By Alastair Macdonald
Reuters, 27 August 2006
BAGHDAD - Iraq's government hopes its plans to attract investment and create jobs can stem a descent into civil war and says foreign leaders should back a U.N. economic package or face a disaster for the entire Middle East.
In an interview with Reuters, Deputy Prime Minister Barham Salih, the government's economy supremo, said the need to clamp down on sectarian and ethnic violence would not distract him from working to develop Iraq's vast potential oil wealth. Restoring prosperity could help rein in the killing, he argued.
"Undeniably security has to rank at the top," Salih, the most senior ethnic Kurd in the cabinet, said of its priorities.
"But does that mean at the expense of the economy and services? You cannot. All these things are inter-related. You need to regenerate the economy, create meaningful opportunities for employment, in order to help the security environment."
As a result, while bombs and death squads kill dozens of Iraqis every day and U.S. and Iraqi forces sweep Baghdad this month to try to staunch the bloodshed, Salih and other ministers are engaged in intensive meetings in their Green Zone official redoubt, wrangling over the budget and oil industry regulations.
While the lack of a government for six months following the election last December means that ministries are well behind in implementing plans for spending this year, Salih is pushing the Finance Ministry to pump more money into the economy next year.
"The Finance Ministry is erring on the side of caution in terms of budget revenue projections," he said late on Saturday.
"Iraq needs a budget that should be more ambitious and we need to stimulate the economy by providing the funds necessary for investment ... This budget will be crucial to Iraq."
A 2007 budget plan should reach parliament before the end of next month, in line with a constitutional deadline, he said.
The budget and legislation to attract investment in the oil industry, which produces almost all of Iraq's income, are being showcased to international institutions being shepherded by the United Nations into the "Compact for Iraq", what Salih calls a "vision" for support to the country over the next five years.
INTERNATIONAL SUPPORT
U.N. Secretary General Kofi Annan will host a meeting on Sept. 18 in New York before the U.N. General Assembly. Foreign governments will also be solicited during the annual meetings of the World Bank and International Monetary Fund the week before.
"We need sustainable, meaningful engagement of ... all the international community, not just the United States and certain other powers," said Salih, an urbane, British-educated engineer whose warm personal relations with U.S. and British officials are a feature of Iraqi efforts to win foreign support.
"Success in Iraq will have good consequences for the region and the rest of the world," he said during talks at his marbled official residence, once home to an aide to Saddam Hussein.
"God forbid, failure in Iraq will be disastrous for everybody, not just for the people of Iraq.
"It is time ... that the international community moves beyond the differences of the past and unites around the central task of helping Iraq achieve economic and political stability."
Racing inflation of 70 percent, along with unemployment at 50 percent by Central Bank estimates, is causing grave hardship, with fuel prices especially being driven up as subsidies are phased out under a deal with the International Monetary Fund.
Mindful of popular anger, Salih said the government was also looking at ways to target help to the neediest in society.
The factions in Prime Minister Nuri al-Maliki's national unity coalition are thrashing out a crucial law to regulate the oil and gas sector, without which, even without saboteurs attacking installations, foreign companies are not going to start putting money into renovating Iraq's aged infrastructure.
Internal meetings last week secured a basic agreement that control of resources must be shared between central and regional governments, in line with the new constitution, said Salih, whose fellow Kurds are eyeing profits from oil in their region.
But a bill will take at least a couple of months to finish, he added. Divisions reflect in part concerns among the once dominant Sunni Arab minority that new constitution's autonomy for federal regions could give southern Shi'ites and northern Kurds a lion's share of the world's third biggest oil reserves.
Insisting the bill was crucial but should not be rushed, Salih said: "This will decide the political economy of Iraq.
"This will decide the future of politics of this country."
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Citation: Alastair Macdonald. "Iraq govt eyes economy boost to ease conflict," Reuters, 27 August 2006.
Original URL: http://www.alertnet.org/thenews/newsdesk/L27819573.htm
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