Reconstruction in post-conflict Iraq

1. Reconstruction in post-conflict Iraq • Francine Pickup, UNDP / IAU • September 2011

2. Reform Agenda Following the 2003 invasion, reform involved: • establishment of democratic state • Strengthening the economy • resumption and expansion of services

3. Diagnosis

4. Security improved but fragile 7,000 70% 6,000 60% 5,000 50% 4,000 40% 3,000 30% 2,000 20% 1,000 10% 0 0% • 3rd quarter • 4th quarter • 1st quarter • 2nd quarter • 3rd quarter • 4th quarter • 1st quarter • 2nd quarter • 3rd quarter • 4th quarter • 1st quarter • 2nd quarter • 3rd quarter • 4th quarter • 1st quarter • 2nd quarter • 3rd quarter 2007 2008 2009 2010 2011 Civilian casualties Non - civilian casualties Proportion of civilian casualties

5. Access to Services – Electricity • On average Iraqi HHs were receiving 8 hours’ electricity per day through public network in 2007 • 25% of HHs had no access to alternative source of power • 37% of IDP HHs receive less than 4 hours of electricity per day • Situation now worse than in 2007, but some improvements in KRG

6. Access to Services – Education • 44% of children finish primary education • 30% or rural girls are not enrolled in primary education • One in five Iraqis is illiterate • Illiteracy among Iraqi women is 28%, in comparison to 12% of men • In rural areas 25% illiteracy in comparison to 14 % in urban areas

7. Iraq’s single sector economy • Oil sector revived due to contracting with IOCs, high oil price and boosted production • Oil dominates the economy and makes up 99% of exports 5.0 (projected) 2009/2010 average oil export was 2 mill bpd Production (mbpd) 2.9 2.3 Appreciation of IQD hinders non-oil exports and growth Dec. 2010 2009 2016/2017

8. Iraq’s single sector economy • Oil dominates the economy and makes up 99% of exports • Appreciation of IQD hinders non-oil exports and growth

9. State control over oil revenues • Oil revenue relaxes budget constraint on government spending • Iraqi state dominant compared to similar resource-rich countries • State’s spending priorities not supportive of private sector development • High revenues make state labour demand higher than it should be and competes with private sector, making labour more costly. 100% 80% 2011 Government budget 2009 Government Expenditure (% of GDP) 60% 40% Employees' compensation Investment Employees' expenditure 20% compensation 31% Other operational 35% expenditures 0% Investment expenditure Syria Bolivia Egypt Iran Iraq Other operational expenditures 34%

10. Impact on employment 60% 50% Youth 40% unpaid + 30% Those wanting more work + 20% working under 15 hours per week + discouraged workers + 10% Jobseekers 0% Public/Gov Sector Private Sector Unemployed

11. Weak social contract despite ‘democratic’ state • Lack of revenues from taxation weakens govt accountability (9% in 2010) • Low confidence in government institutions Iraqipopulation's confidence levels in institutions and leaders 9 8 7 6 5 4 3 2 1 0 Security insitutions Government Tribal leaders Religious leaders institutions

12. Challenges and Implications In Development

13. Challenges for the reform agenda Abundant oil resources have cursed rather than benefited the country’s development: • Intractable political disagreements between the Arabs and Kurds remain unresolved because of the high oil stakes. • Oil-dominated economy resists diversification (few productive jobs, esp. for young people). • Natural resources provide majority of revenues leading to less accountability and incentive to reform. Result: mounting frustration among Iraqi population…

14. Social Protests • Demonstrations ongoing in many major cities since beginning of 2011 • Government reaction • Largely non-violent and reconciliatory, but some heavy-handedness, esp in KRG • 35 civilians killed, 327 injured; 2 ISF killed, 221 injured (Jan-Sept. 2011) • Grievances: corruption, unemployment, weak civil liberties, poor service provision, lack of protection for vulnerable groups and Iranian shelling of Kurdish border areas • ‘Youth bulge’ with 63% of Iraq’s population under 25 yrs old • Pressure on GOI to be accountable • 100 Days Committee to establish quick-impact projects (extended) • Resignations at local and national level

15. Development in middle-income, resource-rich countries with a weak state • ‘Resource curse’ has limited prescriptive value • Need to strengthen private, public and civil society institutions • But how can institutions be strengthened in absence of independent sources of power besides the state? • Agendas of protestors and int’l community coincide to increase pressure to develop independent institutions • But… challenge to convince people of the reform agenda as corruption has ensured that all reform to liberalize the economy has failed – people are now calling for more state involvement in service delivery and employment.

16. UN Response • Support to diversification of private sector and reform of SOEs easing way towards privatisation • Support to improved service delivery, including capacity building at local level • Support to conflict-sensitive programming that • unblocks obstacles to development • strengthens civil society

17. Thank You • www.iauiraq.org