Young Iraqis use innovation to make a living in oil-rich south

Iraqi Omar Abdallah operates at his workshop in Basra on June 17, 2018. (AFP)
Updated 18 June 2018
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Young Iraqis use innovation to make a living in oil-rich south

  • The job market for Iraqi youths has become starkly different in the post-Saddam Hussein era
  • In the decade which followed the US invasion and the dictator’s ouster in 2003, authorities continued to increase state hirings — with a heavy dose of nepotism

BASRA: From a roving cafe to scrap metal sculptures, young Iraqis unable to tap into the country’s oil wealth are having to find creative ways to make a living.
While their parents generally went straight into public sector jobs after graduation, the job market for Iraqi youths has become starkly different in the post-Saddam Hussein era.
In the decade which followed the US invasion and the dictator’s ouster in 2003, authorities continued to increase state hirings — with a heavy dose of nepotism.
But now, as 26-year-old Karrar Alaa discovered, there are no more guarantees.
Three years ago, he was counting on his business degree leading to a public sector job in the southern port city of Basra.
But tired of waiting, he has turned entrepreneur.
After gathering up all of his savings and borrowing money from relatives, Alaa invested in a car and transformed it into a coffee shop on wheels.
“It’s the first of its kind in Basra. I got the idea from a video shot in Europe and posted on Facebook,” he told AFP.
The “Coffee 2 Go” car has a giant plastic cup mounted on the roof, while an image of a cup of cappuccino and coffee beans is emblazoned on the body.
An initial investment of $20,000 has led to daily earnings of around 150,000 dinars, or $120, from cups of coffee made in a machine installed in the car boot.
Mashreq Jabbar earns similar sums from his little bookshop squeezed into a corridor of a Basra fashion mall.
“Renting a shop costs $6,000 a month; I only pay $2,500 for my hallway,” said the slim 26-year-old, as he tidied shelves of school books, romantic novels and poetry collections.
The geology graduate had also hoped to get a job as a public official, confident that his degree would make him employable in the local oil industry.
But even though the sector accounts for 89 percent of the state budget and 99 percent of Iraq’s export revenues, it provides only one percent of jobs as the majority of posts are filled by foreigners.
The lack of opportunities is nationwide; from the capital Baghdad to second city Mosul in the north, and from the agricultural east to the western desert.
It is not uncommon to find engineers working as taxi drivers, or sandwich stalls manned by literature graduates in a country of avid readers.
Officially, 10.8 percent of Iraqis are jobless, while youth unemployment is twice as high in a country where 60 percent of the population are aged under 24.
A mushrooming number of private universities — with Baghdad boasting around 30 — has made the situation even worse among graduates.
The private sector which emerged after Saddam’s rule has failed to fill the employment gap, with many young Iraqis holding out for the coveted public sector posts.
“The common view is that there’s no choice but to work in the public sector,” said Ahmed Abdel Hassan, an economics professor at the University of Basra.
“Young people who go to work in the private sector say it’s a temporary move before getting a post in the public sector,” he said.
Even Basra’s entrepreneurs see the benefits, with Alaa noting the social security and pension perks, while Jabbar pointed to civil servants’ guaranteed salaries.
Many of those holding out for a state job, however, are left unable to move out of their parents’ house.
Omar Abdallah, 28, had pinned his hopes on getting a teaching job at the end of his studies in fine art.
Iraq once had a high-quality and free education system, but that was left in tatters following the international embargo of the 1990s after Saddam’s invasion of Kuwait.
Having failed to land a job and with no capital to start a business of his own, Abdallah began collecting scrap metal.
“I could only count on myself and my talent,” he said at his family home, where one room serves as both his workshop and exhibition space.
Abdallah has transformed old bicycle chains into scorpions, cutlery into dragonflies and used nuts and bolts to make motorbike models.
In a good month he can sell half a dozen sculptures, charging between $200 and $250 apiece.
“People love my sculptures,” he said proudly. “They tell me: ‘How did you manage to make something so beautiful out of rubbish?’“


Oil markets jittery over lower demand forecasts

Updated 18 November 2018
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Oil markets jittery over lower demand forecasts

RIYADH: Oil prices continued to nosedive last week over demand concerns amid an outlook of a slowing global economy. The strong US dollar weighed on both oil prices and the global demand outlook. Currencies weakened against the dollar, eroding their purchasing power.
Brent was down to $66.76 per barrel and WTI dropped to $56.46 per barrel by Friday. The former came close to its one-year low as both the International Energy Agency (IEA) and OPEC released monthly reports that articulated a darkening demand outlook in the short term. This increased fears of an oil demand slowdown. Market fundamentals also suggest that price volatility is likely to remain high in the near-term, although the oil market reached a balance in early October.
OPEC’s Monthly Oil Market Report (MOMR) arrived with bearish sentiments, revising downward its oil-demand forecast for this year and next, for the fourth month in a row. It forecast that global oil demand will rise by 1.29 million barrels per day (bpd) in 2019, 70,000 less than what OPEC expected last month. The MOMR also forecast increasing non-OPEC supply growth for 2019, with higher volumes outpacing the annual growth in world oil demand, leading to an excess in supply. The report was welcomed with open arms by the IEA, which had been at least in part responsible for driving sentiment toward a bear market. Surprisingly, OPEC warned that oil demand is falling faster than expected. Necessary action is a must.
Saudi Arabia is not sitting idly by while oil markets look as if they are heading toward instability. Markets were expecting severe US sanctions on Iran, which could have resulted in supply shortages once Iran’s crude exports went to zero. The unexpected introduction of waivers to allow eight countries to continue importing Iranian oil, was however an eye-opener. Now, as the world’s only swing producer, Saudi Arabia will have to take other measures to balance oil markets and drain excess oil from global stockpiles.
Despite what some analysts are claiming, there is currently no strategy to send less oil to the US to help reduce US stockpiles. Yes, some have claimed that Saudi crude shipments to the US are at about 600,000 barrels per day this month, which is a little more than half of what was being shipped in the summer months. But the reasons for this are related to seasonally low demand, the surge in US inventories and refineries heading into their winter maintenance season. Remember that November crude oil shipments were allocated to the US refiners last month before the US waivers on the Iranian sanctions were revealed. Also, keep in mind that Saudi Arabia owns the largest refinery in the US, which has a refining capacity that exceeds 600,000 bpd.

Lurking on the horizon is the massive US budget deficit and increasing rumblings that the US economic boom is over. 

It must be noted that there is a degree of financial manipulation underway in the oil futures markets. At the moment, there are few places where quick profits can be made, so some investors moved from stocks to commodities. Now, there are downward pressures on oil prices as some commodities market traders went long on oil futures, thinking that crude prices would rise. Then these same traders shorted natural gas, assuming that with a warmer winter, prices of that fuel would fall. Unfortunately for the traders, Trump’s sanction waivers on Iranian crude oil exports and cold weather on the US East Coast, caused exactly the reverse to take place. Oil prices fell and natural gas prices rose. Traders were therefore forced to sell their assets to cover margins, pushing oil prices lower. It is expected that some hedge funds and investment funds will also be moving away from going long on oil futures and this will cause further selling.
Lurking on the horizon is the massive US budget deficit and increasing rumbling that the US economic boom is over. The US federal budget deficit rose 17 percent in the 2018 fiscal year. It is now larger than in any year since 2012. Federal spending is up and amidst US President Donald Trump’s tax cuts, and federal revenue is not keeping pace. To make matters worse, the strong US economy and interest rate hikes by the US Federal Reserve have boosted the dollar.
A strong dollar makes commodities such as crude oil more expensive in international markets and reduces demand. Trump wants oil to be priced as low as possible to help bolster the US economy, which is clearly under strain, and to facilitate sales of crude abroad. But with a looming global oil shortage just a few years away due to a lack of upstream investment, it is incumbent on global oil producers to consider the long term in their output decisions.

* Faisal Mrza is an energy and oil market adviser. He was formerly with OPEC and Saudi Aramco. Reach him on Twitter: @faisalmrza