Iraqis generally recognize that their country sits on some of the world's largest oil and gas supplies that could provide substantial benefits. But depressed commodity prices aggravated mismanagement imposed by outsiders as well as internally in a nation that's in the middle of one of the world's most politically unstable neighborhoods, an expert observed.
Part of this has resulted from Iraq's having been a country for only 95 years, and having 12 successful uprisings since 1923 amid growing sectarianism, Luay J. Al-Khatteeb, founder and director of the Iraq Energy Institute and a senior energy policy and economic reform advisor to Iraq's parliament, said during a July 19 discussion at the Middle East Institute in Washington, DC.
"It was forced to move from a monarchy underpinned by tribal structures to a republic with a strong military basis," Al-Khatteeb explained. "When politics moved from centralism to federalism, it created 'shock and awe' on the regional level. The people basically weren't that well prepared. Negotiations over hydrocarbons law, heads of court, finance, and other issues were difficult."
Al-Khatteeb said Iraq survived all this by sheer luck-in the form of high oil prices that quadrupled its revenue over 10 years. "Consensus, not democracy, defined its politics. Everyone agreed to split the pie, with all the political parties having one leg in the government and the other in the opposition. Everybody dealt with this as their own personal supermarket," he said.
Matters might improve if outsiders quit interfering, Al-Khatteeb suggested. Iraq is surrounded by six countries, each with its own foreign policy that sometimes is only interested in exploiting Iraqi factions. But recent administrations made bad choices when they increased the national payroll from $2 million in 2003 to $7 million just 10 years later when oil and gas prices were high, he added.
Gas imports amid flaring
"Corruption and mismanagement are serious problems," Al-Khatteeb said. "International Monetary Fund conditions for further assistance are valid, particularly when it comes to subsidies and wasting resources. Iraq produces 2 bcf of natural gas and flares another 1.6 bcf-about equal to what it's talking about importing from Iran."
As oil and gas prices stay relatively low, Iraq's national government needs to slash salaries at every level, he said.
"I can't understand how a member of Parliament makes a $20,000/month base salary or an administrator makes $1 million/year. Teachers and healthcare workers should be getting more of this money," Al-Khatteeb said.
Essentially, he maintained, "Iraq is rich in people-resources, but has been poor in leadership. Without radical economic reform to address giant government payrolls in Baghdad and up north, its problems won't begin to be solved."
