The political equations in Iraq in the period of relative peace return to this country, after the end of the caliphate declared by ISIS led by Abu Bakr al-Baghdadi, still face a wide range of political, social and economic crises.
Differences between Iraqi political currents, continuing differences between the Iraqi central government and the Kurdistan Regional Government, social crises after the period of the rule of ISIS terrorists in parts of Iraq, the crisis of the return of refugees to their areas, the problem of rebuilding war-torn cities, and most important of all the heavy external financial debt Among the issues still weighing on Iraq, tired of terrorism and bloodshed.
In the meantime, the issue of heavy financial debt to the federal government and the KRG is the most tangible level.According to the reports submitted, the central government with about $ 85 billion of debt, has the greatest responsibility in managing the Iraqi economy in the new era.
However, in terms of oil revenues and the ability to borrow from international financial institutions, the central government seems to be able to manage this in the not-too-distant future.
But more importantly, the KRG’s $ 17 billion in debt appears to be a major crisis in northern Iraq, and given Erbil’s restrictions on earning private revenues, it seems very difficult to make up for this level of debt.
Economy of the Kurdistan Region under the rubble of heavy financial debt
In the past few years, several reports have been published about the size of Iraq’s Kurdistan’s external debt, most of which emphasize Erbil’s heavy debt of around $ 20 billion to foreign companies and countries.
What is clear is that most of the Kurdistan region’s debt comes from the debt of this autonomous region in northern Iraq to Turkey, and the Kurdistan region has received several billion dollars from the Russian company “Rosneft” to sell oil in advance.
In this regard, Euromoney, the prestigious European financial and banking institution, in a report, estimated the debt of the Kurdistan region at $ 17 billion, but stressed the lack of adequate financial transparency in the region.Therefore, the KRG’s debt may be higher than estimated.
Euromoney warned that this amount of external debt to a region of 5 million people, equivalent to about 100% of GDP, and if the Kurdistan Region of Iraq fails to solve this problem, it will face greater problems in the economic field.
Euromoney also warned that since the Kurdistan region of Iraq cannot issue bonds without reference to the Iraqi central government or obtain international loans, Erbil will not be able to attract funds of international origin easily.
The economy of the region is a victim of failed independence
Undoubtedly, the most important factor in the current state of the economy of the Kurdistan Region can be traced to the ambitious plan of some Erbil leaders to move to the stage of independence and secession from Iraq.
The leaders of the region in mid-2013 followed the strategy of independent sale of oil through the oil pipeline between Kirkuk – Ceyhan Turkish port, through the plan of the Minister of Natural Resources in the Kurdistan Regional Government, “Ashti Hawrami.”
Following the decision, the Baghdad government led by Nouri al-Maliki cut in the first measure the region’s share of 17% of the annual Iraqi budget. Moreover, relations with Baghdad reached the lowest level in all dimensions.
The recent move by the province to move towards a referendum on independence on 25 September 2017 has compounded the economic problems of the KRG.
During this period, the Kurds took the path of borrowing from oil companies, in order to secure a minimum wage for workers in their departments.
They also received heavy loans from the Ankara government, supported by oil exports through Turkey.
However, in the new case, international bankers told this institution that the most important issue is that the KRG has high levels of debt to foreign countries but is still seeking independence from Iraq, and this will have a negative impact on the KRG economy.
As a result, what seems certain in the new situation is the need for the region to change its approach to future issues and relations with Baghdad.
In this regard, “Euromoney” to an article written by the Prime Minister of the Kurdistan region in a US newspaper recently, on forgetting independence and the adoption of comprehensive interaction with the Iraqi central government, saying that this approach is appropriate to address the economic distress of this Kurdish region in Iraq.