Since 2003, the United States has been an active partner to help Iraqis strengthen their democracy, build civil society, improve security, and re-integrate fully into the regional and global community and economy. Since 2009, we have worked through the U.S. Iraq Strategic Framework Agreement to reinvigorate this partnership in a range of sectors, including democracy-building, security, education, energy, trade, health, culture, information technology, law enforcement, and judicial cooperation.
We have made a substantial investment and great sacrifices to bring about progress. We have strengthened Iraq’s democracy, rule of law, and civil society. We have helped rebuild its security infrastructure and helped Iraq rejoin the international community after decades of isolation. Our support – with significant assistance from international partners since 2003 – has helped Iraq successfully conduct five major elections or referenda since 2004, including two parliamentary elections. Over 12 million Iraqis voted in the 2010 parliamentary election – a 62 percent turnout. The U.S. has also substantially assisted Iraq’s new parliament, the Council of Representatives, in building core capacity and competence. State and USAID programs have helped Iraqi civil society – including women’s groups, human rights organizations, budget transparency entities, and the media -- play an active role in Iraq’s democracy. We are also supporting Iraqi parliamentary efforts that produced the region’s most progressive non-governmental organization law. In December 2010, the United States also helped Iraq secure UN Security Council termination of most Chapter VII sanctions against Iraq, bringing Iraq into a more normal relationship with the community of nations.
Since November 2008, our security relationship with Iraq has undergone a significant transition. Building on the success and sacrifice of our troops who partnered with Iraqi Security Forces to bring an end to sectarian fighting and combat insurgency, we have ended the combat mission, reduced our troop level to below 50,000, and handed the lead for the security of their nation to Iraqi Security Forces. The Iraqis have developed the capacity to successfully provide internal security, as our forces have shifted from a combat role to a role focused on advising and training.
The U.S. has provided training, technical expertise, and equipment to bolster critical rule of law capacity in Iraq, focusing in particular on the police, corrections service, and judiciary. This investment has improved the Iraqi government’s ability to provide for the humane treatment and legal rights of its citizens, while also properly incarcerating criminals and insurgents.
On the economic front, we have worked to promote growth and reform in multiple sectors of Iraq’s economy. We have helped the Iraqis realize better management in key ministries with procedural and institutional reforms and training on international procedures and standards. U.S. programs have produced or supported key benchmarks:
§ Three transparent and efficient oil and gas bid rounds since 2009.
§ An Electricity Master Plan which lays out a strategy to improve and reform Iraq’s electricity sector.
§ Iraq setting up the first commercial court to settle arbitration disputes for international investors in 2011.
§ Iraqi ministry and provincial officials reforming agricultural policies and boosting productivity in a sector that is key to Iraq’s employment.
§ Iraq’s accession to the World Trade Organization to expand Iraq’s trade and global economic integration.
§ Iraq’s successful engagements with the IMF and World Bank to undertake key public financial management, social safety net, and banking sector reforms.
§ Intense interaction between U.S. and Iraqi businesses to promote investment in Iraq.
Our assistance has helped Iraq combat corruption with programs for integrity institutions: the Board of Supreme Audit, the Commission on Integrity, and the Inspectors General. Our assistance also helped Iraq produce and begin to implement a 2010 comprehensive national anti-corruption strategy.
We have promoted long-term economic growth, political development, and strong cultural links to the U.S. by assisting the educational sector in Iraq. Iraq has the largest Fulbright Foreign Visiting Student Program in Middle East, and the International Visitor Leadership Program in Iraq is the largest in the world. Iraq is the eighth-largest foreign government contributor to the Fulbright program. Additionally, USDA has cemented links between Iraqi universities and U.S. land grant universities to build an agricultural extension program.
Strengthening Iraq - Source
The Coming Iraqi Business Boom
12/21/2010
By BARTLE BULL
The expected announcement of Iraq's new government marks the culmination of a remarkable process. The former bully-boy of the Arab neighborhood has become its only functional democracy. What may be the world's richest resource economy, once the closed shop of a murderous clique, is today wide open for business.
Driven by what many geologists consider the world's largest oil reserves, Iraq will probably be the world's biggest crude oil producer within a decade. The country currently ranks second to Saudi Arabia in official reserves, with 143 billion barrels. With much of Iraq's exploration still to come after a three-decade hiatus, and with Saudi Arabia's reserves substantially inflated and already in decline, Iraq could take the mantle as No. 1 in fairly short order.
Iraq last year signed 12 oil contracts that promise to take output from under two million barrels per day currently—less than Algeria—to over 12 million by 2016. This timeline is probably optimistic, but the contracts will likely see Iraq surpass Saudi Arabia's 10 million to 11 million barrels per day within a decade. And these figures include no contributions from Iraqi Kurdistan, from natural gas reserves, or from new oil fields, with which the lightly-explored country is replete.
The Saudi comparison suggests that as Iraq's oil production rises, its economy could grow approximately six-fold over the coming decade—gross domestic product is currently $66 billion—and add a mind-boggling $300 billion in annual GDP. This means one of the largest economic reconstruction and development booms in history.
The entire Iraqi economy is being rebuilt. The government's electricity program has a $50 billion price tag. Baghdad has awarded the reconstruction of Sadr City to six Turkish companies at a cost of $11 billion. Nationwide, thousands of police stations, schools and clinics will be built. Airports, bridges, dams, railways and roads are being planned. The $20 billion Al Faw port project will create the leading port in the Persian Gulf. A modern army, air force and navy will be trained and armed. The investment programs of last year's 12 oil deals alone add up to well more than $200 billion.
The holy cities of Najaf and Karbala currently receive more annual visitors than Mecca but have almost no hotel space or modern residential facilities. Iraq's real-estate sector generally is warming up, with Abu Dhabi companies alone committing over $65 billion in the last year. New refineries, cement plants and steel mills are being financed across the country.
Iraq's greatest resource is its famously resourceful, tough, educated and enterprising people. Whereas the capitals of the Gulf oil monarchies did not have paved streets a generation or two ago, Baghdad and Basra are ancient capitals of commerce, ideas and global finance.
Oil, people and history are not Iraq's only advantages. One of the important food-exporting countries of world history, watered by the Tigris and Euphrates rivers, Iraq possesses abundant agricultural potential. Located at the head of the Persian Gulf, Iraq is poised to regain its ancient role as a trade link between East and West. A modern rail system linking the Gulf to Europe via Turkey will provide Asian exports a faster, safer and cheaper alternative to the Suez Canal and the Horn of Africa.
Perhaps most important of all, Iraq's is a free economy. There is no ruling family, party or tribe in Iraq, and there is no culture of religious imposition.
There is strong evidence that Iraq can avoid much of the "oil curse" and build a more cosmopolitan and modern economy than those of its autocratic neighbors. In the last election, senior Iraqi leaders campaigned on, among other things, establishing individual oil accounts for Iraq citizens to receive their share of the nation's wealth directly. Unique among the region's resource economies, this would put the state at the mercy of the people, not the other way around.
The quality of Iraq's economic management is visible in the soundness of its macroeconomic picture. Inflation is under control at 5% per year, the government budget will likely be balanced with increased exports in 2011, and the Iraqi dinar (soon to appreciate as exports take off) has held steady against the U.S. dollar since early 2009. GDP growth, forecast by the International Monetary Fund to be 11.5% for 2011, is already among the highest in the world, with the investment boom barely in its infancy and the export surge yet to begin.
Corruption, of course, is a problem. But Iraq's oil industry, which accounts for 80% of the economy, is one of the world's most transparent. Last year's auctions were subject to competitive bidding, the contract terms were announced publicly, and the bids were opened live on national television.
To followers of extractive industries, it was previously unimaginable that this could happen outside of a few highly developed countries like Norway or Australia. This year Iraq was accepted on the membership track for the international Extractive Industries Transparency Initiative. It is the only Middle Eastern oil country even to apply.
Violence in Iraq is now mostly a criminal matter. Over the past two years, the country has suffered fewer than 40% of the deaths by violence that Mexico has. Iraqi fatalities are now well below the levels seen during the quiet months immediately following the U.S invasion in 2003. A visit to Baghdad or Basra today isn't intimidating for businessmen accustomed to Lagos or Rio de Janeiro.
Bureaucracy is Iraq's biggest problem. Incorporating local entities is expensive and time-consuming. Obtaining a visitor's visa is absurdly difficult for a country requiring so much foreign investment. And numerous ministries and government agencies frequently claim authority over simple business matters. But the big picture for foreign companies is positive, as Iraq has a substantially more modern and liberal regulatory framework than almost any nearby country. Foreigners can own 100% of Iraqi companies, must pay only the 15% flat tax that the rest of the economy pays on profits, and may take 100% of those profits home when and how they please.
Nine months has been a long time to wait for a new government, but the process has happened peacefully and constitutionally. That's far more encouraging than all the country's oil reserves together.
