I thought I’d take the liberty to present a counter argument to Mousa’s. The glass is half empty. This is because we shouldn’t consider economic success in nominal terms, but by comparing it to potential, and unfortunately, we are no where near this at the moment. Yes, GDP will grow by around 9% a year in 2012, but this belies serious weaknesses in the economy; take out oil production growth, and the picture is much different and far bleaker. Fine, the government’s revenue will grow, but this isn’t because there are suddenly more productive industries that are coming to the fore, there aren’t. Its oil…only oil, which can only really absorb a tiny proportion of the overall work force.
Part of the problem is that the policies needed to stimulate an economy just aren’t there. The government hasn’t decided whether it wants to adopt socialism or free-market capitalism. It oscillates, incoherently, between the two. It vowed to privatise inefficient state-owned companies, but hasn’t. It says it wants to get the private sector involved in key development areas like electricity, but hasn’t. This is a massive failure; I spoke to Hussein al-Shahristani on a recent trip he had here, and when I asked him what he was doing to attract independent power projects (IPPs, when a private company comes in to build a plant), he was happy to tell me that they had offered deals to companies. The problem is that no body took up the offer because the policies and legal frameworks that support the system are so fundamentally lacking. Contrast this to the Kurdistan Regional Government, which has managed to increase electricity supply in the region by getting the private sector to do the work. It has also managed to successfully build the first private-sector refinery too. The discourse in the rest of the country, though, is completely different. It centres around issues that were settled in most of the rest of the world in the 1970s. Doing business with international companies is still viewed with serious suspicion…and often as being a zero sum game. The transaction is looked at as having one of two possible outcomes: 1) the company is screwing us, or 2) we are screwing the company….not one of mutual benefit where fair payment is paid in return for a service or a good.
The way the economy is being run is an extension of the politics in Iraq, it is haphazard and inconsistent- hardly the kind of environment that puts companies at ease. Not only does this mean that jobs aren’t being created (putting a larger burden on the state to absorb the workforce), but that the services that these companies can ultimately offer are also lost.
This isn’t about moaning for the sake of it, or being a persistent pessimist, it’s about identifying the structural weaknesses, both within the system and the psyche, so that they can be treated. The economy is not just about the bottom line growth number. It is about peoples’ jobs, about productivity and about well being. A lot has to be done to ensure that Iraq’s economy flourishes properly. Unfortunately, I see very little serious initiative being taken to ensure that the policies needed for this to happen are even being discussed, let alone implemented.