By Alexander Whitcomb 7 hours ago
The region’s business-friendly Investment Law has drawn in many foreign firms. It is easy to start a business, and low corporate taxes, income taxes, exceptions and other incentives make it a good place to run one. Photo: sardar group
ERBIL, Kurdistan Region – As Iraq’s autonomous Kurds speak more openly about independence following an Islamist insurgency that threatens to splinter the country, the London-based and highly-respected Economist Intelligence Unit (EIU) has released a report comparing the northern Kurdistan Region to full-fledged countries around the world.
The region ranks higher than its parent country, Iraq, in all six categories analyzed in the report, with the largest gaps between the two in “quality of life” and “political stability and security.” The narrowest difference is in “human development.”
The Global Peace Index, which ranks countries and regions in terms of their peacefulness, places the Kurdistan Region higher than Turkey or Iran, while Iraq finds itself at the bottom of the list, ahead only of South Sudan, Syria, and Afghanistan.
Since the report was conducted before the present turmoil, with Sunni insurgents in control of several cities and vowing to march on Baghdad, Iraq may rank even lower now.
In terms of political stability and security the Kurdistan Region, a three-province enclave of some five million people in northern Iraq, is closest to China and Brazil. Iraq is closest to Nigeria and Syria, where a civil war has been raging for more than three years.
The report found that crime rates in Kurdistan are incredibly low. Theft is a bigger problem in Singapore than in Kurdistan. Homicides are rare; Iraq has one of the highest murder rates in the world.
On average, Kurdistan has only half as many prisoners as the rest of the world, and organized crime is not a major issue. Social unrest is significantly lower than the rest of the Middle East and North Africa (MENA) region, even considering the 2011 protests in Sulaimani and elsewhere.
The report does list a few criticisms regarding security.
Attacks by the jihadi Islamic State of Iraq and Syria (ISIS) in the disputed territories surrounding the Kurdistan Region, and against the Ministry of Interior last September, keep the enclave near the middle of global rankings. High gun ownership rates and violence against women are also factors.
The EIU report states that the size of Kurdistan’s military, relative to population, is a cause for concern. But recent events, that include Kurdish Peshmerga forces fighting ISIS militants in areas deserted by the Iraqi Army, illustrate why so many Peshmerga are a necessity in Kurdistan’s volatile neighborhood.
In terms of the political environment, Kurdistan is ranked most akin to Thailand or Tunisia. Iraq is dead last, even behind failed states like Libya.
Pro-business policies and a steady diversification of political parties are positive developments in the Kurdistan Region, but considerable challenges remain. Tensions with the federal government over disputed territories, oil, and security forces are a drag on the region.
Corruption is not quite as rampant as in the rest of Iraq, but extremely high nonetheless. According to the report, international companies complain that competitors pay bribes to secure contracts. The legal system is still underdeveloped, and the report urges the KRG, and Iraq as a whole, to sign international arbitration conventions to protect overseas businesses. Excessive red tape, an oversupply of public sector bureaucrats and a lack of coordination between ministries are other complaints.
Some of these factors keep business environment rankings closer to Iraq, placing Kurdistan just ahead of Indonesia and Jordan, but behind China. The region’s business-friendly Investment Law has drawn in many foreign firms. It is easy to start a business, and low corporate taxes, income taxes, exceptions and other incentives make it a good place to run one. Other conditions block investment.
Border crossings with Turkey are overcrowded. Local financing is hard to come by, making things tough for small businesses and entrepreneurs. Real estate and rents are too high, and building quality is low on average. Firms struggle to find workers with strong English and information technology skills, some of the most important assets needed to compete in a globalized world.
In terms of human development, Kurdistan is ahead of Turkey, Brazil, and Iran, but below Saudi Arabia and the United Arab Emirates. This is largely due to the relatively low education levels amongst adults, something which the report acknowledges will change as expectations are high for Kurdish children, and the educational system is undergoing reform.
In the most subjective category, quality of life, the Kurdistan Region scores 55th, putting it not far behind Argentina and ahead of Turkey and Thailand. According to the study, Norway is the best place to live and Chad the worst. Iraq is closest to Yemen, below Iran and Syria.
Several factors contribute to this relatively high score in quality of life, an impressive achievement for such a young government in a tough neighborhood. The Kurdistan Regional Government (KRG) gained official recognition only in 2005.
Income levels in Kurdistan are rising quickly. Divorce rates are low (but rising), which the EIU considers an indication of a happy family life. High participation in events and organizations signal strong bonds within Kurdish communities. The EIU believes that a parliamentary quota mandating 30 percent of seats for women is a sign of rising gender equality.
So what fault did the report find with life in Kurdistan? Life expectancy is still lower than the MENA average, at 70.6 years on average. Climate was also an issue. “The climate is still relatively harsh by global standards,” the report said.
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