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The reasons for the collapse of the economy and investment in Iraq
Hazim al-Nuaimi
July 9, 2015
At the outset I would like to recount to you this short true story, which happened to me a few months ago in Iraq, I went to a bank (banks, known in Iraq), and after a long wait in the waiting lounge where there is no basic services of drinking water and clean bathrooms I met Bmozvh responsible and asked her to open my current account of the Iraqi dinar and the US dollar, drove the employee of the drawer office paper bearing a long list of conditions required to open the account and it was most notably bringing endorsement of two agents (Zbonin) of this bank with a deposit of $ 500 is retractable and another set of pledges and related documents which take time to be configured. She asked me if the issuance of Visa card you pay an amount equivalent to almost one hundred dollars to cover the wages Print this card and you pay the same amount annually when renewing the card. Frankly, I was shocked from these complex procedures and I said to her: "Are you sure about these actions?
I am here to deposit sums of money, not to withdraw an investment loan, "she stressed to me these actions official books of higher authorities. Vsrdt her incident with me several years ago when I went to America as a college student and I went to the bank name (Bank of America Bank of America), one of the largest banks in America and asked them to open an account with my Visa card issuance. It propagated operation within five minutes and only a copy of the passport and immediately got on the current account number with temporary Visa card until the new card by sending them my name to my house after only one week is required. The employee was not asking me to deposit any amount or pay the account opening fees.
Before I left for this bank employee showed me an album of designs Bank Visa card, and asked to choose what I want from forms placed on the Visa card and there were dozens of models. Then he asked for a photograph to be placed also on the Visa card. The biggest surprise that shocked me that the staff member told me that the bank has to deposit an amount of $ 25 gift them, said when customers bring you any of your butt will deposit $ 25 for each new customer in addition to the new customer for the same amount. And you've already done so with my wife. Having expressed this to the employee in the Iraqi bank for my dismay of these actions and the need to learn from international banks whispered in my ear and said: (best to deposit your money in a respectable bank outside Iraq).
My question now is, is this the banking situation is suitable for a country that is in dire need of national funds by the search for foreign investment? As a result of such a failed policies in the management of banks, earning investors and owners of the funds does not have any local or foreign investor make any large investment project in Iraq. And what you hear from medium projects such as the construction of a large shopping mall (Mall) or luxury restaurants, these projects where the government may have contributed to twice the amount of local or foreign investor. We will come on the reasons for failure in investment and economic growth later in this article.
A advisers in the Secretariat of the Iraqi cabinet said that Iraq, unfortunately, is located at the bottom of the list of countries from among the 186 countries in the field of business facilities, in the sense that it is more worse in the business and investment environment countries, according to the annual World Bank reports which measures the Doing Business systems that encourage business activities or restrict cross-9 areas or "indicators" essential are; (starting a business, dealing with construction permits, registering property, getting credit facilities, and the protection of investors, paying taxes, trading across borders, enforcing contracts, and closing the business) , so how can we invite investors to invest in Iraq and they are aware of such reports and each difficulty there they face the cost and the greater the costs of investment is profitable and is the glory became in accordance with criteria (cost / benefit).
fact that can not be concealed that the Iraqi economy is going through the most serious economic crisis since 2003 It may threaten the entire future. Among the reasons for this significant deterioration: the sharp decline in oil prices (oil) and control organization Daash on the third of the area of Iraq (where many oil refineries and local banks and foreign fields), and breadth of financial and administrative corruption in the country, which has led to the reluctance of foreign investors to enter into Iraqi market.
Although the 2015 budget of more than $ 100 billion, however, about 80% of this budget goes to operational expenses of salaries and retirement (pension) and daily expenses. The amount allocated for investment, it does not exceed 20 percent of this budget is spent only on current projects that have not yet been completed. Even this small amount will not be available because of the country's need to very large sums of money to buy weapons to counter the terrorist organization Daash after being abandoned by the whole world, not just shy is received assistance from the international coalition.
And financial revenue Iraq depends on oil as the main source, which constitutes 98% of the state budget. Budget adopted this year to guess the price of a barrel of oil at about $ 56 card and export 3 million barrels per day, despite the fact that Iraqi oil is now sold for less than $ 45 per barrel. The continuing decline in oil prices could lead to an increase in the size of the budget deficit, which currently stands at $ 25 billion. This year, the government has developed some measures to diversify its financial resources by raising taxes on the mobile phone companies and airline tickets and buy cars, alcohol and other luxury products. These actions may lead to counterproductive vigorously strike the local economy stagnated if not total paralysis. The government also seeks to cover the deficit of foreign loans from the International Monetary Fund and World Bank, as well as demand from some countries that have a financial entitlements such as Kuwait (compensation for the Kuwait war) and Egypt (compensation of Egyptian workers) to postpone the payment of their payments to the next year or taking worth of Iraqi oil instead of the cash payment.
On the other hand, unemployment in Iraq constitute more than 25 per cent, although the proportion of people below the poverty line more than 30 percent, according to official data from the Central Bureau of Statistics as well as the United Nations Development Programme. This is a scary number in oil country like Iraq, and when many economists semantics known about the actual reality of the country's economy.
What a fragile agreement between the central government and the Kurdistan Regional Government on the export of oil and there is still hazy and clear in a lot of the terms of this Agreement. The collapse of this agreement could lead to a significant deterioration in the economy of the two parties. Government of the Territory still unable to provide the Center with a quantity of 550 thousand barrels per day, and in return the central government reluctant to provide its share of the region's annual state budget, amounting to 17 percent. Joe continued mistrust between the two parties would have a very negative impact on the economy and the labor market and the movement of trade between the region and the center. Iraq Stock Exchange index down record by more than 19 percent this year and a lot of companies suffered heavy financial losses.
And it can shorten the causes of the economic and investment chaos in the country following matters. It can put the rest of reasons within these Sbaan:
The political and security turmoil, and in my opinion that the political unrest is the most serious of the security situation on the economy and investment. There are plenty of ready to work in an unsafe environment for international companies by providing the necessary security protections but is not willing to work in politically unstable environment. Take for example the political and partisan conflict between the central government and the province of Basra. There are obvious conflict of powers and the instability of many officials in their responsibilities and their positions. When any new official comes to fight all the agreements and contracts concluded by the former official and fights all his projects for political reasons and settle political accounts and we have a lot of experience in it. Some of the projects implemented parked although half exceeded due to a conservative or conservative officials and a former official accused of corruption change. Most of these accusations and be political.
One manifestation of political turmoil is the different political parties in the economic direction and in line with the interests of the party and the size of its influence in the government. For example, after the formation of the government in 2006, the Iraqi Minister of Planning of the Iraqi Islamic Party, while the Minister of Finance of the Islamic Supreme Council, and Deputy Prime Minister for Economic Affairs Kurdish secular, and it was these are the pillars of the Iraqi economy in the first elected Iraqi government since the US occupation in 2003. The first It adopts the idea directed by the state centralized economy, and the third was believed in the idea of the open market or free economy and that the state move away completely from intervening in the economy and leave the subject of the private sector and investors, as is the case in America and Europe.
The third and he wanted an economy that combines the first and second my policy and to give some of the powers of the state and management of some strategic projects, as well as some proprietary companies accountable. There was a clear disturbance in the orientation of the country's economy and was often cause embarrassment at international conferences and negotiations with investors because of the absence of a unified approach to state in the finance and economy and investment.
1 - financial and administrative corruption : Indicates a lot of statistics issued by local and international organizations concerned with the integrity and the fight against financial and administrative corruption that Iraq is at the forefront by corruption among the countries of the world and for several consecutive years, in spite of having a lot of regulatory circles as a body integrity, BSA and offices inspectors general and the internal oversight services in the ministries that are supposed to all work on monitoring government performance in the financial and administrative areas. To find out the extent of corruption in Iraq, Iraq has been spent since 2003 and so far more than US $ trillion (thousand billion dollars), we have not seen the construction of a new building or a single school or hospital of modern standards. Most of the projects was a restoration of some of the buildings, bridges, roads, airports old. US inspector general has found a great havoc in the Iraqi ministries, especially the ministries of defense, interior, trade and electricity. Experts say that the rate of corruption and waste of public funds in excess of 50 percent of the total value of any project would be forwarded to the companies.
Is a financial and administrative corruption obstacle to investors, due to the lack of clarity and transparency in contracts and to identify investment opportunities, which encourages manipulation operations to conclude investment deals, and non-compliance with laws own in that area, as the administrative and financial corruption leads to increased costs which are reflected directly on the All of the product and the consumer alike, thus contributing to the decline in motivation among investors on foot process of investment in the country.
It can put other reasons for the deterioration of the economy and investment in Iraq as part of the administrative and financial corruption, including the weakness of the financial and banking sector, the overlap between monetary and fiscal policy of the state, weakness and it provided incentive for investment legislation, fluctuation of the exchange rate of the Iraqi dinar against the dollar and the lack of appropriate infrastructure for the establishment of large-scale projects.
Therefore, unless we find a stable political environment and eliminate financial and administrative corruption not hope for Iraq in the triumph over terrorism and recover economically even if spent annually hundreds of billions of dollars.
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Hazim al-Nuaimi
July 9, 2015
At the outset I would like to recount to you this short true story, which happened to me a few months ago in Iraq, I went to a bank (banks, known in Iraq), and after a long wait in the waiting lounge where there is no basic services of drinking water and clean bathrooms I met Bmozvh responsible and asked her to open my current account of the Iraqi dinar and the US dollar, drove the employee of the drawer office paper bearing a long list of conditions required to open the account and it was most notably bringing endorsement of two agents (Zbonin) of this bank with a deposit of $ 500 is retractable and another set of pledges and related documents which take time to be configured. She asked me if the issuance of Visa card you pay an amount equivalent to almost one hundred dollars to cover the wages Print this card and you pay the same amount annually when renewing the card. Frankly, I was shocked from these complex procedures and I said to her: "Are you sure about these actions?
I am here to deposit sums of money, not to withdraw an investment loan, "she stressed to me these actions official books of higher authorities. Vsrdt her incident with me several years ago when I went to America as a college student and I went to the bank name (Bank of America Bank of America), one of the largest banks in America and asked them to open an account with my Visa card issuance. It propagated operation within five minutes and only a copy of the passport and immediately got on the current account number with temporary Visa card until the new card by sending them my name to my house after only one week is required. The employee was not asking me to deposit any amount or pay the account opening fees.
Before I left for this bank employee showed me an album of designs Bank Visa card, and asked to choose what I want from forms placed on the Visa card and there were dozens of models. Then he asked for a photograph to be placed also on the Visa card. The biggest surprise that shocked me that the staff member told me that the bank has to deposit an amount of $ 25 gift them, said when customers bring you any of your butt will deposit $ 25 for each new customer in addition to the new customer for the same amount. And you've already done so with my wife. Having expressed this to the employee in the Iraqi bank for my dismay of these actions and the need to learn from international banks whispered in my ear and said: (best to deposit your money in a respectable bank outside Iraq).
My question now is, is this the banking situation is suitable for a country that is in dire need of national funds by the search for foreign investment? As a result of such a failed policies in the management of banks, earning investors and owners of the funds does not have any local or foreign investor make any large investment project in Iraq. And what you hear from medium projects such as the construction of a large shopping mall (Mall) or luxury restaurants, these projects where the government may have contributed to twice the amount of local or foreign investor. We will come on the reasons for failure in investment and economic growth later in this article.
A advisers in the Secretariat of the Iraqi cabinet said that Iraq, unfortunately, is located at the bottom of the list of countries from among the 186 countries in the field of business facilities, in the sense that it is more worse in the business and investment environment countries, according to the annual World Bank reports which measures the Doing Business systems that encourage business activities or restrict cross-9 areas or "indicators" essential are; (starting a business, dealing with construction permits, registering property, getting credit facilities, and the protection of investors, paying taxes, trading across borders, enforcing contracts, and closing the business) , so how can we invite investors to invest in Iraq and they are aware of such reports and each difficulty there they face the cost and the greater the costs of investment is profitable and is the glory became in accordance with criteria (cost / benefit).
fact that can not be concealed that the Iraqi economy is going through the most serious economic crisis since 2003 It may threaten the entire future. Among the reasons for this significant deterioration: the sharp decline in oil prices (oil) and control organization Daash on the third of the area of Iraq (where many oil refineries and local banks and foreign fields), and breadth of financial and administrative corruption in the country, which has led to the reluctance of foreign investors to enter into Iraqi market.
Although the 2015 budget of more than $ 100 billion, however, about 80% of this budget goes to operational expenses of salaries and retirement (pension) and daily expenses. The amount allocated for investment, it does not exceed 20 percent of this budget is spent only on current projects that have not yet been completed. Even this small amount will not be available because of the country's need to very large sums of money to buy weapons to counter the terrorist organization Daash after being abandoned by the whole world, not just shy is received assistance from the international coalition.
And financial revenue Iraq depends on oil as the main source, which constitutes 98% of the state budget. Budget adopted this year to guess the price of a barrel of oil at about $ 56 card and export 3 million barrels per day, despite the fact that Iraqi oil is now sold for less than $ 45 per barrel. The continuing decline in oil prices could lead to an increase in the size of the budget deficit, which currently stands at $ 25 billion. This year, the government has developed some measures to diversify its financial resources by raising taxes on the mobile phone companies and airline tickets and buy cars, alcohol and other luxury products. These actions may lead to counterproductive vigorously strike the local economy stagnated if not total paralysis. The government also seeks to cover the deficit of foreign loans from the International Monetary Fund and World Bank, as well as demand from some countries that have a financial entitlements such as Kuwait (compensation for the Kuwait war) and Egypt (compensation of Egyptian workers) to postpone the payment of their payments to the next year or taking worth of Iraqi oil instead of the cash payment.
On the other hand, unemployment in Iraq constitute more than 25 per cent, although the proportion of people below the poverty line more than 30 percent, according to official data from the Central Bureau of Statistics as well as the United Nations Development Programme. This is a scary number in oil country like Iraq, and when many economists semantics known about the actual reality of the country's economy.
What a fragile agreement between the central government and the Kurdistan Regional Government on the export of oil and there is still hazy and clear in a lot of the terms of this Agreement. The collapse of this agreement could lead to a significant deterioration in the economy of the two parties. Government of the Territory still unable to provide the Center with a quantity of 550 thousand barrels per day, and in return the central government reluctant to provide its share of the region's annual state budget, amounting to 17 percent. Joe continued mistrust between the two parties would have a very negative impact on the economy and the labor market and the movement of trade between the region and the center. Iraq Stock Exchange index down record by more than 19 percent this year and a lot of companies suffered heavy financial losses.
And it can shorten the causes of the economic and investment chaos in the country following matters. It can put the rest of reasons within these Sbaan:
The political and security turmoil, and in my opinion that the political unrest is the most serious of the security situation on the economy and investment. There are plenty of ready to work in an unsafe environment for international companies by providing the necessary security protections but is not willing to work in politically unstable environment. Take for example the political and partisan conflict between the central government and the province of Basra. There are obvious conflict of powers and the instability of many officials in their responsibilities and their positions. When any new official comes to fight all the agreements and contracts concluded by the former official and fights all his projects for political reasons and settle political accounts and we have a lot of experience in it. Some of the projects implemented parked although half exceeded due to a conservative or conservative officials and a former official accused of corruption change. Most of these accusations and be political.
One manifestation of political turmoil is the different political parties in the economic direction and in line with the interests of the party and the size of its influence in the government. For example, after the formation of the government in 2006, the Iraqi Minister of Planning of the Iraqi Islamic Party, while the Minister of Finance of the Islamic Supreme Council, and Deputy Prime Minister for Economic Affairs Kurdish secular, and it was these are the pillars of the Iraqi economy in the first elected Iraqi government since the US occupation in 2003. The first It adopts the idea directed by the state centralized economy, and the third was believed in the idea of the open market or free economy and that the state move away completely from intervening in the economy and leave the subject of the private sector and investors, as is the case in America and Europe.
The third and he wanted an economy that combines the first and second my policy and to give some of the powers of the state and management of some strategic projects, as well as some proprietary companies accountable. There was a clear disturbance in the orientation of the country's economy and was often cause embarrassment at international conferences and negotiations with investors because of the absence of a unified approach to state in the finance and economy and investment.
1 - financial and administrative corruption : Indicates a lot of statistics issued by local and international organizations concerned with the integrity and the fight against financial and administrative corruption that Iraq is at the forefront by corruption among the countries of the world and for several consecutive years, in spite of having a lot of regulatory circles as a body integrity, BSA and offices inspectors general and the internal oversight services in the ministries that are supposed to all work on monitoring government performance in the financial and administrative areas. To find out the extent of corruption in Iraq, Iraq has been spent since 2003 and so far more than US $ trillion (thousand billion dollars), we have not seen the construction of a new building or a single school or hospital of modern standards. Most of the projects was a restoration of some of the buildings, bridges, roads, airports old. US inspector general has found a great havoc in the Iraqi ministries, especially the ministries of defense, interior, trade and electricity. Experts say that the rate of corruption and waste of public funds in excess of 50 percent of the total value of any project would be forwarded to the companies.
Is a financial and administrative corruption obstacle to investors, due to the lack of clarity and transparency in contracts and to identify investment opportunities, which encourages manipulation operations to conclude investment deals, and non-compliance with laws own in that area, as the administrative and financial corruption leads to increased costs which are reflected directly on the All of the product and the consumer alike, thus contributing to the decline in motivation among investors on foot process of investment in the country.
It can put other reasons for the deterioration of the economy and investment in Iraq as part of the administrative and financial corruption, including the weakness of the financial and banking sector, the overlap between monetary and fiscal policy of the state, weakness and it provided incentive for investment legislation, fluctuation of the exchange rate of the Iraqi dinar against the dollar and the lack of appropriate infrastructure for the establishment of large-scale projects.
Therefore, unless we find a stable political environment and eliminate financial and administrative corruption not hope for Iraq in the triumph over terrorism and recover economically even if spent annually hundreds of billions of dollars.
[You must be registered and logged in to see this link.]
