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Spotlight on the Iraqi Economy

Updated: Jan 21

“Iraq can't open the door to Gulf or other Arab countries for help because it's under Iran's control”

Date: January-February, 2021

Place: Baghdad

The following report consists of interviews and some observations


Basim Atwan, 56, Business owner and Economic Expert, Baghdad.

Iraq is a very rich country in all aspects. Human resources, natural resources and a rich history are among its gifts. After the fall of Saddam, as businesspeople we expected that subsequent governments would choose the right people for the right positions, and that a qualified and patriotic government would come to run the country. Unfortunately, the US made many mistakes. They increased imports, and local and national production inside Iraq suffered. Oil prices increased, and Iraq came to depend more on this sector. As a result, the wrong people took power in Iraq. Qualified and educated personnel were pushed aside.

After 2006, under the governments of Nuri al-Maliki, there was massive corruption and theft of public wealth by parasitic groups – local companies and contractors who were ignorant, and with no loyalty to Iraq. Rather, they were loyal to neighboring countries.

The Government has continued to change hands between Islamic parties, with no changes on the ground for the Iraqi citizens and public. They controlled natural resources and siphoned money out of the country.

Over time the influence and power of other countries increased, weapons were in the hands of gangs and militias. Such sectors as manufacturing, tourism and agriculture were destroyed.

It’s normal for countries to feel pride in what they plan to build in the future. In Iraq, we began to rather feel proud of our past. Because in the period from the 1940s to the ‘60s, the economy was in far better shape than now.

Due to the lack of development and sustainability illiteracy, poverty, health and lack of education have increased significantly now.

Iraq has a debt of $130 to $140 billion.

There is no real determination for economic reform, rather, corruption is pervasive. The reform that the current minister of finance proposes – namely, devaluing the Iraqi dinar against the US dollar, is not well formulated. I think the dinar should be devalued 10%, and we should then wait for 6 months to see the results of this decision. As the coronavirus decreases, I expect oil prices to rise, and we hope to increase the price to $60 a barrel.

But, we will still have issues in Iraq, because the same corrupt people will be controlling the revenue of the country.

Iraq needs investment from the Gulf countries and from China. We have massive land resources, which are not being exploited. The ignorant and illiterate people who control the country reject such opportunities. Such people don’t believe in change and development, they are slaves for neighboring powers. Such countries bring only destruction for Iraq. We don’t oppose investment from any country if they are qualified to do so. When Kuwait and Saudi Arabia invest here, they bring money into the country. While Turkey and Iran take from here to their countries.

Iraq has rich land and resources for investment. But, due to the power of ignorant political people, many opportunities have been blocked.

I as a businessman am blackmailed by militias, and by the governmental and political sectors. If the price of oil doesn’t increase, we will lose our hope, and I would like Prime Minister Mustafa Kadhimi to carry out the needed reforms as soon as possible or to quit his position to avoid further embarrassment

Hussain Arab. 44, Erada (WILL) movement, Vice Chairman of labor, Social Affairs and Displaced Persons Committee, Iraqi Parliament Member and Businessman.

We are currently seeing the devaluing of the Iraqi currency against the dollar. It will have a significant impact on the Iraqi economy and markets. Until now, we don't have the results of that decision. Iraqi economic markets remain unstable.

I predict that if the devaluation of the dinar doesn’t bring a solution, there will be tax increases and increase of rents in the market, which will become the main issues. The government decided on the devaluation. It's their responsibility.

We think it was a rushed decision. The reasons for the current Iraqi economic crisis are misadministration, and bad management and planning over recent years. We don’t see the current government as to blame.

Yet we are still at the red line of a very bad situation of our economy, and we may face a worse one. Everyone is responsible – Iraq is a parliamentary system and everyone has a share of this.

People have the right to protest. If the economy doesn’t improve soon, we are all sliding toward a very hard situation.

The second wave of Corona hit Iraq hard, and we are going to see increased unemployment among the young, who are 76% of the Iraqi population.


MP Ahmed Hama Rashid Ahmed Mohammed, 57, Member of Parliament Financial Committee, coalition-Kurdistan Islamic Group / Iraq:

Iraq has three core issues - political, economic and administrative. Iraq has clear issues with Turkey and the Gulf countries, and not openly with Iran. The reason is the immoral people who control Iraq and its government, and who are close to Iran. The issues of use of oil fields by Iran and Iranian intervention into Iraqi internal issues are there, but are kept out of sight because most of the leaders now controlling Iraq are close to Iran.

People have the right to protest. If the economy doesn’t improve soon, we are all sliding toward a very difficult situation.

Political issues

Turkey: The main issue with Turkey is Kurdistan Region oil exports to Turkey at a reduced price, and Iraq asking Turkey for its share of monies that Turkey made from sales of Kurdistan oil. Another issue is water. Turkey has constructed two dams on the rivers (Euphrates, Tigris) that flow from Turkey to Iraq which leads to less water coming to Iraq. Turkey is asking that Iraq should buy new agricultural technology in return for increased water supplies.

Gulf countries: Saudi Arabia has an ideological issue with Iraq. Kuwait has less issues with Iraq, but there is the outstanding matter of remapping the border between the two countries.

IRAN and the US: Iraq became the central area of the conflict between Iran and the US. The US is giving Iraq only three months to buy gas from Iran, under current sanctions. At the same time Iran is threatening to cut gas supplies to Iraq if US troops and bases are not removed from Iraq.

Economic Issues

IRAQ is a country dependent on oil. Covid 19 has significantly impacted oil prices. The result is that revenue is not covering expenses.

According to the debt law issued from the Iraqi parliament, a $15 billion dinar internal debt has been agreed on and $5 billion external debt. Iraq has low credibility among international credit bodies when it comes to debt.

Iraq has a shortage of 71 billion dinars, for the first time in its history.

The current exchange rate of the Iraqi dinar is $100=145,000 IQD, which increases prices on all goods.

Iraq has multiple border crossings which are not under Iraqi government control. Rather, they are controlled by militias, political parties and tribes.

There are 86 banks in Iraq, they are open for currency speculation. They have created major issues for Iraq. They are not contributing to any positive processes.

Administration issues

The Islamic state war significantly impacted on Iraq,. Iraq lost about $35 billion . It hugely damaged the construction sector and the economy.

There are militias controlling ports and border crossings. This reality affects not only Iraq but the Kurdistan region as well.

Regarding the future, if there is not an urgent solution for the current situation, things will get very bad. Within six months, if reforms based on the green paper that has been agreed on aren’t implemented, the Iraqi economy will face collapse. The green paper contains three areas for reform - price of Iraqi dinar, customs revenue, and austerity.

The corruption will take time to get control over, some of it is covered by law and political power.

Iraq cannot take any support from Iran because it is under sanctions, and if they deal with Iran they will be treated likewise. At the same time, Iraq cannot open the door to the Gulf or other Arab countries for help because Iraq remains under Iran's control.

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