Iraq

Politics:

• Analysis

  Iraq politics: Quick View - John Kerry asks government to inspect flights t

  Event

  The new US secretary of state, John Kerry, visited Iraq on March 24th, urging the country to crack down on potential arms shipments to Syria.

  Analysis

  The focus of Mr Kerry's visit was not surprising, reiterating a long-standing US demand for Iraq to prevent shipments of arms to the Syrian regime over its borders and through its airspace. Prior to the visit, a State Department official in Mr Kerry's delegation told the media that there are almost daily Iranian arms deliveries to Syria, which are thought to be significantly bolstering the confidence of the Syrian president, Bashar al-Assad, in the face of the territory and munitions his forces are steadily losing to rebel fighters.

  Despite the pressure from the US, not to mention other Arab states opposed to the Assad regime, Iraq has only twice requested that Iranian flights land for inspection, both in October 2012, and found only food and medical supplies, fitting with Iranian claims that the flights contain only humanitarian aid.

  Before his appointment as secretary of state, in his former role as chairman of the Senate Foreign Relations Committee, Mr Kerry had pushed a tough line on Syria, suggesting that the US make its assistance to Iraq (in security training for example) conditional on action on this issue. In office, however, he has adopted a softer approach, urging Iraq to consider how its actions will affect its future relations with a post-Assad Syria. There was no sign that Mr Kerry's visit has shifted the stance of Iraq's prime minister, Nouri al-Maliki, on this issue. Iraq can maintain plausible deniability that the flights contain arms, because the US has seemed unwilling so far to share the detailed intelligence it has on them, presumably owing to concerns about compromising its sources to the Iranians (with whom Mr Maliki's political group has close links).

  Mr Kerry also addressed some Iraqi domestic issues on his trip, urging Mr Maliki to reconsider the postponement of local elections in Anbar and Nineveh provinces, and meeting with the speaker of parliament, Osama al-Nujaifi, to urge an end to the recently renewed boycott of cabinet by Iraqiya, a rival political faction to Mr Maliki's State of Law alliance. These domestic interventions were probably even less welcome than his urgings on Iraqi foreign policy.

  March 27, 2013

• Background

  Iraq: Key figures

  Grand Ayatollah Ali Husseini al-Sistani

  The most senior Shia religious figure in Iraq, Grand Ayatollah Sistani, is revered by Shia both in Iraq and elsewhere as a marja' al-taqlid (source of emulation) in Islamic jurisprudence. Born in Mashad, Iran, in 1928, he ranks more highly in theological terms than any of the clerics in Iran, including the supreme leader, Ayatollah Ali Khamenei. Ayatollah Sistani, in common with Iraq's three other living grand ayatollahs, continues to espouse a tradition that encourages scholars to interpret texts in light of necessity and political realities. Thus he and his senior colleagues have an adaptive approach to Islamic texts, which encourages scholarship and political quietism, rather than support for an overt role for clerics in the political process. However, he has wielded considerable political influence at times of major inter-Shia strife in Iraq.

  Nouri al-Maliki

  Exiled in Iran and Syria between 1980 and 2003, the leader of al-Daawa, Mr Maliki, was viewed with more suspicion by the US administration than his predecessor, Ibrahim al-Jaafari. The internal politics of the United Iraqi Alliance and Iranian support facilitated Mr Maliki's emergence as prime minister of Iraq in April 2006. Regarded for much of his premiership as weak and ineffectual, Mr Maliki boosted his standing in early 2008 by ordering a military crackdown on rogue Shia militias.

  Abdel-Aziz Baqr al-Hakim

  In 2003 Abdel-Aziz Baqr al-Hakim took over the leadership of the Supreme Council for the Islamic Revolution in Iraq (now the Islamic Supreme Council of Iraq, or ISCI) from his brother, Ayatollah Mohammed Baqr al-Hakim, who was assassinated by a car bomb in Najaf. Mr Hakim has continued to maintain strong connections with Iran, with which the ISCI is the most closely aligned of the Iraqi Shia groups. Although remaining ambitious and outspoken, he has thus far declined to take up a government position since the transfer of sovereignty. He reportedly has lung cancer, and has recently spent prolonged periods of time in Iran and the US receiving treatment.

  Jalal Talabani

  Chosen by the Iraqi parliament as the president of Iraq after the January 2005 election, and selected again following the election in December of that year, Mr Talabani is also the head of one of two main Kurdish parties, the Patriotic Union of Kurdistan. His good relations with Iraq's myriad political blocs and the country's neighbours (including Iran) have seen him take an active mediatory role, although he is in a difficult position as head of state whenever Kurdish and Iraqi national interests conflict.

  Moqtada Sadiq al-Sadr

  Although the young cleric, who is in his early 30s, lacks religious credentials in the eyes of many other Shia clerics, his impressive familial lineage (he is the son and son-in-law of two of Iraq's most famous Grand Ayatollahs—both assassinated by Saddam Hussein) and decision to remain in Iraq during the rule of Saddam Hussein have won him respect among poorer members of the Shia community. He has staunch support in the populous Shia area in Baghdad known as Sadr City, as well as in many of the southern cities, and has sought links with both Shia and Sunni Arab political forces, believing that he can eventually play a leading national role in post-occupation politics. However, the sectarian atrocities carried out by his movement's militia, the Mahdi Army, has undermined his popularity, and he has stayed out of the public eye recently.

  Tariq al-Hashimi

  Vice-president and head of the largest Sunni Arab political party, the Iraqi Islamic Party (IIP). Although the parliamentary coalition in which the IIP participates, the Iraqi Accord Front (Tawafuq), withdrew from the government in August 2007, Mr Hashimi retained his post, and eventually played a central role in negotiating the group's return a year later. Three of his siblings have been killed by Shia militia death squads, and he has been a vocal advocate of retaining the US military presence in Iraq until stability is secured.

  August 05, 2008

• Structure

  Iraq: Political structure

  Official name

  Republic of Iraq

  Executive

  The current cabinet was appointed in December 2010, following an election for the Council of Representatives (parliament) in March. The prime minister and cabinet have executive authority, whereas the position of president is largely ceremonial

  National elections

  The next parliamentary election is scheduled for 2014

  Main political parties and armed factions

  All the prominent Shia Arab-led parties participated in the last election through one of two slates: the State of Law (SoL) list, which was dominated by the Islamic al-Daawa Party (the party of the prime minister, Nouri al-Maliki), and the Iraqi National Alliance (INA), which brings together Moqtada al-Sadr's political faction, the Islamic Supreme Council of Iraq (ISCI) and the Islamic Virtue Party (al-Fadhila). After the 2010 election these lists merged to form the National Alliance. The Kurdish "secular" parties include the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), which form the bulk of the Kurdistan Alliance (KA); there is also a Kurdistan Islamic Union and the Gorran (Change) list. Among the Sunni Arab groupings are the Iraqi Accord Front (Tawafuq), which ran in alliance with the Iraqiya party of Ayad Allawi, a former prime minister, as part of the Iraqi National Movement (INM), the Iraqi Islamic Party (part of the Muslim Brotherhood) and the National Dialogue Front. The largely Sunni Awakening Councils have a political role alongside their function as counter-insurgent militias. Among the representatives of other minorities are the Iraqi Turkoman Front and the Assyrian Democratic Movement. Parties with a less sectarian identification include the Iraqi National List (which includes the Iraqi Communist Party); Free Officers; and the Baath party. In addition to these more coherent parties, Sunni Arab insurgent groups include the Islamic Army and Jaish Mohammed, as well as al-Qaida in Iraq

  The government

  President: Jalal Talabani (PUK)

  Prime minister: Nouri al-Maliki (Daawa)

  Deputy prime ministers:

   Roj Nouri Shawis (KDP)

   Unfilled following resignation

   Hussein al-Shahristani (SoL)

  Key ministers

  Agriculture: Ezzedine al-Dawla (Iraqiya)

  Communications: Vacant

  Defence: Saadoun al-Dulaimi (interim)

  Education: Mohammed Tamim (Iraqiya)

  Electricity: Abdul Karim Aftan (Iraqiya)

  Finance: Unfilled following resignation

  Foreign affairs: Hoshyar Zebari (KDP)

  Health: Majeed Iqmoh (KA)

  Higher education: Ali al-Adib (Daawa)

  Industry & minerals: Ahmed al-Karbouli (Iraqiya)

  Interior: Vacant

  Justice: Hassan al-Shimmari (Fadhila)

  Municipalities & public works: Adel al-Maliki (National Alliance)

  Oil: Abdul Karim al-Luaibi (Independent)

  Planning & development co-operation: Ali Youssef Abdel Nabi (National Alliance)

  Trade: Khairallah Mohammed (KA)

  Several key portfolios have yet to be awarded and will be held by existing ministers on an interim basis

  Parliamentary speaker

  Usama al-Nujaifi

  Central Bank governor

  Abdel Basset Turki (interim governor)

  March 26, 2013

• Outlook

  Iraq: Key developments

  Outlook for 2013-17

  • The continued weakness of the central authority and the security forces may allow militia and insurgent groups to re-establish themselves in some areas, although violence is unlikely to return to 2006-07 levels.
  • The government of national unity, which brings together the four largest political groups, will continue to be weak and divided, and some blocs may pull out to join the parliamentary opposition.
  • Tensions between the central government in Baghdad and the Kurdistan Regional Government, stemming from, among other issues, the allocation of oil revenue, will persist in the absence of a national hydrocarbons law.
  • The role of foreign oil companies will expand as they are drawn in by the unique opportunity presented by Iraq's massive oil reserves.
  • The government will continue to record comfortable fiscal surpluses over the forecast period, averaging around 4% of GDP. Iraq's fiscal account will track closely movements in international oil prices.
  • We forecast strong real GDP growth, averaging 9% in 2013-17, as investment in a range of oil and infrastructure projects picks up and an increase in public capital spending (and foreign investment) reduces unemployment.
  • The current account will largely track movements in oil export receipts. The services deficit will continue to expand as foreign investment and the import bill increase over the forecast period.

  Review

  • Sunni Arabs have continued to hold large and regular protests, expressing frustration at what they see as bias against them from the Shia-dominated government.
  • Iraq's parliament has pushed through the delayed 2013 budget despite a lack of agreement over payments to oil companies operating in the Kurdish region.
  • In early March protesters demanding jobs broke into the West Qurna-2 oil development, causing damage to offices. Lukoil, the Russian oil company that is operating the project, maintained that production would come on stream in 2013, reaching 150,000 barrels/day by end of year.
  • The successful initial public offering (IPO) of Asiacell, a mobile-phone operator, has raised US$1.3bn, making it the largest new listing in the Middle East in more than four years.
  • The Ministry of Industry and Minerals awarded a US$700m contract to United Brothers Holding, a Turkish group that is present across a number of sectors in Iraq, to modernise the defunct State Company for Iron and Steel.

  March 26, 2013

Economy:

• Background

  Iraq: Economic background

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	14.3	11.4	12.6	12.2	11.9
  Industry	53.3	60.2	57.2	57.7	58.8
  Services	27.8	25.7	27.4	27.3	26.7
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  The lifting of sanctions following the passing of UN Security Council Resolution 1483 in May 2003 allowed reconstruction efforts to begin, but serious security problems continue to hamper the rebuilding effort. The neglect and mismanagement generated by three and a half decades of Baathist rule also mean that there are serious structural shortcomings to overcome. The oil industry, which is the bedrock of the economy, has begun gradually to recover from the toll of war-related damage and post-war looting. However, attempts to boost and sustain exports have been held back by persistent and often organised sabotage, targeted mainly at oil export infrastructure, as well as by a lack of investment in new production. Nevertheless, having remained at or below a disappointing 2m barrels/day (b/d) since 2003, oil production has increased markedly since the autumn of 2007, as improved security has allowed the reopening on a sustainable basis of the northern Kirkuk pipeline. As a result, oil output averaged around 2.4m b/d over the first half of 2008.

  Reliable employment figures are difficult to obtain, but it is estimated that up to one-third of Iraqis were employed directly by the state under the previous regime, a pattern being repeated under the new government. As a result, major economic activity (outside the oil sector) has for many years been concentrated in the main cities, which has contributed to a decline in agriculture's share of GDP (although the sector is still estimated to provide employment to some 25% of the workforce). The IMF estimates that the oil sector accounted for around 60% of GDP in 2007, and this heavy reliance on oil will continue for the foreseeable future.

  Elsewhere, development of a manufacturing sector has been hindered by the extremely poor security climate since 2003, as well as by the country's infrastructural deficiencies. In order to address the latter, the government has sought to boost development spending significantly, but progress has been hampered by security problems (despite improved stability since mid-2007), as well as by bureaucratic shortcomings.

  August 05, 2008

• Structure

  Iraq: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 26, 2013

• Outlook

  Iraq: Country outlook

  Iraq: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The Economist Intelligence Unit expects the political situation in Iraq to remain unstable. Militant groups will attempt to exploit the political uncertainty, and violence will spike intermittently. However, we do not expect a repeat of the sectarian conflict that engulfed Iraq in 2006-07. Much will depend on how satisfied Iraq's various communities are with their level of representation in the government of national unity. The threat of defections to the opposition remains, reflecting criticism that Nouri al-Maliki, the prime minister, is concentrating executive power, including control of the security apparatus, in his hands.

  ELECTION WATCH: Following the 2010 election, Mr Maliki retained his position as prime minister in the national unity government, which includes his State of Law coalition, the largely Shia Iraqi National Alliance, the Kurdistan Alliance and the Iraqi National Movement, led by a former prime minister, Ayad Allawi. Despite representing Iraq's main communities, the government is proving to be weak and divided, with policymaking and lawmaking hamstrung by a failure to reach consensus.

  INTERNATIONAL RELATIONS: Iraq will seek to strengthen its ties with its Arab neighbours--a strategy that it hopes will lead to new debt write-offs. However, this process will remain hostage to security developments and political posturing, and, more recently to Iraq's growing influence on global oil markets. Relations with Saudi Arabia have been undermined by the kingdom's clear preference for an Iraqi government not dominated by Shia Islamists. Despite an acrimonious past, relations with Kuwait have begun to improve. In late January Kuwait's parliament approved a US$500m settlement with Iraq Airways for damages following Iraq's invasion of the country 1990-91.

  POLICY TRENDS: Economic policymaking will be constrained by the weakness of central government control. Consequently, the government's primary aims will be to improve project implementation and cut bureaucratic constraints. Progress will remain slow, hindered by vested interests and corruption, but better security should at least allow progress in upgrading basic services, such as electricity and water.

  ECONOMIC GROWTH: We expect Iraq's economy to grow by a robust 9% on average during 2013-17, driven primarily by rising oil production. Bouts of violence, especially in central areas around Baghdad, will continue to disrupt the economy, but improvements in the security situation overall should aid economic activity in some of Iraq's more ethnically and religiously homogenous southern and western provinces, leading to increased wholesale and retail trade. In addition, private investment is set to surge as work on several large oilfield and infrastructure projects gathers speed. The economic growth already witnessed in the more stable Kurdistan Regional Government-administered provinces should persist provided that tensions with the central government remain in check. Growth will be aided by significant increases in government spending; the 2013 draft budget places investment expenditure at around 20% of forecast GDP. With mounting pressure on the government to provide basic services, a larger proportion of the budgeted levels will be spent. As one-third of Iraqi workers are employed by the state, private consumption is also likely to benefit from increasing government expenditure.

  INFLATION: Consumer prices rose by 6.1% on average in 2012, with prices edging down in the fourth quarter. Consumer price growth has been relatively low since early 2008, as the Central Bank of Iraq (CBI) has maintained the Iraqi dinar's peg to the US dollar and an improvement in the supply of basic items has lowered import costs and kept down inflation expectations. The cabinet approved a replacement of the subsidised food-rationing system with a system of monthly cash payments of ID12,000 (US$10), but a political backlash prompted the government to offer both in conjunction. This is likely to provide some support for prices, and we expect inflation to stay relatively steady in 2013 at around 6%. Nevertheless, inflation will moderate in 2013-14 as global food prices fall in general, but will pick up slightly later on, averaging 5.9% a year in 2013-17.

  EXCHANGE RATES: With inflation relatively low and the US dollar strengthening, the CBI has kept the dinar steady at around ID1,170:US$1 since January 2009. We expect the unofficial peg to remain in place at around this level over the forecast period, given the country's overwhelming reliance on oil revenue (which is denominated in the US currency). However, with fluctuating oil prices and occasional political shocks likely to cause intermittent downward pressure on the dinar, we believe that the CBI will occasionally have to dip into its substantial stock of foreign reserves to avoid bouts of volatility.

  EXTERNAL SECTOR: The current account will largely mirror movements in oil export receipts (which accounted for 99% of total export earnings in 2011, according to recently released CBI data). We expect Iraq to record a sizeable trade surplus in the forecast period as increasing imports of capital goods for investment are more than offset by increased oil exports at elevated prices. Overall, the trade surplus will average around US$35bn over the forecast period. Iraq's trade links will continue to shift towards emerging markets, particularly China, meaning it should be able to avoid some of the drop-off in demand from importers such as the US as local production gathers pace there. The non-merchandise deficit will widen steadily as services debits rise in line with import spending and as international oil companies become more involved in the exploitation of Iraq's hydrocarbons resources. Consequently, the current-account surplus will moderate from 6.6% of GDP in 2013 to 5% of GDP in 2017.

  March 28, 2013

• Forecast

  Iraq: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	8.5	8.2	8.7	9.0	9.4	9.7
  Consumer price inflation (av)	6.1c	6.0	5.5	5.6	5.8	6.5
  Oil production ('000 b/d; av)	2,957	3,311	3,699	4,132	4,627	5,183
  Government balance (% of GDP)	7.3	3.6	4.0	3.9	4.0	5.1
  Exports of goods fob (US$ bn)	93.9	93.6	107.5	124.8	145.4	170.9
  Imports of goods fob (US$ bn)	56.9	66.7	77.2	89.6	106.5	126.7
  Current-account balance (US$ bn)	26.3	15.1	16.4	19.0	19.6	20.8
  Current-account balance (% of GDP)	12.7	6.6	6.2	6.1	5.5	5.0
  External debt (end-period; US$ bn)	50.3	41.2	40.4	39.7	38.9	38.2
  Exchange rate (av) ID:US$	1,166c	1,166	1,166	1,166	1,166	1,166
  a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c Actual.

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  Download text file (csv format)

  March 26, 2013

View detailed map

Country Briefing

Surface area

441,839 sq km, including 924 sq km of territorial waters and 3,522 sq km representing Iraq's half share of a neutral zone jointly administered with Saudi Arabia. (There is an agreement to divide the zone, which, unlike the Saudi-Kuwaiti neutral zone, has no oil resources. However, the division has yet to be made)

Population

31.7m (Iraqi estimate, 2009)

Main provinces

Population in '000 (Iraqi estimates, 2009)

Baghdad: 6,703

Nineveh: 3,107

Basra: 2,405

Babil: 1,730

Climate

Very hot summers, cool winters

Weather in Baghdad (altitude 40 metres)

Hottest months, July, August, 24-43°C (average daily minimum and maximum); coldest month, January, 4-16°C; driest months, June-September, 1 mm average monthly rainfall; wettest month, March, 28 mm average rainfall

Languages

Arabic; Kurdish; Turkoman and Aramaic in parts of the north and north-east

Measures

Metric system. Some local measures are used unofficially, including:

1 dhirraa (Baghdad) = 74.5 cm

1 dhirraa (Mosul) = 70 cm

1 feddan = 5 ha = 12.36 acres

1 mann = 6 hogga = 24 okiya = 25 kg

1 tughar = 20 wazna = 80 mann = 2 tonnes

Currency

Iraqi dinar (ID)

Time

3 hours ahead of GMT

Public holidays

National Day (anniversary of the 1958 overthrow of the Hashemite regime-July 14th) remains a public holiday despite the scrapping of other political anniversaries

The dates of Islamic holidays are based on the lunar calendar and are therefore approximate. The month of Ramadan is not a public holiday, but significantly reduces the working-day. Eid al-Fitr (end of Ramadan, August 8th 2013) and Eid al-Adha (Feast of the Sacrifice, October 15th 2013) are widely observed

January 17, 2013