptable to both Iraqiya and himself. The same seems to be the case for the Ministry of interior. Maliki has also rejected the law proposal for the establishment of a National Council, over which his rival/ally Allawi would have to preside according to the coalition agreement. Once again Iraqiya is threatening to quit the coalition, but few believe that it will implement these threats.

A new round of oil and gas field auctions is now announced for the end of 2011. It appears that the contracts signed by the Kurdish regional government will be honoured by Maliki, probably the price to pay for Kurdish support in the new coalition. The government is preparing to establish serious barriers to imports, by increasing the custom rates on all goods and in particular on some goods that Iraq is supposed to be able to produce itself. Many fear an inflationary impact, compounding the situation for the poorest strata of the population. The move would also be a slap in the face to Washington, but this seems to be a fashion now in Baghdad: the city council recently demanded that the US pay US$1 billion in compensation for the damage inflicted to the roads by the American occupation forces.

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