Iraq

Politics:

• Analysis

  Iraq politics: Quick View - President's stroke could increase instability

  Event

  Jalal Talabani, the Iraqi president and long-time leader of the Patriotic Union of Kurdistan (PUK), the second-largest Kurdish party, suffered a stroke on December 17th.

  Analysis

  The intensity of the stroke is currently unclear. Mr Talabani, who is 79, has had a string of medical problems in recent years. Some local media sources have reported that he is in a coma, but Mr Talabani's chief of staff told a press conference that he was in intensive care but stable. There is discussion about sending him abroad for treatment. He may yet recover but, until the situation is clarified, it is possible that the Iraqi political scene could lose one of its most influential personalities.

  Mr Talabani founded the PUK, a leftist party with a power base in Sulaymaniyah, in 1975, following a dispute with the dominant Kurdistan Democratic Party (KDP). Relations between the two parties, who fought a brief civil war in the 1990s, are better these days, and they are partners in the Kurdistan Regional Government (KRG) and also in the Kurdish bloc within the Iraqi parliament. Mr Talabani is a shrewd political player, who has at various times allied closely with as disparate players as Iran and the US, and manages to maintain cordial relations with most parties inside Iraq. These qualities helped him to become president of Iraq in 2005.

  The presidency has little direct power under the constitution, but Mr Talabani has used its symbolism and his own diplomatic skills to serve as a frequent mediator between Iraq's factions. He brokered the Irbil Agreement in 2010, the basis for the current Iraqi government, and also an initial deal last week to dampen a recent upsurge of tensions between Kurds and the central government in disputed territories on the borders of the KRG.

  Mr Talabani would not be easy to replace. Barham Saleh, a former Iraqi deputy prime minister and former KRG prime minister, is probably best placed to take over as Iraqi president-a position allocated to Kurds under an informal sectarian arrangement-and also PUK leader, although Mr Talabani's son Qubad might be a candidate for the latter role. Although Mr Saleh is well regarded internationally, he is a generation younger than Mr Talabani and lacks his political weight. Within the KRG, he might struggle to counterbalance the KDP's more bellicose leader, Masoud Barzani, as effectively as Mr Talabani.

  December 19, 2012

• 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)

   Saleh al-Mutlaq (Iraqiya)

   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: Rafi al-Issawi (Iraqiya)

  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)

  December 04, 2012

• Outlook

  Iraq: Key developments

  Outlook for 2013-17

  • The continued weakness of the central authority and the services 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 (KRG) will persist in the absence of a national hydrocarbons law. However, an outright military conflict appears unlikely.
  • 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 a comfortable fiscal surplus over the forecast period, averaging over 4% of GDP. Iraq's fiscal account will closely track 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

  • Representatives from Iraq's Ministry of Oil have held meetings with China National Petroleum Corporation and Lukoil (Russia) about taking over the stake of ExxonMobil (US) in the West Qurna 1 super-giant oil field.
  • In mid-November sources close to the prime minister said that Iraq was reconsidering an arms deal with Russia that would see the country provide Iraq with military jets and helicopters. However, the cancellation announcement was denied by other Iraqi officials.
  • The armed forces of the central government and the KRG stood to in a disputed region near Kirkuk. The escalation in hostilities led to Iraq's speaker of parliament convening talks between both governments in an effort to defuse tensions.

  December 04, 2012

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

  
  

  

  December 04, 2012

• 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. Political discourse became more polarised after the arrest warrant issued in December 2011 against Tariq al-Hashemi, a vice-president and prominent Sunni politician, a move that many Sunni Arabs saw as an attack on their community. The end of a boycott of both the cabinet and parliament by the Iraqi National Movement (INM), the bloc that Mr Hashemi belongs to, brought only momentary respite from the tensions, which flared up again in May with a petition for a no-confidence vote in Mr Maliki. This foundered after Moqtada al-Sadr, a Shia cleric, withdrew his initial backing for the petition. However, the political scene remains troubled, with a ministerial resignation from the government in August and the death sentence handed down to Mr Hashemi in absentia in September. The much-discussed National Conference, called by the president, Jalal Talabani, to help to resolve long-standing differences between the various political blocs has not yet been scheduled.

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

  INTERNATIONAL RELATIONS: In the wake of the US military withdrawal, Iraq's foreign policy will be dominated by its efforts to carve out a more independent role for itself, while seeking to balance its ties with Iran to the east and its Arab neighbours to the south and west. The US announced an end to its combat mission in Iraq in August 2010, and the last of its troops had left Iraq by end-2011. With the end of its troop presence, the US role in Iraq will be greatly diminished, but the two countries will maintain a close diplomatic relationship.

  POLICY TRENDS: Economic policymaking will be constrained by the weakness of central government control. As a result, the government's primary aim will be to improve project implementation, in part by encouraging greater local participation and cutting bureaucratic constraints. Progress will remain slow, hindered by vested interests and corruption, but better security should at least allow progress with 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 overall in the security situation 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 KRG-administered provinces should persist. 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: We estimate that prices will have risen by 6.8% on average in 2012. Consumer price growth has been low since early 2008, as the 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 political backlash prompted the government to offer both in conjunction. This is likely to provide some support for prices, and we expect inflation in 2013 to average 6%. Nevertheless, inflation will moderate in 2013-15 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 (despite a recent increase) 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$40bn 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 IOCs become more involved in the exploitation of Iraq's hydrocarbon resources. As a result, the current-account surplus will moderate from 6.8% of GDP in 2013 to 5.7% of GDP in 2017.

  December 01, 2012

• 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)	6.8	6.0	5.5	5.6	5.8	6.5
  Oil production ('000 b/d; av)	3,000	3,360	3,753	4,192	4,695	5,258
  Government balance (% of GDP)	4.5	3.0	4.3	4.4	4.7	5.4
  Exports of goods fob (US$ bn)	88.1	93.5	107.9	125.5	146.2	171.8
  Imports of goods fob (US$ bn)	56.9	66.0	75.9	88.1	104.8	124.7
  Current-account balance (US$ bn)	20.5	15.7	18.1	21.2	22.1	23.7
  Current-account balance (% of GDP)	9.9	6.8	6.8	6.9	6.2	5.7
  External debt (end-period; US$ bn)	50.3	41.2	40.4	39.7	38.9	38.2
  Exchange rate (av) ID:US$	1,168	1,168	1,168	1,168	1,168	1,168
  a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts.

  Download the numbers in Excel

  Download text file (csv format)

  December 04, 2012

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

28.5m (IMF 2006 mid-year estimate)

Main provinces

Population in '000 (Iraqi estimates, 2004)

Baghdad: 6,307

Nineveh: 1,353

Basra: 1,932

Babil: 1,424

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 19th 2012) and Eid al-Adha (Feast of the Sacrifice, October 26th 2012) are widely observed

March 27, 2012