Iraq Paradox

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Iraq’s Paradox:
Wining Democracy & Losing Rule of Law
Dr. Kamal Field Al-Basri
Director of Research
Iraq Institute for Economic Reform
kamal@field.net
Iraq Ten Years On
19 March 2013, Chatham House, London

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
TrillionGDP 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

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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
SingaporeUnited
States
Saudi
Arabia
United
Arab
Emirates
KuwaitTurkeyJordanSyrian
Arab
Republic
SudanIraq
1
4
12
33
6771
96
134135
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
Functioningof
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
Controlof
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
RegulationsReform
AbsenceofRegulationReform
On-Track
Missed opportunity
Disappointment
Off-Track
Absence of Good Governance
Iraq Toward Cross-Road

Iraq Paradox

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