Iraq 20 years later: the curse of oil [PART THREE]

With Iraq almost completely lacking public transport except taxis, the country is in a neverending traffic jam. Traffic lights in the capital are extremely rare and function as a shy but well-meaning wish for order in traffic. No one is impressed. Traffic is regulated by policemen, and days and even evenings are punctuated by a steady din of hornsacting as blinkers, swear words and cheesy salutes.

Read parts one and two of the report HERE:

The air in big cities is heavy, dirty, and almost visible. There is always something burning, whether it be garbage or oil wells, it doesn’t matter much. Iraqi summer is unbearable.

Burning oil wells around Kirkuk. The process is controlled to remove various natural gases.

Two things make a real impression in the country. The first is the dirt. Everywhere, except in the most expensive neighbourhoods is littered with rubbish – streets, balconies, sidewalks, ravines, riverbeds, rooftops…

“It wasn’t like this before. Something happened to us as a people. 20-30 years ago, everything was so green and clean. And now, look at us! But it’s not just people’s fault. Do you see garbage cans around? No. The government has gone batshit crazy and retired from this most basic function. And people throw on the ground. It all starts from the top,”

said Hasan, an elderly businessman from Tikrit.

Poverty and misery

The vast majority of buildings in the big cities are either abandoned or significantly neglected. Urban planning, pavements and building control are in many cases a mirage. The mark of chaos is visible here. The bullet holes and shell damage are visible.

And this is not surprising, given that the country has been at war or living under heavy sanctions for 40 years. Not a few have emigrated – and mostly from the more educated and critical strata of society. The average wage in the country is about $400-500 per month. And while there are no taxes for citizens, and electricity and water are only a few dollars a month – prices are far from the lowest.

The courtyard is an outdoor antique shop, and the shops around it on the first and second floors are also filled with antiques. Vendors play backgammon and chess all day. Often, though, it’s hard to tell the difference between trash and antiques. Notice the pile of junk on the roof of the building. Such sights are everywhere in Baghdad.

A closer look at the rubbish in the Kasa River in Kirkuk. A caged bird is seen on the bridge. Just beyond is the city’s animal market. The filth and unpleasant smell are particularly intrusive. Photo.

“A lot depends on whether you live in the capital or not. Here, in Mosul (ed. – the second largest city in the country), I live comfortably on 70 dollars a month for food, coffee and shisha. For rent in the broad center of a 50 sqm or so apartment, you pay another $70 or so. In the downtown area, a similar apartment would be around $200. If I want to buy a 100 square meter apartment in the most expensive part of Mosul, I will have to pay between 70 and 100 thousand dollars. That’s just for the land. Construction already varies a lot in terms of prices. In Baghdad, however, it is far more expensive. There, in some nice neighbourhoods, the price per square metre reaches 14,000 dollars… It’s a cosmic amount, but still many people can afford it,”

said Ali, a doctor from Mosul. He continues:

“But I am not one of those people. As a personal physician in a government job, I make $700 because I’m early in my career. As the years go by, my salary will go up to $1,000, then $1,500 for a specialist. In the private sector the money is many times more. There I would start at $2000, but the working conditions are no better, I dare say.

The gap between rich and poor in Iraq is huge, more so than in other countries. In some places in Baghdad you will pay about 3 dollars for a shisha. In Mosul, it’s considered an average amount. In the capital it is the lowest possible. There the price starts at 3 and goes up to 30 dollars…”

A crowd of people waiting for Rafidain Bank to open. There were similar queues in front of all the banks in the capital as the authorities had announced a comfortable exchange rate for the Iraqi dinar against the dollar that day. Locals waited to exchange their money into a more stable currency. However, each person could exchange a maximum of 500 dollars.

A white pickup truck haunts my life

Against the background of all the misery and rubbish that one observes, the expensive fleet of cars in the capital stands out. The price range here is huge – from barely running, +30-year-old cars to huge, expensive and new pickups, SUVs and limousines.

Most of the cars are imports from the US, and even their mileages are in miles. They’re everywhere in the 8-million-strong capital, and one wonders where so many people find the money for it. Even the intercity taxis are nice (albeit old) cars. Many of them are Chrysler 300Cs, nicknamed “Chrysler Obama” by the locals since the former US president drove a similar car.

“Arabs love to show off. We love expensive cars, jewelry and phones. We may live in poverty and misery, but in front of people we will be wearing our best clothes and especially cars. This is something typical of us,”

said Hasan from Tikrit.

And this is indeed so, when one thinks about it. The new Central Bank of Iraq building, currently under construction on the banks of the Tigris, is a perfect example of this. It was designed by the world-famous Iraqi-British architect Zaha Hadid and it looks impressive. And it cost nearly $800 million.

On a purely visual level, Iraqi cities are quite overwhelmed by the tangle of cables that are literally everywhere.

The heaviest fighting in Iraq against ISIS took place in Mosul. A huge number of buildings in the centre have been abandoned since the fighting ended in 2017. It is important to note that drivers in Mosul generally obeyed traffic lights. Quite surprising given that they are ignored in the rest of the country. The Iraqis had no logical explanation for this phenomenon.

Corruption by the kilo

Most of the money for the expensive fleet of cars and luxury government buildings (and $14,000 a square meter) comes from the government and the stinking corruption. Specifically, from the $115 billion* from oil sales, making up about 90% of the government budget (and about 65% of the GDP).

This is the reason for missing/low taxes and heavy subsidization of many industries. This creates a kind of bottleneck, summarised in academic circles as the “resource curse”. Generally speaking, since the country gets money easily through minerals – it does not feel the need to develop the rest of its economy. This results in too much economic dependence of the elites on the government in power, makes it susceptible to international political shocks that would affect the price of oil, and seriously undermines public capacity (and even desire) for development and entrepreneurship.

This is also true for the public administration, which often remains underdeveloped and therefore unable to meet serious economic, social and military challenges. Tax collection and redistribution is one of these important components that is largely lacking in Iraq and other similar countries.

Hotel Babylon Rotana is a 5-star gem built in 1982. Currently, a night there costs an average of about 250-300 dollars. In the lower left corner is a visible reconstruction of the Ishtar Gate from ancient times. The shape of the building resembles a ziggurat, a Babylonian stepped pyramidal structure .

No voting without money

“No taxation without representation” was one of the popular slogans during the American Revolution. Back then, Americans claimed to pay taxes, but in the British Parliament, no one defended their interests. They have no representatives.

But the reverse logic is very valid in Iraq and other oil and gas rich countries. No taxes – no representation. A huge number of people do not feel obliged to participate in the governance of their country. Nor do politicians feel beholden to their people. This psychological paradigm is well known and is bearing fruit in terms of public engagement and political accountability. In European countries, citizens say to MPs and administrations: ‘We pay your salaries with our taxes’.

There are no taxes in Iraq (or extremely low in the case of companies, many of which do not even report their activities). And the state actually pays/subsidizes its people. This leads to a 40-50% turnout in voting, with suspicions of massive electoral fraud and rigging overshadowing even the Bulgarian ones. Controlled voting is also noticeably prevalent.

A view of Baghdad’s antique district from another angle. The place has its charisma despite the problems mentioned. Photo.

Beautiful historic buildings are falling into ruin across the country. The historic part of Kirkuk is on the verge of collapse, if not complete ruin. In some cases it is a case of carelessness. In others, it is corruption. In others, it is political decisions. Many times all three together. Central power is in the hands of the Shia, who are often hostile or disinterested in Sunni and Kurdish settlements. Kirkuk in particular is rich in oil, but the profits are shared between Kurdistan (an autonomous Kurdish region in Iraq) and Baghdad.

In these cases, self-initiative and entrepreneurship are undermined (unless the state sets out to encourage them) and discouraged, and many do not even want to work. Production (unlike the strong years under Saddam Hussein) is limited at the expense of imports from abroad (noticeably from Turkey), and so-called foreign investors are frowned upon. They even have a special counter along with diplomats at Baghdad airport. Involvement in politics, on the other hand, is locked mainly in one purpose: redistribution and absorption (corruptly mostly) of the billions of petro-dollars.

And the parties and countries that want a piece of the black gold pie are ready to get it at any cost. Including at the cost of life. Not their-own, of course. And the Iraqis..
*These are the figures for 2021. Because of the complicated international situation, Organization of the Petroleum Exporting Countries (OPEC) decisions, etc., oil barrel prices have fluctuated widely in recent years, raising or lowering government revenue by tens of billions per year. For example, in 2021, the state approved a budget of $89 billion (with 19 of that deficit). In 2023, it is 152 billion (48 of which are deficits). Such financial “tinkering” puts the state’s financial and political security in a very fragile situation. It lacks the sustainability of an economy diversified across different sectors that is characteristic of countries without significant natural resources (although there are exceptions in the US and Norway). Steps towards sustainable energy and economic development after fossil fuel depletion/substitution are not being taken (unlike countries such as Saudi Arabia and the United Arab Emirates). And this portends dire predictions of increasing poverty, emigration and future armed conflict.

This article was originally published in Bulgarian at the site KlinKlin and is part of a series of articles by Kaloyan Konstantinov. All photos were taken by the author.

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