Thread: Archive Latest News - Think Tank - 01/01/08 - 14/04/08

Continued.......

If rentier-state effects are subsequently strengthened, corruption and a more active insurgency are likely to reinforce the process of economic decline. On the other hand, if rentier-state effects can be controlled or weakened, then economic outcomes improve and with that, the possibility of establishing a virtuous circle strengthening the federation. With increased political stability, there will be further gains in economic activity. This longer-term virtuous circle can be further strengthened if stability results in a reorientation of economic policies from short- to longer-term focus with stabilization funds providing a supporting macroeconomic environment.

Figure 1
Iraq: Constitutional Rules and Economic Performance




There are some encouraging signs. In the southern provinces, interviews of voters suggest that the critical issue is to ensure that the proceeds of Iraq's oil exports are distributed more fairly than in the past--something that is explicitly catered to in the constitution. The impulse toward creating a virtual separate state is not as strong in the south as it is in the Kurdish north. Southern voters, for the most part, seemed to view the constitution as a vital step towards peace and stability, rather than as a divisive, provocative formula for Shi'a-Kurdish collaboration to suppress the once-dominant Sunni Arab minority.[43] Although the Sunnis opposed the decentralization structure of the new constitution, their opposition centers more on the potential loss of oil revenues to the Kurds and Shi'a and less on regaining control of the entire country.[44]

What might the government consider in the way of modifying the economic sections of the existing constitution? One option that has received surprisingly little attention is the simple one of distributing a relatively large share of oil revenues directly to the population. A clear advantage of this approach is that it would give the Sunnis a clear stake in the success of the economy. Acts of insurgency that jeopardize oil revenues would directly hurt large segments of the Sunni community. Formalization of this type of distributive system would allay Sunni fears that at some time in the future they would be completely cut off from the country's oil revenues.

A number of other benefits would also flow from the direct disbursement policy. With direct payments, massive subsidies and price controls would no longer be needed and could be phased out quickly, leaving prices to be determined by market forces. The broad-based demand that would be created from increased purchasing power no doubt would provide opportunities for more profitable small-scale private sector businesses. Many studies of small- and medium-sized businesses in developing countries have concluded that businesses of this type are the chief engines of job creation and innovative activity.

As the experience of the transitioning countries of Central and Eastern Europe has shown, in addition to job creation and innovation, growing business sectors often find it in their best interest to press governments for additional market reforms. Governments, in turn, find it is in their interest to nurture this new base of prosperity and respond accordingly. In this way, it is conceivable that a virtuous circle of growth, reform, and further growth could be put in place over time in Iraq. The country has the broad-based talent, skills, and ingenuity to prosper if only it can break the link between state and oil, with its corrupting and debilitating influence.

Unfortunately, to date, improvements in economic performance have been limited. An independent assessment, made in late 2007 by Stuart W. Bowen the Special Inspector General for Iraq Reconstruction (SIGIR), notes some bright spots,[45] including economic growth in the Kurdish north;[46] tribal reconciliation in the western desert province of Anbar; and patchy progress in the development of local governments. Beyond that, some of the provinces are showing increasing ability to create plans, write contracts, and carry out construction projects to rebuild Iraq's physical infrastructure.[47] Skill shortages are, however, impeding progress in many local governments and ministries.[48]

Clearly, many factors are still impeding progress in key areas across the country. For example:[49]

• The failure of the Council of Representatives to pass a provincial powers law that defines local governments' rights and responsibilities has limited provincial councils' effectiveness in managing their governmental institutions.
• Weak and uncoordinated rule of law programs within the provinces and at the national level have been a continuing problem. In most provinces, there is little cooperation.
• Among the police, courts, and correctional facilities, judicial orders are routinely ignored.
• Efforts to increase local living standards and reduce unemployment have been undermined by the dangerous security situation, but micro-lending programs, agribusiness development, and small-business development programs are beginning to make headway.
• Provincial governments have limited capacity to manage and sustain infrastructure and to budget for operations and maintenance, but some improvements have been noted in Iraqi management of local reconstruction projects.
• Local political reconciliation efforts have been undermined in some areas by rival Shi'a groups, a sense of alienation among Sunnis, and growing frustration over the inability to obtain government services.

At the risk of over-generalizing, the greater picture is one of high investment and rapid increase of incomes in the Kurdish regions, promise of stability and improved prospects in the Sunni region of al-Anbar, and continued stagnation in Baghdad with limited pockets of progress in the Southern provinces. One danger of the development of distinct regional economies is the Balkanization of Iraq, which may in the longer term impede efforts to consolidate the country around a strong central government. There are already an increasing number of examples of provinces defying the central government through such actions as withdrawing their electricity generation from the national grid.[50]

What accounts for this sad state of affairs? The failure to integrate economic programs more tightly with political and military dimensions is a major factor. Since the overthrow of Saddam Hussein, the economy has largely been an afterthought with the result that political and military gains are hard to sustain in an environment of grinding poverty and unemployment.

One of the main lessons learned from the British experience in Southern Iraq was that:[51]

In conditions of economic stagnation the security forces find that they are dealing with general public order issues caused by significant numbers of ordinary disgruntled Iraqis, rather than the pure terrorist threat. What is required is a balanced approach with equal focus on the redevelopment of the domestic economy as well as the rebuilding of the domestic security forces.

Global Politician - Impediments to Stability in Iraq: Th Illusive Economic Dimention

Continued........

Conclusions

Iraq's economic future will be largely determined by events surrounding the oil sector together with the adoption of a number of the basic principles noted in the previous section. One can easily envision a bright future as well as one quite grim. There are, however, several simple guidelines that Iraq's leaders should keep in mind. Most importantly, the true test of the expenditure of scarce resources in Iraq should be the total contribution to political and economic development. Expenditure patterns that contribute to the avoidance of rentier-state effects are likely to be the most productive for the country's eventual recovery and growth.

Fortunately, within Iraq there appears to be increasing acceptance of these principles. On July 27, 2006, the Iraqi government and the United Nations announced the creation of the International Compact with Iraq. Over a five-year period the Compact--jointly chaired by the government of Iraq and the United Nations with the support of the World Bank--is to aim to unite the international community and multilateral organizations to help in Iraq's recovery.

The Compact primarily focuses on building a framework for Iraq's economic transformation and on Iraq's integration into the regional and global economy. To achieve this goal the government of Iraq will focus on political inclusion and consensus-building, establishing professional security forces, tackling corruption, creating a transparent and efficient oil sector, developing a solid budgetary framework, and improving governance by building and consolidating effective national institutions.

Hopefully this is a blueprint for Iraq to achieve its national vision "[t]hat in five years Iraq shall be a united, federal and democratic country, at peace with its neighbors and itself, well on its way to sustainable economic self-sufficiency and prosperity."[52]

Global Politician - Impediments to Stability in Iraq: Th Illusive Economic Dimention

Iraqi clerics meet in Cairo to allay sectarian tension

An Iraqi academic on Saturday said Shiite and Sunni clerics are meeting in Cairo to allay the sectarian tension and strengthen the cohesion of Iraqi communities.

"The forum has seen deep-rooted talks to sow trust among all Iraqis and smooth out the political and sectarian tension to reach a consensus," academic and cleric Abdel Karim Hammim, the secretary general of Iraqi scholars and intellectuals grouping, told Aswat al-Iraq - Voices of Iraq - (VOI).

He pointed out "clerics of different sects agreed on dialogue as the best means of reaching positive results."

The Iraqi scholars and Intellectual grouping, a cross-sect body led by academic and cleric Abdel Karim Hammim, has a headquarters in Baghdad and several offices in Iraqi provinces.

The Cairo meeting, to be held in Nasr City Hotel, is a pursuant to several meetings held earlier in Damascus and Baghdad.

Aswat Aliraq

Cheney comes to Mideast with ‘rich agenda’ on oil and peace
WASHINGTON: Vice President Dick Cheney left yesterday for the Middle East to raise concerns about high oil prices, push Israeli-Palestinian peace talks, and seek support for Iraq, where war began five years ago this week.

Cheney, who has strong ties with leaders in the Middle East, will visit Oman, Saudi Arabia, Jerusalem, the Palestinian territories, and Turkey during a nine-day trip to the region.

“Clearly, our ongoing efforts in Iraq and Afghanistan will be discussed,” John Hannah, national security adviser to Cheney, told reporters. “Middle East peace, Iran, the situation in Syria, Lebanon, the violence in Gaza, energy – it’s a very long list and rich agenda.”

Cheney will reinforce the message from visits by President George W Bush in January and Secretary of State Condoleezza Rice earlier this month, in a stepped-up diplomatic push for Israelis and Palestinians to move forward on peace efforts dealt a blow by violence in Gaza and Israel.

“The mood has deteriorated incredibly in the last six weeks since the president was there,” Jon Alterman, director of the Middle East programme at the Centre for Strategic and International Studies, said.

“From the outside it’s very hard to see that Secretary Rice was able to even arrest the slide let alone get things moving forward. My guess is the vice president will be able to arrest the slide if not necessarily put things on track,” he said.

In Saudi Arabia, Cheney will discuss energy with King Abdullah as record-high oil prices strain the US economy, but he was not expected to repeat the call by Bush for Opec to increase production.

“I’m not sure he’ll seek anything more than a good and thorough discussion about the current situation in the global energy markets,” a senior administration official said.

The US wants Saudi Arabia, and other Arab allies like Egypt, to set up a diplomatic presence in Iraq by appointing an ambassador and opening an embassy in Baghdad.

“The US can do a lot for Iraq, but we cannot provide Iraq with an anchor in the Arab world, a kind of legitimacy for the new Iraqi project that comes from being fully integrated in its neighbourhood,” the US official said.

"And I think clearly some of our friends in the Arab world can do more on that score,” he said on condition of anonymity.

But analysts were sceptical that Cheney would make any major breakthroughs.

“I don’t think that he’s going to be able to bring back anything meaningful because he’s got nothing to offer,” Steven Simon, a senior fellow for Middle Eastern studies at the Council on Foreign Relations, said.

“He represents a lame duck president, a floundering economy, a situation in which the US for all its efforts in Iraq has no leverage on the government in Baghdad,” Simon said.

Cheney throughout his trip will discuss the situation in Iraq, where security has improved, but violence persists five years after the US-led invasion.

Bush will soon receive a new assessment from Gen David Petraeus, the top US commander in Iraq, and US Ambassador Ryan Crocker, that he will weigh in deciding whether any changes to US strategy are needed.

Cheney will tell allies that the US remains concerned about Iran’s nuclear ambitions and would like to see its growing regional influence contained.

“I expect in all of these countries that the challenge we face from Iran will be a very high topic of conversation,” the US administration official said.

The message for Turkey, which has been fighting Kurdish rebels known as the PKK in northern Iraq, will be that the US agrees “the PKK is a terrorist organisation that needs to be defeated,” and will continue to support Turkey in addressing the problem, the official said. – Reuters

Gulf Times – Qatar’s top-selling English daily newspaper - First Page

Oil prices soar above $111

Oil jumped to a record above $111 a barrel on Monday, as a surprise weekend cut in the Federal Reserve discount rate and the fire sale of stricken U.S. investment bank Bear Stearns sent the dollar to all-time lows.

Light sweet crude for April delivery on the New York Mercantile Exchange traded 93 cents higher at $111.14 per barrel. Earlier the contract hit an all-time high of $111.42 per barrel.

In London, May Brent crude futures were 75 cents higher at $106.95 a barrel.

PUKmedia :: English - Oil prices soar above $111

Work on Iraq-Turkey Natural Gas Pipeline in Progress

Turkey and Iraq plan to complete feasibility works of a natural gas pipeline project in the possible shortest time.

Executives of the two countries earlier signed the frame agreements for the construction of a natural gas pipeline between Turkey and Iraq.

After feasibility studies are completed, the route of the pipeline, how much it will cost, annual amount of natural gas flow and other technical matters will become clear.

The project aims to increase natural gas fields in Iraq and bring natural gas from this country to Turkey. A consortium formed by TPAO, Tekfen and BOTAS are carrying out the project.

Around 10 billion cubic meters of natural gas obtained from five areas in Iraq will be sent to Turkey p.a. A terminal will be constructed in Yumurtalik town of Turkey, and a great deal of the gas will be shipped to world markets.

According to the project, the natural gas pipeline will be laid from Iraq to Turkey, and follow the Silopi, Sirnak and Diyarbakir route in Turkey. From Diyarbakir, the pipeline will go through Adana's Yumurtalik town.

PUKmedia :: English - Work on Iraq-Turkey Natural Gas Pipeline in Progress

President Talabani Meets Dick Cheney

Iraqi President Jalal Talabani met today the American vice-president Dick Cheney, in the presence of the Iraqi vices-president Tariq al-Hashimi and Adel Abdul al-Mahdi.

It’s worth mentioning that vice-president Cheney has arrived today in Baghdad in an unannounced visit.

Details will be announced later.

PUKmedia :: English - President Talabani Meets Dick Cheney

Baghdad Rocked as McCain, Cheney Visit

Sen. John McCain stressed the importance of a U.S. commitment to Iraq during talks with Iraq's prime minister Monday, and explosions struck Baghdad during twin visits by the presumptive Republican presidential nominee and Vice President Dick Cheney.

Helicopter gunships circled over central Baghdad and the heavily fortified Green Zone, but no details were immediately available on the cause of the explosions.

McCain, who has linked his political future to U.S. military success in Iraq, met Monday with Prime Minister Nouri al-Maliki shortly before the Iraqi leader began separate talks with Cheney.

Al-Maliki said he and the vice president discussed ongoing negotiations over a long-term security agreement between the two countries that would replace the U.N. mandate for foreign troops set to expire at the end of the year.

"This visit is very important. It is about the nature of the relations between the two countries, the future of those relations and the agreement in this respect," the prime minister told reporters. "We also discussed the security in Iraq, the development of the economy and reconstruction and terrorism."

McCain also said it was important to maintain the U.S. commitment in Iraq and warned that a U.S.-Iraqi military operation to clear al-Qaida from its last urban stronghold of Mosul, 225 miles northwest of Baghdad, will be "very difficult and very important."

McCain, who arrived in Iraq on Sunday, told reporters that he also discussed with the Shiite leader the need for progress on political reforms, including laws on holding provincial elections and the equitable distribution of Iraq's oil riches.

The Arizona senator said he had reviewed the security situation in Baghdad with Iraqi officials.

He also visited the Anbar province city of Haditha on Sunday, drinking soft drinks from street vendors and answering questions about the U.S. presidential campaign to tout recent security gains ahead of the fifth anniversary of the U.S.-led invasion.

Asked by one of the vendors if he would return to Iraq, McCain responded, "We'll come back if I win." Footage of the visit was distributed on a military Web site.

Cheney landed at Baghdad International Airport, then flew by helicopter for talks with U.S. and Iraqi officials. It is Cheney's third vice presidential trip to Iraq where 160,000 American troops are deployed and the U.S. death toll is nearing 4,000.

The U.S. Embassy in Baghdad said it could not confirm reports of a rocket attack on the Green Zone after Cheney's arrival. "I'm not aware of any," embassy spokeswoman Mirembe Nantongo said.

Violence has dropped throughout the capital with an influx of some 30,000 additional U.S. soldiers as well as a Sunni revolt against al-Qaida and a cease-fire by radical Shiite cleric Muqtada al-Sadr's Mahdi Army militia. The U.S. military has said attacks have fallen by about 60 percent since last February.

McCain met with Deputy Prime Minister Barham Saleh on Sunday and planned to meet with Gen. David Petraeus, the top U.S. commander in Iraq, the U.S. Embassy said. Further details of the visit were not released for security reasons, the embassy said.

Before leaving the United States, McCain, who was making his eighth trip to Iraq, said the tour to the Middle East and Europe was for fact-finding purposes, not a campaign photo opportunity.

McCain, the senior Republican on the Senate Armed Services Committee, was accompanied by Sens. Joe Lieberman, an independent, and Republican Lindsey Graham, two top supporters of his presidential ambitions. The weeklong trip will take McCain to Israel, Britain and France.

In other violence Monday, police said they found the bodies of three members of a U.S.-allied group fighting al-Qaida in Udaim, 70 miles north of Baghdad. Members of the mostly Sunni groups have been increasingly targeted by suspected al-Qaida members seeking to derail the recent security gains.

A roadside bomb targeting a U.S. convoy injured four civilians in Baghdad, while a separate bombing in the capital's Mansour neighborhood injured a policeman. Both were reported by police officials on condition of anonymity because they were not authorized to release the information.

PUKmedia :: English - Baghdad Rocked as McCain, Cheney Visit

Kurdistan National Assembly Considers Several Bills at First-reading

Today the speaker of the Kurdistan National Assembly (KNA) Adnan Mufti chaired the regular session of the assembly to consider several bills related to the Kurdistan region.

“At the first reading, a number of bills for the Kurdistan region’s budget of 2008 which was submitted by the KRG Council of Ministers, general board for civil airport, financial monitoring group of Kurdistan region, and protection of environment were discussed,” Karim Bahri, a lawmaker in KNA told PUKmedia.

After receiving reports and suggestions from the lawmakers, the bills are expected to be voted on in the next sessions as Bahri said.

PUKmedia :: English - Kurdistan National Assembly Considers Several Bills at First-reading

Barham Saleh: Now It is Time to Put Our Speeches into Practice

Today the Iraqi deputy prime minister Barham Saleh participated in the 2nd conference of the United Nations Convention Against Corruption held in Baghdad.

In the conference the deputy prime minister made a speech in which reasons and level of spreading corruption, and mechanisms to uproot corruption in the institutions were focused on.

“Now it is time to put our speeches into practice. We should benefit from the capability and experience of the potential institutes and experts,” Barham Saleh said.

The conference, which was attended by the UN special envoy in Iraq Stefan de Mistura, is expected to continue for two days. It was initiated by the international convection with Iraq in which many topics and subjects to be discussed.

PUKmedia :: English - Barham Saleh: Now It is Time to Put Our Speeches into Practice