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Iraq is 'so riddled with corruption', economy remains in ‘existential crisis’ if oil prices remain below $70: official
[You must be registered and logged in to see this image.]Iraqi Government Finance Minister and Deputy Prime Minister Ali Allawi at a news conference promoting his book in Washington DC, US on April 9, 2007. (Photo Credit: Shutterstock)
SULAIMANI — Iraqi Government Finance Minister Ali Alawi has said that his country’s economy is replete with corruption, claiming that minor jobs at border points are changing hands for as much as $100,000.
In an interview with the London-based Guardian newspaper on Wednesday (November 24), Allawi said that there are “no quick wins” and Iraq’s economy would probably remain in “existential crisis” as long as oil prices are below $70 a barrel, calling for cuts in public spending as its revenues fall short.
“Only a tenth of the $8bn due annually to the Iraqi treasury arrived from border customs, in contrast to Jordan, where 97% was received,” Allawi, who is also the Iraqi Deputy Prime Minister, was [You must be registered and logged in to see this link.]as saying by the UK newspaper. “Border customs are riddled with corruption to the point where minor clerks’ jobs in some outposts change there for $50,000 to $100,000 and sometimes it goes up to multiples of that”.
Prime Minister Mustafa al-Kadhimi’s cabinet came to power in May following large-scale protests that had [You must be registered and logged in to see this link.] Iraq and forced the then Iraqi Prime Minister Adil Abdul Mahdi to resign, as the protesters were [You must be registered and logged in to see this link.] basic services, employment, an end to the ruling class that has taken the country’s power since the overthrow of the Saddam’s Hussein’s regime in 2003.
On October 14, Iraqi Council of Ministers [You must be registered and logged in to see this link.] a package of reforms known as white paper, consisting a number of key measures to tackle the immediate financial crisis facing Iraq.
“On the assumption that oil prices don’t move up, something somewhere has to give – either we follow a sort of Venezuela course and become an oil economy that goes belly up, or we tighten our belts,” he said, claiming that “nobody’s going to be for belt-tightening…… there was a subliminal recognition that things had to change. Current levels of public spending were unsustainable.”
He also said that there are some “vested interests” that bar the Iraqi Government from going ahead with reform.
“People say, ‘Why not go after low-hanging fruit.’ There really is no such thing as low-hanging fruit if the entire environment around you is to a large extent devastated.”
Iraq is the second largest oil producer within the Organization of Petroleum Exporting Countries (OPEC), but the country has experienced harsh economic crises following the precipitous decline in oil prices due to the global COVID-19 pandemic.
On November 12, the Council of Representatives [You must be registered and logged in to see this link.] the Fiscal Deficit Financing bill to fill deficits through borrowing 12 trillion Iraqi dinars (some $10 billion) in internal and external loans to finance the salary payments to public servants and other expenditures for the last three months in 2020.
Iraq’s oil exports [You must be registered and logged in to see this link.] in October, compared to September as it pumped 89.15 million barrels with an average of 2.87 million barrels per day during the 32 days in October. In addition, it raked in $3.43 billion in revenue from its oil exports for an average price of $38.48, according to the statement.
During September, Iraq exported over 78.38 million barrels with an average of 2.61 million barrels per day for a $40.4 average price that earned $3.16 billion.
Iraq has also failed to adhere to OPEC+ oil cuts deal owing to its financial and political struggles.
Allawi also said that his country’s approval to OPEC’s oil cuts “was close to breaking point, suggesting Iraq may leave the network,” by “allocating output cuts without taking into account member countries’ economic and political conditions,” according to the paper.
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