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How does the Iraqi economy develop in the presence of corruption?
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How does the Iraqi economy develop in the presence of corruption?
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The number of people living in countries suffering from corruption is nearly 6 billion people, where poverty is prevalent in most of these communities and services are worsening, especially in the education and health sectors.
There are multiple definitions of corruption, but what concerns us here is the use of power or public service. According to Transparency International, corruption is "any act involving the misuse of the public office for the sake of a particular self-interest or a particular group."
Iraq suffers from the spread of corruption in all its forms. In addition to financial and administrative corruption, there is political and social corruption. Corruption has contributed to a 20% rise in unemployment, while more than half a million Iraqi children are in the labor market and 3.5 million are out of school.
Although Iraq is swimming on lakes of oil, this has not been able to support the process of development and human construction and oil was unable to finance the infrastructure to diversify the economy.
Although foreign exchange reserves stood at about $ 84 billion in 2009, they fell to $ 49 billion in 2017 despite an increase in oil production. An average of $ 130 million a day comes out of Iraq because of the sale of the currency, which is riddled with corruption.
Today, Iraq has become a country that can not complete any project without being financed by borrowing (internal and external) of about $ 135 billion, which is more than 30% of the value of GDP.
Corruption has caused billions of dollars in lost investment, with more than 6,000 fictional projects estimated at over $ 200 billion. Until 2016, there were 4 thousand projects parked at a value of 5 trillion dinars (some of which are not economically viable and borrowing to achieve, but the rate of achievement did not exceed in most of the 20%).
These poor statistics come in the form of explosive budgets. Budget surpluses between 2006 and 2014 alone amounted to about $ 120 billion, while the total budget in the same period was at least $ 700 billion, all of which went into the pockets of the corrupt.
But what are the main reasons for not controlling corruption in Iraq?
There are many reasons not to control the corruption in Iraq, but we will try in this short paper to address the most prominent of which are:
1 - The multiplicity of regulatory bodies and their weakness to the influence of corrupt, strengthened by the power of arms and rooted in most of the facilities and institutions of the State, where the role of the Financial Control Bureau was weakened and created institutions such as the Integrity Commission and the Office of the Inspector General,
2 - weak oversight role of the legislative institution, especially with regard to transparency, despite the huge budgets, but it is still without disclosure of the final accounts and knowledge of cash flows, which amounted to about 1 trillion dollars between 2003 and 2017.
3- Weakness of the accounting systems of banks and their failure to connect to the international network while remaining behind the technology, which contributes positively to strengthening supervision and tracking of funds and transfers. The Central Bank of Iraq, for example, is still very far from the system of documentary credits for the import and export of goods to prevent the exit of hard currency for fictitious accounts, as happens in the case of (flying instruments) and others. The Central Bank of Iraq is the only financial institution in the world that sells the currency of its country auction, which leads to the depletion of cash reserves and wasted a lot of opportunities for the benefit of other neighboring countries developed with purely Iraqi funds.
4. Public sector inflation and the transformation of the ministries of the state from a business entrepreneur to an investor competing with the private sector until the public sector becomes a center for the unemployed that burdens the state and costs more than half of its annual budgets.
This has been reflected in the performance of the private sector, which is almost non-existent in the Iraqi economy, while the public sector is swollen so that the number of its employees reached 7 million employees (including 3.2 million retirees) estimated at 4 billion dollars a month and productivity efficiency equivalent to half an hour a day.
5 - impede the work of the private sector, specifically small and medium enterprises that support youth and provide employment opportunities and contribute to the diversification of the economy and replace them with small grants without clear strategies for development, which contributes to waste public money without real gains negligible.
6 - Lack of experience resulting from the deliberate neutralization of competencies or polarization, which places the inappropriate person in a place that fits originally another person more experienced and efficient than him.
7 - Lack of productive environment to accommodate the huge preparation of the unemployed and reduce poverty, which is one of the most important causes of financial corruption in Iraq. According to the Ministry of Planning has increased the number of people living below the poverty line in Iraq in 2016 to 30%, an increase of 6.5% from the proportion of the announced in 2015, which was more than 25%, which indicates the aggravation of the problem and its escalation.
8 - Poor education and educational curricula that create an environment against corruption and contribute to raising awareness of its dangers.
9 - The weakness of the moral system in society and the negative shift in some values, so that the employee of the Secretary turned public expression to the "coward or gashim" or the corrupt employee is (shared or successful) and bribery became a gift or a more popular term (commission).
10 - The corruption of the media and forced him to benefit party groups or beneficiaries of state funds and turn it into a mask to beautify the face of corrupt or trying to dilute the issues to be a loose freedom or false democracy.
11 - Lack of a real political will to fight corruption, despite the existence of physical evidence sometimes reach the recognition of the crime publicly on the air and in front of millions on television screens, but without a check. Indeed, the successive governments of Iraq since 2003 have mostly covered corruption in favor of political deals that serve only the parties of power.
This deteriorating reality does not prevent the existence of a number of solutions to overcome this rampant disease in the body of the Iraqi state and reform the economic situation. This is as follows:
1- Developing the legal environment and legislation in line with the protection of the rights of citizens and investors alike and respecting the implementation of these laws in accordance with the rule of law.
2. Modernize the judicial system and raise the efficiency of judges and provide support and physical and moral protection for them.
3- Enhancing transparency in management and financial procedures and applying modern technological systems to track money in banks and prevent evasion and avoidance of tax.
4 - Developing the work of banks and setting strict conditions for the establishment of private banks.
5- Ending the system of selling the currency by auction and linking the importation process to the banks according to the documentary credits system.
6 - Consolidating the financial control apparatus in the Bureau of Financial Control and taking advantage of past and efficient experiences of the staff of this body.
7 - Attention to human resources and the training of professional cadres capable of monitoring and applying laws and tracking of funds and prevent their exit from the Iraqi economy through corruption networks.
8 - Determining the powers in line with the federal system of the state and not be a conflict of interest, but that all projects and investments in accordance with the comprehensive development plan, which is based on the movement of all departments and institutions in the state.
9 - Formation of a higher council of natural resources to preserve those resources and prevent their waste or not to benefit from them in achieving the specific development plans.
10- Establishing a national council for reconstruction that supervises, directs and coordinates the ministries. The Council cooperates with banks, the private sector and foreign countries to attract investments and thus gives it the task of formulating economic policies for Iraq in line with the program of reconstruction and national development.
11 - Training national cadres to enable them not only to benefit the public sector but to enable them to start their own projects that provide the state with more financial resources and do not make Iraqi youth hostage to government appointees Umsetia to pay bribes for jobs.
12. Directing the labor force to work in the private sector by increasing the incentives that the sector receives as tax breaks to enable it to create new jobs and create more productive opportunities.
13 - Achieve the principle of efficiency in the work and the application of strict standards of quality and administrative control and financial performance and achievement in addition to the application of the principle of rewards and incentives or severe penalties for violators.
14 - Support productive sectors with high returns that occupy the largest amount of labor, such as industry and agriculture, but according to the principle of partnership or investment.
15 - Return to values and ethics not only through educational curricula, but through the creation of models and good qualities are highlighted and honored.
16 - Develop the capabilities of creativity and innovation of students and use them commercially to create new investment opportunities that increase the confidence of the community and its children to work and production away from fraud and exploitation.
17. To compel the government to implement the development plan agreed upon and to hold it accountable if the percentage of achievement is below the criteria specified in the plan itself.
18. Support the media, especially the investigative, and protect journalists so that they can play their oversight role, highlight mistakes or encourage achievements.
19. Encourage the role of civil society organizations in monitoring the performance of governments and bear the criticism directed at these governments.
20. Corruption has lost many opportunities to build Iraq and caused the illiteracy of 7 million Iraqis, so education and investment in human capital must be supported.
In conclusion, the process of fighting corruption will not be in accordance with specific steps, but also through a system of institutions that cooperate with each other inside Iraq and abroad. It is a collective responsibility that all the Iraqi people must cooperate to eliminate because they threaten not only their present but also contribute to the destruction of their future and to obstruct any opportunity for development and success.
Iraq has been very late and its development rates have fallen to low levels, so it is time to eradicate corruption and start each of us from its position.
The number of people living in countries suffering from corruption is nearly 6 billion people, where poverty is prevalent in most of these communities and services are worsening, especially in the education and health sectors.
There are multiple definitions of corruption, but what concerns us here is the use of power or public service. According to Transparency International, corruption is "any act involving the misuse of the public office for the sake of a particular self-interest or a particular group."
Iraq suffers from the spread of corruption in all its forms. In addition to financial and administrative corruption, there is political and social corruption. Corruption has contributed to a 20% rise in unemployment, while more than half a million Iraqi children are in the labor market and 3.5 million are out of school.
Lost opportunities:
Although Iraq is swimming on lakes of oil, this has not been able to support the process of development and human construction and oil was unable to finance the infrastructure to diversify the economy.
Although foreign exchange reserves stood at about $ 84 billion in 2009, they fell to $ 49 billion in 2017 despite an increase in oil production. An average of $ 130 million a day comes out of Iraq because of the sale of the currency, which is riddled with corruption.
Today, Iraq has become a country that can not complete any project without being financed by borrowing (internal and external) of about $ 135 billion, which is more than 30% of the value of GDP.
Corruption has caused billions of dollars in lost investment, with more than 6,000 fictional projects estimated at over $ 200 billion. Until 2016, there were 4 thousand projects parked at a value of 5 trillion dinars (some of which are not economically viable and borrowing to achieve, but the rate of achievement did not exceed in most of the 20%).
These poor statistics come in the form of explosive budgets. Budget surpluses between 2006 and 2014 alone amounted to about $ 120 billion, while the total budget in the same period was at least $ 700 billion, all of which went into the pockets of the corrupt.
But what are the main reasons for not controlling corruption in Iraq?
There are many reasons not to control the corruption in Iraq, but we will try in this short paper to address the most prominent of which are:
1 - The multiplicity of regulatory bodies and their weakness to the influence of corrupt, strengthened by the power of arms and rooted in most of the facilities and institutions of the State, where the role of the Financial Control Bureau was weakened and created institutions such as the Integrity Commission and the Office of the Inspector General,
2 - weak oversight role of the legislative institution, especially with regard to transparency, despite the huge budgets, but it is still without disclosure of the final accounts and knowledge of cash flows, which amounted to about 1 trillion dollars between 2003 and 2017.
3- Weakness of the accounting systems of banks and their failure to connect to the international network while remaining behind the technology, which contributes positively to strengthening supervision and tracking of funds and transfers. The Central Bank of Iraq, for example, is still very far from the system of documentary credits for the import and export of goods to prevent the exit of hard currency for fictitious accounts, as happens in the case of (flying instruments) and others. The Central Bank of Iraq is the only financial institution in the world that sells the currency of its country auction, which leads to the depletion of cash reserves and wasted a lot of opportunities for the benefit of other neighboring countries developed with purely Iraqi funds.
4. Public sector inflation and the transformation of the ministries of the state from a business entrepreneur to an investor competing with the private sector until the public sector becomes a center for the unemployed that burdens the state and costs more than half of its annual budgets.
This has been reflected in the performance of the private sector, which is almost non-existent in the Iraqi economy, while the public sector is swollen so that the number of its employees reached 7 million employees (including 3.2 million retirees) estimated at 4 billion dollars a month and productivity efficiency equivalent to half an hour a day.
5 - impede the work of the private sector, specifically small and medium enterprises that support youth and provide employment opportunities and contribute to the diversification of the economy and replace them with small grants without clear strategies for development, which contributes to waste public money without real gains negligible.
6 - Lack of experience resulting from the deliberate neutralization of competencies or polarization, which places the inappropriate person in a place that fits originally another person more experienced and efficient than him.
7 - Lack of productive environment to accommodate the huge preparation of the unemployed and reduce poverty, which is one of the most important causes of financial corruption in Iraq. According to the Ministry of Planning has increased the number of people living below the poverty line in Iraq in 2016 to 30%, an increase of 6.5% from the proportion of the announced in 2015, which was more than 25%, which indicates the aggravation of the problem and its escalation.
8 - Poor education and educational curricula that create an environment against corruption and contribute to raising awareness of its dangers.
9 - The weakness of the moral system in society and the negative shift in some values, so that the employee of the Secretary turned public expression to the "coward or gashim" or the corrupt employee is (shared or successful) and bribery became a gift or a more popular term (commission).
10 - The corruption of the media and forced him to benefit party groups or beneficiaries of state funds and turn it into a mask to beautify the face of corrupt or trying to dilute the issues to be a loose freedom or false democracy.
11 - Lack of a real political will to fight corruption, despite the existence of physical evidence sometimes reach the recognition of the crime publicly on the air and in front of millions on television screens, but without a check. Indeed, the successive governments of Iraq since 2003 have mostly covered corruption in favor of political deals that serve only the parties of power.
suggested solutions:
This deteriorating reality does not prevent the existence of a number of solutions to overcome this rampant disease in the body of the Iraqi state and reform the economic situation. This is as follows:
1- Developing the legal environment and legislation in line with the protection of the rights of citizens and investors alike and respecting the implementation of these laws in accordance with the rule of law.
2. Modernize the judicial system and raise the efficiency of judges and provide support and physical and moral protection for them.
3- Enhancing transparency in management and financial procedures and applying modern technological systems to track money in banks and prevent evasion and avoidance of tax.
4 - Developing the work of banks and setting strict conditions for the establishment of private banks.
5- Ending the system of selling the currency by auction and linking the importation process to the banks according to the documentary credits system.
6 - Consolidating the financial control apparatus in the Bureau of Financial Control and taking advantage of past and efficient experiences of the staff of this body.
7 - Attention to human resources and the training of professional cadres capable of monitoring and applying laws and tracking of funds and prevent their exit from the Iraqi economy through corruption networks.
8 - Determining the powers in line with the federal system of the state and not be a conflict of interest, but that all projects and investments in accordance with the comprehensive development plan, which is based on the movement of all departments and institutions in the state.
9 - Formation of a higher council of natural resources to preserve those resources and prevent their waste or not to benefit from them in achieving the specific development plans.
10- Establishing a national council for reconstruction that supervises, directs and coordinates the ministries. The Council cooperates with banks, the private sector and foreign countries to attract investments and thus gives it the task of formulating economic policies for Iraq in line with the program of reconstruction and national development.
11 - Training national cadres to enable them not only to benefit the public sector but to enable them to start their own projects that provide the state with more financial resources and do not make Iraqi youth hostage to government appointees Umsetia to pay bribes for jobs.
12. Directing the labor force to work in the private sector by increasing the incentives that the sector receives as tax breaks to enable it to create new jobs and create more productive opportunities.
13 - Achieve the principle of efficiency in the work and the application of strict standards of quality and administrative control and financial performance and achievement in addition to the application of the principle of rewards and incentives or severe penalties for violators.
14 - Support productive sectors with high returns that occupy the largest amount of labor, such as industry and agriculture, but according to the principle of partnership or investment.
15 - Return to values and ethics not only through educational curricula, but through the creation of models and good qualities are highlighted and honored.
16 - Develop the capabilities of creativity and innovation of students and use them commercially to create new investment opportunities that increase the confidence of the community and its children to work and production away from fraud and exploitation.
17. To compel the government to implement the development plan agreed upon and to hold it accountable if the percentage of achievement is below the criteria specified in the plan itself.
18. Support the media, especially the investigative, and protect journalists so that they can play their oversight role, highlight mistakes or encourage achievements.
19. Encourage the role of civil society organizations in monitoring the performance of governments and bear the criticism directed at these governments.
20. Corruption has lost many opportunities to build Iraq and caused the illiteracy of 7 million Iraqis, so education and investment in human capital must be supported.
In conclusion, the process of fighting corruption will not be in accordance with specific steps, but also through a system of institutions that cooperate with each other inside Iraq and abroad. It is a collective responsibility that all the Iraqi people must cooperate to eliminate because they threaten not only their present but also contribute to the destruction of their future and to obstruct any opportunity for development and success.
Iraq has been very late and its development rates have fallen to low levels, so it is time to eradicate corruption and start each of us from its position.
* The speech presented by Dr. Sadiq Hussein Al-Rikabi in his answer to the questions presented by the Center for Development and Strategic Studies at the forum of the weekly news, where the subject was discussed: (the Iraqi economy between the hammer of corruption and state bond) on Saturday, July 7, 2018 10 am, at his monthly meeting, which is held within the weekly news series
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