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Why Iraq is like Alaska?

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1Why Iraq is like Alaska? Empty Why Iraq is like Alaska? Thu May 24, 2018 3:55 pm



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Why Iraq is like Alaska?

24/5/2018 12:00 am
Luqman Faily

During my recent visit to the United States, I visited some states to give lectures on Iraq's status and democratic development.

The theme of these lectures was "Postwar Iraq: What's Next".

The trip included a visit to two major cities in Alaska, with commercial capital Ankhorge and its political capital, Juno.

Although my lectures and news stories focused on Iraq, I was also keen to learn from Alaska's own experience of a rural economy in which the state relies heavily on oil production and export

As a result, I met with key officials in the state's energy and finance departments.

It is useful to remember that many of the features of countries that rely heavily on oil exports apply to Alaska as well.

Here are some useful facts and lessons to learn about our Iraqi situation.

• Government employees receive generous wages for overtime (by one and a half hours) for more than eight hours of work in one day.

• Alaska's minimum wage is $9.84 an hour which is higher than most other US states.

• The state waives sales tax and income tax for its citizens and has the lowest tax system in the United States.

• The country's unemployment rate was 7.3 percent, higher than the national average of 4.1 percent.

• During the construction of the Trans Alaska pipeline in the 1970s, oil companies flooded the state treasury with money paid for leases to explore and secure drilling rights. The total amount of $900 million has been disbursed within a few years.

• When the pipeline was completed, Alaska residents realized that they were about to get a lot of money from the oil. They wanted to improve their strong income coming from these lines, but their state constitution did not allow funds to be allocated in this area.

In 1976, the people of Alaska voted to amend the constitution (extract below) to put at least 25 percent of the oil money in a dedicated fund called the Permanent Fund, which would save money for future generations when oil was not their main source of income.

Constitution of Alaska Article IX, paragraph 15, Alaska Permanent Fund. {{At least 25% of the total rental of finance leases, proceeds, proceeds of compulsory sales, federal revenue sharing and state benefits should be in a permanent fund, whose capital is used only for those revenues. Investments produced specifically defined by the law as eligible for the Fund's permanent investments.

All income of the permanent fund shall be deposited in the General Fund unless otherwise provided by law.

• Oil production began in Alaska during the 1970s, peaking at 2 million barrels per day during the 1980s and 1990s, and in the last 17 years production has been falling and is now less than half a million barrels Per day.

• Every year Alaska residents receive generous returns from oil sales. For example, in 2018, permanent Alaska residents will receive funds from the permanent oil-funded fund at $1,600 per person. The only condition for rehabilitation is that they must stay there for a year Complete calendar.

The amount paid to the population of Alaska is derived from the formula of the average income of the permanent fund over a period of five years.

In theory, this year's dividend was estimated at $2,700 but was reduced due to legislative action.

• By 31 March 2018, the value of the Fund's assets was $64.6 billion.

• The annual payment from the Permanent Fund has kept many low-income families in Alaska out of poverty.

• The collapse of global crude prices in late 2014 had a significant impact on the revenues of this state but had a lower impact on the Fund's annual payments.

This is due to fund managers who benefit from the rising stock market as well as real estate and private equity investments.

• The sharp fall in oil revenues has contributed to a significant budget deficit and may continue to fall.
This year's government deficit could reach $2.7 billion, and could be reduced to about $700 million if lawmakers passed a law that would make use of the permanent fund.

• Given the current economic structure of the state, even if the permanent income system of the Fund is reformed, it will likely remain the state's substantial fiscal deficit.

• The existence of a permanent fund and its increased revenues make Alaska's fiscal policy more difficult and complex than other US states.

Alaska officials are finding that moving from a heavy dependence on oil revenues will not be easy.

The challenge of Alaska is psychological and psychological, not just financial and political. Here Alaska officials face a special challenge because huge oil revenues have made it relatively easy for officials to absorb many requests For spending.

Now the sharp drop in oil revenues is pushing government officials to move to a new reality that forces them to reject the previous situation and thus are not as popular as before. One may suggest that the increase in oil prices may solve this chronic challenge.

Oil prices have risen in the last few months, but as always, it is important to remember that oil prices fluctuate, so the financial problem can not be solved by increasing oil prices Alone.

At the same time, the level of spending can not be maintained, and the longer the wait, the more Alaska's people wait for their financial challenge and reform their economy.

Let us now talk about our country, Iraq. Are the observations and facts mentioned above similar to our financial and economic challenges?

It is true that our oil industry is much larger, so there is a greater chance of sudden gains from higher oil prices, yet the population of Alaska is less than seven hundred thousand, while we are approaching 40 million.

We urgently need to learn from the positive steps, mistakes and lessons of other countries' experiences.

Otherwise, our children and grandchildren will pay the price for continuing this erroneous approach and our stubbornness not to adopt other options. Surely we still have a fix in the case, do not we?

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