Kurdish Blogger, political & security risk analyst and Due Diligence consultant with legal background; writing about policy, political & legal reforms in Kurdistan, Iraq and wider Middle East. Special focus on Kurdistan Region oil & gas sector, investment & economic development.
Saturday, August 29, 2009
New Kurdish Prime Minister and the political fallout
Recent election in Kurdistan Region has been hailed as a big success, not only because the process was reasonably free and fair, but the emergence of a new powerful movement which simply call themselves, Change. The movement is led by former Patriotic Union of Kurdistan (PUK) deputy leader, Nawshirwan Mustafa and among its ranks are former PUK loyalists.
The failure of the current Kurdish government to provide basic services and tackle corruption at all levels resulted in large scale voter defection from the traditional parties. Change movement managed to win a substantial share of the votes but fall short of a majority to form the new government, but the incumbent parties managed to secure more than 50 per cent of the votes, which will enable them to form the new cabinet.
Life has been improving under the previous administration and Kurdistan Region and has been a world apart from the rest of Iraq, security has improved to an extent and the standard of living has risen, but the Kurdish public has lost patience with the previous administration and demands a much faster than anticipated transition to accountable and transparent governance.
All these factors has led to the emergence of strong opposition in the form of Change and other smaller political parties from the left and right, which have so far resisted calls by Kurdistani List (formed by PUK and Kurdistan Democratic Party alliance) to join the government and chosen to stay in opposition, nevertheless; the situation is fluid and position can change
Strong parliamentary opposition has not been experienced before in Kurdistan without leading to violance and the main two political parties are nervous about the changes as they have had free reign in the last two decades and got away with incompetency and economic mismanagement without any serious opposition. In the past the opposition parties have joined a unity government and therefore, proved difficult to hold the government into account.
Since the narrow win by Kurdistani List which was only possible because PUK and KDP entered into a collision and been doing so for the last four years, they are nervous about their popularity and future of their parties. In the face of public backlash and division within PUK and KDP ranks, Kurdistani List has been grooming the next Kurdish prime minister which is the Iraqi deputy Prime Minister, Barham Salih, who has resigned his post in Baghdad last week.
Salih is a popular figure and a pragmatist, Western reporters adore him as he is known to provide access and have detailed conversations in English as well as twitting and dishing out gossip about the elite in Iraq and Washington DC. He is also popular amongst the educated classes in Sulaymaniyah where most of PUK supporters have switched sides to Change movement.
Barham Salih is also known as a reformer therefore not popular within PUK old guards and he is seen as an outsider, because he was educated in UK and spent time in Washington DC. However it is clear that Kurdistani List is willing to risk upsetting party grandees who have spent most of their lives in the mountains fighting for the Kurdish cause, to try to win public support once again.
The appointment of Salih as the new Kurdish Prime Minister is seen by many as President Masu'd Barzani's way to sideline his nephew the current prime minister, Nechirvan Barzani. Nechirvan's supporters believe he is president Barzani's natural successor, however; Mas'ud Barzani has his own agenda and wants to promote his son Masrur in preparation for succession and give him more responsibilities.
Nechirvan has managed to build himself a power base in Arbil while he was the PM for the last 4 years during which he managed create a network of influential businessmen and powerful allies. But sending him to Baghdad to fill Salih's position would be very difficult for him as this would take him out of his comfort zone. Political exile for Nechirvan orchestrated by his uncle Mas'ud Barzani would bring about his demise. Nevertheless Nechirvan may not ride off into the sunset just yet and may make matters complicated which would make life difficult for Mas'ud Barzani, KDP and Kurdistani List.
The Prime minister in waiting, Barham Salih has already started to consult the other parties to seek consensus as he is known to be very skilful in making political deals. Since meeting with opposition party leaders, it is becoming more apparent that opposition parties would not be taking part in the new government which makes his task even more challenging. On the other hand an effective opposition would make the government more accountable and it will benefit the region long term, therefore expectation is high and time will tell whether Salih is up to the challenge.
The current change in Kurdistan political landscape which has been taking place is part of a process of change in Iraqi politics. New challengers have been emerging on the scene and they are fundamentally changing long established loyalties in Iraqi politics which is an indication that the issues have changed therefore, the symbols must change too.
Economic successes or incompetence IN KURDISTAN Regional Government
By SHWAN ZULAL
Erbil government prides itself on being the centre of trade in Iraq and claims Erbil to be the fastest growing city in Iraq Kurdistan .
The claims of economic successes might look all colourful from the outside comparing it to the rest of Iraq, but Kurdistan has had a completely different circumstance from the rest of Iraq and the picture on the ground does not look as good as its claimed.
Reliable statistics on the fiscal figures are hard to come by therefore, it is very difficult to measure the real progress. What the regional government claims is the only source of fiscal data available to measure the economic well being of the region, but if we look at what is happening on the ground there are discrepancies between what is claimed by the government and the reality.The KRG budget form the Iraqi central government is seen by many as a generous and a substantial budget, however, the reality is, that the funds available to KRG are no where near the fiscal potential KRG could have.
The KRG has not yet published any coherent report on the expenditure of the budget and as far as the future planning of the budget and improving it there seems to be no planning at all. The current figures on the budget published by Rozhnama News paper suggest that there is a slight shift toward a more transparent future spending.
Any transparent government will usually publish its achievements, expenditure and thorough accounts of all the different government departments. KRG has failed for the last decade to show any accountability towards public by publishing the fiscal data required to show how the allocated budget has been spent and on what.
In a recent broche published by KRG called [invest in the future 2008 available on KRG website] on page 189 the document refers to third party fiscal data and confirms that until now there are no fiscal figures for publication from the Kurdish government. Furthermore, the report refers to fiscal data, which are estimates from IMF. The IMF figures are usually reliable but in this instance, the data is only an estimate because there are no data supplied by the KRG to complement those of IMF.
It is fair to say that the publication refers to the establishment of the planning ministry and better data recording in the future. However, this substantiates that after 17 years the KRG has failed to record any economic data. The new planning ministry mentioned in the document is suppose to start recording data but so far there are very little details about who is recording what and the method of recording. There is not any evidence that in the future there will be accurate data recordings.
The absence of fiscal data in the KRG is like a business without any account. The Kurdish leadership has been running the country without any accountability and bookkeeping. This is a grave failure with serious implications and raise’s questions as to why there were not any data available for the last few years. The first thing comes to mind when looking at the status quo is abuse of power and corruption.
Alarm bells have been ringing recently about the productivity level of the public sector workers and civil servants. There are report suggesting that around seventy-per-cent of the KRG budget is spent on salaries for the public sector and civil servants. A recent move by the government to reduce this figure for 2008 to around 60-per-cent is reported but the figure is still exceptionally high.
These are startling figures and confirm a high level of economic incompetence by the government. Any economic model based on this high level of government employment is doomed to fail, simply because the percentage is too high to make any economic sense.
The availability of work through the public sector as one recent report suggested that for one job in the public sector there are seven employees employed. This rate of employment by the government cannot be sustained because according to the report six out of every seven workers are superfluous and does not contribute to the economy. If the public sector employment figures are what the reports suggests, this indicates a catastrophic level of unemployment. There are not any reliable unemployment figures published by the government therefore it will be an estimate only. If six out of seven public workers who has not got a job to do yet still getting paid added to the unemployment figures, will undoubtedly raise the level of unemployment to around or above fifty percent of the working population.
This high level of unemployment whatever way looking at it is unsustainable and is the sign of stagnant and failing economy. The high level of public sector employment appears like a smokescreen by the government to try to show artificially high level of employment therefore, claim economic success.
The lack of economic planning has contributed to a soaring inflation. The salaries of the public sector have been rising at a very high rate without taking into account the inflationary implications this might bring with it.
The weakness of the dollar and the unsustainable rise in pay of public sector has pushed inflation very high. There are no official inflation figures published by the KRG and there is no evidence that the finance ministry has been monitoring inflation or has a target as such.
High inflation has also contributed to the demise of the private sector work because their pay has not been increasing in line with government sector employment. Therefore, the private sector workers are choosing to transfer to public sector for better pay.
Furthermore, inflation has contributed to an increase in poverty among the working populations, because of the downfall in the private sector pay and employment. The high level of employment by the government has made the workforce dependent on the state and there are no incentives for the workers to be productive or creative in their jobs.
What the economists in KRG failed to account for, is private enterprise and its role in developing the economy in the region. The way the economist and the government seem to operate is an over reliant on high price of oil.
The economists in KRG have not considered innovation and enterprise as a priority, their vision seems to be a very short term. Apart from Oil export, there are not any other commodities or services on offer for export to contribute to the Kurdish economy.
There are assumptions and over dependency on the high price of oil and a growth in oil production. These analyses might be correct but there are not any other alternatives discussed or reflected upon. Over dependency on oil export has left very little room for KRG to manoeuvre in case of economic downturn.
There are no contingency plans for any down tern in oil prices, prices will not always stay as high and if it did, the oil will eventually run out in few decades. Without proper planning, the economy will crumble as and when that happens. Future generations’ welfare is the last consideration to the economic planners.
The economic calculation by KRG has been disastrous, as it is evident when looking at the state of the general infrastructure and financial establishments. Reliance on one aspect of the economy is a serious mistake on KRG part therefore, revising KRG fiscal policy with a more innovative approach needed.
The Economy in KRG is still a cash economy and the banking sector is largely ignored. This has contributed to the overall failure of the economy and the lack of interest by multi national companies to invest.
There must be more emphases on private sector enterprise and competent economic planning. The economic model adopted at the moment is not working. Failure to encourage the private sector will have a devastating effect on the overall wellbeing of the economy and contribute to the demise of the regions influence on Iraqi politics.
Oil export alone is not the answer to a modern and successful economy. To demonstrate this point no need to go further that the Unite Arab of Imarets. Their economy a decade or so ago was mainly based on oil but after an expansion to the financial market and significant investment on their infrastructure the UAE became a hub for Middle-East transport and financial activates. The UAE has expanded their economy into mixture of different economic activates therefore today the UAE’s GDP is one of the highest in the world.
UAE is an example of what could be achieved if the Oil revenues invested in the right way. The comparison is somewhat difficult with the geographical constrains in KRG.
What has been achieved in a place like UAE is a product of many years of investment and stability; however, it is needles to say that similar economic success could be achieved in Kurdistan region.
The more transparent and accountable the KRG becomes, the more foreign investment will come pouring in. There are very good opportunities for the multi national companies to invest in KRG: infrastructure, oil and gas exploration, tourism, other natural resources, banking, science and agriculture.
The level of expertise and knowledge by the multi nationals must be utilised to the maximum to benefit the local population. In exchange of lucrative contracts, KRG could insist that companies must have quotes for employment and training of local population in Kurdistan region. This can be in the form of apprenticeships or giving grants to local students to go and study abroad and acquire the expertise needed to run future Kurdish industries.
Knowledge base economy must be encouraged, as this is the way the global economy heading. The KRG population is very small compare to the Asian economies in particular therefore relying on unskilled work force economy will not be a viable option to adopt. For the KRG to be a competitive economy they must invest in producing highly skilled and educated workers.
Within few decades the oil fields of Iraq will eventually dry out. If there is not any robust planning as to how the region and Iraq as a whole will sustain economic growth, the future generations will be even more destitute than the past and present generations. Short term planning is not an option for a successful and prospers KRG. A long term vision is needed to plan for the way the economy is heading.
The opportunity should not be missed with the price of oil at all time high. The KRG has a substantial share of the Iraqi oil revenue therefore, they must excel and start investing in the infrastructure, Education and financial institutions.
Subscribe to:
Posts (Atom)
POSTS AND ARTICLES