Iraq Paradox

[email protected] www.iier.org 1

Iraq’s Paradox: Wining Democracy & Losing Rule of Law

Dr. Kamal Field Al-Basri

Director of Research Iraq Institute for Economic Reform

[email protected]

Iraq Ten Years On 19 March 2013, Chatham House, London

mailto:[email protected]


Economic Outlook

Since 2004 there has been significant progress in the following areas:

1. GDP per capita growth from $1670 to $5400 (2004 - 2011),

2. Average daily oil production increase 1.8 MB to 2.9 MB (2005- 2012)

3. A decline in the rate of unemployment down from over 28% to 15% (2004 -

2011),

4. A reduction in poverty, down from 54% to 23%,


Economic Outlook

5. A lowered rate of inflation, down from 68% to 6% (2006 - 2011),

6. An increase in the supply of electricity from 3500MW to 7500MW (2004 - 2011),

7. A reduction of Iraq's debt, down from $ 127 to $ 54 (billion dollars),

8. Iraq is expected to achieve highest rate of growth %10 (in 2013).


GDP 2011(at constant prices) (1988=100)

(Million I.D)

8%

43%

3%

2%

4%

2%

7%

13%

18%

Agriculture, Forestry, Hunting & Fishing

Mining and Quarrying

Manufacturing Industry

Electricity and Water

Building and construction

Transport ,Communications and storage

Wholesale, retail trade, hotels & others

Finance, Insurance, Real estate and Business services

Social and personal services


GDP Growth (at constant prices) (1988=100)

(Million I.D)

0.0

10000.0

20000.0

30000.0

40000.0

50000.0

60000.0

70000.0

2004 2005 2006 2007 2008 2009 2010 2011

Social and personal services

Finance, Insurance, Real estate and Business services

Wholesale, retail trade, hotels & others

Transport ,Communications and storage

Building and construction

Electricity and Water

Manufacturing Industry

Mining and Quarrying

Agriculture, Forestry, Hunting & Fishing

Over 41 Trillions

Over 62 Trillion

GDP in creased 51%


Oil Revenue & Public Expenditure

Trillion I.D

34,584.6 34,139.6 42,179.6 39,308.3

67,277.2 67,842.2

83,824.9 96,662.8

117,122.6

32625.1 39453.95

46908.04 53154.987

77562.35 51719.06

66819.67 71872.5

94378.1

0.0

20,000.0

40,000.0

60,000.0

80,000.0

100,000.0

120,000.0

140,000.0

2004 2005 2006 2007 2008 2009 2010 2011 2012

Total Expenditure Oil Revenues

Revenue increased by 189.3%

Public Expenditure by 238.6%


Private & Public Sectors Shares in GDP Although

Government policy is give

private sector a lead

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2004 2005 2006 2007 2008 2009 2010

69.1 67.2 70.3 69.1 73.3

66.1 65.4

30.9 32.8 29.7 30.9 26.7

33.9 34.6

Public Sector Private Sector

[email protected] www.iier.org [email protected] 8

Public Expenditure: Investment & Operational (I.D)

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

2007 2008 2009 2010 2011* 2012* 2013**

Operational 32.72 52.30 45.01 49.94 66.60 79.92 83.32

Invesment 6.59 14.98 9.65 14.41 30.07 37.18 55.11

The % of public investment National

Budget in creased from 16.7 to 40


% of Citizens not Satisfied with

Public Services

0

10

20

30

40

50

60

70

Health Eduction other Services

30

40

60

not Satisfied satisfied

Source: Ministry of Planning 2007


Education

Literacy level is at 28% of the total population aged 10 years and over,

School dropout rates are 8% in primary education, 9% at the secondary level

There are shortages of over 5000 schools, and over 40% of schools are in

need of reconstruction.

Despite the importance of developing human capital in democracy, health budget

is around 9% of the total public expenditure , and less than 10% of education

budget is for investment.


Health Statistics in 2010

0 20 40 60 80 100

Population using improved sanitation facilities (%)

General government expenditure on health as a percentage of total

government expenditure

Total expenditure on health as a percentage of gross domestic product

73

8.98

8.42

90

12.79

6.74

100

16.03

9.64

UK

Turkey

Iraq


Public Investment Budget Execution

0

5

10

15

20

25

30

35

40

2004 2005 2006 2007 2008 2009 2010 2011

Allocated

Spend

Trillion I.D

Due Bureaucracy, Regulations, Incompetency, weak Institutions


0

20

40

60

80

100

120

140

160

180

Singapore United States

Saudi Arabia

United Arab

Emirates

Kuwait Turkey Jordan Syrian Arab

Republic

Sudan Iraq

1 4

12 33

67 71 96

134 135

164

Rigidity of Business Regulation

World Bank: Doing Business 2012


0

1

2

3

4

5

6

7

8

9

10

Iraq Iran Algeria Egypt Lebanon Jordan Turkey

Economic

Political

Security

Social Welfare

Sources: INDEX OF STATE WEAKNESS IN THE DEVELOPING WORLD, Susan E. Rice and Stewart Patrick 2008,

Foreign policy at Brooking.

Iraq world’s fourth-weakest state

According to Brookings Institute Iraq fail to

provide basic services to citizens

Ranking Iraq is below Iran, Algeria, ..


Has Democracy Evolved?


Democracy Index 2011

0

1

2

3

4

5

6

7

8

9

Score

Source: Democracy Index 2011, Economist Intelligence Unit


Source: Democracy Index 2011, Economist Intelligence Unit

0

2

4

6

8

10

12

United Kingdom Turkey Tunisia Iraq Egypt Jordan Iran

Political Index 2011 - Economist Intelligence Unit Electoral process and pluralism Functioning of government Political participation

Political culture

Civil liberties

Overall score

Insight - Democracy Index 2011


Despite the political hurdles, Iraq has made significant political achievements,

which have manifested in the following:

a) Referendum of the constitution,

b) Several National and sub-national elections,

c) Improvement in political freedom and in human rights,

d) Enforcing decentralisation

e) High levels of participation within political parties in the current coalition

government.

f) Free press, Civil liberty

This does not mean that the abuse of Human Rights or bad practices have

not occurred.

Evolving Democracy


0

10

20

30

40

50

60

70

Iraq Iran Algeria Egypt Saudia Jordan Turkey

Voice & Accountabily

Political Stability

Govrerment Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

Iraq Wins Democracy, but Lost Rule of Law

World bank Statistics on Good governing 2011

According to World Bank Rule of Law is lowest in the region


Democracy has not evolved naturally in Iraq, maturity will be enhanced

with culture and level of education.

The function of cultural & non governmental organizations to promote rule

of law, and social cohesion is very limited.

Sadly, politics in Iraq has taken shape as a form of competition between

political parties with a sectarian and ethnic dimensions.

Democracy failed to address improving Institutions, the Rule of Law or

Good Governance.


Democracy & Institutions

Growth and development cannot take place in the absence of

sound institutional environment. Institutions provide the necessary

framework that allows transactions to take place in an orderly

manner and in which economic agents are reassured that their

contractual rights are protected and enforced by the law (without an

unexpected complications or additional cost).

In addition, economic stability can be provided only by good

governance and sound economic policy-making. For that reason,

the lack of FDI, which is vital for the development of the Iraqi

economy as it attracts. The above explain weak foreign investors

which is vital for development


Iraq the World Fastest Growing Economy at Cross-Road

Iraq is regarded as one of the fastest growing economies (due to

increased oil production). To be on track for economic advancement it

needs to address the following strategically options:

1) Reforming the regulatory system and

2) Improving human capital.

Otherwise, will face the 3 possible states: (A) Missed Opportunity, (B)

Disappointment, (C) Off-track.

Iraq at Cross Road


Iraq the World Fastest Growing Economy at Cross-Road

Effective implement these options, Iraq needs to have in place a

Technocratic Government, as Collation Government & Parliament

failed to engineer Economic Reform since 2004


Rule of Law & Good Governance Regula

tions R

efo

rm

Abse

nce

of Regula

tion R

efo

rm

On-Track

Missed opportunity

Disappointment

Off-Track

Absence of Good Governance

Iraq Toward Cross-Road

[email protected] 25 www.iier.org

Documents

Iraq Paradox