By Azhar Al-Rubaie, for the Washington Institute for Near East Policy. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Despite Political Turmoil and Coronavirus, Iraq’s Protest Movement Continues

With neighboring Iran one of the most severely affected areas of coronavirus, Iraqi authorities are also confirming rising infections and deaths despite closing the border between the two states.

However, Iraqi protestors maintain that “oppression and fear are more dangerous than coronavirus,” and have consistently demonstrated a will to continue what has become known as the October 2019 revolution.

Full report here.

By Hafsa Halawa for The Middle East Institute. Any opinions expressed here are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

The story from Iraq since last October has been mainly one of uplifting hope, as mass protests sweep across the country in a fight against corruption, nepotism, and bad governance.

But what of the places left behind and ignored? For most of its modern history, Iraq has been embroiled in sectarianism and conflict, most recently with the rise of ISIS.

The country has celebrated its ability to fight ISIS and take back the areas the group controlled between 2013 and 2017, but for those that remain in the most vulnerable liberated areas, life is precarious and dangerous, with underserviced communities living in the most dire of conditions.

Click here to read the full article.

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund. This article was originally published by the LSE Middle East Centre.

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

Iraq’s Power Conundrum: How to Secure Reliable Electricity While Achieving Energy Independence

Iraq remains in a bind regarding how to secure energy independence within its geopolitical constraints – most pertinently the American sanctions on Iran. The US is continuing to maintain pressure on Baghdad by extending ‘final’ waivers on the purchase of Iranian gas for only another 30 days, as part of its new tougher stance.

Iraq, in response, could produce credible plans to eliminate its dependence on Iranian imports, which it accelerated with the approval in January of the fifth round of gas exploration contracts. However, achieving this would not end the need for Iranian imports, nor would it secure any kind of energy independence. More importantly, it will not change the shortages in the provision of electricity, which have served as a lightning rod for public anger over the failings of the post-2003 system.

Appreciating the dependence on Iran for the provision of electricity means delving into the extraordinary mess that is Iraq’s power grid, consisting of the power plants that generate electricity; transmission system that transport this electricity to population centres; and distribution networks which then distribute this electricity to end users. Decades of conflict have damaged most parts of the grid and, coupled with poor maintenance of the parts that escaped damage, this has rendered the grid impotent.

Rebuilding the grid post-2003 was hampered by the rolling dysfunction of successive governments, in which significant capital expenditures were neutralised by mismanagement, lack of coordination between ministries, and the county’s corrosive corruption. The public’s frustration over this impotence extends beyond the inadequate provisioning of electricity throughout the year, as the summer’s intense heat creates a particularly acute need for electricity, exposing the grid’s shortcomings.

These start at the generating stage with the gap between nameplate capacity, i.e. the maximum sustainable power output under ideal conditions, and actual output. While a gap always exists between these two, in 2018 the nameplate capacity was 30.3 gigawatts (GW), while effective capacity through the year was a mere 11.9 GW. A primary reason for this gap is the lack of appropriate fuel supply, in this case gas, which leads to substitutions by fuels such as crude or heavy fuel oil with the result that plants run at less than 60% of capacity – in 2018 only 62% of operating gas-powered plants actually used gas. Other reasons include poor maintenance and lack of cooling in high ambient heat. Moreover, up to 20% nameplate capacity in 2018 was non-operational.

In turn, this increases the gap between demand and supply – in 2018 average demand was 17.7 GW vs. effective generated power of 11.9 GW. But this gap is only part of the story, as the electricity generated to meet demand does not mean that it was actually delivered to end users. The total electricity generated in 2018 was 105.4 terawatt-hours (TWh), but only 43.7 TWh reached end users for a loss of 58.5%. Most of these losses take place at the distribution stage, with technical losses stemming from age, conflict damage, poor maintenance accounting for two thirds, and non-technical losses, mostly electricity theft, accounting for a third. Technical losses are natural, however they occur at an extremely high rate in Iraq, as do non-technical losses. Stolen electricity – still consumed but not billed – is estimated at 17 TWh, and so the electricity delivered would rise to 61 TWh, equating to a loss of 42.2%. This dynamic can be seen below.

Figure 1: Comparison between electricity demand and supply, 2010-18

The increase in losses from 2014 onwards can be attributed to the ISIS conflict, which damaged 20% of the transmission system and 5.0 GW of generating capacity. 2019 saw meaningful improvement as effective capacity increased from 11.9 GW to 14.3 GW, and crucially during the summer months peak generation was 19.3 GW vs. peak demand of 27.5 GW. This gap of 8.2 GW has narrowed from 2018’s 10.0 GW gap when peak supply was 16.5 GW vs. peak demand of 26.5 GW.

Electricity generated from Iranian electricity and gas imports accounted for 20.7% of that generated throughout 2019, and probably a much higher percentage during the peak summer months. These contributions from electricity imports from 2010 and gas imports from 2017 can be seen below.

Figure 2: Iranian contribution to Iraq’s energy requirements between 2010-19

The importance of Iranian electricity imports as a percentage of the total have steadily decreased, even though they increased in absolute levels; nevertheless, the decline in summer of 2018 was large enough to ignite the demonstrations in Basra. Imports in 2019 returned to the trend line and averaged 1.1 GW for the year. Plans for other regional imports include 0.5 GW to be imported from Kuwait by the end of 2020, rising to 1.9 GW over subsequent years, including planned imports from Jordan and Turkey.

Iranian gas imports were 7.0 billion cubic meters (BCM) in 2019, up from 4.1 BCM in 2018, and accounted for 31% of total gas consumed – up from 24% in 2018. Plans for increased domestic production include increasing captured flared gas to 16-19 BCM by end of 2021 from 12 BCM in 2019. Additionally, the fifth round of gas contracts call for replacing Iranian imports in three years, i.e. generating 7.0-10.0 BCM over that period from the current 3.5 BCM.

Assuming that the government executes these plans, in three years’ time this would replace the current electricity produced by Iranian imports. But demand is set to increase by 20% from current levels, meaning that the current the gap between supply and demand would increase by up to 20%. Moreover, planned capacity additions require additional fuel, which under existing plans is earmarked to replace imported gas. However, maintaining Iranian imports would significantly decrease their importance in power generation from the current 20.7%, and in the process Iraq would add meaningful capacity to address demand.

The goal posts are moving much faster than Iraq’s ability to approach them, and as such the US’s insistence on eliminating Iranian imports, far from achieving energy independence for Iraq, would instead exacerbate its energy vulnerabilities. Compounding these vulnerabilities is the massive investment spending needed to expand the grid’s capacity, currently unaddressed in the government’s structurally unbalanced budget, but which is ever more critical following the collapse of oil prices.

Iraq’s pathway out of this predicament, even at much higher oil prices, involves electricity tariff reform and the removal of energy subsidies, both the source of monumental waste and substantial market distortions. However, this requires a popular buy-in and for the increasingly alienated population to renew their belief in the post-2003 system’s legitimacy. It is here where the international community can help Iraq achieve energy independence.

Sources

The figures and charts used in the article are the author’s estimates, and are based on data from the Ministry of Electricity’s annual reports and conference presentations, the IEA, BP, MEES, Oxford Energy, and publicly available news sources. However, all errors and omissions are the author’s own.

The data used in the article exclude electricity demand and generation in the Kurdistan Region of Iraq (KRI). However, figures for locally produced and consumed gas include the KRI, and as such the Iranian-origin percentages of total gas consumed would be somewhat higher than the 31% and 24% used if the KRI was excluded.

Disclaimer: Ahmed Tabaqchali’s comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

 

COVID-19 is spreading rapidly across the world. Governments of even the wealthiest countries are struggling to cope with the scale of the Pandemic. For Iraq this is nothing short of disaster. Iraq’s health care system is in almost permanent crisis, constantly on the brink of collapse.

Only days ago, its Health Minister, Jafar Allawi, was seen on television pleading to Ayatollah Ali Al-Sistani, the spiritual leader of Iraq’s Shia Muslims, for help. His government had failed to agree to Allawi’s plea for emergency funding to cope with the Corona crisis.

Iraq is a country devastated by decades of war, internecine conflict, dictatorship, corruption and poverty, and now its beleaguered staff and broken infrastructure is being asked to deal with one of the most virulent viruses the world has ever known.

The hundreds of thousands of Yazidi IDPs living in the sprawling camps in the north are particularly at risk. AMAR field teams are doing all they can to limit the spread by dispensing much needed advice and support to those most in need.

For the last 27 years, AMAR has been at the forefront of efforts to support and enhance the Iraqi health care system. We have built, refurbished and run more than 75 health care centres, our medical professionals have carried out almost 11 million consultations, and our teams have been caring for and supporting hundreds of thousands of Yazidi IDPs since the ISIS invasion of 2014.

To continue to do this we need your support. Without our amazing donors we could not have achieved so much for more than a quarter of a century. Today, with COVID-19 the very latest threat to the lives and livelihoods of the poor Iraqi people, we need your help more than ever.

ALL THE WAYS YOU CAN DONATE DONATE BY CHEQUE DONATE BY UK CREDIT OR DEBIT CARD

Search for us on Virgin money giving under AMAR International Charitable Foundation or go to our website www.amarfoundation.org

We are delighted to add that the appeal is being backed by the Joss Stone Foundation (@JossStone) which aims to raise awareness and support for more than 200 charities globally. Thank you so much Joss!

SUPPORT AMAR ICF VIA VIRGIN MONEY HERE

or

PLEASE FIND THE DONATION FORM HERE

(Source: IBBC)

COVID-19 is spreading rapidly across the world. Governments of even the wealthiest countries are struggling to cope with the scale of the Pandemic. For Iraq this is nothing short of disaster. Iraq’s health care system is in almost permanent crisis, constantly on the brink of collapse.

Only days ago, its Health Minister, Jafar Allawi, was seen on television pleading to Ayatollah Ali Al-Sistani, the spiritual leader of Iraq’s Shia Muslims, for help. His government had failed to agree to Allawi’s plea for emergency funding to cope with the Corona crisis.

Iraq is a country devastated by decades of war, internecine conflict, dictatorship, corruption and poverty, and now its beleaguered staff and broken infrastructure is being asked to deal with one of the most virulent viruses the world has ever known.

The hundreds of thousands of Yazidi IDPs living in the sprawling camps in the north are particularly at risk. AMAR field teams are doing all they can to limit the spread by dispensing much needed advice and support to those most in need.

For the last 27 years, AMAR has been at the forefront of efforts to support and enhance the Iraqi health care system. We have built, refurbished and run more than 75 health care centres, our medical professionals have carried out almost 11 million consultations, and our teams have been caring for and supporting hundreds of thousands of Yazidi IDPs since the ISIS invasion of 2014.

To continue to do this we need your support. Without our amazing donors we could not have achieved so much for more than a quarter of a century. Today, with COVID-19 the very latest threat to the lives and livelihoods of the poor Iraqi people, we need your help more than ever.

ALL THE WAYS YOU CAN DONATE DONATE BY CHEQUE DONATE BY UK CREDIT OR DEBIT CARD

Search for us on Virgin money giving under AMAR International Charitable Foundation or go to our website www.amarfoundation.org

We are delighted to add that the appeal is being backed by the Joss Stone Foundation (@JossStone) which aims to raise awareness and support for more than 200 charities globally. Thank you so much Joss!

SUPPORT AMAR ICF VIA VIRGIN MONEY HERE

or

PLEASE FIND THE DONATION FORM HERE

(Source: IBBC)

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

Iraq’s Falcon Intelligence Cell wants to root out corruption

Terrorism generates corruption and corruption generates terrorism,” stressed Abu Ali al-Basri in his soft-spoken but acutely focused voice.

Basri leads Iraq’s elite Falcon Intelligence Cell, which was created to focus on extremist groups including Al-Qaeda and the Islamic State (IS). The counterterrorism intelligence unit has become better known after some high-profile cases and successes in recent years.

Basri told Al-Monitor in a Baghdad interview in late February 2020 that the unit has also at times been involved in corruption cases linked to terrorism.

Click here to read the full story.

Briefing to the Security Council by Jeanine Hennis-Plasschaert 3 March 2020

Mister President, thank you so much
Distinguished members of the Security Council,

Iraq has not left the headlines in recent months, as domestic, regional and international events have continued to take their toll on the country.
And while we will explore these events today, I choose to begin with hope:

  • The hope of a people who remain united in their determination for a more just and prosperous future;
  • The hope of a sovereign nation that refuses to become a battleground for conflicts that are not its own;
  • And the hope that Iraq may very well find itself at the most opportune moment for genuine and lasting political reform in a generation.

But for this to materialize, political leaders and communities will have to step up to the plate: placing the country’s interest above all else, building domestic strength.

And within this context, it is important not to sugar coat the current harsh reality.

The many brave Iraqis – who continue to pay an unimaginable price for their voices to be heard – deserve that we recognize the intolerable abuses they have been subjected to.

The killings. The abductions. The violence. The intimidation. The threats. These abhorrent human rights violations are ongoing and fly in the face of all that is decent. They have no place in a democracy, any democracy.

And yes, of course, we do recognize the challenges of operating within a fluid, puzzling security context with multiple actors. However, as I have stated many times: the ultimate responsibility for the peoples’ safety and security undeniably rests with the State.

It is therefore imperative to put an end to these abuses. Moreover, it is imperative that perpetrators be brought to justice. Impunity ends where accountability begins.

And let me emphasize: justice and accountability are a matter of burning importance to the many Iraqis who have lost their loved ones or seen them injured, for no other reason than expressing their frustration with poor economic, social and political prospects.

Justice and accountability should also be a pressing matter for the State of Iraq. The rule of law must be strengthened if public trust is to take root.

Now Mister President,
As I have stated time and again: Iraq’s problems did not occur overnight, nor will they be solved in an instant.

Yet times of crisis also present opportunities. And I sincerely hope that Iraqi political leaders will recognise in this moment the crossroads where they either stand idle, or where they place themselves in the service of their countrymen and women. But I have to say: the critical window of opportunity is closing fast.

Now, with regard to the participation of Iraqi women in the ongoing public protests, it is unprecedented and marks a new page in the history of women’s grassroots mobilization in Iraq. Political leaders should heed this call.
Going back to the streets: the security picture is undeniably complex and most challenging to manage. We witness ambiguously identified armed entities with unclear loyalties. And we see groups or individuals using the cover of peaceful protesters and/or security forces to muddy the issues, misleading the public, harming the country’s interest, confusing the scene and causing casualties.

All of this is part of Iraq’s tough reality.

And as Secretary-General Guterres recently stated: “The large number of armed groups operating outside state control is preventing the country from functioning as a normal state.”

However, it bears repeating that this is not something political leaders should hide behind. On the contrary. They must dismantle or formally integrate these armed entities under full state control without delay. In other words: this is no excuse for political and governmental inaction.

Now Mister President,
After five months of protests, and the many injured and killed, it should be clear that peaceful protesters – backed by a silent majority – it should be clear that they will not budge on their aspirations. Now, this should be the political class’ first and last concern – but so far, we have seen few results.
And let me be clear: delivering on the demands of the people will require a collective effort. I again emphasize that no Prime Minister can go it alone. Every single political actor and leader is fully responsible for restoring the critical confidence of the public in their government and its institutions.

Late last November, the Prime Minister announced his resignation, which was soon approved by Parliament and the President.

The designation of a new Prime-Minister, and subsequent attempts to form a new government, ultimately failed due to distrust and disunity. This led to a complicated situation in which the Prime Minister-designate was not able to obtain sufficiently broad support to form his government within 30 days.

Within the last three days, we saw the withdrawal of the candidacy of the Prime Minister-designate – accepted by the President -, and the announcement by the previous and current caretaker Prime Minister that he was stepping back from most of his duties while calling on parliament to seek early elections in December 2020.
Constitutionally, the President now has another 15 days to nominate a new PM-designate, whose government and programme would again be subject to parliamentary endorsement. And While political consultations are ongoing, the question remains whether political parties will find a new consensus-candidate within these time limits.

Clearly, all this prolongs uncertainty and causes significant challenges – further eroding public trust.

Mister President,
One way or another: the road ahead remains fraught with difficulties.

I already mentioned the pressing need for accountability and justice. And another top priority is corruption: perhaps the greatest source of dysfunction in Iraq, and sadly, a core feature of Iraq’s current political economy. It is built into everyday transactions.

A related feature of Iraq’s political economy is its reliance on patronage and clientelism. This has resulted in a ballooning, inefficient public service that functions more as an instrument of political favour than as a servant of the people.

Now, A cynic would describe this “payroll corruption” as the perfect electoral mobilization strategy, where – perversely – low turnout benefits those pursuing their own narrow, partisan and/or transactional objectives.

Now It is important to tackle the system as precisely that: a system and not just a series of individuals or occurrences. Each bribe or favour serves to reinforce the existing structure.

Therefore, full systemic reform will be necessary. And no one understands this better than the Iraqi woman and man whose chances of a more prosperous life continue to be undermined by a system which ignores them.

Mister President,
Iraq is by no means a poor country, but as I said: private and partisan interests conspire to divert resources away from critical investment in the way forward.

Iraq’s massive oil wealth has financed a crude rentier system that sees enormous revenues converted to salaries in unproductive sectors.

Now While external factors (such as regional tensions and oil price fluctuations), while they continue to weigh on the national economy, there are internal factors which Iraq can control. Reducing bureaucracy, increasing the ease of doing business, strengthening the rule of law, anti-corruption mechanisms: these measures can all incentivize the domestic private sector while attracting foreign investment. These steps are necessary to build a healthy environment that is conducive to broad-based, fairly distributed growth and employment generation.

Iraq must also build, repair and upgrade critical infrastructure, and broaden its revenue base to reduce its dependency on hydrocarbons. Now, Agriculture is already showing promise – good news – as a candidate for investment. And an agricultural revival, in the birthplace of agriculture, will not only improve employment and social cohesion (notably in liberated rural areas) but also strengthen Iraqi food security.

And Within this context, I would also like to highlight the creative resilience of the Iraqi people. Because If one looks beyond the statistics and legal structures, we observe – on the street – plenty of commercial activity. And One can only imagine what this spirit of innovation and entrepreneurship could achieve if freed from the burdens of red tape and bribes.

Mister President,
An important aspect of corruption is illicit financial flows: they not only help explain why Iraqis continue to await roads, hospitals, schools, and legal employment opportunities. They also contribute to further destabilization, by providing channels for the financing of organized crime and violent extremism.

And with regards to violent extremism, we cannot ignore the continued threat of terrorism.

Although ISIL has been defeated territorially, it continued – in the past two months – its attempts to increase its military operations in northeastern Diyala, northern Baghdad and areas of western Iraq.

it goes without saying that ISIL must not be allowed to regroup and recruit. And while constructive negotiations between Iraq’s government and its allies are ongoing, following the vote on the parliamentary resolution on the presence of foreign troops, Iraq’s allies continue to assist the government and its institutions in the fight against ISIL.

Now It is obvious that a strong state which has a monopoly on the use of force is best equipped to face these multiple security threats. And of course, an equally powerful tool against violent extremism is fairness and justice.

Mr. President, turning to the need for free, fair and credible elections. While the “electoral reset” is a top priority for many – broad, underlying systemic reform and a strong, independent electoral commission will prove crucial.

In other words: the newly appointed electoral commission will need to stand with greater resolve in adhering to the principles of transparency, accountability, independence and professionalism as they rebuild the commission’s institutional capacities and kick-start technical electoral preparations.

Moreover, in order to firm up the electoral calendar, there is an immediate need to complete the electoral legal framework. Parliament must act on pending, urgent elements of the electoral law, in particular constituency demarcation and seat apportionment, hopefully bringing voters closer to the candidates and making future elected representatives accountable to their constituents.

Now Turning to Baghdad-Erbil relations, notwithstanding an encouraging preliminary deal between the KRG and the Federal Government on oil and revenue sharing, we continue to await a final, long-term and sustainable agreement on this file as well as on security co-operation and Sinjar.

Mr. President,
I think we can all agree that the volatile domestic and regional climate took an extraordinary toll on Iraq in the past months. To point out the obvious, the state-to-state violence we saw play out across Iraq earlier this year, was received as a clear and substantial threat to the country.

The modus operandi and rules of engagement have shifted, and the risk of rogue action by armed groups with unclear reporting lines is a constant concern.

Beyond the immediate security threat, this also takes critical political attention away from urgent unfinished domestic business. But As I have stated before, regional security developments should not eclipse domestic priorities.

Now The question is whether Iraq will flourish as a venue for peace and understanding, or suffer as the arena of external battles.

Mr President,
I will now turn to the issue of missing Kuwaiti, third-country nationals and missing Kuwaiti property, including the national archives.

Hopes renewed in January when new human remains were discovered and exhumed from a third grave in Samawa. Despite a very challenging operational context, the Iraqi Ministry of Defence has demonstrated commendable focus on this important file, leading the excavation efforts with assistance from the ICRC.

And I truly hope that the DNA identification of these newly discovered human remains, as well as those that are still being analysed in Kuwait, that it will prove positive and that it will bring closure to the families and relatives of those who went missing nearly thirty years ago.

The contribution of the Tripartite Committee members through the provision and analysis of satellite imagery, supported by witness information, it all proved crucial in locating the Samawa sites. And I would like to call all members of the Committee to continue their steadfast support to the efforts underway for other potential burial sites.

Mr President,
In closing, It was my intention to conclude with words of hope. But the ongoing political indecisiveness and dissension, leading to a further paralysis in decision-making, unfortunately do not give cause for immediate optimism. The country and its people continue to be pushed into the unknown.

Also, the repeated pattern of parliamentary sessions which have failed to reach quorum is exactly the opposite of what the country needs, especially during a period of acute political crisis. The fundamental mandate of an elected representative is: to be present, to be counted and to vote.

Now Like I said last time: out of the ongoing political crisis – a fairer, stronger and inherently more resilient Iraq can emerge. But again, for this to materialize: political leaders will have to act fast, placing the country’s interest above all else.

Iraq must and can find strength in diversity, recognizing a cohesive society as more than the sum of its parts.

Putting out one fire after the other is no strategy. It must move from constant crisis management to sustainable and stable politics, building resilience through deep and broad systemic reform. And as we all know: at the end of the day, Mr. President, strength at home is a prerequisite for strength abroad.

Thank you.

(Source: UN)

By John Lee.

Deceptive shipping practices are reportedly being used in an attempt to conceal cargoes of sanctioned Iranian fuel oil being shipped via the Iraqi port of Khor al-Zubair.

Writing in Lloyds List, Michelle Wiese Bockmann gives details of a network of shell companies running ‘dark’ tankers to transport the sanctioned fuel.

Click here to read the full article.

From Middle East Monitor, under a Creative Commons licence. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

Iraq’s official anti-corruption agency stated in its latest annual report that it restored 2.84 trillion Iraqi dinars ($2.38 billion) to the Treasury in 2019.

The Federal Commission of Integrity added that it has utilised its relationships with other state watchdogs, and that it created a national strategy for fighting corruption in collaboration with the Federal Board of Supreme Audit.

According to the report, the commission examined and was involved in 26,163 notices and court cases in 2019, with 10,143 persons accused of corruption. Those included 50 officials who were government ministers or holding equivalent positions.

There were 931 court rulings in which 1,231 defendants were convicted of corruption. They included four ministers or officials at the same level.

(Source: Middle East Monitor)