A peak morning and Dr Hasan Bader *: some perceptions about economic reform in Kurdistan Iraq
By حسن وصباح بدر وقدوري
- Posted on 24/08/2015
Sabah Kadduri & Hasan Badr article on Kurdistan economy to download print friendly version click on the link
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First: an introduction
II: constraints on development in Kurdistan Iraq
III: ideas for economic reform
The first A: the entrance
1. badalharob absurd and crazy ex-dictatorship, the latest conquest for the State of Kuwait in 1990, the UN Security Council imposed a package of economic sanctions on the Iraqi people a period of 13 years.
Economic conditions have deteriorated in Iraq, which eventually led to the country under the tutelage of the United Nations under a system called (OFP).
2. following the uprising the glorious Iraqi people take for 1991, the geographical area of Iraq, including Arbil and northern areas adjacent to the Turkish border, and actually joined Sulaymaniyah, are outside this line and acknowledged her safe zone within the latitude of 36.
The region also was covered with oil-for-food regime with economic continuity the blockade by the toppled dictatorship.
3. the current federal system was established in the territory of the Kurdistan Parliament on 4/10/1992, as a practical formula to express determination within the unity of Iraq.
The Government has been formed in the region equally between the two main parties: the Democratic Party and the Patriotic Union of Kurdistan and Kurdistan supervised the territory's economy, the share of income (OFP), plus some local financial resources derived from tax and customs duty when the territory's border crossings with Turkey and Iran.
The lion's share of these were customs graphics come from crossing (Abraham), causing the emergence of differences among the ruling parties about these revenues and how to distribute and dispose of, in addition to other factors.
This led to the outbreak of fighting between them lasted for four years from 1994 to 1998, and finally over reconciliation.
4. after the fall of the dictatorial regime in 2003 and occupy Iraq by the United States and its allies, the legacy of the previous regime and was the heavy economic and social burdens and cost on the Iraqi people, including the Kurdish people in Kurdistan Iraq.
under the interim Government of Iyad Allawi in 2004, the Cabinet of Ministers to be the territory's share of 17% of the annual federal budget, subtracts them sovereign expense (the cost of the projects implemented by the Central Government of the territory) and the settlement of local revenue to the territory of taxes and fees, etc.
These expenses ratio to matsal (15-20)% share of territory , plus share albitrodolar rose $1 on every barrel sold oil territory.
After the legislative elections and me in 2005 and permanent Iraqi Constitution in the same year by the Iraqi people, there were problems between successive Governments and Kurdistan Iraq on this percentage and calculated foundations, attempts to reduce between (10-13)%, but this has not materialized for lack of accurate statistics for the population in the territory.
5. the Kurdistan region to develop its own economic policy (fiscal, monetary, public budgeting) as a federal territory in the Republic of Iraq in accordance with article (109) of the leave year 2005. Article (110) of the Federal Government's exclusive aldstoralakhtsasat (financial policy walkmerkih and the issuance of currency and trade policy planning across the borders of the territory and the provinces in Iraq, setting the General State budget and monetary policy and the establishment of a Central Bank and its management, and population).
And the territory usually redistribute his share of the budget in accordance with its own economic policy.
6. gradually emerging oil investments in the territory, and a successful production fields. And generated an export pipeline across Kurdistan Iraq linked, when the Iraqi-Turkish border, the old pipe that connects the Kirkuk to Ceyhan in Turkey.
Since then serious and substantial problems emerged between the territorial Government and the Federal Government about: calculate territorial federal budget share, production capacity, sales and marketing of oil from the region and legal powers to act in the territory's oil, foreign oil companies operating in the territory, in addition to the issue of the disposal of other financial resources of the territory, local taxes and customs fees and foreign aid.
All these things, and others, are not resolved until now between the territory and the Federal Government. In any case, the resources of the territory in question, lacking transparency and identify spending and disclosure.
Researcher finds difficulty in getting this data from the competent ministries (finance, economy, natural resources, and planning), which are necessary for the quantitative research to the territory's economy. It is difficult to develop reliable economic policies without such data.
7. After nearly a quarter century of this March, the territory experienced some quality developments at political, economic, social and security, but these developments did not rise to the level of the aspirations of the people of Kurdistan and available financial and human potential of the Federal Administration.
Today ymralaklim critical and difficult economic phase due to the pale of reasons including: low oil prices and thus resulting revenues, the differences between the Centre and the region.
There is economic stagnation and lack of liquidity, worsening the indebtedness of Kurdistan to foreign oil companies and commercial banks, and not to pay the salaries of many employees of the Institute of management since April 2015 and that it did not receive the territory to his share of the federal budget, and economic mismanagement in addition to corruption.
There are problems in implementation of the recent agreement concluded on 17 December 2014 Haydar Abadi Government and the territorial Government, to hand over territory to the Centre (550) thousand barrels-(300) from the Kirkuk oil field and (250) oil production region for receiving a share of 17 percent of the federal budget.
Therefore, the territory announced that he had to sell part of its oil directly to third parties by foreign companies to overcome the difficult economic conditions , especially after the decline in oil prices of around (96) dollar year 2014 to less than 50 dollars per barrel at present, down about $30 a barrel.
Forecasts suggest the difficulty of a significant improvement in the price in the foreseeable future.
This is in addition to the territory's preoccupation with Muslim country (Saudi Arabia), worsening the problem of refugees and displaced persons, and it takes all of the extra expense.
II : Constraints on development in Kurdistan
We try to provide a clear picture and intensive (without details), about the nature of the economic system and mechanisms in the region.
1. the economy of the territory's status REI Iraqi economy economy. and that means income region dependency from export the oil core class rental nature of territorial economy finds expression in a very weak and even declining, the contribution of agricultural and manufacturing sectors in the composition of GDP, official figures available indicate a modest contribution these sectors in the total output, and doesn't fit with large financial and non-financial resources available, not even with the case was already until the mid-1980s.
At the level of Iraq as a whole, agriculture and manufacturing industry increased by 5.8 per cent of GDP in 2012; and even when excluding the oil sector, the contribution of private and 12.1 percent of non-oil GDP (8.6% for agriculture and manufacturing 3.5).
 this modest contribution to agriculture and industry, in turn, is reflected in the adoption of the territory (and Iraq generally, of course) on the oil sector in financing most of consumption and investment.
2. Tftkrakod territory with foreign oil companies operating in it to transparency. Such contracts was concluded on the basis of participation in production, and are a great injustice against the territory and Iraq.
According to some preliminary data, these contracts are awarded, and for a long time has more than 20 years, share high profits from oil extracted, and also participate in ownership, and low cost compared to develop oil fields in the region.
3. the lack of transparent and clear strategic vision in a comprehensive and sustainable national development process, besides being open ghiralmndabt on the market economy at the expense of the declining and poor performance of the public sector in the reconstruction process (modern technology infrastructure), diversity in economic activities walmsadralmalih.
4. territorial features small size of the domestic market, among other factors  , A population of about 5 million people.  , Any Some (14%) of the population of Iraq , which was estimated at about .33.4 million in early 2013 and about 35 million early 2015,  which limits the sophistication of economic sectors.
However, overreliance on imported foreign goods domestic GLUT, with declining domestic production, has exacerbated the problem of tight domestic market and make domestic production is able to withstand foreign import competition in terms of price and quality.
5. controlled all of Turkey and neighbors Iran and China for 90% of the market of Kurdistan  , A 35%, 25%, 30% each, respectively. trade (which consists of the sum of the values of imports and exports) between Iraq and Turkey to 2013 had reached $12 billion, 70% of it with Kurdistan (8.4). either with Iran amounted to 12 billion dollars, almost half of the territory, IE (6) billion.
a volume of imports (which may also include transit trade to the rest of Iraq) from these two countries within 14 billion dollars. In 2013. While the Kurdish exports exceed them, excluding oil and energy (100) million dollars a year. China has in recent years gradually permeate into the markets of the region, expected to be confiscated has size limits (4) billion dollars a year.
These import figures reflect a bleak performance is not only a waste of foreign currencies and financial resources in the region, but also in national resource leak from the local economic cycle and therefore its contribution to stimulate foreign production rather than domestic production now.
And if we take the import ratio of GNP as a measure of the import role in satisfying the demand for goods, imports constitute a very large proportion of total output (without oil) in the territory, which means he also meets a large proportion of the total demand for goods in the territory and in Iraq as a whole, may increase that percentage much about 60% of the total demand after 2007 . and so, probably, in view of the similarity of the situation and in Iraq as a whole.
6. exacerbate unemployment, especially among young people, this proportion reached around (25-30)% of the total workforce last year , because of the recession and the financial crisis afflicting the region and Iraq generally, lower oil prices and unstable security situation as a result of the war with (ISIS), prompting many foreign companies operating in the territory to lay off large numbers of employees. in addition, there are more than one million employees receive salaries from the Government of the territory, although not The need for a large number of them.
And thus suffer from underemployment institutions too, which is one of the facets of administrative and financial corruption in the territory. And Government officials are usually set, especially in leadership positions and top recommendation of the ruling parties on the basis of narrow partisan favoritism and personal loyalty, and not on the basis of competence, integrity and sincerity.
7. the growing social polarization, thereby strengthening of existing inequalities in society, a big wezhorfgoh between rich and poor, and this is reflected in the increasing concentration of wealth in the hands of powerful groups at the top of the pyramid General Administrative and party, which controls determine the general economic trends.
8. the existing economic policies contributed to drawing up the markets and prices policy forms inconsistent with economic development, the absence or weakness of accountability and transparency in management and performance, weaken the middle class, which is an engine for development, the emergence of disparity in incomes.
This is particularly evident in the manufacturing field, both private and Government-owned, which had a certain role until the mid-1980s as a parasitic bourgeoisie slices enhanced visible and bureaucratic wekombradorih which means capital accumulation process directed towards areas of real estate property and internal trade and speculation, rather than production-based accumulation.
Add this to the emergence of a competent smuggling mafia slices and sell oil through multiple channels, kickbacks and payoffs with companies operating in the territory, package orientation labels meeting your trading alshraih drugs and weapons.
Thus, a growing percentage of revenue seeping out through foreign trade, corruption and money laundering, thereby depriving the region of huge financial resources would be invested in building productive capacities and thus contribute to delay and weaken the growing development and improve the real incomes of the masses, and weaken the central role groups known for development, it also enhances the phenomenon of social polarization between the layers and segments of society.
9. the growing phenomenon of migration among young people of the territory toward Europe, especially lately because of the heightened difficulty in obtaining jobs and resurgence of political corruption and financial and administrative, with the continued dominance of powerful parties approach in the region.
10. double the contribution of taxation and customs duties on local budget funding, due to the spread of its administrative and financial corruption, lack of control, and the difficulty of collection, poor control of the competent departments of their organization, with the dominance and the tyranny of party authorities.
On the other hand, there is a weakness in the performance of financial legislation and in developing the tax system and financial institutions, chiefly banks and banks Insurance companies, multiple accounting systems in public and private institutions.
11. There is also weak and limited sources of qualified manpower and sophisticated expertise in the production process.
12. restrictions on development and economic reform do not do it in isolation from similar limitations on political and social fields reflect financial corruption, and not to put the right man in the right place and overtaking on the standards of professionalism and specialization, well expressed. Since standing partisan nepotism, poor financial control, behind corruption at different levels of administration and party.
As to exaggerate the concept of privatization and Cisse just market economy has encouraged and encourage more of that corruption.
Thus the federal administration institutions wield at the behest of the ruling parties, away from the separation between the judicial, legislative and executive authorities, and even the fourth power media, so the marginal utility of such institutions in making decisions which shows that true democracy is not practiced in General only a few boundaries.
III : Ideas for economic reform
Iraq Kurdistan's economy needs a number of reforms and structural changes. Thus there is a need to form a team of academics and experienced in development and economic and social development and planning with the task of diagnosing the existing economic situation as it is and set goals to be achieved in the short term and Anya (3 4) years since then as much as possible, and then propose policies that will achieve the goals.
And that such a group is formed, the following ideas and proposals may have some benefit:
1. Defining the role of the public sector, the private sector and foreign investment and selection mechanism
2. The greatest challenge in designing and adopting clear and realistic strategy for economic and social development process and thus the strategy should define the role that Government should play, especially since there is, since the beginning of the 1990s, broad and tough to deny the importance of this role and limited to a minimum.
In contrast, highlights the need to take advantage of the great potential (ideas, organizational abilities, with funds) owned by the private sector, particularly in the area of commodity production in the agriculture, manufacturing and residential construction and tourism. In the same way could be considered foreign sector of investments to complement the role played by the public and private sectors.
In all, to prevent any confusion, it must be stressed that no sector leadership role should not be based on ideology, but's argument based macroscopic studies concrete give this sector or that actual course, real, and not the supposed role in the minds of the makers of speeches designed for all sizes.
As to what degree orientation of Justice and prosperity for this generation and future generations (by ensuring the right to education and treatment, insurance and social security), is from the basics and the State is everywhere, and it is only through a policy of market economy. Hence the emphasis on government intervention to achieve and ensure those rights.
3. Attention to the productive sectors
Given that the bulk of the local commodity supply comes from imports, thanks to oil revenues, is very essential to develop local sectors that produce goods.
The process of developing the agricultural and manufacturing sectors (construction, water and electricity, transport and complement them), as and details that can be played by economic ministries concerned and/or team who propose configured for theme development and economic reform will bring significant economic and social consequences for Iraq and the region as a whole.
The agricultural sector, for example, suffers from weak management and regulation and manifestations of corruption, as well as primitive methods of agricultural and livestock production and marketing services.
And here we see the need for diversification and modernization of means of production and the introduction of modern management in running, and the use of modern technologies in production and transport, communications and storage, and to adopt modern methods of marketing of agricultural and animal products, fish and poultry, with a view to raising production and productivity in this vital sector.
It should also work to increase resources for water management, rural roads and storage facilities, research and extension, and through the establishment of huge companies specialized in this area without affecting the small agricultural units, the involvement of the private sector and cooperative.
It is necessary to take into consideration the geographic redistribution of industrial enterprises at the county level, according to population density and level of economic and social development and the financial and natural potential and available labour force and qualified in various areas of the territory.
As interest in tourism and hospitality is essential and complementary because the fundamentals for the industry in the territory, of beautiful nature and climate and having eyes water, waterfalls etc, plus security and relative stability in most places, the availability of manpower which need to be inked in this sector.
This issue requires granting incentives and Government support to secure the fundamental pillars of the sector, aimed at stimulating domestic and foreign private sector investment in this vital sector.
There is no doubt that a clear strategy and transparent medium and long term for human development that would form the basis for the construction and development in the sector producing goods and services sector.
This is linked to educational policies which must receive special attention and big under the review process and economic and social reform.
The development of the commodity sector would gradually achieve the objectives development process itself.
It provides a reasonable proportion of the needs of food and consumer products industry, at least, thus cutting out the proportion of goods that are secured through import, which yo'fer in foreign currencies which go to fund it, and reduces the exposure of the territory to the outside and adopted him.
The development of the productive sector of goods represents the way a normal to process increasing numbers of labor force and qualified and trained at the same time, as well as absorb massive unemployment, especially among young people.
And when I realized that, the economy has gone into the control of the appropriate rate of inflation in the territory. When the concrete and increasing amounts are produced from local commodity supply, control the sources of costs and productivity as well as sources of domestic demand, the economy has much control of sources of variation in prices and therefore inflation.
And improving the productive sector of goods and continue insisting it only way also to build local productive capacities and thus build the foundations and physical safeguards for the demise of the rentier nature of the economy and a diversified economy contribute to domestic sectors in the production of added value. 
3. attention to residential complexes for citizens
A large proportion of the investments are concentrated in certain types of construction: hotels (4 of 5) stars, high buildings and residential complexes for rich categories, villas for party officials and administrators, along with courtyards, gardens and various government buildings with little part to build housing complexes.
And because the real housing crisis territory, particularly for the poor and limited income groups, it is very interested in this area and encourage the individuals themselves and the private sector to contribute actively, so that Government activity towards other infrastructure elements such as roads, bridges, tunnels and modern means of communication, urban planning, etc which is constantly increasing.
4. There is an urgent need to encourage the private sector and adjust
Private sector investment is not a relatively large potential level and needs of the territory.
This applies in particular for his contribution to agriculture and manufacturing industries, producers of goods.
The reasons are many and substantial and known, for good luck. Concerning financial and administrative institutions, especially tax laws, banks and their loans and their terms, tariffs, as related to other economic considerations more generic.
Therefore, there is a need for concessional financing for small and medium industries, in cooperation with Chambers of Commerce, and benefit from the experience of the Iraqi Federation of industries in this area, and to consider the possible inclusion of private retirement (as employed in the Government sector), as well as provide protection for industrial projects and exemption from taxes for me (5 7) years, the demands of the private sector itself.
It is also Lori take advantage of foreign private sector, especially in large industrial branches that require sophisticated technology and experience and skill in accordance with local conditions.
5. financial resource disposition
Necessary financial resources territory to act rationally and high transparency in the service of development, and this includes the (17%) Of the federal budget (after deductions), as well as revenues from local tax and customs collection, and some foreign aid.
And with that go around (70%) Of revenue for operating expenses, including salaries and wages, and some (10%) Other consumer expenditure, so don't stay for investment (20%) Available financial resources is understandable and predictable due to the evolution of local sectors could assimilate and therefore their accumulation in the Government jobs without any work, but consumer spending was necessary to increase investment spending on capital projects and infrastructure.
The issue of revenue from oil sale directly benefit foreign companies in the territory, it is still a pending issue, complicated between him and the Centre. Investment policy in the territory, and of long lasting participation contracts and payout is very high for companies, constituted an injustice on the level of Iraq and the region and a threat to national sovereignty.
6. it is necessary to provide for specific branches and studies the following bodies to develop specific policies are in the process of economic and social construction:
Reform of the financial and monetary system.
This includes the application of modern financial system based on information technology, on the one hand and, on the other hand, must exercise control over the banks, especially foreign and civil, and emphasize the principle of the separation of powers of the administrative boards of executive departments with a view to controlling the use of financial resources. It is also necessary to pursue the policy of increasing public lending interest rate, lowering it to industrial and productive loans, the Central Bank branch in the territory.
Activating the role of the financial control bodies, impartiality and respect for the astklalthma in the performance of their duties, and quarterly and annual reports study seriously in the territorial legislature and approval.
Reform of the accounting system so that the climb to the global measurement level, through the consolidation of multiple accounting systems currently in place in the public and private sectors, and to develop the methods and quality of financial control, raising professional capacity for workers in the fields of accounting and management.
Reorganization of the system of direct and indirect taxes, and special laws to achieve social justice and limits the financial and administrative corruption in these fields.
Raising public awareness and cultural level of society, and activating the role of civil society organizations in the exercise of democracy and participation in decision making and scrutiny.
Directly to social and economic development policies pursued with the same long and patient, and rely on the real interests of the masses and the majority of citizens, with a commitment to standards of professionalism and specialization so that the right man in the right place, a reasonable degree of social justice, equal opportunity and the rule of law and institutions to sponsor a rational and humane system building for the management of the economy is also effective and preventive and powerful tool against financial corruption, based on a strong and impartial judiciary authority, a fourth power media enjoy opportunities to build and consolidate a truly democratic experience and expose those trying to harness them for non-interest The majority of the people.
Finally, to discuss these proposals and establish it is important to develop a vision and strategy for economic and social development process sustainable and inclusive, involving the masses and support. in this context we should note that extreme application for privatization ideology and simplistic free market, based on political decisions do not touch products and market facts/awalmstkhdmat, and in the absence of social preparation and tactical level, resulting in many different forms of destruction and mention here, for example, what happened and is happening in most developing countries and Eastern Europe and Iraq, and is embracing Copy (profoundly ideological), has no factual basis, of free-market capitalism, within as (shock treatment).
So there must be another option searches include social protection through the application of a model consistent with economic rationality and social, legal and regulatory environment of the territory .
 Example: Iraq budget (105) billion for 2015. the share of the territory's (17% of the 105 billion) of about 18 billion dollars (after rounding). and of this share, resolve, according to estimates, approximately 17% (which is above average 15-20%), or about three billion dollars, so the net outstanding share of territory around (15) cost $. Add this to albitrodo.
 According to the statement, spokesman for the regional government/Sven diza (Baghdad/agency sky Bryce,
23.7, 2015), that the territory has betsadirakthrmn (11) million barrels of oil during 19 days of July 2015 independently of Baghdad.
 Dr Ahmad abrihi: "development and finance in Iraq 2014 and future prospects," April 2014, the article reproduced on the Web site of Iraqi economists, 14-7-2014, p 8, as well as the table on p 10.
 Local the market size depends on a number of factors such as population size, age and geographical distribution between rural and urban areas, the level of national income and therefore the level of per capita income, the roads especially the rural part of the coverage of the agricultural country, or how the local product protection from foreign competition, and other factors.
 Bulletin of the Ministry of planning/CSO 22 January 2014. the Directorate of statistics in the Kurdistan region of Iraq.
 IMF, Iraq: Selected Issues, IMF Country Report No. 15/ 236, 2015.
Note that the IMF report figures indicate that by 2013 the population size 33.4 million. based on an annual growth rate of about 2.4 percent, was expecting the arrival of population size to about 35 million People early 2015.
 Hayat newspaper come 16 July 2014, ARPEL Muwaffaq Mohammed, reports of an economic forum in Kurdistan. importers and exporters ' Union statistics site.
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 Dr Hatem haide: "the role of the exchange rate in determining the General level of prices and problematic monetary policy in Iraq" Arab economic research journal, Nos 59-60, summer autumn 2012, research published on the Web site of Iraqi economists, 13 3 2015, p 4 5.
 Arabic (Sky News) video 5 December 2014.
 for example, that Iran, a neighbor of the territory and Iraq Iraq maintains oil and territory wide and powerful relationship with her in almost all areas, including the economic field, a good example of a country succeeded in developing local production capacities, agricultural, industrial and service scientific and tech, not to exceed the oil sector contribution (30%) Of their GDP. The rest of agriculture viati (Iran state-contained in many agricultural wheat were first-blockade) and transformative industry (producing Iran million cars annually, and ranks 17th globally in production cars) and electricity, as well as in specialized scientific articles and books, even a certificate of European countries.
 The Federal and regional budgets for the years (2010-2014) and analytical report of Iraq's financial budget for 2013 and share Kurdistan Iraq (about general budget for Iraq) 12 December 2013, movement're Curran site.
 even official investigations indicate that the work of government employees in Iraq does not exceed 17 minutes a day.
 For more information, see: William Crescent and Kenneth b. Tyler: "twenty-first century economy, socio-economic prospects for a changing world" translation Dr Hassan Abdallah Bader and Dr Abdul Wahab Hamid Rashid,
Arabic translation, Arabic Unity Studies Center, first edition: Beirut, March 2009.
* A Professor, researcher, Economist-accounting
* A professor and economic researcher
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