Iraq’s Greatest Threat: An Economic Collapse
- November 30th, 2014
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Isis is not Iraq’s only threat. Iraq may be on the verge of an economic collapse. Iraq’s economy is not only shrinking but also acquiring a larger fiscal deficit. The private sector which includes 4 millions people has been crippled. Politicians and analysts worry that Iraq’s crippled economy will undermine the countries ability to fight off ISIS. The Iraqi state is also struggling to pay for the country’s nearly two million internally displaced refugees. Iraq’s economy is forecasted to shrink by 2.75% in 2014.
Under Nouri al-Maliki, the government overstated its oil revenue expectations and carried forward burdensome financial commitments. Even though the national budget had not been passed in Parliament, al-Maliki spent money illegally. Apparently around 65 percent of Iraq’s planned budget has already been spent. Under the new leadership of al-Abadi, the government still hasn’t approved of the 2014 budget proposal. Prime Minister al-Abadi did announce that his government would be implementing a set of austerity measures. Plans to hire some 37,000 new government employees, including doctors and teachers, have been ditched. Without a budget proposal for 2014, Iraq’s economic future sheds a dim light.
A majority of Iraq’s economy is based on oil sales. Today’s falling oil prices ($80 a barrel) hurt Iraq tremendously. ISIS has been a major problem for Iraq’s oil industry. The Kirkuk-Ceyhan pipeline that runs through Turkey has been shut down since March due to repeated attacks from ISIS. It is estimated that shutting down this pipeline alone has cost Iraq U.S$ 1.2 billion per month.
An economic collapse in Iraq would be detrimental to the Obama administration’s mission against ISIS. The U.S needs a strong Iraqi government to cooperate in fighting ISIS. The U.S needs to further protect Iraqi oil interests as well as help Iraqi forces regain lost oil refineries primarily in the North. We also need to push Iraq to pass a budget proposal. Further unbudgeted spending will hurt Iraq going into 2015.
-Timmy
http://www.niqash.org/articles/?id=3581