Iraq making progress thanks to constructive reforms

Dr. Majid Rafizadeh

Iraq has undoubtedly been facing several challenges involving economic, security and environmental issues. But the latest developments highlight the fact that Baghdad is making progress in tackling these underlying problems and that the country appears to be moving in the right direction under the leadership of Prime Minister Mohammed Shia Al-Sudani.
Al-Sudani is putting his words into action, as he has shown that he is determined to implement several critical and positive initiatives alongside fundamental reforms. First of all, the Iraqi government’s ambitious budget plan for the next three years will likely be instrumental in creating jobs and reducing unemployment, as it is expected to add more than half a million new public sector jobs. Such an ambitious budget plan, if fully and successfully carried out, will also help enhance the nation’s social welfare and safety net.
The second promising move is related to Iraq’s new social security law, which has introduced significant reforms to the social security system for private sector workers. The new Social Security Law for Private Sector Workers is critical because more people in Iraq, including self-employed and informal workers, are now eligible for the social security system. In addition, the law will cover maternity and unemployment benefits, as well as provide health insurance through various providers, including both the public and private sectors. The third positive development is linked to Al-Sudani’s launch of long-overdue reforms in the banking and finance sectors. These fundamental reforms are vital due to the fact that they will tackle corruption in the financial and banking systems and lead to financial and economic growth.
The prime minister is taking the issue of corruption seriously, including by this week giving detailed directions in order to “simplify all banking procedures and to prepare a proposed list of facilities and simplified procedures to be presented within a week, in addition to providing a summary of the obstacles obstructing the banking reform process, and proposing effective and implementable treatments for it, in a way that helps in overcoming the approved traditional contexts, which prevent the achievement of the government’s goal of developing this important economic and service sector.” Iraq has also been taking several other steps that will most likely lead to economic growth. It was a step in the right direction when, in June, Iraq signed several memorandums of understanding with Egypt covering a variety of sectors, including tourism, finance, administrative development and diplomacy. In addition, Baghdad has entered into a multilateral cooperation agreement with Jordan and Egypt, which focuses on deeper economic integration. This alliance will definitely yield gains in various fields, such as the commercial, security and financial sectors.
Furthermore, a multibillion-dollar agreement was in July signed between the Iraqi government and France’s TotalEnergies. This will help address Iraq’s long-standing electricity shortage. The $27 billion agreement is considered to be the largest foreign investment in Iraq’s history. As part of the project, Saudi Arabia’s ACWA Power will build a 1,000 megawatt solar power plant in central Iraq. This will reduce Iraq’s dependence on gas imports from Iran and alleviate tensions between Washington and Baghdad over Tehran. The Iraqi government must continue to ensure that division and corruption do not prevent such an invaluable and critical project from materializing.
Iraq can take several other steps in order to tackle its multifaceted challenges. It ought to attract foreign investment and spend on rebuilding its infrastructure to create more jobs and further improve its economic situation. It is estimated that Iraq’s population will double by 2050, meaning more people will be in need of jobs. It is worth noting that Iraq has great potential for attracting foreign investment. This can be partially accomplished by further strengthening the country’s bilateral and multilateral economic and political ties.
In addition, it is vital for the government to diversify its economy. Iraq, OPEC’s second-largest oil producer after Saudi Arabia, unfortunately heavily relies on oil exports for its revenues. They account for nearly 92 percent of Iraq’s federal budget revenue. Such dependence on oil puts the country at great risk when prices plummet, as occurred in 2020. Economic diversification can be accomplished by strengthening the private sector, investing in infrastructure and other industries, promoting tourism and, most importantly, investing in renewable energy. Finally, Iraq is being significantly impacted by climate change. In fact, it has been identified as the world’s fifth-most vulnerable country to climate change. That is why it is extremely important to find sustainable solutions to combat the environmental problems in Iraq.
It is a positive development that Al-Sudani is making it a priority to tackle climate change through sweeping measures he hopes will be implemented by 2030. Iraqi leaders have also been taking constructive steps, such as implementing policies to combat climate change and participating in key global and regional events related to the environment. In a nutshell, although Iraq is facing several key problems, it is moving in the right direction and gradually making progress in tackling its financial, political and environmental challenges.