Faris Al Salman
The decision to establish the first sovereign fund to manage the national wealth in the country is the most important and bold decision since the stage of change, but it will face major challenges, as the importance of this decision lies in that it will lay the foundation for the establishment of the Generations Fund, which aims to secure the future of future generations, and the government can adopt it within economic reform policy. The oil wealth is permeable in addition to being threatened with being dispensed with, and many countries have begun to adopt alternative and clean energies.
The government is considering establishing a sovereign wealth fund, in which it will deposit funds equal to the ongoing compensation for the Kuwait war (deduction of 3% of the proceeds of each barrel of Iraqi crude oil that is exported).
The establishment of the Sovereign Fund should not be under the supervision of a narrow range of government advisors (with our respect for their capabilities), but through openness to the people’s forces and segments, because it is the owner of wealth, especially that Iraqi universities are full of professors specialized in this field, as well as civil society organizations specialized in the economy And economic development has already dealt with the subject and organized mature and advanced workshops, including the Baghdad Economic Forum, in which international organizations such as the United Nations and the World Bank participated and came out with solid recommendations.
The biggest challenge to the project is corruption and partisan and sectarian quotas and their impact on the process of forming the fund and its future method of work, especially in choosing the chairman and members of the fund's board of directors. Because if corruption and quotas infiltrate it, these assets and resources will be squandered and will be lost forever. Especially since we have before us the pension fund model (the size of 50 billion dollars), which, due to corruption and mismanagement, is on the verge of bankruptcy.
We need to be careful in drawing up the fund's structure, its legal framework, methods of governance, management, financing, implementation of its tasks and control, choosing consultants in international investment specializations and investment portfolios.
In addition to being careful to draw up the fund’s policy, because we want it to be a good source of revenue (if it were scientifically managed and prosecuted) to compensate for the missed opportunities that Iraq missed, including the rise in oil prices to more than 130 dollars / barrel in 2008, which Norway and the Gulf countries exploited to create a surplus wealth Kabir went to the sovereign funds, while Iraq squandered these revenues as a result of mismanagement and corruption, and they are added to the lost opportunities in the life of the Iraqi state.
The other worrying dilemma is where the fund’s money will be invested? Is it by investing in profitable international stocks or bonds, similar to the Gulf funds and the Norwegian sovereign fund, or going to risky emerging markets? Or in the international real estate market, hedge funds, investment funds in the financial markets and bonds Stocks, futures and raw materials?
In addition to the foregoing, a logical question is added: Will the fund meet the aspirations and ambitions of the Iraqi people and the current Iraqi government in reorganizing the national economy in a way that ensures that the Iraqi national security is met?
I do not think so....because this fund cannot meet several requirements at the same time. If we say that to guarantee the future of future generations, the controversial and legitimate question will be: What about the current generations who suffer from poverty, illiteracy, etc.?, and if we consider that this fund can It should be a buffer against the normals of time and the government can borrow from it in economic crises, then the fund will be forced to forfeit its investments in investment portfolios and assets to provide liquidity to the government at a time when the market is suffering from a financial crisis. Therefore, Iraq needs a set of bumpers, not a single one, that is, a package of sovereign funds by benefiting from the experiences of other countries that preceded us in this field, while putting the national touch in line with the requirements of the Iraqi economy.
Iraq is characterized by the abundance of its natural, financial and human resources and wealth, as well as the importance of its geopolitical position in the region, which urgently requires a rational management of its resources and its economy. A package of sovereign funds managed with good governance and transparency, as well as the development and [You must be registered and logged in to see this link.] of the Iraqi Fund for Foreign Development as one of the tools of the Iraqi state's influence to secure the vital space within the theory of Iraqi national security.
It is noteworthy that the Baghdad Economic Forum had previously organized, in partnership with the General Secretariat of the Council of Ministers, a workshop entitled “Sovereign Funds and their Role in the Development of the Iraqi Economy” on 25/10/2017 at Al-Mansour Hotel, in the presence of a group of concerned officials, parliamentarians, local and foreign economic figures, academics, international organizations and the Bank International and the United Nations.