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The missing ingredients in Iraqi
Kurdistan's economy
17.1.2011
By Bashdar Ismaeel,
a
longtime contributing writer for ekurd.net
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January 17, 2011
From decades of repression and barbaric rule, the
rise to prominence and political prosperity for the
Kurdistan Region has been nothing short of
remarkable.
As the Region has undergone significant
transformation, the expectations of the population
have exponentially grown.
Nowadays new airports, luxury malls, classy
restaurants, highways and skyscrapers have become an
accustomed part of the Kurdish horizon. Long
perceived as an existential threat, the only
invasion by neighboring countries was from Iranian
and Turkish companies flocking to the region to
strengthen their hand economically, culturally and
politically.
However, whilst the Kurdistan Region has literally
become "the other Iraq", new lofty buildings and
brand new cars do not always paint the most accurate
picture of economic progression, social equilibrium
and the path of development that needs to ensue.
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Bashdar Pusho Ismaeel, senior UK Editor.
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Such
rapid progress is unmistakable and has attracted the
plaudits of many but in truth the establishment of
the foundations of a healthy and vibrant economy
goes much further than infrastructure that takes the
eye.
Without the establishment and promotion of a number
of key ingredients that underpin economic affluence,
long-term growth and sustainability cannot be
achieved.
There is great risk that the economic growth is
faster than the current infrastructure or social
apparatus is able to support. At the current time,
the price of land and real estate has sky rocketed,
with the price of rent been driven to new levels by
those relocating across the more volatile south.
Generally, whist the cost of living has rapidly
increased, the standard of living has not
necessarily kept the same pace.
There are certain dangers that if the imbalances are
not adequately addressed, it may not only derail
economic progression but also the strategic goals of
the Region.
The factors that underline a healthy economy is
maintaining and protecting growth whilst controlling
inflation. At the same time, ensuring that the
economy is sustainable and safeguarded against a
number of outside risks that come as a result of
globalization.
As such self-preservation is crucial for Kurds to
safeguard their current prosperity. After all, the
Kurds need no reminders about their not so distant
past. Only a few years ago, the Kurds enjoyed frosty
relationships with its neighbors who frequently
threatened to invade, while less than two decades
ago, Kurdistan was subject to genocide and
destruction.
Self-sufficiency is pinnacle to the survival and
economic independence of a nation. In this regard,
agriculture is the cornerstone of an effective and
healthy economy and the bread-basket of its people.
Ironically, for a land and a people who established
their existence over thousands of years on utilizing
highly arable lands and agriculture, Kurdistan has a
strong dependency on neighboring countries to feed
it.
The government needs to introduce firm incentives
for ordinary Kurds to return to agriculture and
farming that most abandoned for the dependability of
city life. Such people need access to modern tools,
subsidies from the government but also the same
level of education and public services as they would
enjoy in the cities.
One of the reasons people flocked to the cities was
partially due to scorched earth policies of Saddam
but also due to the contrasting conditions across
Kurdistan. While the main cities have witnessed
marked progress, this is not necessarily reflected
across the entire Region.
The Kurdish market is very much import driven with
little exportation aside from oil. As a result,
Kurdistan relies heavily on outside parties for
everything from building materials to consumer
items.
The Region may have an abundance of oil, meaning
that it has tremendous purchasing potential but
without economic diversity this leaves a fragile
economy that is susceptible to outside market
conditions. The Region has the potential to export
many other items. With adequate infrastructure and
production capabilities in the future, the Region
can support its own growth and also ensure that
money stays internally.
There are simply not enough Kurdish made items,
factories or production lines to underpin the
economy, and a private sector that is far too
embryonic for people to stop relying on the
government.
While there is a very weak banking system, no
affective system of taxation, an infant IT
infrastructure at best and a lack of
self-sufficiency, the economy cannot be deemed
strong.
There needs to be an economic cycle, whereby as the
economy prospers, there is more money to spend and a
higher budget for the government who in turn plough
more money back into public infrastructure and
society.
With the majority of people working directly for the
government and essentially reliant upon the state,
over 60% of the regional budget is consumed solely
by salaries. Whereas in the majority of the Western
world,www.ekurd.netnot only is this typically less than 20% but
the government has even more revenue through both
ordinary and corporate taxation.
The rapid growth in Kurdistan needs new ways of
thinking and close monitoring. Quality assurance and
compliance to international building and management
standards is imperative. Ever increasing
construction is fine but can we be sure that they
are of the highest standards?
This makes economic regulation of paramount
importance. Investment and business must comply with
law and be transparent in nature.
With a growing social infrastructure and roads
packed with cars, there now needs to be
environmental regulations to protect Kurdistan's
future. The environment and the future of the
children simply cannot be traded off for more money
and infrastructure projects on the ground.
One of the greatest dangers in today's Kurdistan is
the evident divide between the rich and the poor.
New luxury foreign style villages may be iconic in
our social heritage but ultimately this is confided
to those able to purchase such expensive homes. New
parts of Erbil aside, old parts still suffer from a
lack of basic services.
The Region still has a shortage of electricity, an
inadequate sewage system and medical care that is
not all encompassing. As the economy advances, there
needs to be a social welfare balance to narrow the
rich-poor divide and ensure taxes are paid based on
one's capability.
While, the Kurdistan government has an investment
law that rivals any of that in the Region, this
should not be at the expense of encouraging a
skilled local workforce which is currently lacking.
In this light, education and training should be the
building blocks of the economy. The Region is overly
reliant on foreign skills, which more training,
qualifications and education can address.
Above any of the factors mentioned above, the
mentalities of the people need to change for real
progress to ensue. There is a lack of
professionalism amongst the workforce and a lack of
accountability in employment.
People often want to do the minimum to become as
rich as quick as possible. Once the private sector
really takes hold, this is when there can be more
professionalism, competitiveness and a desire to
improve skills sets.
In Western countries, economic conditions and
business dealings are bound by tight regulations and
a systemized way of working. Workers have clear
contracts with employers that drive their terms and
conditions, salary and working hours, with both
sides afforded rights under legislation. In
Kurdistan, such systemized working conditions are
lacking and employers do not always drive the
highest of returns.
This is because too many jobs in Kurdistan are
provided by the government which become a safety net
and are often around providing services such as
security. In the West, which is based primarily on
skilled professions and working for corporations,
the fundamental aim is profitability. Every
individual directly or indirectly works towards
growing the company portfolio and its bottom line.
As such, the employers are often under fierce
pressure to deliver under a cut-throat environment.
In Kurdistan, there is not the same pressure on
employees to deliver or meet certain obligations.
Once ordinary Kurds start to develop their own
businesses and hire their workforce, competition
will naturally increase which will put an undoubted
onus on qualifications and the professionalism of
candidates.
In addition, much of the basis of Western society is
about forward planning, investment and notion of
ensuring a better tomorrow. Too often in Kurdish
society, it's a case of live for today and worry
about the future later. Kurds can start thinking
about investing for the future and protecting what
they have today.
This mentality of lack of forward thinking is not
exclusive to finance, the same rule applies to the
environment and attitude to healthy eating and
fitness. Littering and the abuse of our landscape
can be ignored today but will certainly bite even
harder in the future.
Ultimately, it far easier to erect blocks and cement
for plush buildings, than create an affective
skilled and professional workforce that can underpin
an efficient economy.
First Published On: Kurdish Globe
Other Primary Sources of Republication: eKurd.net,
Various Misc.
Bashdar Pusho Ismaeel is a London-based freelance
writer and analyst,
a regular
contributing writer for ekurd.net website.
Ismaeel whose primary focus and
expertise is on the Kurds, Iraq and Middle Eastern
current affairs. The main focus of his writing is to
promote peace, justice and increase awareness of the
diversity, suffering and at times explosive mix in
Iraq and the Middle East.
Most recently he has produced work for the
Washington Examiner, Asian Times, The Epoch Times,
Asia News, The Daily Star (Lebanon), Kurdish Globe,
Hewler Post, Kurdistan Regional Government (KRG), KurdishMedia, PUK Online and OnlineOpinion.
He has achieved seminar recommended readings for Le
High University (Pennsylvania) and Massachusetts
Institute of Technology. His work has been
republished extensively elsewhere on the Internet.
You may reach the author via email at:
bashdar@hotmail.com
, Bashdar's website
http://www.bashdar.co.uk
Copyright © 2011 ekurd.net. All rights
reserved
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