Iraq: Developing More Capacity to Manage Public Funds

Even amid conflict and fluctuations in oil prices, as home to the world’s third-largest oil reserves, Iraq has the sort of wealth from natural resources that makes it possible for its government to invest in the country’s infrastructure.

Iraq spent more than US$51 billion on public procurement in 2014, well over 20% of the country’s GDP. Harnessing this revenue to develop the economy, however, requires an efficient system of government contracting.

Public procurement in Iraq has been effected by decades of sanctions, war, and instability—conditions that have created a system characterized by inefficiency, corruption, and delays. Procurement is a bottleneck that prevents budgetary expenditure; according to the World Bank’s 2014 Public Investment Management Report, often the process is stuck at 50%–60% of its capacity.

Another assessment in 2012 showed widespread corruption in public contracting weakening investors’ perceptions of doing business in Iraq, and thus hurting its prospects of increased foreign investment. Simply put, Iraq’s outdated procurement system, combined with its post-conflict low absorptive capacity, is significantly increasing the cost of public investment and also diminishing its returns.

The Bank’s Middle East and North Africa (MENA) procurement team has worked with the Government of Iraq to address this. The Bank’s regional public procurement strategy promotes building capacity in a way that moves beyond small-scale, short-term training, towards comprehensive programs that look for more sustainable solutions.

In Iraq, the Bank is trying to help the country build a future generation of civil servants with the skills needed to manage procurement with efficiency and integrity.

By John Lee.

Fiber optic company m2fx has announced a new partnership with Hevek Company, expanding distribution of its products into Iraq for the first time.

Hevek Company will provide customers with m2fx’s full product range, including its tough yet flexible range of pushable fiber cables, lightweight aerial solutions and microducts for Fiber to the Home (FTTH) networks.

Fariborz Ardalan, Managing Director, Hevek Company, said:

“With m2fx solutions now available in Iraq data providers finally have the opportunity to quickly respond to customer demands without needing expensive installation equipment or highly trained engineers.”

Hevek Company has already supplied m2fx cables and microducts to leading carrier Gorannet, which is deploying them as part of its FTTH customer rollout in Kurdistan.

Simon Roberts, sales director, Middle East and Africa, m2fx, said:

“The telecoms market in Iraq is changing very quickly as the country rebuilds and upgrades infrastructure, harnessing the power of high speed fiber to transform the economy.”

(Source: )

By Mohammed A. Salih for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

As a coalition of Sunni Arab states led by Saudi Arabia targets Shiite Houthi forces and their allies in Yemen, Iraqi Kurds are watching with concern and caution, wondering how the repercussions of the region’s deepening sectarian conflicts might affect them.

Sandwiched geographically between opposing Shiite and Sunni regional powers such as Iran and Turkey, Iraqi Kurds wonder how long until they are dragged into the unfolding regional hostilities.

“If the struggle reaches its pinnacle and leads to an even deeper polarization, Kurds might be forced to become part of it,” said Muthana Amin, a member of the Iraqi parliament from the Kurdistan Islamic Union. “If Kurds become part of this struggle, then we will be serving outside agendas and will end up empty-handed.”

In recent years, Kurds have shown signs of division in face of regional polarization. The eruption of the Syrian revolution in 2011 divided the largely united Iraqi Kurds regarding the Kurdish response to Syrian events. The two major Iraqi Kurdish groups, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), appeared to be aligning themselves with opposite regional camps.

The KDP, led by Iraqi Kurdistan President Massoud Barzani, adopted a pro-opposition stance, as did most of the Sunni states in the region, from Turkey to Saudi Arabia and Qatar. The PUK, led by former Iraqi President Jalal Talabani, refrained from supporting that policy and has been seen as closer to the Iran-led camp.

While most other regional actors possibly chose allies based on sectarian identities, Iraqi Kurdish politics are hardly defined in terms of Sunni-Shiite affiliations. In fact, both the KDP and PUK are heavily dominated by secular elites.

The 5-Miles IDP Camp in Basra, a Story of Social Cohesion

The opening ceremony of new shops managed by internally displaced persons in the popular al-Asri market, 5 miles off the city of Basra, marks a story of success.

Following a fire in a community of displaced people in Tannoma District, 300 families (2,000 people) who had lost everything, settled down in a camp in the proximity of the market since August 2014.

The governorate and the United Nations provided basic services such as shelters, water and sanitation, and schools. The UN Development Programme (UNDP) helped boost job skills and entrepreneurship through training. As they regain their livelihoods, they now show signs of recovery.

“The reconstruction of the souk, which we are inaugurating today, will help the displaced restart their lives, and is pivotal to building social cohesion in the 5-Miles neighbourhood,” said Lise Grande, the UN Deputy Special Representative of the Secretary-General and UNDP Resident Representative in Iraq. “With the hope of resuming normal life, many go on with their new economic activities in the camp’s environment,” she added.

UNDP is spearheading the UN support programmes to generate employment and income for the displaced and their host community, addressing potential competition on the labour market and the stress on camp neighbourhoods. Country-wide the UNDP’s livelihoods programme has reached to some 14,000 vulnerable people in 2014.

By Mona Alami for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The United States has led an offensive against the Islamic State (IS, ISIS, ISIL) in Iraq since August. It has been backed on the ground by the Iraqi military with the support of US-led coalition forces and the Iran-backed Popular Mobilization Units that has forced IS to retreat from some of its territory in Iraq, such as Tikrit and regions around the capital, Baghdad, killing thousands of its militants in the process, with a death toll that amounted to over 6,000 as of January.

Iraq’s security forces are now battling in the region of Anbar, a stronghold of Iraqi Sunnis, spearheaded by this unlikely alliance. However, to succeed in this particular region, it needs to gain the trust of the Arab Sunni tribes.

The Sunni tribes played a key role in fighting al-Qaeda in Iraq (AQI), which rose after the US invasion in 2003. IS, an offshoot of AQI, has taken over large swaths of the country since June, playing on the distrust of local populations with Baghdad’s Shiite-led government of former Prime Minister Nouri al-Maliki.

The Iraqi security forces have since reversed IS successes, most recently by taking over the city of Tikrit, which was the hometown of Saddam Hussein. The fact that militias now patrol the city has not eased the distrust of powerful Sunni tribes, whose support is key in securing the territory seized from IS.

According to Niqash, an Iraqi wire service, pro-government forces in that region include Sunni fighters, who do not number more than an estimated 5,000. While there have been reports of some Anbar leaders, namely Shalan al-Nimrawi, calling to deploy the Popular Mobilization Units (Hashd Shabi), this stance may not “represent the collective stance of Anbar leaders,” a recent report by the Institute for the Study of War said.

Norwegian oil and gas operator DNO today announced the doubling of capacity at its flagship Tawke field in the Kurdistan region of Iraq to 200,000 barrels of oil per day (bopd).

The 200,000 bopd wellhead, processing and pipeline capacity milestone was reached in less than two years with 10 new horizontal wells and the construction of two early production facilities with combined capacity of 80,000 bopd and the installation of a new 44-kilometer, 24-inch pipeline.

Earlier in the week, the company hit a new Tawke daily production record of 156,379 barrels of oil and will ramp up output in the coming weeks by continuing to commission facilities and open wells. Discussions are underway with the Ministry of Natural Resources to set out future production levels, including the split between export deliveries and local sales.

Bijan Mossavar-Rahmani (pictured), DNO’s Executive Chairman, said:

We are very proud of bringing the Tawke 200,000 project to completion and solidifying our position as the leading operator in Kurdistan.

“Higher Tawke production, including higher deliveries to Ceyhan, should help unlock payments to DNO. The timing and extent of export payments will drive new investment at Tawke which will be required to sustain the high production rates.”

Overall output from Tawke during the first quarter averaged 104,925 bopd, including 90,172 bopd delivered for export, 8,679 bopd sold into the local market and the balance used in the Tawke refinery. Recent contracts have raised local sales from Tawke to 20,000 bopd.

Weak local sales in Kurdistan in the first quarter and low oil prices led to reduced revenues of USD 26 million. Write-downs of USD 27 million in Yemen following suspension of production from the DNO-operated Block 32 and Block 43 due to a rapid deterioration in the country’s security conditions contributed to an operating loss of USD 69 million in the quarter. The company ended the first quarter with USD 204 million in cash and USD 28 million in marketable securities.

DNO’s gross production in the first quarter from Kurdistan, Yemen and Oman stood at 121,026 barrels of oil equivalent per day (boepd), of which company working interest production stood at 72,873 boepd.

Capital expenditures in 2015 have been reduced to a projected USD 100 million, of which USD 35 million was spent in the first quarter.

(Source: DNO)

By John Lee.

Texas-based Alliant Techsystems Inc., has been awarded a $14,173,202 contract for contractor logistic support for the Iraqi Air Force’s Cessna 208B fleet.

The work will be performed in Iraq and is expected to be complete by 31st December, 2015.

(Source: US Dept of Defense)

(Picture: Iraqi Air Force Cessna 208)

By John Lee.

Iraq has ranked 112th out of 158 countries in the latest World Happiness Report.

The report, produced by the Sustainable Development Solutions Network (SDSN), contains analysis from leading experts in the fields of economics, neuroscience, national statistics, and describes how measurements of subjective well-being can be used effectively to assess national progress.

The report is edited by Professor John F. Helliwell, of the University of British Columbia and the Canadian Institute for Advanced Research; Professor Richard Layard, Director of the Well-Being Programme at LSE’s Centre for Economic Performance; and Professor Sachs, Director of the Earth Institute and SDSN.

Jeffrey Sachs, Director of the Earth Institute, Columbia University, said:

“This report gives evidence on how to achieve societal well-being. It’s not by money alone, but also by fairness, honesty, trust, and good health. The evidence here will be useful to all countries as they pursue the new Sustainable Development Goals.”

Top of the list of happiest countries were:

  1. Switzerland
  2. Iceland
  3. Denmark
  4. Norway
  5. Canada

… while at the bottom were:

  1. Rwanda
  2. Benin
  3. Syria
  4. Burundi
  5. Togo

The full report can be downloaded here.

(Source: World Happiness Report)

Celebrating World Press Freedom in Baghdad, UNESCO and the Iraqi Journalists Syndicate (IJS) agreed to strengthen their cooperation to foster freedom of expression, develop the media sector and provide universal access to information and knowledge in Iraq.

To this effect, IJS President Moaiyad al-Lami and UNESCO Representative to Iraq Axel Plathe (pictured) signed an agreement on behalf of their organizations during an event that IJS and UNESCO organized this morning on the occasion of the Day at Iraqi Journalists Syndicate’s headquarters, in the presence of scores of journalists, human rights activists and members of the international community.

The agreement that we signed today is a very solid basis to jointly foster the role of media for national reconciliation and increase the safety of journalists”, says Axel Plathe.

Since 2003, approximately 400 journalists have lost their lives in Iraq, this number is the highest in the world,” stated IJS President Moaiyad al-Lami, urging the government and state institutions to investigate and find out who the perpetrators are.

He also underscored that press freedom can only be achieved through an independent media environment based on pluralism, one that they will continue to strive for to ensure the safety of journalists.

The agreement comes in light of the worsening security situation in Iraq which has drastically limited the media’s capacity to report safely and in a non-partisan manner.

As a first concrete action, the agreement foresees the implementation of the project “Enhancing Iraqi journalists’ capacities in conflict sensitive reporting”, that will ensure that the standards of reporting are up to par with internationally recognized standards.

By John Lee.

The Government of Canada has said it is committed to supporting Iraq in addressing the development challenges that it faces as a result of the barbaric and murderous rampage of the so-called Islamic State of Iraq and Syria (ISIS, ISIL, IS).

To this end, Prime Minister Stephen Harper, pictured here on his recent visit to Iraq, announced the following initiatives, for a total of $26.59 million, to further address Iraq’s stabilization and development needs and enhance bilateral relations between our two countries:

Development

Building Community Resilience in Communities Most Affected by the Influx of Internally-displaced Persons
Government support: $5 million (2015-2016)

This project will support the rehabilitation of infrastructure, help improve access to water, sanitation and hygiene services, and help increase community social cohesion related to basic service delivery.

Building Resilience and Coping Capacity among Conflict-Affected and Hosting Communities in Iraq

Government support: $4.34 million (2014-2015)

This project will support community-based rehabilitation of schools, as well as help provide water, sanitation and hygiene services, psychosocial support and child protection services.

Dohuk Water, Sanitation and Hygiene Resilience Response
Government support: $3.85 million (2015-2016)

This project will support the rehabilitation of infrastructure and help provide access to water, sanitation and hygiene services, as well as help enhance the capacity of the Ministry of Water Resources to deliver services in International Development Program hosting communities.

Programming Social Cohesion through Community Support Projects
Government support: $3.7 million (2014-2015)

This project will support communities to identify and deliver projects to address education, health and municipal service delivery needs.