By Wassim Bassem for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News

Mohammad Hassan worries about the steady decline in the number of customers who come to his shop in Baghdad’s Souk al-Safafeer, the legendary copper market in the neighborhood of Bab al-Agha. The shop sports Hassan’s handmade copper products, mostly miniatures of Iraq’s symbols and monuments, such as the palm tree, the Lion of Babylon, the Malwiya Minaret in Samarra and Mosul’s Great Mosque of al-Nuri, which the Islamic State destroyed in 2017.

Hassan, who has been a coppersmith for 30 years, exercises a profession that dates to the Abbasid period of the 10th century, when many everyday goods, from lanterns to water bottles and from cups to knives and daggers, were made of copper. But those days are long gone.

“Industrial development has turned this profession into a business that only provides decorative objects,” Hassan told Al-Monitor in his shop in Souk al-Safafeer, which takes its name from the color of copper, “safra” in Arabic.

The situation is similar in all coppersmiths’ markets around the country. In Nasiriyah, a city on the banks of the Euphrates River about 370 kilometers (225 miles) southeast of Baghdad, the copper market, once an important place of commerce and socialization, is now almost nonexistent. The same goes for Mosul’s market, Basra’s Musa al-Attiyah market and Najaf’s Safafeer market, which are turning into mere memories.

Coppersmith Haider Khafaji told Al-Monitor that the famous Safafeer market in the southern province of Babil has now faded behind the modern shops, but in the past it was packed with tourists who would head there after visiting the nearby historic city of Babylon about 20 kilometers (12 miles) away.

Khafaji said, “I started working in this profession 40 years ago, back when there was significant demand for copperware, when copper was an important commercial commodity and copper goods were a sign of status.” He added that there are just a few coppersmith shops left and most double now as blacksmiths.

“Our work today is limited to making gifts and souvenirs that hardly ever get sold,” Khafaji added. “We seriously fear that this craft will disappear, as the new generation is not keen to learn the craft.”

Member of parliament Maysoon al-Damluji, a member of the legislature’s committee on culture, told Al-Monitor that the days when people used copper in most of their daily goods are gone, but that the craft of the coppersmiths, part of the Iraqi intangible heritage, should be maintained.

“[The coppersmith shops and markets are part of] the identity of Iraqi cities,” he said, expressing concern that Iraq’s cities, which have been badly damaged in the wars and battles that have taken place in Iraq and have been subject to poor urban planning, have lost their historical heritage.

Damluji said one of the reasons copper markets are disappearing is the “law issued by the Ministry of Health in the 1950s preventing the use of copper utensils for eating, as it causes poisoning.”

Another reason, according to Damluji, is related to “the unstable security and political situation in Iraq, as the Iraqi state has allocated its budget for wars since the 1990s, leaving no room for projects to preserve cultural heritage.”

Ibrahim Khalil al-Alaf, professor of modern history at the University of Mosul, told Al-Monitor that the craft was also disappearing because local and handmade goods were unable to hold their ground against foreign copper miniatures of Iraqi monuments that flood the markets and are sold at lower prices. These come from China and the government has no regulation or subsidies to protect the local products. “The Safafeer market in Mosul has been in steady decline,” he added.

In many Safafeer markets, coppersmiths themselves have begun trading in imported goods, no longer relying on creating their own. Given the lack of financial support from the government for this dying profession and the reluctance of the new generation to master this craft in which profits are low, coppersmiths are becoming a part of disappearing intangible heritage.

Alaf said he deeply regrets how Mosul’s heritage has been falling apart before his eyes. “We need to preserve historical monuments using modern restoration techniques and learning from the experience of developed countries in urban and market planning,” he said.

“The Directorate of Heritage and Antiquities should develop a comprehensive national strategy and cooperate with the United Nations Educational, Scientific and Cultural Organization because the Safafeer market in every city is not only a market but a museum preserving this profession and all Iraqi handicrafts,” Alaf said.

Meanwhile, Amran Obeidi, the director of media and spokesman at the Ministry of Culture, told Al-Monitor that the ministry believes preserving Baghdad’s Safafeer market, the largest of the copper markets in the country, does not fall under its responsibilities according to laws and regulations in force. “Maintaining the Safafeer market is Baghdad municipality’s job. Our work in the ministry is only limited to technical consulting,” he said. “The Safafeer markets are Iraq’s cultural introduction to the world, as well as they showcase a now rare profession that has long been part of the Iraqi folklore.”

Obeidi said the ministry classified Rashid Street, at the end of which the Safafeer market in Baghdad is located, as a historical area, so any change in buildings there requires the ministry’s approval. “It is particularly important to preserve this market because it specializes in creating cultural handicrafts,” he said.

Hakim Abdul Zahra, the director of media and public relations in the Baghdad municipality, told Al-Monitor that the city is trying to ensure that the old markets do not disappear. Some store owners try to reconstruct the historical stores and turn them into another business, which is illegal. “We have plans, in coordination with the Heritage Authority, to repair and restore houses and ancient markets as soon as our financial situation improves,” Zahra said.

(Picture credit: Jonathan Zander)

By John Lee.

Malaysia-based Wah Seong Corporation Berhad (WSC) has announced that its indirect wholly-owned subsidiary Wasco Engineering International Ltd (WEIL) has been awarded a contract by Basrah Gas Company (BGC) for the design, packaging and sale of gas compressor packages and associated plant and site facilities.

The contract is valued at $34.6 million.

The scope of work of the contract involves provision of gas compressors and process equipment such as tri-ethylene glycol (TEG) unit, fuel gas conditioning skid, pipe racks, slug catcher, knock out drum, vent stack, site facilities such as office and workshop containers, lighting, safety equipment, fire and gas detectors, power generators and air compressors.

The activities undertaken will include engineering, detail design, procurement and packaging of the above process equipment. The activity is expected to commence in March 2018, and to be completed by end of 2018.

The contract is for the provision of engineering, design, supply and fabrication services which are within the business scope of the Engineering Division of the WSC Group and the risks are the normal operational risks associated with the said business. The WSC Group has previously supplied similar packages to the same customer in Iraq.

The contract is expected to contribute positively to the earnings of WSC Group over the contract period. The contract is project specific and is not renewable.

(Source: WSC)

By John Lee.

A new report from the Washington Institute for Near East Policy says that Iraqi hydrocarbons “will either be exploited by Iran and its allies or used for Iraq’s own benefit, transforming the country into an energy export hub between the Gulf states, Turkey, and Europe. The United States has a strong strategic interest in promoting the latter outcome.

Authors James F. Jeffrey, a former US ambassador to Iraq and Turkey, and Michael Knights, who has worked extensively on energy projects inside Iraq, suggest that the US should put its weight behind a north-south energy corridor in which Iraq serves as an energy hub between ever-friendlier Gulf states and Turkey, ultimately forming an export bridge to Europe.

They add that Washington should also support the Basra-Haditha-Aqaba pipeline project to bring Iraqi oil and gas to Jordan.

The full paper can be read here.

(Source: The Washington Institute for Near East Policy)

By John Lee.

Platts reports that Iraq plans to launch a new Basrah Medium crude oil grade “whenever logistics allow,” to provide “more stability” in existing grades.

It quotes Ali Nazar al-Shatari, the Deputy Director General of the State Oil Marketing Organization (SOMO) as saying the new grade will have an API gravity of 29-30 degrees, with 2 percent sulphur.

Basrah Heavy will remain largely the same at 23 degrees API and 4 percent sulphur, while Basrah Light will be become even lighter, rising to 34 API degrees, up from an average of 29-31 degrees currently.

(Source: Platts)

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

The Parliament voted in its session No. 14 of March 5, 2018 on a law reinstating the Iraqi National Oil Company-INOC.

Briefly, the law passed hastily at a critical pre-election time with clear populist politics orientations and motivations.

The law suffers from serious gaps and inconsistencies between the functions of the company and its organisational structure and composition of its management; creates two competing entities for the management of the petroleum extractive sector; it is a blatant afoul to the Constitution; converts sovereign revenues into commercial proceeds for a public company; assigns tasks that are not at all related to its nature as an oil company and, the most dangerous assertion, it legalises the breakup of the country.

Views expressed by its proponents manifest a tactic of known populist politics taking advantages of the national election campaign and thus contributing to the timing and passing of this damaging law; INOC deserves much better law than this.

The executive authority (the Council of Ministers) should act immediately to stop the promulgation process of the law; ask the State Consultative Council to examine the due legitimacy of the law and finally, challenge the constitutionality of the law before the Supreme Constitutional Court.

This was premised on the following assessment:

At the outset, it is necessary to make a caveat. The “final version” of the law was not published on the website of the Parliament; what was published on March 7 is the text of the “first reading” before the vote. The “final version” was posted to me by three parliamentarians; it is the version that was adopted in this evaluation after ensuring that the three copies were identical.

First, the text of the law is completely different from the draft law submitted by the government in April last year; so why and why now?

In the substantive, this is an imposed law by the parliament on the government, which turns the constitutional process upside-down and, thus, the legislative branch breaches the prerogatives of the executive branch. This would surely prompt the latter to invoke its constitutional rights before Supreme Constitutional Court; and it should do so..

Moreover, one could questions the motives and the timing as the country is in the height of the national election and thus, it is the time for populist politics by the proponents of the law.  They, i.e. the advocates of the law, assume that those in government are preoccupied with the election campaign and thus would dare to object to such populist appealing politics that is translated into specific provisions, i.e. Article 12, as discussed latter.


Second, the law attaches INOC to the Council of Ministers-CoM and gives its chairman the status of a Minister. In spite of INOC importance, there are serious concerns on this setup:

  • There are absolutely no compelling and convincing justifications to or merits in attaching INOC, which is an oil producing company, to the highest executive authority in the country; it was never directly attached to CoM since its creation in the sixties;
  • INOC, according to this law, deals with only one sub-sector of petroleum and, thus, this formula may cause damage and conflict in the management of upstream petroleum between two entities, each is headed by a minister. Case to remember is the trade of accusations and blame-game on power shortage and outage between the Ministries of Oil and of Electricity regarding the supply of fuel to power plants;
  • The proponents of the law argued for the need to separate the “regulator”, i.e. MoO from the “regulated”, i.e., INOC. That is really absurd; how is it logically, organisationally and operationally possible to have a healthy and functional regulator-regulated relationship when the two entities have an unequal “legal” status and, moreover, when the regulated is attached to higher authority than the regulator!? Illogical and inconsistency and the outcome could very well be a chaotic relationship that could impact negatively the entire petroleum sector.

Ironically, the proponent of this arrangement consider this as “checks and balances”; they really and apparently do not understand what checks and balances entail and between what authorities.


Third: Among the objectives of INOC is, “investment in processing oil and gas industry”; this means investment in refining, gas utilisation and petrochemicals. Leaving rhetorical phrases that dominate the law, there is too much ambiguity regarding the above objective.

  • Does the law consider INOC as “investment agency” and it should or could invest in the above mentioned activities/industries? Will it invest in the current or future projects or in its own projects? How it could do that while the law provide nothing in its structure and tasks on these activities;
  • Currently, refining activities and gas processing are within the domain of MoO, while petrochemicals fall within the Ministry of Industry and Minerals-MIM. Yet, there are no representatives for the refining sub-sector, i.e. the three state refining companies: North-NRC, Central-MRC and South-SRC in INOC Board of Directors-BoDs;
  • It is also strange that the two state gas companies, i.e. North Gas and South Gas were excluded from the list of companies owned by INOC and they are not represented on INOC BoDs. Obviously, gas related activities remain with the Ministry of Oil and this generates further complications, which the law ignores to address: I- it split the upstream petroleum activities between MoO and INOC; II- while INOC, under this law, is responsible for all fields contracted under the licensing rounds, the above split leaves in limbo all free gas fields contracted under third bid round; all gas utilisation provisions under second bid round and all gas discoveries under fourth bid round; III- the organic direct linkage between oil and gas issues since all current gas production is associated gas, which could have detrimental impacts on gas utilization and leaves gas flaring accelerating at a faster pace;
  • Under current modalities, SOMO, the oil marketing company, is responsible for imports and exports of all petroleum products though it could assign some of these tasks to other entities, e.g. export of fuel oil through IOTC. Now, with SOMO been part of INOC and the latter is not part of MoO would create further hurdle especially for exporting excessive fuel oil, LPG, naphtha and condensate/NGL


Fourth, among the means INOC has to achieve its objectives is to “manage and operate the main oil pipeline network and ports of export.” However, the state Oil Pipelines Company is not mentioned in the list of companies owned and associated with INOC; the same applies to southern oil export terminals, i.e. al-Basra Oil Terminal-BOT, Khor al-Amaya Oil Terminal-KAOT and the four single point moorings (SPMs). How could INOC manage and operate the pipelines of another company and ports of export it does not own?

To operationalise that, INOC has to conclude arrangements with MoO, but the law avoids specifying such requirements.


Fifth, the law did not specify INOC “organizational structure” except the composition of its BoDs, which was assigned that task when drafting INOCs’ bylaws.

But the law returns to restrict BoDs by stating, “INOC Board of Directors can, with the approval of the Council of Ministers, introduce any change to its organizational structure”.


Sixth, BoDs functions did not include any reference to the contracts (in terms of type, the power to sign and ratify, and the manner and stages of the contracting modality and other legal, procedural and operational aspects) to be concluded by INOC for the development of petroleum fields. This is a fundamental flaw, whether by intention or omission, and leaves the door open to conclude contracts afoul to the Constitution.


Seventh, SOMO occupies critical and significant importance, but this law is rather ambiguous about it.   The article specifying the functions of the Chairman of BoDs does not include any mention of SOMO, while the law links this company to the Chairman where it mentions, “directly responsible for supervising the oil marketing company”.

Apart from the ambiguity of the law, this could create managerial complexities that could undermine SOMO operational flexibility in a highly competitive and volatile international oil market; the history of SOMO justifies very clearly such flexibility and thus it would be a grave mistake to ignore the obvious lessons of the distant and recent past!!

Probably, a way out from this impasse could be through:

  • Appointing SOMO’ DG as INOC Deputy Chairman for SOMO matters;
  • Any decision by INOC BoDs regarding SOMO should be subject to the agreement and approval of SOMO DG;
  • In case of disagreement, that should be resolved by debating the matter before and by the decision of the Council of Ministers.


Eighth: The law included a paragraph akin to that has been repeated in the budget laws since 2015 that “obliges INOC to review the concluded service contracts and modify them to ensure the interest of the Iraqi people.”

This rigid and politically motivated mind-set seems to be unaware that these contracts have been amended already and to the detriment of the Iraqi interests and any further amendments would be even more devastating.

It is also apparent that the advocates behind inserting this paragraph are behind leaving the mention of the contracts type (discussed above).

It is strange that this text was included in the specific paragraph on “the management of service contracts that were concluded in the bid rounds “, while the law mentions nothing at all to the, illegal as officially declared by the government, production sharing contracts of the KRG!!!


Ninth, the law comprises too many generalities that are not directly related to the nature of national oil company work; undefined terms for BoDs; complete exclusion of KRG petroleum, though the “Undersecretary of the Ministry of Natural Resources in the Region” is includes in INOC BoDs among others.


Tenth, but the most ridicule, disintegrative, destructive and unconstitutional aspects of this law is those covered by Article 12. Moreover, the proponents of this law have actually expressed confused inaccurate and shallow understanding of basic issues and known terms and concepts they themselves use such as “Alaska model”, “checks and balances”, “renter state”, “role and functions of INOC”, “oil and gas ownership”, “societal forces” among others.

This (Article 12) must be completely deleted from the law for the following reasons:

  • It considers revenues generated from the export and sale of oil and gas as “financial revenues for INOC”. This is a flagrant violation of the Constitution, which states that oil and gas belong to the Iraqi people and not a financial return to one public company. Moreover and as mentioned earlier, gas industry and gas companies were excluded from INOC so what are the legal premises that make gas revenues income to INOC?
  • Currently, as have been the case since early years of the Iraqi state, petroleum export revenues are, legally considered sovereign revenues, and in the international standards they are managed by sovereign entities namely the Ministry of Finance and Central Bank of Iraq. Thus, such revenues acquire good degree of sovereignty protection under international financial law and international banking and financial institutions. By considering these state sovereign revenues of oil exports as financial revenues for a public company deprives these revenues of the sovereign status and thus exposes them to all forms of seizure and confiscation in implementation of any judicial action in any place where the proceeds exist. This exposes oil export revenues to many high risks.
  • The law gives the unelected limited number of INOC BoDs the supreme powers and authority to effectively determine the contribution of oil export revenues in the annual state budget and thus decides the welfare and development of the entire economy! This means that INOC BoDs becomes more important than the Ministry of Finance, the Central Bank and the Cabinet in determining the level of budget expenses; hence the Fiscal Policy, the Monetary Policy and Development Policy all became captive to INOC BoDs. What a non-sense!!
  • The Law authorizes INOC BoDs to establish, finance and manage financial entities that are not related to the nature of its activities as an extractive oil company. These entities are the “Citizens Fund”, “Generations Fund” and “Reconstruction Fund”. It is rather strange that these entities, which are usually the functions and powers of the government, especially the Council of Ministers and related ministries, become the exclusive authority of INOC BoDs under this law!

The proponents of this article seem to repeat the same misguided views they insisted on more than ten years ago when they inserted the same funds into the ill-fated oil and gas law and thus contributed to the demise of that law. Strangely enough they argue that these measures by INOC BoDs would end the “renter state”! What a gross misunderstanding of a deep and complex macro structural issue, which what renter state really means, and what it entails of structural changes in the real economy sectors.


Undoubtedly, these three funds are important and urgently needed but INOC has absolutely nothing to do with them. They should be considered and debated thoroughly, explore best possible way to create, manage and fund them through well-articulated legal and institutional framework and transparent governance; as I have debated them previously.

  • This article provides the legal cover for disintegrating the country by legalising the breakaway of the producing provinces. “One of the architects behind the new law” was reportedly said the following on the importance of Citizens Fund, “If Basra decides for tomorrow to be independent and sell their oil and gas without INOC. INOC is a window for upstream and marketing, okay? If they decide that fine, it’s your decision, but you will not get your share in that fund. Basra people will not [receive] it, because you are not delivering oil and gas to INOC.” What a shocking, irresponsible and misguided statement!!

First, Basra oil company-BOC produced, in January 2018, 73.6% of total Iraqi production; Basra people would be better-off to keep this percentage against losing their share in the Citizens Fund, which is almost nothing compared with what they will keep. Moreover, their action according to this law is fully legal. The same applies to Missan province, which produces 10.6% of total Iraqi oil production, and so on;

Second, if Basra, Missan and any other oil producing provinces apply this law and keep the revenues of “their” oil what will be left to INOC BoDs?? Nothing, and that terminates the existence of INOC!!

Third, if the above occurs then the constitutional basic principle of “oil and gas are owned by all people of Iraq” would be grossly and emphatically violated.

Fourth, in consequence to the above, the country will practically disintegrate and most likely severe civil war irrupts and regional conflicts escalate.

Hence, the unconstitutionality of this law becomes apparent and why it is very doubtful, therefore, that the proponents of this article have never understood the Constitution correctly though they keep referring to it!!!!

  • Also this Article 12 provides the legal cover for formalised corruption and Kleptocracy by assigning to the above three Funds at least 10% of the revenues of the oil exports at the discretion of INOC BoDs. Apart from the high likelihood of abusing such significant funds, a newly reinstated INOC does not and would not have the capacity to manage these funds and thus could derail the company from performing its core functions and duties as an oil company concerns with the development of the upstream petroleum.

In the light of the above it is vital and absolute urgency that:

  1. The Executive Authority (Council of Ministers) to immediately move to interrupt the process of promulgating this law with the President of the Republic (to hold his approval of the law) and with the Ministry of Justice (to suspend publishing the law on the Official Gazettes- Alwaqee Aaliraqiya);
  2. The Council of Ministers should request the State Consultative Council to review and identify the illegality of the law;

3 – The Council of Ministers should challenge the constitutionality of the law by launching an appeal before the Supreme Constitutional Court.

INOC deserves much better law than this as this law would disintegrate the country and thus must be revoked.


12 March 2018

Earlier Arabic text was circulated 8 March 2018 among my network and posted on many websites including:


My previous writings on INOC law can be accessed as below:

For Effective and Relevant Law for Iraq National Oil Company-INOC (in Arabic, with Tariq Shafiq), Posted on 19 May 2017 on IBN website ) and on many other websites.

The New INOC Law: Brief and Dysfunctional, Posted on 24 April 2017 on IBN website the Arabic text was published by Assabah Aljadeed (NewSabah) Newspaper, Baghdad on 26 April 2017

Proposed INOC Law Could Disintegrate Petroleum Sector and Damage the Iraqi Economy, Posted with updated 16 & 22 March 2016 on IBN,  Also posted on the Iraqi Al-Akhbar  and

Article-by-article analysis of INOC Law. Expert Opinion submitted before the Experts’ Hearing Session, Oil and Energy Committee, Iraqi Parliament. 3rd July 2011, Posted on:; and

INOC Law: Shaky Premises and Doubtful Prospect, MEES v54:n20, Monday 16 May 2011.

Remarks on the Proposed INOC Law. Presentation delivered before MENA 2009 Oil &
Gas Conference, Imperial College, University of London, UK. 28th– 29th September 2009. and published on MEES 52:40, 5 October 2009.

Technical assessment of the INOC Law. Posted on Iraq Oil Report

The new draft INOC law takes us back to square one” posted on Energy Intelligence–gas-bid-round.aspx


Please click here to download the full article in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at), Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.

UK-based WRA and Associates has announced the signing of a contract with the General Company for Ports of Iraq (GCPI) for a new $350-million facility with 3-4 berths at the port of Umm Qasr, in Basra province.

Built in partnership with local company Bur Al-Aman (BAM), the new development will include warehousing and all other operations facilities, and will have an operating value of approximately $1.5 billion over the 38-year contract.

The three berths will be built in two phases, incorporating three stages; each stage is the construction of a berth with a 200-m long sea interface with storage yards attached to it.

Preparation of the berths and storage yards with the equipment and machinery specified and the technical presentation according to the specifications, is to be developed.

With the infrastructure in position, Umm Qasr Port is in a good competitive position to develop deep-drafted dry-bulk, liquid-bulk and container terminals through private sector participation, and provide better facilities and services.

Project Director Launce Morgan told Iraq Business News:

“As one of the biggest non-oil projects in Iraq, this ia a major breakthrough for a British company. We are delighted to work with Bur al-Aman and we look forward to the successful completion of this important project.”

Design works are to start immediately, and the project will be run on a Finance, Build, Own and Operate basis.

This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

By Mustafa Habib.

For the first time in over ten years, Iraq managed to pass a federal budget with MPs’ votes. In the process there have been last minute deals, Kurdish losers, angry militias and deeply rooted economic problems revealed.

After heated debates that dragged on for months, Iraq’s parliament passed the national budget for 2018. For the first time since 2003, the decision was made with a majority of votes in parliament in Baghdad, rather political deal making.

As the country’s Sunni Muslim and Shiite Muslim politicians brokered a deal though, Iraq’s Kurdish MPs were left hanging, after they exited the session in protest at the Kurdish share of the budget.

Laws on the federal budget say that a draft should be submitted to the Iraqi parliament no later than November 11 every year. However, this didn’t happen due to conflicts between the various political groupings in parliament and thanks to the country’s deepening financial crisis, started by a drop-in oil prices, then exacerbated by the security crisis caused by the extremist group known as the Islamic State.

Around 90 percent of funds coming into the Iraqi budget are dependent on the country’s oil revenues. If oil stays at US$46 a barrel and exports remain at 3.8 million barrels a day, then this would all funnel into US$88 billion budget. That still leaves a shortfall of US$10 billion, according to the recently passed budget.

As recently as last week, it had not looked at all certain that the 2018 budget would pass. A number of disparate groups were opposed to the draft budget, all for their own reasons. This included Sunnis, Shiites from southern oil-producing provinces and the country’s Kurdish ethnicity.

For months previously, the Sunni politicians had been calling for more money for reconstruction in Sunni-majority provinces where the extremist Islamic State, or IS, group had held sway. The salaries of state employees in these areas had been halted since late 2014 for fear that the cash would end up in the IS group’s hands.

Still, in many of the Sunni-majority provinces, it’s been months since displaced locals started returning home – but the salaries still have not started to be paid again. Sunni Muslim MPS were pressuring the government to restart these.

“We were able to convince the government to agree to pay out those stalled salaries and to offer locals loans, so they can rebuild their homes,” Ahmad al-Jibouri, an MP for Mosul, told NIQASH. “We were also able to convince the government to reappoint those individuals who were dismissed from the army and police and to give back state service jobs to locals in those areas too.”

Article 43 of the Iraqi budget now states that “an additional US$344 million is to be allocated to provinces and areas that fell under the control of the IS group, in order to help stabilize the area and for the reconstruction of infrastructure.”

The budget then details which province gets what: Ninawa, of which Mosul is the capital, will get US$152 million, Salahaddin and Anbar will each get US$84 million and Kirkuk in northern Iraq and Diyala will both get US$17 million.

This change saw the Sunni Muslim politicians willing to agree to the budget.

Meanwhile the Shiite Muslim MPs from southern oil-producing provinces came to agree to the budget for different reasons.

Laws from 2013, about the powers of the provincial authorities, allocate part of the revenue from the oil and gas produced there to the province itself. A province should be getting 5 percent of the money from each barrel of crude oil, 5 percent from each barrel refined in the province and 5 percent from natural gas revenues. However, the Iraqi government has not dispensed money in this way for years due to its own need for the cash.

This has had an impact. For example, the southern province of Basra should be one of the country’s wealthiest, going by how much oil and gas is produced here. However, the province also has one of the highest rates of locals living in poverty.

Shiite MPs from these provinces were dissatisfied by that distribution and wanted to force a change before they would agree to vote for the 2018 budget. The government then guaranteed in Article 2 of Chapter 2 of the budget that the provinces that produce the country’s oil would get one of those 5 percents.

For example, Basra extracts oil, refines it and also produces natural gas. According to the original rules, the province should be getting 5 percent from each form of energy. If the province extracts one barrel of oil and then refines it, it should be getting 5 percent plus 5 percent. However the new rules say the province will only get one of those payments.

At least that is better than nothing, says Ammar Tumeh, a Shiite Muslim MP.

“And the budget will also give the oil-producing provinces 20 percent of any budget surplus, should the price of oil go up, beyond the US$46 per barrel,” Tumeh adds.

Of the various interest groups competing to turn the budget to their advantage, the biggest losers were the country’s Kurds. Kurdish politicians withdrew from the final session to vote on the budget in protest over the percentage their semi-autonomous, northern region was supposed to get. The Kurds run their own semi-independent region in northern Iraq; it has its own military, parliament and laws. In the past the Iraqi Kurdish region had been supposed to receive 17 percent of the federal budget, based on how much oil revenue the region contributed to the national income and on the region’s population.

The topic has been a long-running cause of conflict between Baghdad and Iraqi Kurdistan and things recently worsened, after the ill-fated referendum on independence in the northern region in September last year. And the proposed budget didn’t make things any better as the first version of the document saw the Kurdish share of the federal budget drop to around 12 percent.

The new version of the budget does not apparently specify a percentage for the Kurds but analysts suggest that it may now be sitting around 14 percent. None of this matters, of course, if the Iraqi government doesn’t start paying the money to the Kurdish authorities and paying the salaries of Kurdish civil servants.

The fact that the federal budget was passed in parliament even after the Iraqi Kurdish MPs walked out was a source of consternation for those running the Kurdish region. The Iraqi Kurdish prime minister, Nechirvan Barzani, called the budget decision a collapse of the principles of partnership in power, upon which the modern Iraqi state was built.

Now that the budget has passed, it is also far from trouble free.

Another sticking point arose almost immediately. The new budget allocates US$2.5 billion worth of defence spending like this: US$600 million for the ministry of defence, US$146 million to the ministry of interior, US$80 million to the counter-terrorism forces and US$80 million for the formerly-volunteer, mostly-Shiite Muslim militias. The rest – over US$1 billion – will go towards armaments and weaponry.

But just hours after it was approved, some Shiite Muslim politicians were already complaining. The fighters in the militias, which started as a volunteer force assembled to combat the IS group and which have evolved into an official, albeit separate, part of the Iraqi defence forces, were only listed as contractors. Their salaries are paid by the government but the budget says they are not permanent government employees, unlike soldiers in the Iraqi army. Additionally the militia fighters were getting lower salaries than those the ministry of defence was paying out.

Keeping the heroes of the militias on a different pay level and defining them as contractors was “the ultimate betrayal,” said Qais al-Khazali, who heads one of the more extreme militias, the League of the Righteous. Despite their controversial nature, members of the militias are seen by many as heroes who stepped up to protect the homeland when the official army collapsed in the face of attacks by the IS group.

The new budget also presents further problems for the future. It outlines a number of austerity measures and new taxes of the kind that have not been seen in Iraq for decades.

For one thing, the government has decided to suspend new appointments in the civil service. This could have a dramatic impact because a lot of Iraqis are employed by the government – it is the only way that many locals will ever be employed as the private sector remains very small in comparison to the government sector.

A lot of young Iraqis see a government job as their only option to get work. But the number of new openings has been falling steadily since 2013. That year there were 100,000. In 2014, there were only 37,000, in 2015, 30,000 and in 2016, 32, 000. Last year there were only a few thousand and this year there will be none at all.

It’s a decision that threatens to increase the national rate of unemployment dramatically. In 2012, the rate was estimated to be around 12 percent. By 2017, it had risen to 30 percent, thanks mainly to the chaos caused by the security crisis and the displacement of millions of Iraqis from their homes. The rate is almost bound to increase further by the end of 2018, with this new directive.

There are also new taxes for the newly unemployable to think about paying. The Iraqi government wants to impose a sales tax on the costs of using mobile phones and on Internet fees. A special tax will be added whenever an Iraqi buys mobile phone units. So for instance, if somebody buys US§10 worth of mobile phone credit, they will need to pay US§12 in the future.

The tax of US$20 added to every ticket in Iraqi airports will also continue to be charged.

Another item in the Iraqi budget that does not bode well for the future is the amount of foreign debt that the government is continuing to take on.

(Picture Credit: Essam al-Sudani)

By Padraig O’Hannelly.

Iraq’s Ministry of Oil is to establish a Gas Pipeline Company (GPC), which shall perform the functions of the Gas-to-Power Aggregator, by the end of this month.

According to documents obtained by Iraq Business News, the Director General of the Gas Pipeline Company will be appointed by the Council of Ministers based on the recommendation of the Minister of Oil and the relevant deputy minister.

By June 30, 2018, the GPC is to set up a website on which it will publish a description of the entire network, “planned expansions of the network, monthly utilization of capacity by Public Sector Shippers in the most recent full calendar year and in the current calendar year through the latest available date, and anticipated utilization of capacity by Public Sector Shippers in the following three calendar years.”

The current operators of the network are the Oil Pipeline Company of the Ministry of Oil and Basrah Oil Company (BOC); it is anticipated that they will transfer their gas and NGL transportation activities to the Gas Pipeline Company.

The GPC will initially act as both Gas Aggregator and operator of the network. These activities will be separated over time; it is anticipated that the GPC will remain the exclusive operator of the network for a considerable period of time, although it may enter into joint arrangements with or obtain financing from private sector operators or shippers. Additional operators may in the future take responsibility for segments of the network.

Detailed documents can be downloaded here.

(Picture credit: Shana)

By John Lee.

Saudi Arabia’s King Salman has promised to build a football stadium in Iraq.

The news followed a friendly match between the two countries’ teams in Basra last week.

The Iraqi-Saudi Ministerial Coordination Council met on Monday to discuss the measures needed to improve cooperation in the economic, investment, cultural and other sectors.

(Sources: Asharq al-Awsat, Reuters)

By John Lee.

The Basra Oil Company (BOC) is reportedly preparing to tender for a water injection project in Iraq if talks with ExxonMobil and PetroChina fail.

Reuters quotes the head of the Oil Ministry’s Petroleum Contracts and Licensing Directorate (PCLD), Abdul Mahdi al-Ameedi, as telling reporters at the CWC Iraq Petroleum Conference in Berlin, “we cannot wait for a longer time unless Exxon Mobil accepts the deal for the benefit of the two parties.

He added that the delay in negotiations was partly related to initial production rates from the Nahr Bin Umar and Artawi oilfields.

(Source: Reuters )