Finance minister says Iraq's leaders willing to make reforms

Ali Allawi, Iraq's finance minister speaks during an interview with The Associated Press in Baghdad, Iraq, Thursday, Oct. 15, 2020. (AP)
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Updated 16 October 2020

Finance minister says Iraq's leaders willing to make reforms

  • Low oil prices have slashed state coffers in the crude-exporting country by nearly half
  • Over-reliance on oil has limited the government's ability to seek out other income

BAGHDAD: Iraq's finance minister said Thursday there is growing political will to undertake drastic reforms needed for the country to tackle a daunting liquidity crisis, which has pushed Iraq to the brink of collapse.
“There is more will now than there was five months ago,” Finance Minister Ali Allawi told The Associated Press. “Now, I think there is recognition that unless oil prices go up miraculously, this is something we have to cope with and manage.”
Low oil prices have slashed state coffers in the crude-exporting country by nearly half, and over-reliance on oil has limited the government's ability to seek out other income. A widening month-to-month deficit has cast uncertainty over how future payments will be made for public wages, external debts and essential imports of food and medicine.
Iraq's unsustainable economy, laid bare by fiscal pressures spurred by spiraling oil prices and the coronavirus pandemic, is a long-standing problem that has flummoxed reformists for over a decade.
This week, Prime Minister Mustafa al-Kadhimi's government issued a much-anticipated 95-page “white paper” for economic reform that, if implemented, would prompt a drastic overhaul of the entire system within three to five years.
“It is a paper designed to create a strategic and policy framework for a new Iraqi economy,” said Allawi. "In the end of this period of change and reform ... we are supposed to have a restructured and more dynamic economy, that is the point of it.”
The absence of support from major political elites has undermined similar efforts in the past. Al-Kadhimi's government still depends on an endorsement by Parliament for the vision to gain steam.
“There is less denial, before it was all denial," said Allawi.
With oil prices not expected to rebound in the near-term, only reforms will see Iraq avoid an economic catastrophe, top officials in al-Kadhimi’s government, including Allawi, have repeatedly said. The future of the project faces a major test: Parliament endorsement in the form of a binding resolution or legislation.
Later, aspects of the plan outlined in the paper will be incorporated into the 2021 budget, said Allawi, something that will also require a parliament vote. Government subsidies in the electricity and oil sectors will face particular scrutiny.
In September, Iraq made $3.16 billion in oil exports, which accounts for 90% of state revenue — less than half of the $7 billion needed to pay for salaries, pensions, imports and debts. September salaries were delayed and the payment of October wages depends largely on the government borrowing internally. A previous bill allowing for $12 billion in internal borrowing has been used up; a new one, asking for $35 billion, faces a parliament vote.
“I hope parliament will approve it,” said Allawi of the bill. “If it doesn’t, we have potential for other alternatives, but it will be more difficult.”
Iraq's dollar reserves stand at $53 billion.


Turkey irked over joint declaration by Cyprus, Greece and Egypt

Updated 41 min 6 sec ago

Turkey irked over joint declaration by Cyprus, Greece and Egypt

  • The joint statement also asked Turkey to accept Cyprus’ invitation to enter negotiations for an agreement on maritime delimitations

ISTANBUL: Turkey’s Foreign Ministry on Thursday slammed a joint statement by Greece, Cyprus and Egypt that condemns Turkish energy exploration in the eastern Mediterranean and numerous “provocations” that they maintain are threatening regional peace.
The Foreign Ministry said in a statement that it “fully rejected the declaration containing baseless accusations and allegations.”
During a trilateral regional summit on Wednesday in Nicosia, Cypriot President Nicos Anastasiades, Egyptian President Abdel Fattah El-Sisi and Greek Prime Minister Kyriakos Mitsotakis urged Ankara to end its “aggressive” actions.
The joint statement also asked Turkey to accept Cyprus’ invitation to enter negotiations for an agreement on maritime delimitations. Greece and Cyprus have signed maritime border agreements with Egypt while dismissing a similar deal that Ankara signed with Libya’s Tripoli-based government as “legally invalid.”
The Turkish Foreign Ministry said the declaration attacked Ankara rather than supporting peace and stability in the region. It repeated Turkey’s position that cooperation could only take place with the inclusion of Turkish Cypriots in governing and sharing the resources of the ethnically divided island nation.
“We will continue with determination to protect our rights and the rights of Turkish Cypriots in the eastern Mediterranean,” the ministry statement said.
The trilateral summit took place amid high tensions between nominal NATO allies Greece and Turkey over maritime borders and energy rights.
In late summer, Turkey dispatched a research vessel escorted by warships to conduct seismic research in a part of the Mediterranean Sea that Greece claims as its territory, which prompted the Greek government to deploy its own warships.
Turkey pulled the research ship back to shore for several weeks for maintenance and to allow time for diplomacy but redeployed the Oruc Reis on a new energy exploration mission. A maritime announcement by Turkey says the Oruc Reis and two other ships would continue working in the area until Oct. 27.
Turkey also has had ships prospecting for oil and gas reserves in waters that Cyprus claims as its exclusive economic zone.