Thursday, August 31, 2006

[middle-east] meanwhile, in iraq

If the Iraq troubles stopped now, it's greater woes would continue. This is an abridged version of a Reuters article:

"The prices of everything have gone up but the salaries have stayed the same," said Nada, a 33-year old laboratory assistant who works for a branch of the health ministry on a monthly salary of 200,000 dinar (71 pounds). Dire security conditions are a root cause of the problem, according to the country's central bank chief.

"Inflation is a function of the real sector, not the monetary sector ... wages, insurance cover, the smooth delivery of goods. Security is the important factor," Sinan al-Shabibi said in a recent Reuters interview.

U.S. officers say rising sectarian bloodshed has pushed Iraq to the brink of civil war. However, Jeremiah Pam, U.S. Treasury Attaché to Iraq, points to the debt forgiveness from Western creditors that Iraq won last year to ease its re-entry to the world financial community.

It also has the backing of the International Monetary Fund, which agreed a $685 million (361 million pounds) standby credit in December 2005 and said earlier this month that Iraq remained on the right track. But the IMF also had some stern words about prices, spiraling by over 50 percent year-on-year, and warned that conditions risked getting worse.

Corruption is another major problem. An audit sponsored by the United Nations last week found hundreds of millions of dollars of Iraq's oil revenue had been wrongly tallied last year or had gone missing altogether. Business is being done, but it isn't often very productive in nature.

Despite the world's third largest oil reserves, a well- educated work force, an abundance of water and other valuable resources, Iraq's economy was in a mess even before the first bomb was dropped in the 2003 war. A decade of sanctions after the first Gulf War compounded the shortcomings of Saddam Hussein's Baath Party economic model of heavily centralised state control.

At border crossings, officials from half a dozen ministries are involved and if an Iraqi Army unit wants fuel from the oil ministry, rather than rely on the Americans, it requires 14 signatures. A new cabinet proposal to ease chronic fuel shortages by opening the energy sector to private imports has gone nowhere and black market petrol prices have surged.

Logic dictates that it must come down to one of these things - either the [Iraqi] horse won't run, the US is flogging a dead horse, it's powerless in making any inroads against the Arab backdrop, it's not serious about wanting peace or else it does not, itself, control the main agenda in the region. The main agenda may have been set by an entirely other body.

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