Chalabi slams Iraq’s lack of economic progress

  • By Gareth Smyth
  • 10 Oct 2008
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Iraq has made little economic progress since the US-led invasion in 2003, and is vulnerable to further oil price falls, Iraqi National Congress (INC) leader Ahmad Chalabi has said in an interview from Baghdad.

The daily situation of Iraqis was “intolerable” despite reduced violence, Chalabi told Emerging Markets. “There is still instability and Iraqis continue to be killed every day. There is a long way to go.

“On the economic front there has been little progress. Services have not improved. Five and a half years after the US invasion, Iraq produces less than half the electricity needed to meet demand.”

Unemployment, he added, was “unacceptably high”, as most families relied on “government food rations that are not being delivered” and “grossly inadequate” medical care and education.

Chalabi, once considered a front-runner to lead Iraq after fall of Saddam Hussein, has no official post other chairing a largely sidelined de-Baathification commission, but he remains a forceful advocate of market-led policies.

The INC leader charged that ministries had “failed utterly in their duty to provide for the people” and argued that falling oil prices would undermine a budget calculated on $80 a barrel, so unleashing “a further deterioration in import of food and vital goods, and a corresponding lack of investment”.

Chalabi said that a state-led system marked by “centralized control, cronyism, corruption and illicit trade” established by the Baath party was still in operation, with 4.5 million people dependent on the government as employees or pensioners.

Chalabi praised the role of the IMF in helping negotiate the reduction of foreign debt and in persuading the government to reduce fuel subsidies, but he argued the fund should do more to help “crack down on corruption and trace the money that has been looted from Iraq through corruption and laundered in regional banks”.

He criticized deals in the oil sector, signed by both the central government and the Kurdish authorities, for “a lack of transparency” that encourages deep-seated popular suspicion of foreign intentions.

Shell last month signed an initial agreement to take a 49% share in a natural gas joint venture with a state-owned company, the first such deal signed in Baghdad by a western major for 40 years. Canada’s Addax Petroleum this week announced the acquisition of a one-third interest in a northern Iraq oil project – a deal, like others with the Kurdish authorities, considered illegal by the Baghdad government.

Chalabi said the Iraqi authorities had done nothing to build support for transparent deals with foreign majors who were needed for the investment and technology that could boost output.

Oil production is around 2.5 million barrels per day (bpd), and the government hopes to raise it to 4.5 million bpd by 2013.

Hussain al-Shahristani, the oil minister, will on Monday in London present 41 pre-qualified companies with data on oil fields to enable them to bid for contracts, which the government expects to agree by mid 2009.

  • By Gareth Smyth
  • 10 Oct 2008

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