By: Murtadha Abdulhussein Abdulradha
A Business undergraduate student at the American University of Iraq-Sulaimani.
Dictatorship, wars, sanctions, poverty, civil wars, corruption, and instability are the main themes of Iraq’s history since the early 1970s. When someone is asked about the reason of that, few answers might come to his mind, one of them is oil, and that is what we are going to discuss. Is it impossible to deal with oil and turn its curse to blessing? The answer is definitely no.
Many countries have oil and have benefitted from it, such as Norway, and the United States. Regarding democracy, Norway has been the most successful one, but if we take the economic view, we can include so many other countries, such as Iran, and UAE. If we study all those countries, we can notice many different strategies and plans, but the common one between all of those countries is that none of them used the oil revenues as a budget. All the oil producer countries (petrostates) that could overcome the oil curse used the oil revenues as assets to invest. They all invested the oil revenues in different ways and used the returns of those investments as budget and liquidity. If we look at UAE, we see that they invested some of the oil revenues in establishing the Fly Emirates, which became the largest airline in the Middle East and one of the largest in the world. Also, they invested the money in buying the most successful sports clubs, such as Paris San German. Also, they invested the money in building an infrastructure that attracts millions of tourists annually. As for Iran, they invested the money in foreign countries in different categories, such as telecommunication, IT, Banking, Insurance, and petrochemicals. Also, they invested the money in developing their internal industries which led to their huge rate of exports. By using those strategies, these petrostates could diversify their economy in order not to be dependent on oil. After passing that level successfully, each one of them established a fund to save the excess of the oil revenues for the future generations. For example, Norway has the richest fund which includes more than 850 billion dollars.
So why can’t Iraq be one of those counties? Iraq can easily be one of those countries and overcome the oil curse by applying a similar strategy to theirs. In contrast to those countries, Iraq’s annually budget depends on oil revenue by 95%. It is true that it’s hard to apply it now because of the crisis and the low oil price. However, after the crisis, Iraq should never use the oil revenue as the only source of income in its annual budget, so that it does not go through the same crisis again. Oil revenues should be invested to activate the agricultural, and the industrial sectors to improve its economy and diversify it to get rid of the oil curse.
*Murtadha Abdulhussein Abdulradha is a Business undergraduate student at the American University of Iraq-Sulaimani.