Overcoming the economic crisis afflicting Iraq
Dr.. Majid Ahmed Al-Zamili
Iraq is one of the important oil countries in the global markets, as Iraq’s gas reserves exceed 3.5 trillion cubic meters, and the gas associated with oil production constitutes 70% of it, and the rest represents free gas stocks, and that “this gas reserve can be invested urgently and relied upon, Especially since it is spread in many Iraqi provinces, and the development of gas fields can be accelerated, in addition to accelerating projects that aim to get rid of gas flaring. However, the energy sector in Iraq suffers from a large number of problems, and the country’s complex bureaucracy impedes progress by focusing on small, short-term and ineffective technical solutions rather than long-term macro-institutional reforms, and that the energy sector is subject to conflicting agendas for a wide range of actors. Politicians in Iraq, which undermine the unified national vision of his administration. The stability of Iraq is an integral part of global security, and the international community must support the efforts made in Iraq to achieve energy stability, in which the country will stabilize as a barrier against extremism by building and supporting local economies, which prevent internal mass displacement and refugee displacement at regional levels, which affects On the well-being of countries outside Iraq, especially in Europe. It is likely that the manifestations of the economic crisis in Iraq will continue during the coming period, especially in light of the economy’s dependence on oil, as the effect of the structural transformation required to enhance the aspects of balance in any economy needs long decades. The instability in the country, which is expected to extend for a short period in the future, will leave it dependent on the oil sector, especially since the government will not be able to implement the necessary economic plans that are based on diversification, sustainable growth, and facing structural defects in the macroeconomy. In such circumstances, it will depend on relying on the oil resources it controls, amounting to 147 billion barrels as proven oil reserves, in which Iraq ranks fourth in the world in terms of reserves, after Venezuela, Saudi Arabia and Iran. In addition to the fact that the Iraqi economy has been exposed to the challenge of declining oil prices with the major oil-producing economies around the world, but the security instability that Iraq has been experiencing for decades has exacerbated the burden of the decline in oil prices, especially since this situation has increased from 2014 as well, when it is under control. The “ISIS” organization occupies more than 40% of the Iraqi lands, including the economic capabilities and resources it contains, especially the oil wells. The instability in Iraq, due to the presence of ISIS on its soil, has hindered investment plans in the country, and one of the most important plans affected by that was the plan to raise its oil production capacity to nine million barrels per day by 2020, which would have resulted, If fulfilled, to double its current production, in addition to the impact of the Corona virus epidemic on oil market demands and the great recession.
The maximization of the short-term rentier revenues that emerged as a result of the Iraqi political settlement at the present time leads to growth in oil production and exports regardless of, and even at the expense, of maximizing revenue generation over time, including those from non-oil products. It also diverts the very important path of allocating rentier revenues towards recurrent operating expenditures at the expense of productive investment. Political stability leads to the creation of a safe, stable environment that stimulates development, innovation and creativity, as economic development cannot be achieved in isolation from political and security stability, and political stability helps to build confidence in state institutions and stop capital migration outside the country and attract foreign investment to it, in addition to deepening the principle of the state. Institutions and the law; Which, in turn, leads to economic growth and prosperity and enhances transparency and integrity in the country, which helps to gain the confidence of investors. Of course, attracting investments directly contributes to increasing the percentage of created jobs and reducing unemployment rates. As a result of the political instability and the complexity of the business environment, it contributed to the difficulty of the private sector moving in terms of exercising its activity freely and smoothly, due to the presence of many obstacles that restrict its activity, starting with starting a business, obtaining building permits and obtaining electricity, through registering property, obtaining credit, and protecting minority investors. Pay taxes, ending with cross-border trade, contract enforcement and resolving insolvency. Iraq can also enhance citizen participation and government accountability in providing services and infrastructure, due to its importance to the citizen in determining the priority of federal investments according to priorities. The state can realize that the manner in which services are provided and their fairness is a matter of importance, at least with regard to the legitimacy of the state as much as the importance of the person who provides them and the extent of his efficiency in that. Giving priority to investments that have been identified as the highest priorities of the citizen and including them in mechanisms that support accountability, participation and address grievances can help improve the relationship between the citizen and the state.
Monetary policy has a major role in reducing the deficit in the balance of payments, which emerges through the central banks’ use of a monetary policy tool, which is to raise the discount rate, because it will make commercial banks raise interest rates, and if they increase, the demand for credit or its demand will decrease, which will make prices tilted. To decrease also, because the demand for the offered commodities has decreased, and if prices decrease locally, this measure will lead to encouraging exports, and reducing the demand for foreign goods as long as local prices are low, and as high interest rates locally will tempt foreign individuals to invest their money in national banks. Thus, the flow of foreign funds into the country, and this contributes to reducing the deficit in the balance of payments, and with the decrease in domestic prices, the rate of inflation decreases, which makes domestic goods more able to compete with foreign goods, as it encourages an increase in exports, and reduces the deficit in the balance of payments. This is what happened in the aftermath of the 1980 elections in the United States, when interest was high in inflation, and the dollar appreciated in relation to major currencies during the same year. Monetary policy includes sequential goals that start with primary goals such as the target of the monetary base, interest rates and free reserves, and there are intermediate goals that link the primary and final goals such as medium and long-term interest rates and all monetary totals, total credit, gross national product, and the nominal exchange rate. The ultimate goals that are drawn in light of the general economic policy are, to achieve stability in the general level of prices and full employment, and to achieve a high rate of growth and balance the balance of payments. The effectiveness of government shares in bringing about the required changes is determined by the profitability of government projects whose shares are traded in the market. In fact, the government’s profits that it reaps from its private projects are considered very large, given the diversity in those investments. They do not invest in a single project or in one activity, as well. The state’s projects are characterized by efficient management due to its possession of the most efficient running tires, and this is what makes the average profit for the government share close to the average profit for the national economy, meaning that the probability of loss from owning a government share is very weak, and this is why the demand for government shares is greater than the demand for sector shares Private, and this is what makes use of these stocks as a tool to monitor the money supply.
The existence of a positive relationship between oil and democracy in developed countries, as in the case of Norway, which is due to the deepening of democracy, culturally and institutionally. In the sense that it truly represents the people because the people truly believe that it is the source of the authorities on the one hand, and on the other hand the authorities feel that the people are their real source, and they must work to meet their ambitions and aspirations, or else it will be destroyed. In other words, the existence of democracy and its cultural and institutional entrenchment in any A country that makes oil, when discovered, a blessing that increases the welfare of society and not the other way around, as in the case of Iraq. Democracy in Iraq will remain weak and cannot truly represent the people unless oil is separated from the state and administered independently of the state for the benefit of the people, with the principles of transparency and oversight being taken seriously.
Responding to young people’s demands for jobs and addressing medium-term demographic pressures is important to reduce the risk of instability and avoid income-reducing pressures. Iraq needs to accommodate the needs of an increasing number of young people looking for work, and therefore it needs to shift from a model of employment centered around the public sector to another centered around the private sector, and the contribution of the private sector to economic development and activating its role through legislative, logistical and financing measures. This shift requires a change in obtaining public sector jobs. Despite this challenge, and the way of thinking of young people who currently expect jobs but in order to be able to perform those jobs, skills must be developed, and efforts must be made to enhance women’s participation in the workforce. There are still important pathways available to Iraq to expand jobs, especially In the fields of construction, agriculture and enterprise, the youth of Iraq need to acquire more education.
And last but not least, the Iraqi state must adopt a civilized renaissance development project based on programs, plans and policies that place the national interest above any consideration away from regional and international axes. The ability or ability to adopt a civilized renaissance development project based on programs, plans and policies that place the national interest above any consideration, far from regional and international axes. The ability to adopt a civilized renaissance development project based on programs, plans and policies that place the national interest above any consideration far from regional and international axes. The possibility of achieving political reform in the country as an entry point to achieve economic reform and diversification of the economy through rational economic management Encouraging the return of Iraqi talent through programs adopted by the state to benefit from these competencies in the political, economic, social, cultural, educational and other fields by assigning them to real administrative positions, and providing privileges and facilities to them .
Disclaimer: All published articles represent the opinion of their authors only