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DUBAI: When tens of thousands of young people took to the streets of Baghdad and cities in southern and central Iraq at the end of 2019, one fundamental demand rang out louder than any other: job opportunities.
The country, which had only recently emerged from decades of tyranny, siege, war and insurgency, had contributed little to the generation of young Iraqis who had come of age in the years that followed. the fall of Saddam Hussein in 2003.
Two years after those protests, which died down with the onset of the COVID-19 pandemic in early 2020, and under the brutal heel of repression by powerful Iraqi militias, young Iraqis say nothing has changed .
“If anything, we are worse than when we started,” Rashid Mansour, a hairdresser from west Baghdad, told Arab News. “Neither I nor my cousins can afford to stay here. We all work part time. Just like the country, we all manage.
With few performance indicators to suggest otherwise, Iraq’s sputtering economy shows little sign of breaking free from its longstanding reliance on the one thing that sustains it – oil.
Even though the country has opened up to the wider region and the world, after easing visa restrictions for visitors, there is not much sign of investment beyond the oil sector in the many other industries and businesses long championed by its leaders.
Calls to diversify the country’s economy have gone unanswered, while demands to streamline its bloated public sector continue to fall mostly on deaf ears. Efficiency efforts are openly derided by citizens, as are the hurdles investors must jump to create private companies.
Nearly two decades after the US-led invasion toppled the Baathist regime, Iraq continues to maintain one of the largest per capita public sector workforces in the world – which employs on the paper about 7 million people out of an estimated population of 39.3 million.
How this burden on state coffers could be reduced and workers moved to wealth-creating private enterprises has baffled successive governments, and none have dared to act against a constituency that could swing the outcome of any election, or against a system that has long been central to how the country is run.
“Iraq is up to its neck in this problem,” Ahmed Tabaqchali, chief strategist of the AFC Fund for Iraq and senior fellow at the IRIS Mideast policy research institute, told Arab News.
“You see other countries, like Saudi Arabia with its Vision 2030 – it’s a good plan to end the oil addiction. But Iraq is different. You don’t have a strong central government there -down, but rather multiple sources of power.
“Oil revenues play a huge role. They pay public sector pensions and salaries and provide social security. It’s a challenge to get out of it. There is an unwritten social contract between the government and its people. People expect to receive services for their acceptance of the ruling government, and a job in the public sector is one of those services.
“No party wants to embark on reforms alone because it would weaken its power. Iraq needs a political class committed to long-term plans, because that’s the only way to work. The private sector needs time to develop.
* 39.3 million inhabitants of Iraq.
* GDP growth rate of 3.9% (PPP).
* 12.8% Unemployment rate.
* GDP size of $708.3 billion (PPP).
Source: The Heritage Foundation (2021)
According to a recent World Bank country profile, oil revenues make up about 85% of the Iraqi government’s budget. A November 2021 UN study, titled A Diagnosis of Iraq’s Informal Economy, found that the country’s private sector is largely informal and accounts for 40-50% of jobs.
Private sector jobs pay lower average wages, offer fewer benefits and less job security than public sector jobs, which are considered safer and more comfortable with the uncertainty of going it alone or trying to manage a start-up in a heavy regulatory framework. environment.
“We have a big unemployment problem in the country,” Baghdad resident Tarek Abu Abdallah, 50, told Arab News.
“A large number of young people are unemployed and restless. Things did not improve with the rise of the dollar on the Iraqi dinar. Prices have doubled. It’s hard to afford a lot of things. The economic situation is exhausting everyone.
The obstacles to building a functioning private sector are well understood by senior officials. In 2020, Ali Allawi, then Minister of Finance, presented a white paper on economic reforms aimed at streamlining the process of investing and starting a business. A year later, he warned that oil revenues alone cannot sustain the wages and benefits enjoyed by state employees indefinitely.
Over the years, the tedious but necessary task of overhauling a frozen economy and ossified bureaucracy has proven unappealing to Iraq’s ruling elite. The tedious process of forming government after every general election shows how difficult it is to get the country’s many political factions on the same page on almost any issue.
“Iraqi bureaucracy grew because of the socialist system that was established by General Abd Al-Karim Qasim in 1958, and again in 1968 when the Baath Party arrived,” said Entifadh Qanbar, president of the Future Foundation. in Washington and former assistant. Iraqi politician Ahmad Chalabi, Arab News told.
“The remnants of the Iraqi socialist state still control laws and regulations. I would say it is “anti-business” regulation. The bureaucracy was already massive, but after 2003 the bureaucracy exploded again. Iraqis have developed a problematic perception of: “If you want to find a job, find a government one.
“Every prime minister, when he comes into a new government, promises new government jobs – when the state is, in fact, unable to pay more salaries.”
In the semi-autonomous Kurdish region of Iraq, there are signs that things are being done differently, as Masrour Barzani, Prime Minister of the Kurdistan Regional Government, embarked on a reform program that challenged the status quo , in the preservation of which the governing factions had a vested interest.
“Over the past two years, the KRG has embarked on the biggest initiative ever to reform our public finances and empower private enterprise,” a senior Kurdish official close to the government’s office told Arab News. Prime Minister, who asked to remain anonymous.
“The changes we’ve put in place are driving efficiencies and recovering significant dollars that can be redirected to buy the goods and services that really matter, like power generation, medicine and frontline workers. We recognize that old habits of poor public finances are not the engine of progress or improved living standards.
“The digitization of our public spending has been at the heart of these changes. This decision alone has saved hundreds of millions of dollars annually in government costs by eliminating waste. Improved procurement exercises have resulted in additional savings.
“We are also making sure that small businesses have a real chance to earn public money. We’ve streamlined the process of registering a business, which used to be so cumbersome it had a chilling effect. »
Looking to the future, Qanbar says the key to solving Iraq’s problems lies in radically improving the business environment and weaning the political economy from its dependence on oil.
“Dependence on oil revenue has become dangerous over the years,” he told Arab News.
“The Iraqi budget fluctuates according to oil market prices. The country’s instability does not attract foreign investment. There is a huge risk for foreign investors as they would need protection and security, services that insurance companies cannot provide.
The need to do things differently has long been touted by visiting officials and nongovernmental organizations in Iraq. Using green energy is one such idea that has so far failed to gain traction.
“Given the lack of capacity to invest and improve at the most basic levels, I think it’s out of the question that Iraq can invest in green energy at this point,” Qanbar said.
“It cannot provide basic services to its citizens, such as water, electricity, education and infrastructure.”