Economic experts: Obstructing oil supplies threatens the Iraqi government with “inability” to pay ex

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[size=52]Economic experts: Obstructing oil supplies threatens the Iraqi government with “inability” to pay expenses[/size]

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01-19-2024
Geopolitical tensions and continuing unrest in the Middle East, with the Yemeni Houthi movement continuing to attack oil tankers in the Red Sea region, threaten the Iraqi economy, which depends on oil in the process of financing public expenditures, at a time when Iraq has turned into an environment that repels investment despite the urgent need for it. To move the economic wheel due to the escalation between the armed factions, the United States of America, and Iran inside the country, according to specialists.[/size]
[size=45]The Iraqi Oil Minister, Hayyan Abdul-Ghani, confirmed yesterday, Thursday, that Iraq's oil exports were not affected by the recent attacks on ships in the Red Sea.[/size]
[size=45]Abdul Ghani said in statements on the sidelines of the World Economic Forum in Davos, reported by Reuters, that about 90 percent of Iraq's oil exports go to Asia and therefore do not need to pass through the Red Sea.[/size]
[size=45]The volume of Iraqi revenues in the federal budget during 11 months exceeded 121 trillion dinars, according to what the Ministry of Finance revealed the day before yesterday, Wednesday, confirming that the oil contribution to the budget had risen to 93%.[/size]
[size=45]The agency followed the data and tables issued by the Ministry of Finance this January, for the 11-month accounts of the last fiscal year, which showed that oil is still the main resource for Iraq’s general budget, reaching 93%, which indicates that the rentier economy is the basis of the country’s general budget. .[/size]
[size=45]The flows are continuous[/size]
[size=45]Iraq's oil trade balance is mainly concentrated with Asian countries, at a rate of more than 75% of the country's oil exports. Export lines to Iraq and all countries of the Gulf region, whose oil trade is linked to Asia, and at a rate of 90% of their oil exports, flow to the East and South Asia region, are still stable, according to the financial advisor. To the Iraqi Prime Minister, Mazhar Mohammed Saleh.[/size]
[size=45]Saleh added in an interview with the agency, “These flows are met at the same time by import flows that are also still stable until the moment, and these are commercial flows that are mostly outside the current high-risk maritime threat areas.”[/size]
[size=45]He continues, “However, this does not prevent the relative impact on the fluctuation of insurance and maritime freight costs, which witnessed record highs directly and indirectly linked to the security tensions taking place in Bab al-Mandab due to the war on Gaza.”[/size]
[size=45]He explains, “Note that Iraq enjoys high commercial flexibility because it is surrounded by a wide regional group with views of the areas of diverse maritime trade communication with neighboring countries.”[/size]
[size=45]He continues, “The country’s necessary stocks of foodstuffs and essential and durable goods are in an ideal and reassuring situation in our country, and the country’s capabilities in financing foreign trade cover approximately 15 months of imports, which expresses the strength and efficiency of Iraq’s foreign reserves, which is the basis of strategic hedging that strengthens its position.” Our country is free from any potential trade risks due to the geopolitical situation and its possibilities.”[/size]
[size=45]The Houthi attacks in Yemen on ships in the Red Sea forced many companies to divert sailing away from the Red Sea and pass through the Cape of Good Hope route around Africa, which increased the time and costs of trips.[/size]
[size=45]The attacks launched by the Houthis, which they say are in support of the Palestinians, target a route that represents about 15 percent of global shipping traffic and serves as a vital channel between Europe and Asia.[/size]
[size=45]Lack of dollar revenues from oil[/size]
[size=45]Exporting oil via ships affects the Iraqi economy because it depends on oil in the process of financing the government’s public expenditures, according to the economic researcher, Ali Abdul Kadhim. He notes that if the process of transporting oil via ships becomes bad or difficult, this will negatively affect oil exports, leading to There will be a decrease in dollar revenues from oil, and this will be reflected in the general budget and its deficit will increase further.”[/size]
[size=45]Speaking to the agency, Abdul Kadhim points out that “the two countries that import Iraqi oil the most are China and India, so oil revenues will be affected and the Iraqi government will then not be able to pay budget expenses.”[/size]
[size=45]Regarding the incident of Iran detaining a commercial ship flying the Tanzanian flag inside Iraqi waters, he explains that “these incidents affect the Iraqi economy, as this tanker was carrying oil from Basra.”[/size]
[size=45]He stresses the need for “Iran to intervene to resolve this current crisis, as Iraq is the best market for its products, and that the continuation of unrest will harm its economic sector, especially if the Iraqi private sector and merchants turn to other countries to import from.”[/size]
[size=45]Investment-repellent environment[/size]
[size=45]For his part, economic researcher, Omar Al-Halbousi, says, “The security situation that Iraq is witnessing, including an escalation between armed factions, the United States of America, and Iran inside Iraq, is negatively affecting the economy and turning it into an environment that is replete with foreign and even national capital.”[/size]
[size=45]Al-Halbousi explains in an interview with the agency, “Attracting investment requires security stability, but this escalation leads to investors being reluctant to enter Iraq or completely refraining from investing at a time when the country is in dire need of attracting foreign investors to move the economic wheel.”[/size]
[size=45]He continues, “The security escalation between the factions, America, and Iran comes in conjunction with the Baghdad International Fair, which witnessed an important international presence, and it is an intended escalation as a message to the international companies participating in the fair not to come and invest in Iraq.”[/size]
[size=45]He added, “Especially since the exhibition was the best among its previous sessions in terms of organization, international participation, and public attendance, but there are countries that want Iraq to remain a market for selling their goods and not move the wheel of investment in it.”[/size]
[size=45]He notes that “these attacks inflict great economic losses on Iraq due to the loss of current and future investment opportunities, as the process of attracting investments is complex and difficult in light of an unstable security situation, which makes Iraq lose the most important economic element it needs.”[/size]
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