Final Consolidated Document, 2018

United Nations Human Settlements Programme (UN-HABITAT) www.unhabitat.org

DISCLAIMER

The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the secretariat of the United Nations concerning the legal status of any county, territory, city or area or its authorities, or concerning the delimitation of its frontiers or boundaries regarding its economic system or degree of development. Excerpts may be reproduced without authorization, on condition that the source is indicated. Views expressed in this publication do not necessarily reflect those of the United Nations Human Settlements Programme, the United Nations and its member states.

ACKNOWLEDGEMENTS

UN-Habitat Iraq thanks the European Union for its support and interest in the conservation of urban heritage and the implementation of the New Urban Agenda in Iraq.

This report was developed under the Local Area Development Programme (LADP-EU) by Dr. Mona Serageldin, Vice President of the Institute for International Urban Development (I2UD) and her team: Tariq Waly, Barbara Sumer, Daniel Tsai, Alejandra Mortarini, Johann Friedl, with the support of UN- Habitat team: Anna Soave, Saad Mahdi, Haitham Oabid, Bozhan Hawizy, Sara Mahmood, Rania Kamal, Ishaku Maitumbi.

Finally, UN-Habitat acknowledges the firm support of the Iraqi Ministry of Planning, namely H.E. Dr Maher Johan, Deputy Minister; Dr Mohammed Muhsin Al Sayed, Dr Sawsan Jabbar Ibraheem, Aseel Mahdi Rathi, Zuhair Rasheed Abbas, Ebtisam Mohsen Hameed, Jabbar Juma Laibi, Bassam Siham, Kareem, Osama Neza Abdul Rahman and Governorates Planning directors.

Graphic design by Bozhan Hawizy

Cover page: Baghdad © United States Department of Defense

Table of Contents

Introduction…………………………………………………………………………………………………………………………………………….1 Section 1: Platform Description ...... 3 Section 2: Population Projections & Distribution ...... 7 2.1 Fertility Rates ...... 7 2.2 Mortality Rates...... 8 2.3 Migration ...... 9 2.4 Revised Population Projections ...... 10 2.5 Urban Population ...... 12 2.6 Recent Population Movements ...... 13 Internally Displaced Persons ...... 13 Syrian Refugees in Iraq ...... 15 Iraqi Migrants and Refugees ...... 15 2.7 Governorate population projections 2010-2030 ...... 16 Establishing a base year 2015 population ...... 16 Impact of IDP movements...... 17 Projection Methodology ...... 19 Section 3 Economic Analysis ...... 21 3.1 Governorate GDP Computation Methodology ...... 22 3.2 Importance of economic analysis to the formulation and implementation of national and governorate urban strategies ...... 24 3.3 Overview of the context in growth and employment as it affects subnational GDP ...... 25 3.4 Value Added per Worker ...... 26 3.6 Economic Performance and Growth Prospects ...... 28 3.7 A general perspective on GDP and Employment in the Governorates...... 30 3.7.1 The Greater Baghdad Metropolitan Area ...... 33 3.7.2 The Southern Anchor Zone: Basrah & Muthanna ...... 34 3.7.3 Northern Oil Producing Cluster: Salah al Deen, Kirkuk, Ninevah ...... 35 3.7.4 The Kurdistan Regional Government Area: Dahuk, Erbil, Sulaymaniyah ...... 38 3.7.5 The Basrah/Baghdad Corridor: Thi-Qar, Qadissiya, & Babylon ...... 41 3.7.6 The Eastern Corridor: Misan, Wasit, & Diyala...... 44 3.7.7 The Pilgrimage Centers: Kerbela & Najaf ...... 46 3.7.8 Desert Zone: Anbar ...... 48 3.8 Concluding Remarks ...... 51 Section 4: Infrastructure System and Resource Management 4.1 Climate Change ...... 52 4.2 Access to Potable Water Supply ...... 54 4.3 Energy ...... 56 4.4 Roads and Transport ...... 59 4.5 Infrastructure Improvement Projects ...... 63 4.6 Deprivation and Poverty ...... 64 4.7 Estimating Deprivation Levels ...... 65

Section 5: National Urban Strategy Framework Conceptual Approach 5.0 National Urban Strategy Framework Conceptual Approach ...... 68 5.0.1 Urban Development Patterns ...... 69 5.1 Development Corridors ...... 77 5.2 Development Clusters ...... 78 5.2.1 Kurdistan Region Clusters ...... 79 5.2.2 Development Clusters Integrating Water Resource Management ...... 81 5.2.3 Development Clusters Integrating Agriculture ...... 84 5.2.4 Oil Based Development Clusters ...... 86 5.2.4 Pilgrimage Cities Cluster ...... 88 5.3 Looking to 2030 ...... 92 References ...... 93 Statistical Annex ...... 95

In fond remembrance of Dr. Mona Serageldin 1938 – 2018

Dr. Mona Serageldin was the Vice President of the Institute for International Urban Development (I2UD) based in Cambridge, Massachusetts, USA. She obtained a BSc in Architecture from Cairo University, Faculty of Engineering. She later obtained a MSc degree in Urban Planning and a PhD in Urban and Regional Planning from Harvard University. She retired from the position of Adjunct Professor of Urban Planning at the Harvard University Graduate School of Design (GSD) in June 2008 after having been a faculty member since 1985.

Dr Serageldin had over 35 years of professional experience in local development, strategic planning, social inclusion, and policy and program assessments in Sub-Saharan Africa, Eastern Europe, the Middle East and North Africa, Central Asia, Latin America and the Caribbean. She specialized on: decentralization; municipal finance of urban development; participatory urban planning and management; land regularization and infrastructure services; migration patterns and the impacts of remittances on land and housing markets; microcredit in housing and infrastructure; community-based development; and revitalization of the historic urban fabric. She worked on projects sponsored by UNDP, UN-HABITAT, the World Bank, USAID, the InterAmerican Development Bank, and various foundations. In 2003-2004 she served as one of the experts on the Millennium Project Task Force 8 on Improving the lives of 100 million slum dwellers by 2020. In 2008, she served on the Higher Council in Urban Planning and Development in Egypt.

Her very last work focused on the delivery of Iraq's national and governorates urban strategies under the EU-funded Local Area Development Programme.

Introduction

This study focuses on reshaping the 2010 outline spatial strategy for Iraq based on the situation on the ground today while charting a path towards the goals embodied in the post conflict vision presented by the Ministry of Planning.

1. To overcome imbalances in the level of development among governorates. 2. To strengthen the physical and economic links between the urban centers and the rural settlements to reduce disparities and poverty. 3. To address the issues related to the return and resettlement of IDPs. 4. To regularize informal areas and alleviate the factors underpinning their formation. 5. To make significant progress towards achieving the SDGs and the New Urban Agenda.

Reconstruction and development should proceed simultaneously. In a federal governance system this requires coordination between the Ministries, the governorates and the Kurdistan Regional Government. The web-based platform especially designed and set up for this project is providing an excellent tool to structure the participation of governorate teams in every stage of project development.

Effective harmonization, coordination, and articulation between the national ministries and the governorates, as well as, among the tiers of local administration within the governorates are a core requirement of development. In countries that experience conflict, like Iraq, there is the additional burden of wartime administrative issues to resolve. Governorates have a key role in restarting Iraq’s stalled economic growth. To enable them to fully drive development in their territorial jurisdictions, constraints hindering them must be alleviated. Spatial issues dominate these concerns and need to be addressed:

• Land ownership and real property records have to be updated ; • IDP settlement, resettlement of IDPs currently living in unsafe sites and provision of affordable housing; • Current occupancy of land and premises and anticipated future land occupancy and use to be reflected in governorate structure plans and city master plans ; • Resolution of issues relating to unclear property titles resulting in disputes and grievances that impede land and real estate transactions; and • Improving security to reduce the risk carried by public and private investors and alleviating concerns deterring private investment in enterprises and businesses

Public sector financial management is facing constraints arising from the necessity to give priority to expenditures on defense and security, and the cumulative impacts of problems caused by the weakness of the financial sector, the marked preference for investment in real estate assets, the

proliferation of informal activities, the difficulties encountered in collecting taxes and duties and the inability to expand access to credit for lower and middle income households and small businesses.

The focus on the economy should not detract from the social and humanitarian crisis situation prevailing in many governorates, which have to cope with large numbers of IDPs, refugees, and veterans in addition to unemployed workers unable to find jobs. Arrears in the payment of salaries, pensions, and other social benefits due to the sharp decline of public revenues are creating financial hardships, social problems, and political tensions.

It is important to develop an approach to spatial planning that strengthens the articulation of national urban strategies and governorate structure plans supported by land management tools (registration, regulations, inspection, and code enforcement) essential for their implementation. At all levels of governance plans should also reinforce connections between urban and rural areas.

Central transfers to governorates have decreased in parallel with the decline in national public revenues. There are opportunities to obtain donor financing for projects that address reconstruction and essential services, particularly in the health and education sectors, the two key dimension of the UN Human Development Index, including programs to integrate youths and displacees in the local economy. Similarly, funding can also be secured to support poor and special needs populations in target areas, as well as, initiatives to build up urban resilience and improve the effectiveness of responses to emergencies.

Section 1: Platform Description

Ministry of UN Habitat Planning

upload share discuss

Specialist Consultant I2UD Governorates

Participation is a critical challenge in situations of ongoing conflict and turmoil. Yet participatory planning is a pillar of democratic governance and empowerment of local communities. Using modern web based technology I2UD experts set up an online information platform so that all stakeholders can share information, and discuss issues. The key stakeholders are the Iraq Ministry of Planning, UN-Habitat and UNDP, KRG-I, and the governorates, and the consultant specialists at I2UD. Basic considerations in setting up the platform are:

1. Ease of use and maintenance; 2. Interactivity; 3. International accessibility; 4. Capacity to exchange all forms of documentation: visuals (maps, etc.), statistics, and text as well as to discuss and comment on the information. 5. Organization of information so it can be posted, shared, discussed and analyzed as it is collected.

To meet these needs, two interlinked platforms were set up:

1. A file based sharing platform 2. A conversation-based blog platform

Cloud document sharing Discussion

Google Drive or Dropbox Blog + Website

upload share discuss

A global document sharing platform, in this case Google Drive is used to share documents. Sharing can be across all participants in the project. Each governorate will have separate files to upload and edit material which can be seen but not edited by other participants. A global platform is important because the participants are geographically dispersed.

The document sharing system only provides a storage system that can be shared. A blog, in this case, word press offers a discussion system that can handle stored documents and can also be linked to documents online. The blog will enable participants to post questions, answers and comments. The two interlinked systems create a larger platform enabling participants to collect and share documents, discuss tasks and comment on results as the project progresses.

Context and Open Topics Urbanization Connectivity TBD

Development Open Topics Environment Corridors TBD

NUS Governorate Economy Framework Plans

The document sharing platform will have the following thematic content areas: (1) Context and connectivity (2) Environment (3) Economic development (4) Urbanization (5) Spatial development corridors (6) National Framework (7) Governorates (8) KRG-I governorates (9) Other themes. These areas will be filled as the project progresses. Each thematic area can be

expanded into more detailed content areas. For example, the context theme will expand to include, topography water bodies, transportation routes, highways, trans-border crossings, railways, air connections, pipelines, etc.

DEMOGRAPHIC DATA G Pop I Un/e … National Governorates Nineueh Kirkuk Diala Al-Anbar Baghdad Babylon Kerbela Wasit Salah Al- Deen Al-Najaf Al-Qadisiya Al- Each governorate will supply & develop data for topics

Matrices will cross topics and jurisdictions namely governorates, and where possible Qadaa level. Information at both national and sub national levels, for topics such as GDP, population, IDPs, and employment will be collected, compiled or computed from source materials and may take the form of spatial visuals, maps, statistics, data, and documents. The format and availability of information is expected to vary among governorates. The sharing platform will help provide a view of both information availability and data gaps. The ability of participants to access other participants’ postings in view-only mode will help guide data gathering, processing, and analysis tasks.

GDP ECONOMIC DATA Total Agricul Servi Manufactu Trans Co National ture ces ring port mm . Governorates Nineueh Kirkuk Diala Al-Anbar Baghdad Babylon Kerbela Wasit Salah Al-Deen Al-Najaf Al-Qadisiya Al-Muthanna Thi-Qar Maysan

Mining, textiles, refined petroleum,

chemicals, rubber, plastics… The matrices will display a collective set of data across governorates and topics. For example, the calculation of sub-National GDP involves information on GDP, by economic sectors and employment at the national and governorate levels. Similarly population projections involve data from UN-DESA and IOM. Each “cell” within the matrix represents a set of data, with the possibility of increasing levels of detail. For example, manufacturing can be expanded into subsectors to include textiles, refined petroleum, etc according to data availability and the level of disaggregation needed by the governorates for development planning purposes.

A PowerPoint presentation explaining the structure and use of the platform has been presented to the stakeholders. It is currently managed jointly by specialists, members of the UN-Habitat and I2UD professional teams, but this responsibility will be assumed by the UN-Habitat project team as soon as access to the systems by selected representatives of all stakeholders is finalized.

Section 2: Population Projections & Distribution

Iraq’s population shares the same demographic characteristics as other Mashreq countries with 52.4% of the population under 20 years of age.1 The shape of the Iraq population pyramid and its evolution since the 80’s shows the impact of the wars endured by the country. There is a loss of young males in the age bracket of 20 to 35 in the 1980-90 decade due to the war with Iran. The noticeable dent in the pyramid moves upward as the group ages from 1985 to 2015. The 2003 war created another loss affecting primarily the children and the elderly due to the destruction of civilian infrastructure. The ongoing conflict will also affect the age distribution, but the ultimate impact at the national level is still unclear.

The population projections given in the 2010 Outline Spatial Strategy for Iraq are computed through the cohort survival plus net migration model. Events since 2010 have invalidated many of the assumptions used in the computations and led UN-DESA to revise its 2009 estimates and projections accordingly.

2.1 Fertility Rates

The age specific fertility rate which drive population projections drawn from the UN-DESA 2009 figures projected a decline in fertility across all cohorts of females between 15 and 44 years of age. Current UN figures also show a declining trend since 1990, but the decline varies between age groups and is lower than anticipated in 2009, probably due to the increase in natality in the 1990’s at the end of the decade long war with Iran. The current UN revised and projected rates are shown in the table below:

Table 2.1 Age-specific fertility rates (2015 Revision) Age-specific fertility rates (births per 1,000 women) Period 15-19 20-24 25-29 30-34 35-39 40-44 45-49 1980 - 1985 83.7 227.8 297.4 283.8 219.2 114.4 43.7 1985 - 1990 75.1 212.9 283.5 275.9 215.2 114.4 40.9 1990 - 1995 67.5 196.6 264.9 259.1 201.4 107.2 32.5 1995 - 2000 64.8 188.1 248.7 238.6 181.8 93.1 22.5 2000 - 2005 66.0 190.0 240.0 210.0 140.0 70.0 15.0 2005 - 2010 80.0 210.0 240.0 210.0 130.0 50.0 8.0 2010 - 2015 80.0 210.0 240.0 210.0 130.0 50.0 8.0 2015 - 2020 88.1 213.0 223.1 195.5 112.7 33.6 4.1 2020 - 2025 88.2 206.2 208.4 182.9 102.0 27.1 2.9 2025 - 2030 87.6 199.2 195.3 171.9 92.8 22.1 2.1 Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

1 2010 estimate from the United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

These fertility rates translate into crude birth rates per thousand population shown on the table below: Table 2.2 Birth Rates

Birth Rate (births per 1,000 population) 45 40 35 30 25 20 15 10 5 0

Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

By 2010 most countries in the Mashreq and Mahgreb noted an increase in fertility rates among younger women since 2000 which is reflected in the UN-DESA 2015 revision of its statistics for women between 15 and 25 years of age.

2.2 Mortality Rates

The 2010 report used an unusual assumption regarding the age specific mortality rates which are assumed to remain constant over the two decades from 2010 to 2030. This is contrary to the trends recorded by the UN in Iraq and in other countries of the region. UN figures project a decline from 5.3 per 1000 in 2010-15 to 4.6 in 2025-30. The current UN projected rates are shown in the chart below. The projections developed for this project use the revised 2015 statistics.

Table 2.3 Mortality Rates

Mortalty Rate (deaths per 1,000 population) 12.0 10.0 8.0 6.0 4.0 2.0 0.0

Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

2.3 Migration

Migration is the most difficult component of population projections. The rural to urban migration accelerated since the wars disrupted the agricultural sector as noted in the GDP analysis. To this trend the conflict has generated large population movements internally (IDPs) and across international borders (migrants).

In the 2010 report net migration (the balance of in and out of the country population movement) was assumed to be negligible and was not accounted for in the projections. The latest UN-DESA projections record negative rates from 1980 to 2010 as a result of out migration triggered by destruction and hardships created by wars and sanctions. This outflow is followed by an inflow resulting in an increase in net migration to 3.3% between 2010 and 2015. This period included an inflow attracted by the development generated by to the oil price boom as well as returnees and refugees seeking to avoid the violence in Syria.

Table 2.4 Net Migration Rates

Net Migration Rate (per 1,000 population) 4.0

2.0

0.0

-2.0

-4.0

-6.0

-8.0

-10.0

Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

Net migration rates are projected to fall back into the negative range as a result of the ongoing conflict, the slump in oil prices, and the decline in the volume of exports. The underlying assumption is that the combined effect of these factors will depress the economy and continue to spur out migration during the projection period. Nevertheless UN DESA reported that as of the end of 2015, about 1.5 million Iraqi’s had emigrated.2

For national population estimates and projections internal population movements (IDPs) are not taken into consideration. However these movements are significant for the computation of the population at the sub national level. The most recent IOM estimates tracing these population movements are discussed in section 2.6.

2.4 Revised Population Projections

Based on the most recent UN-DESA figures (2015 revision) National population evolution and projection to 2030 are given in the following table and graph.

2 UN DESA 2015a

Table 2.5 Population Pyramid

Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

Table 2.6 Population by Age Group & Sex (1985-2030)

Age 1985 2000 2015 2030

F M F M F M F M 0-4 1 312 1 389 1 865 1 976 2 783 2 944 3 569 3 789 5-9 1 165 1 230 1 615 1 709 2 415 2 559 3 287 3 482 10-14 1 022 1 076 1 437 1 526 2 053 2 172 3 034 3 207 15-19 885 913 1 275 1 345 1 857 1 957 2 745 2 892 20-24 649 635 1 138 1 181 1 615 1 694 2 381 2 508 25-29 501 486 972 983 1 410 1 483 2 024 2 122 30-34 488 478 803 777 1 218 1 272 1 830 1 908 35-39 300 318 560 513 1 073 1 102 1 587 1 646 40-44 284 299 428 394 915 912 1 376 1 431 45-49 244 248 428 406 754 713 1 177 1 210 50-54 206 205 258 268 519 459 1 021 1 022 55-59 170 166 246 252 388 338 849 810 60-64 144 141 206 198 376 328 673 591 65-69 127 120 164 150 211 193 434 341 70-74 96 87 121 103 179 154 289 212 75-79 63 54 83 66 120 92 228 158 80+ 45 34 80-84 50 37 66 45 89 61 85-89 20 14 26 15 42 25 90-94 5 3 7 3 11 6 95-99 1 0 1 0 2 1 100+ 0 0 0 0 0 0 Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

2.5 Urban Population

The 2010 Outline Spatial strategy for Iraq states that the 2009 projections by UN-DESA indicated a decline in the growth rates of urban populations that fell into the negative range between 1990 and 2015. Current UN figures indicate a positive rate for this time period and project a slow decline from around 3% in 2015 to 2.4% by 2030. The revised rates translate into continuous growth of the urban population which increased by a factor of 2.5 between 1980 and 2015 reaching 25 million. It is expected that over 12 million new urban dwellers will be added between 2015 and 2030 when the urban population will have reached 36.9 million.

Table 2.7 Urban Population Growth Rate

Annual Rate of Change of the Urban Population (percent) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00

Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

Table 2.8 Urban Population

Urban Population at Mid Year (thousands) 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Source: United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

These considerations entail that the scenarios presented in the 2010 report need to be revised to reflect the changes that have occurred as a result of fluctuations in the price of oil and ongoing conflict in Anbar and Ninevah provinces. Destructive conflict spillover has been controlled first in Kirkuk and lately in Salah El Din after the recapture of the Baiji refinery in 2015.

2.6 Recent Population Movements

Iraq has traditionally been a migrant receiving country. Wars, ongoing conflict, and turmoil have led to outflows of people and capital. The hardships created by the ongoing conflict as well as perceptions of opportunities in Europe or other parts of the world have triggered large population movements internally and across international borders. Statistics compiled by IOM provide a current assessment of this constantly changing situation which affects urban settlement patterns and impact populations throughout Iraq’s governorates.

Internally Displaced Persons The continuing conflict has generated an unprecedented number of IDPs. Today, IOM estimates that over 3 million persons (539,246 families) have been displaced. One of the largest waves of internal displacement in recent years occurred between June and August 2014, displacing 1.2 people (primarily from Ninevah governorate). Internal displacement continued at a relatively steady pace of approximately half a million people every three to four months from September 2014 to June 2015. During this period, a total of approximately 1.4 persons were displaced3.

3 IDMC 2015

Table 2.9 Family Displacement in Iraq (2016) Governorate of origin Governorate of Anbar Babylon Baghdad Diyala Erbil Kirkuk Ninevah Salah al- Total displacement Din Anbar 95,749 425 895 22 422 1,267 98,780 Baghdad 67,752 1,182 7,712 2,285 535 9,507 9,545 98,518 Dahuk 415 65,454 182 66,051 Kirkuk 21,566 30 265 1,447 17,384 6,262 16,089 63,043 Erbil 29,275 2 196 766 23,616 5,926 59,781 Ninevah 853 5 419 43,678 1,278 46,233 Salah al-Din 940 12 454 15 1,505 75 31,865 34,866 Sulaymaniyah 15,273 631 1,392 3,332 2,684 4,006 27,318 Diyala 843 77 26 14,847 58 499 16,350 Najaf 496 23 22 45 12,646 37 13,269 Kerbala 876 198 27 42 65 10,099 82 11,389 Babylon 2,457 2,465 116 32 13 4,545 112 9,740 Wassit 790 10 39 117 3,302 90 4,348 Qadissiya 946 15 70 33 395 2,547 37 4,043 Basrah 498 19 20 56 137 693 481 1,904 Thi-Qar 305 22 11 22 136 964 82 1,542 Missan 173 6 31 19 123 664 87 1,103 Muthanna 339 22 52 43 541 56 1,053 Total 239,546 5,075 10,634 22,900 781 20,917 187,757 71,721 559,331 Source: IOM Iraq 2016a

Baghdad hosts the largest number of IDPs in Iraq due to its relative proximity to the governorates most impacted by conflict. The majority of IDPs in Baghdad (52.5%) rent housing while another 37.6% are accommodated by host families. 42.8% of all IDP families are originally from Anbar while 33.6% are from Ninevah. Due to the sheer size of Anbar province and lack of adequate accessibility, almost all of the IDPs within Anbar province (96.9%) are from the province itself.

Table 2.10 Percentage of IDP families by Governorate of Origin in the Top 8 Host Governorates Baghdad Anbar

Dahuk Kirkuk

Ninevah Erbil

Sulaymaniyah Salah El-Din

Source: IOM Iraq 2016a

Syrian Refugees in Iraq In addition to its own displaced population, Iraq hosts an estimated 250,000 Syrian refugees (as of March 31, 2016), primarily concentrated in the governorates of the Kurdistan Region of Iraq. As of January 2016, approximately 96,000 Syrian refugees were accommodated in ten camps in Anbar (Al-Obadiy); Dahuk (Domiz I, Domiz II, Akre, and Gawilan); Erbil (Basmira, Darashakran, Kawergosk, and Qushtapa); and Sulaymaniyah (Arbat)4. According to the Kurdistan Regional Government, 97% of all Syrian refugees in Iraq are in the Kurdistan governorates.

Iraqi Migrants and Refugees There have always been population movements between Iraq and Syria of a more or less temporary character. From 2003 to 2010 Jordan and Syria hosted Iraqi families affected by the war. However, since the 2011 turmoil that has engulfed Syria, Iraqi population movements have

4 UNICEF 2016

been more complex with Turkey and Jordan hosting the bulk of the refugees5. As of mid-April 2016, there are 54,990 Iraqis registered by UNHCR in Jordan; 89.2% of whom reside in the Amman governorate (mostly in Greater Amman). Over half of the Riaqi’s in Jordan (53.9%) come from Baghdad governorate6. The greatest flow of Iraqis to Jordan since 2013 occurred in the second half of 2014, aligning with the greatest wave of internal displacement in Iraq that same year.

Globally, as of June 2015, UNHCR lists approximately 518,000 refugees and asylum seekers from Iraq (378,000 and 142,000, respectively) presumably included in the UN DESA out migration component in section 2.3. Iraqis constituted a significant group in the recent migrant wave through Europe in the fall of 2015. Findings from the application of IOM’s Displacement Tracking Matrix in Europe in November and December of 2015 indicate that, 11% came from Ninevah, but only 5.1% actually resided in Ninevah before they left. While 90% of all refugees transited through Turkey and 28% left from Baghdad International Airport7.

2.7 Governorate population projections 2010-2030

Iraq is still experiencing conflict and turmoil, but also post conflict reconstruction in the densest most productive governorates. Sub-national population projections are complicated by the situation on the ground in each governorate. Anbar and Ninevah are still partially occupied and the governorates in the northwest experience some conflict zones along the borders, particularly in Salah El Din and Dahuk. Despite sporadic turmoil, Baghdad and the central governorates can be considered post conflict, while the southern and western governorates from Erbil to Basra are stabilized.

Establishing a base year 2015 population The population statistics compiled by COSIT and the most recent socio-economic survey provide the only sources of estimates of base year governorate populations. National figures can be more accurately projected and the conflict situation made it difficult for COSIT to get updated population figures at the subnational level. Hence their use of a stable percentage distribution over the 2011-2015 period to arrive at governorate population estimates that were needed for budgeting and other governance purposes. Pre 2015 population estimates relied on 2009 UN- DESA figures for birth, death, and migration rates, which as stated earlier were revised by UN- DESA in 2015 based on evidence of an increase in fertility which resulted in higher rates of population growth in Iraq and throughout the Arab region.

5 Serageldin et. al. 2015 6 UNCHR 2016 7 IOM Iraq 2016b

The use of a stable percentage to distribute of the projected national population among the governorates is an approximation that does not take into consideration changing differences in economic opportunity and the conflict induced internal population movements. Already before June 2014 IOM enumerated 86,324 IDP families. By July 2014 116,897 new IDP households had been added and another 126,652 in August. A further 83,455 were displaced after September 2015 and 146,003 in April 2015.

The projections presented below have used the DESA 2015 revised rates to project the national population from 2015 to 2030. The COSIT percentage distribution was then applied to the 2015 DESA national population to arrive at a base year (2015) population projection at the governorate level.

Impact of IDP movements The population movements triggered by the conflict have a direct impact on sub-national entities. The smaller the administrative level considered, the greater the effect can be. Some governorates are receiving and sending IDPs simultaneously depending on the location of displacement and direction of flows. As expected the majority of IDPs have moved to governorates other than their own governorates of origin. Only 38% of IDP households are displaced within their governorate. Of the 62% of IDP households who are outside their governorates, 83% come from Anbar or Ninevah. The governorates of Baghdad, Dahuk, and Erbil have the largest numbers of IDPs from other governorates. Over 70% of the IDP households in Baghdad are from Anbar, whereas nearly 99% of those displaced to Dahuk are from Ninevah as seen in Table 2.10.

Table 2.11 Internal Displacement in Iraq Across Governorates (excluding displacement within Governorates) IDP Households IDP Households Governorate displaced to displaced from Governorate Governorate Anbar 3,031 143,797 Babylon 7,275 2,610 Baghdad 90,806 2,922 Basrah 1,904 0 Dahuk 66,051 0 Diyala 1,503 8,053 Erbil 59,015 15 Kerbala 11,389 0 Kirkuk 45,659 3,533 Missan 1,103 0 Muthanna 1,053 0 Najaf 13,269 0 Ninevah 2,555 144,079 Qadissiya 4,043 0

Salah al-Din 3,001 39,856 Sulaymaniyah 27,318 0 Thi-Qar 1,542 0 Wassit 4,348 0 Source: Calculations made based on the IOM Iraq DTM as of April 16, 2016

To account for population movements between governorates, the projection has relied on the excellent searchable matrix posted by IOM which gives a detailed picture of the situation on the ground as of April 2016. IDP populations move entailing that projections must reflect these changing flows. The matrix was used to estimate the net flow of IDPs between governorates. IOM tracks the number of IDP households. To arrive at a population count, average household sizes were computed from the COSIT population estimates and the socio-economic household survey of 2011 and are shown in the following table. Reflecting the extended family pattern, households are large averaging between seven and eight persons. The smaller size recorded for the Kurdistan governorates may be due to inflow of migrants from Syria to the capital cities. Table 2.12 Average household size per Governorate 2011

Average 2011 2011 # Governorate Household Population households Size Anbar 1,561,407 190,537 8.19 Babylon 1,820,673 255,177 7.13 Baghdad 7,055,196 1,096,832 6.43 Basrah 2,531,997 350,149 7.23 Dahuk 1,128,745 187,602 6.02 Diyala 1,443,173 209,989 6.87 Erbil 1,612,692 332,676 4.85 Kerbala 1,066,567 155,224 6.87 Kirkuk 1,395,614 245,919 5.68 Missan 971,448 129,464 7.50 Muthanna 719,069 87,742 8.20 Najaf 1,285,484 184,981 6.95 Ninevah 3,270,422 438,475 7.46 Qadissiya 1,134,313 145,987 7.77 Salah al-Din 1,408,174 187,785 7.50 Sulaymaniyah 1,878,764 394,358 4.76 Thi-Qar 1,836,181 232,220 7.91 Wassit 1,210,591 158,864 7.62 Total 33,330,510 4,983,981 6.69 Source: COSIT 2011

Projection Methodology UN-DESA projections of national birth and death rates according to the 2015 revision were used to project the population of individual governorates over subsequent five year time periods from 2015 to 2030. The IOM displacement matrix was used to arrive at the net flow in each governorate. This two step process provides the best estimate of projections. These IDP movements will change the subnational population distribution without affecting the total national population. Over a projection period of 15 years, it is improbable that the IDPs will all return to their homes. Many times, they return briefly to recuperate their assets, particularly houses, which they then rent or sell. Returnees find it difficult to exercise their property rights if titles are lacking or unclear or if properties are occupied by intruders who cannot be easily evicted. In conflict areas, recently liberated cities often continue to experience violence and are insecure for more or less longer periods of time.

Based on the Balkan countries experience we assume that about 30% of the IDPs will permanently return to their hometowns during the 2015-2020 period in the stabilized governorates of the north, south and east. In the 2020-2025 period 40% of the remaining displacees will return to the west central governorates including Kirkuk and Salah El Din. In the 2025-2030 period 30% of the remainder may be able to return mostly in the liberated areas of Ninevah and Anbar. In essence these assumptions imply that over the next 15 years no more than 60% will return to their governorates of origin, while 40% will remain in the governorate to which they have moved.

Tracking the IDP movements entails estimating household sizes for households leaving their host governorates as well as households returning to their governorates of origin. The leaving population is estimated using a weighted composite household size reflecting the composition of the IDPs present in the governorate according to their governorate of origin as shown in the IOM tracking matrix. Intra governorate movements are excluded. Anbar and Ninevah displaces are not assumed to return in large number for the first five year period (2015-2020) due to ongoing violence and potential conflict. The returning IDP populations are computed based on the average household size of their governorate of origin to which they are returning. Based on these assumptions, the population projections for the governorates from 2015 to 2030 are given below.

Table 2.13: Population projections for Governorates with estimated IDP movements 2015-2030

2015- 2015- 2025- 2025- 2015 2020 with 2020-2025 2020-2025 2025 with 2030 with Governorate 2020 2020 2020 2025 2030 2030 2030 (base year) Returnees Leaving Returnees Returnees Returnees Leaving Returnees Leaving Returnees Anbar 1,828,965 2,097,924 (5,532) 2,086,859 2,381,259 (6,423) 471,353 2,896,422 2,690,236 (2,890) 212,109 3,508,608 Babylon 2,132,658 2,446,277 (564) 5,587 2,445,149 2,776,658 (22,140) 5,214 2,756,167 3,136,940 (9,963) 2,346 3,105,184 Baghdad 8,264,153 9,479,441 (29,625) 3,709 9,420,191 10,759,686 (275,624) 3,462 10,383,515 12,155,792 (124,031) 1,558 11,592,447 Basrah 2,965,872 3,402,020 (1,510) - 3,399,000 3,861,479 (5,109) - 3,852,252 4,362,519 (2,299) - 4,349,497 Dahuk 1,322,163 1,516,595 (409) - 1,515,776 1,721,418 (197,021) - 1,496,859 1,944,778 (88,660) - 1,590,918 Diyala 1,690,471 1,939,064 (1,338) 16,604 1,936,388 2,200,944 (4,185) 15,497 2,210,747 2,486,524 (1,883) 6,973 2,503,350 Erbil 1,889,038 2,166,831 (13,739) 22 2,139,352 2,459,472 (179,241) 20 2,224,857 2,778,597 (80,659) 9 2,422,425 Kerbala 1,249,331 1,433,051 (858) - 1,431,336 1,626,592 (33,802) - 1,586,278 1,837,648 (15,211) - 1,774,919 Kirkuk 1,634,762 1,875,163 (39,754) 6,015 1,795,655 2,128,413 (126,477) 5,614 1,900,981 2,404,582 (56,915) 2,526 2,086,194 Missan 1,137,912 1,305,249 (517) - 1,304,215 1,481,529 (3,031) - 1,476,915 1,673,762 (1,364) - 1,667,009 Muthanna 842,287 966,149 (349) - 965,452 1,096,632 (3,051) - 1,092,378 1,238,924 (1,373) - 1,232,566 Najaf 1,505,761 1,727,191 (250) - 1,726,692 1,960,456 (39,588) - 1,914,956 2,214,832 (17,814) - 2,143,302 Ninewa 3,830,832 4,394,176 (3,599) 4,386,978 4,987,631 (6,155) 429,853 5,460,380 5,634,793 (2,770) 193,434 6,384,287 Qadissiya 1,328,685 1,524,076 (991) - 1,522,094 1,729,910 (11,625) - 1,714,465 1,954,371 (5,231) - 1,931,013 Salah al-Din 1,649,474 1,892,039 (3,543) 89,662 1,884,952 2,147,568 (6,612) 83,685 2,227,006 2,426,222 (2,975) 37,658 2,555,150 Sulaymaniyah 2,200,703 2,524,329 (19,919) - 2,484,491 2,865,251 (76,662) - 2,733,018 3,237,028 (34,498) - 3,048,663 Thi-Qar 2,150,823 2,467,114 (530) - 2,466,054 2,800,309 (4,370) - 2,794,146 3,163,659 (1,967) - 3,154,475 Wassit 1,418,034 1,626,564 (501) - 1,625,561 1,846,239 (12,909) - 1,830,449 2,085,795 (5,809) - 2,061,393 Total 39,041,927 44,783,251 (123,528) 121,598 44,536,195 50,831,447 (1,014,024) 1,014,698 50,551,789 57,427,003 (456,311) 456,614 57,111,401 Source: Calculations made based on IOM Iraq DTM as of April 16, 2016 and United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

The estimated leaving and returning population totals for these five year periods are within 2% of each other respectively. The total population factoring in the IDP movements is within is within 2% of the base national population projection. This is a good margin given the need to estimate household size and forecast population flows.

The projections in the above matrix should be considered the most plausible estimates given the revised DESA rates and the current IOM figures. Changes over time will occur and should lead to future revisions. It is therefore important to follow the evolution of the demographic picture and the IOM tracking of IDPs in order to update the governorate population projections as needed over the next 15 years.

Section 3 Economic Analysis

Iraq has to cope with the challenges of conflict on its territory, warfare in the northern and western governorates, particularly Mosul, disruption of its traditional trade routes and pipelines adversely affecting its economy and lately severe economic recession due to the slump in oil prices. Recovery and post conflict reconstruction should aim at sustainable development and growth. Iraqi economists and planners realize that this transition from crisis to opportunity is a process that requires economic restructuring and diversification, as well as, funds for capital investments. While some donor funding for specific programs can be secured, it is critical that Iraq pursues its own development agenda and sets the strategies that will drive the process.

Several factors present Iraq with serious challenges:

• The sheer magnitude of the destruction suffered in the conflicts, which has affected infrastructure, housing, and industrial establishments; • The decline in oil prices and the forecasts regarding the fluctuations of the oil markets; and • The reliance on public sector employment which accounts for close to 50% of the formal employment to provide jobs for the labor force.

With few exceptions, the GDP and households incomes in the different governorates have fallen the past three years.

The current recession has adversely affected the availability of jobs. The increase in the ratio of public sector to private sector employment and the expansion of the informal economy are indicative of both the depth of the downturn and the reliance on oil revenues. The current situation whereby the public sector provides over 40% of the employment in the civil service and in about 190 state owned enterprises (SOEs), whose efficiency and economic viability are a matter of concern, is unsustainable in the longer term, particularly in light of the oil sector forecasts and market responses to price fluctuations.

Criticism of Iraqi SOEs derives from the same issues encountered in transitional economies elsewhere. They control important segments of the economy, large land holdings, and key urban assets. Their lack of efficiency entails significant subsidization by the government. In Iraq these subsidies have fluctuated between 3 and 4% of GDP since 20088. Part of the deficit they incur is due to overstaffing. Despite obvious redundancies, the government is understandably reluctant

8 World Bank 2014.

to cut the workforce at this time. Opting for recurrent capital injections is only possible as a short term measure unless oil prices rebound to $75.2 per barrel, a currently unlikely prospect9.

3.1 Governorate GDP Computation Methodology

Economic performance measured by the GDP represents the value of gross output less the value of intermediate goods and services and is calculated by summing the value added by all the producers. An important consideration given the concern for sustainability and the environment is that consumption of capital stock including the depletion of natural resources is not accounted for leading many experts to call for the necessity to revise the GDP accounting method. Other issues that have to be taken into consideration are the large proportion of informal economic activities that are not reported and the share of agricultural production that is consumed by the farmer households and therefore escape the GDP accounting by the value added method. .The alternative method based on income /expenditure compilation is more difficult to account for and is considered less reliable than the value added by production method.

Figure 3.1 Formula for Calculating Value Added per Worker

Figure 3.2 Methodology for Calculating Governorate GDP

9 Spindle 2016.

In the course of the next decade the Iraqi economy will undergo a series of partial restructurings as they become politically feasible to diversify its economic base and compete in the globalized economy. These changes, as they occur will be reflected in the sectoral distribution of the GDP. Even though oil will continue to be the dominant industry, new growth industries will emerge.

Every structural change in the economy will entail requirements for labor with new or enhanced skills. Ideally educational and training programs will be developed to teach students, job seekers, and employees the skills needed to compete in the market as employees or entrepreneurs. Whether economic restructuring occurs through a managed planned transition process or is driven by technological innovation, the value added per worker in the different sectors will change to reflect the mix of productive activities in each sector, their capital and labor intensity, and their productivity at a particular point in time.

Over the past two decades, spatial disparities in all countries have increased despite government efforts to foster balanced spatial development through redistribution policies and infrastructure projects, as well as, incentives to attract investment to lagging areas which carry a higher risk. In Iraq, as in other countries experiencing similar conflict situations, conflict induced constraints on the mobility of labor and businesses compound growth imbalances and increase income disparities among governorates and smaller administrative units.

The Ministry of Planning Central Statistical Organization National Accounts Department used both methods for the provisional estimate of the 2013 GDP posted in February 2015. The value added per worker method was selected by the project team to estimate the governorates’ GDP. At the sub national level the method provides a good estimated value because it looks to the

country as a single economic space where value added per worker in each economic sector is uniform across this space, which may not be the case in reality. Variability occurs within a more or less limited range. Quite apart from security issues unique to countries experiencing conflicts, the availability of land, supporting infrastructure and services and the particular character of the sectoral activities and the costs of procuring their inputs and marketing their outputs will vary between locations affecting productivity and the value added per worker. Despite this assumption, the methodology is well adapted to the computations of the governorates GDP. It has the flexibility required to deal with the dynamic economic environment of post conflict reconstruction.

While public efforts focus on rebuilding strategic economic and civilian infrastructure, private activity restarts with the construction, transport, and trade/commerce sectors. All governorates have suffered extensive destruction of their infrastructure, therefore repair, modernization and expansion of infrastructure is a priority as it is the cornerstone of economic recovery from the current recession and the structural frame for post conflict socio-economic reconstruction in the different governorates.

3.2 Importance of economic analysis to the formulation and implementation of national and governorate urban strategies

National urban strategies provide the framework for development across governorate boundaries and determine the alignment of development corridors to optimize benefits, ensure sectoral coherence, and identify the key projects needed for their implementation. Potential growth sectors and opportunities differ between governorates hence they each have their own needs. It is therefore important to analyze the economic performance of the different governorates since they are determinants of the structural spatial components of urban plans. These components include transport, energy distribution, fiber optic cables, communications, and water supply and sanitation. Requirements have to be integrated in strategic development plans and structure plans that focus on land management, improving the existing urban fabric including informal areas, shaping and regulating urban growth, identifying and planning new urban nodes and extensions, integrating returnees and resettling IDPs. Governorate structure plans are therefore key instruments of urban management and capital investment programming.

These tasks are at the core of economic development and can only be conceived in the context of interlinked national urban strategies and integrated governorate structure plans to ensure coherence in planning and coordination in implementation. Development corridors cross administrative boundaries connecting governorate capital cities, gateways and border crossings. They create opportunities for the development of growth nodes and revitalize cities, towns and villages along their path as well as secondary cities well connected to them reducing economic

disparities and social distance. As security improves, options for shared initiatives and services provision among adjacent localities tend to materialize.

The platform developed by I2UD experts draws on statistical national and governorate databases being assembled to provide an interactive framework for developing and monitoring plans and programs and assessing their impact. This is a particularly important task because of the wide range of projects required by reconstruction. Furthermore post conflict projects carry high levels of risks and have to be assessed in this light, from the perspective of both the national government and the governorates.

3.3 Overview of the context in growth and employment as it affects subnational GDP

To analyze the spatial distribution of production and employment in Iraq, the methodology used relied on national GDP and employment to compute the value added per worker in each economic sector and apply this figure to local employment to arrive at an estimate of governorate GDP. This methodology has been discussed in detail in section 3.1 of this report first submitted in March as an interim report. This section presents the results of these computations. The evolution of employment is analyzed to provide the context for a better understanding of the structure of production and employment in the governorates and their development potential in the medium term.

The employment dataset obtained from the Ministry of Planning is drawn from the 2013/2014 socio-economic survey which is usually based on a sample of a few thousand households across all governorates. Most of the socio-economic data included in the governorate structure plans also relies on the findings of these ongoing surveys.

The employment dataset has two shortcomings that have to be addressed in the methodology used to compute governorate GDP:

1. It includes a mix of employment and occupation categories in the same table requiring that occupation be reclassified under the most appropriate sector to match ILO statistics which give employment by economic sector10. 2. It includes a category varying from 0.7% to 10.4% with an average of 5.0% of the total employment which is unallocated and labeled unknown. It is not clear whether respondents did not wish to state an informal activity or whether they are unemployed.

10 ILO 2008

Usually unemployment figures are included in the analysis of the labor force together with the distinctions between active and non-active labor. Further clarification may be extracted later from the information available with the governorate administrations.

These drawbacks are tempered by the statistical difficulties encountered in processing raw figures obtained through interviews or questionnaires. There is always a degree of arbitrariness in coding some responses no matter how structured the survey instruments are because some occupations can be classified under one or another category.

A reasonable option for the treatment of the unknown category is to attribute to it the average value added per worker in the governorate exclusive of the oil sector, since it was assumed that the unclear unclassified occupation would probably not be in this sector and its high value added per worker could distort the GDP estimate. Under any option treatment of the “unknown” category will be an estimate based on best professional judgment.

The governorates of Anbar and Ninevah are still experiencing conflict hence figures obtained for employment and the associated GDP can only be considered rough estimates that may or may not reflect the reality on the ground today. The situation of provinces in the conflict is always dynamic, witnessing important population movements in accordance with the changes in conflict on the ground. All human settlements in the governorates have sustained serious damage. The economic base has been in turn disrupted, reoriented and has declined due to ongoing violence. The state of destruction and disrepair of infrastructure and buildings are indicative of the massive reconstruction effort needed and the impediments to economic revival until security is fully restored and repair work well advanced.

3.4 Value Added per Worker

As can be expected in an oil producing country the sectors that contribute the highest value added per worker, namely, mining, real estate and finance employ only a limited number of workers, while oil production and exports are the mainstay of public revenues; real estate generates private profits. In particular the high value and appreciation of urban land underpins the value added by real estate development. It will be important for governorates to leverage their investments in infrastructure to recover part of the appreciation in real estate value created by public investment in services. New mechanisms are needed to accomplish this task Governorates should explore innovative approaches in their strategic plans.

3.5 Evolution of Employment

Table 3.3 Governorate Employment 25.0% UNKNOWN

Extra-territorial organizations and bodies 20.0% Private households with employed persons

Other community,social and personal services 15.0% activities Health and social Work

Education 10.0% Public administration and defence;compulsory social security Real estate,renting and business activities 5.0% Financial intermediation

Transport,Storage and Communications

0.0% Hotels and Restaurants

Wholesale & Retail Trade

ERBIL

NAJAF

WASIT

MISAN

ANBAR DAHUK

KIRKUK Building and Construction

BASRAH

DIYALA

THI-QAR

KERBELA

NINEVEH

BABYLON QADISIYA

BAGHDAD Electricity and Water supply MUTHANNA

Manufacturing Industry SALEHAL DEEN SULAYMANIYAH

Several sources were reviewed to analyze the evolution of employment. The ILO labor statistics post figures for 2006, 2007, and 200811. There are also World Bank figures from 2007 to 201212. The Ministry of planning dataset is based on the annual socio-economic survey and includes figures from 2012, 2013, and 2014.

This period coincided with a boom in oil prices, which buoyed the economy in post conflict areas. The sharp decline in oil prices during 2015 and early 2016 led to a severe downturn across all economic sectors, including in the Erbil and Sulaymaniyah governorates. While the country is trying to overcome this recession, the governorates are cash strapped. Economic activities formal and informal are badly affected, significantly increasing unemployment. It is unclear whether the most recent increase in oil prices signals the beginning of a reduction of the glut of oil on the world markets or is a transitory fluctuation. Even if this is the start of a welcome reversal, the price decline was so sharp that its economic impact will be felt for several years to come.

11 ILO 2008 12 World Bank. 2016.

3.6 Economic Performance and Growth Prospects

In its analysis of the link between growth and employment in the 2007-2012 period, the World Bank noted that Iraq’s GDP grew at an annual rate of 7% between 2008 and 201213. It was a period of recovery and macroeconomic stabilization based on rising oil prices and production. By 2012 the country achieved a fiscal surplus of 4% of GDP with oil receipts accounting for around 80% of public revenues14. However job creation during the period remained almost stagnant, leading to an increase in unemployment due to the inability to generate jobs commensurate with the growth of the labor force. The oil sector throughout its different phases (exploration, transport, refining, and export) is capital intensive and does not generate many jobs. Manufacturing did not grow at a rate that could absorb the job seekers due to the magnitude of the damage to infrastructure during wars, particularly transport and electricity a requirement for this sector.

The growing numbers of young entrants in the labor force looking for employment were joined by workers leaving agriculture. Rural income declined due to the disruption caused by lingering conflicts even in the southern governorates where it once flourished. Rural poverty increased driving people to seek opportunities to earn a livelihood in the cities mostly in informal activities while waiting for a job in construction or public administration. Poverty was being transferred from rural to urban areas and was aggravated by the movement of IDPs to the larger centers, in particular Baghdad.

During the oil boom, the government used the revenues to repair part of the damage suffered by infrastructure and urban services and to launch housing programs. However in terms of employment the most significant feature was the expansion of public sector, which accounted for the bulk of new jobs. Like other countries in the region, Iraq looked to the public sector to relieve the adverse social and political impacts of growing unemployment. The welfare objective underpinning this policy is demonstrated by the high proportion of lower skilled workers hired.15

The post war period did require restructuring and shoring up public administration and setting up new public agencies to deal with the critical issues facing the country and each of the governorates. In the Kurdistan region, where the government benefited from earlier security and relative stability it also expanded the civil service. Furthermore wages and salaries in the public sector were increased in parallel with the growth in public revenue.

13 World Bank. 2015b. 14 World Bank. 2014. 15 According to the World Bank, 60% did not complete primary education.

The decline in oil prices, aggravated by the ongoing conflict induced displacement of local populations and the inflow of Syrian refugees, eroded the capacity of public revenue to keep up with public expenditures inflated by the burden of wages, salaries, and pensions. The resulting economically and politically disruptive delays in project executions and arrears in payments of wages and salaries affected both productivity and the capacity to foster social inclusion.

From an economic perspective, the loss of revenue undermined the effort to diversify the economy and strengthen private enterprise across a broader range of economic sectors to create sustainable jobs. Depreciation of the currency should help revitalize manufacturing and agriculture by increasing the competitiveness of their products. Improvement of security, stability, and public services are prerequisites to support this effort.

Given that the agriculture sector provided livelihoods for over 20% of the population including over one third of the poor it is not surprising that poverty did not decline during the oil price boom. Despite overall improvement in access to services, disparities between urban and rural areas are significant. More importantly rural poverty remained at double the proportion of urban poverty spurring continued rural/urban migration and accounting for the spatial disparities in deprivation. Revitalizing the agriculture sector should be a priority. In an arid region, Iraq is blessed with two of the region’s major rivers and a fertile soil that can sustain a thriving rural economy.

To overcome these imbalances the World Bank emphasizes the importance of economic diversification by strengthening the links between the oil sector and other productive sectors where the role of private enterprise could expand including manufacturing, construction, finance (banking), tourism, and commercial activities16. These “resource corridors” represent the economic parallel to the spatial development corridor, which will structure the national urban strategy framework. Both are conceived to promote growth and foster spillover effects. They both require appropriate infrastructure, particularly transport, energy, and communications, as well as a labor force with technical skills.

In its review of public expenditures, the World Bank addresses macroeconomic stability, financial management, and service delivery. Among the key issues highlighted is the expansion of public sector employment, the fuel and food subsidies and the pension system, which all need improved management and better targeting. These issues are by no means unique to Iraq except that the complexity of the context and the magnitude of the challenges that Iraq faces are daunting and account for the lower rate of execution of capital investment budgets noted by the World Bank.

16 World Bank. 2015a.

The national development plan and the poverty reduction strategy include strategic considerations that will be reviewed. The key orientations will provide guidance in the elaboration for the national urban strategy framework: the strategic objectives shaping the framework will reflect the specific challenges that are discussed in this analysis of GDP, employment, and their spatial distribution.

3.7 A general perspective on GDP and Employment in the Governorates

This section of the report presents and analyzes the structure of employment and the associated GDP estimates. It is important to keep in mind that the employment data are based on a 2013/2014 household survey and the national GDP reflects the situation in 2012. As discussed above the economic situation has since changed due to the decline in oil prices. Unemployment and socio-economic hardships increased. While detailed numbers may have changed the overall composition of employment, GDP will only change gradually as the structure of the economy changes through policies promoting diversification, supporting the emergence of growth sectors and alleviating problems created by the shrinkage of declining sectors.

Table 3.3 Map of Iraq’s Governorates

Source: wikipedia.org

The governorates have been grouped in subsets:

1. The Greater Baghdad Metropolitan Area 2. The Southern Anchor zone: Basrah and Muthanna 3. The Northern Oil producing Cluster: Kirkuk, Salah al Deen and Ninevah 4. The Kurdistan Regional Government Area: Dahuk, Sulaymaniya, and Erbil 5. The Basrah/Baghdad Corridor: Thi-Qar, Qadissiya, and Babylon 6. The Eastern Corridor: Misan, Wasit, Diyala 7. The Pilgrimage Centers: Kerbela and Najaf

Governorate GDP is presented in table, graph, and pie chart to facilitate focusing on individual governorates by the local teams using the platform. The statistical analysis is supplemented by maps displaying the spatial distribution of population and GDP. Key features that influence this distribution are outlined.

Figure 3.4 Relative GDP per Governorate

Figure 3.5 GDP per Governorate

60,000,000.00 UNKNOWN

Extra-territorial organizations and bodies 50,000,000.00 Private households with employed persons

Other community,social and personal services 40,000,000.00 activities

Health and social Work

30,000,000.00 Education

Public administration and defence;compulsory social 20,000,000.00 security

Real estate,renting and business activities

10,000,000.00 Financial intermediation

Transport,Storage and Communications -

Hotels and Restaurants

ERBIL

NAJAF

WASIT

MISAN

ANBAR

DIYALA

DAHUK KIRKUK

BASRAH Wholesale & Retail Trade, repair of motor

THI-QAR

KERBELA

NINEVEH

BABYLON QADISIYA

BAGHDAD vehicles,motorcycles and personal and household

MUTHANNA goods

Building and Construction SALEHAL DEEN SULAYMANIYAH

3.7.1 The Greater Baghdad Metropolitan Area

The primacy of Baghdad is not surprising and follows a pattern common in the whole Middle East/ West Asia region. As a historic capital, it has the foremost educational, healthcare, and other public services. Its economy is the most diversified. Despite the damages inflicted by the wars, Baghdad governorate generates 19.4% of the national GDP and provides 28.3% of the employment for the labor force. Employment is mostly in public sector dominated categories, namely: public administration and defense, manufacturing (SOEs), and transportation and communications. Private employment is mostly in wholesale and retail trade and personal services, two major sectors that provide formal and informal employment in a metropolitan area the size of Baghdad.

While employment in the oil sector barely accounts for 1% of the total employment, the sector nevertheless contributes to 36% of the governorate GDP, followed by real estate, renting, and business activities and public administration. The unknown category in the case of Baghdad has a proportionately significant impact on the GDP due to the importance of the high value added sectors.

Figure 3.6 Baghdad GDP per Sector

Agriculture,Hunting&Forestry 0.1% 0.2% Fishing

0.1% Mining and Quarrying 1.9% 10.1% 2.5% Manufacturing Industry Electricity and Water supply

Building and Construction 3.3% 36.0% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods Hotels and Restaurants 8.1% Transport,Storage and Communications

Financial intermediation

Real estate,renting and business activities

10.2% Public administration and defence;compulsory social security

Education

Health and social Work

2.3% 5.5% 3.2% Other community,social and personal services activities 4.9% 8.4% 1.8% Private households with employed persons 1.4% Extra-territorial organizations and bodies Unknown

3.7.2 The Southern Anchor Zone: Basrah & Muthanna

Basrah is the second largest contributor to the national economy generating 14.3% of the GDP. As Iraq’s only port, it is to be expected that Basrah’s economy would be overwhelmingly dominated by the oil sector at 77.22%. The disruption of the pipelines that crossed the Ninevah governorate has reinforced Basrah’s role as the key gateway for export of petroleum and petroleum products. Building and construction and public administration and defense are the next largest contributors to the governorate GDP at 5.73% and 3.18% respectively, a feature Basrah shares with other governorates where post conflict reconstruction is actively progressing. These two sectors provide the largest sources of employment followed by wholesale and retail trade and transportation and communications.

This pattern is not expected to change in the midterm until the network of pipelines across Ninevah is restored, repaired, and operational.

Figure 3.7 Basrah GDP per Sector

Agriculture,Hunting&Forestry 0.2% 0.7% 0.8% 1.3% Fishing 0.5% 0.1% 3.2% 0.3% Mining and Quarrying 0.2% 3.0% 3.7% Manufacturing Industry

Electricity and Water supply

Building and Construction 5.7% Wholesale & Retail Trade, repair of motor 2.0% vehicles,motorcycles and personal and household goods 0.9% Hotels and Restaurants Transport,Storage and Communications

Financial intermediation

Real estate,renting and business activities

Public administration and defence;compulsory social security Education

77.2% Health and social Work Other community,social and personal services activities

Private households with employed persons

Extra-territorial organizations and bodies

Unknown

Muthanna’s economy reflects its geographic location between the river valleys and desert area, and its bordering on the Basrah/Baghdad corridor. Its GDP structure lacks specialized dominant sectors. Oil generates 26.6% of the GDP followed by construction with 17.0% and public administration with 12.8%. The two latter sectors are also major generators of jobs providing employment for 23.9% and 15.2% of the labor force respectively. Agriculture in the north close to Qadyssia is a distant third, while trade could yet develop as a spillover from Basra when the latter has achieved its full development potential.

Figure 3.8 Muthanna GDP per Sector Agriculture,Hunting&Forestry

Fishing

Mining and Quarrying 0.1% 6.2% Manufacturing Industry

0.8% 14.5% Electricity and Water supply

1.9% Building and Construction

Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods 4.6% 26.6% Hotels and Restaurants Transport,Storage and Communications

Financial intermediation

12.7% Real estate,renting and business activities

Public administration and defence;compulsory social security

Education 1.3% 4.8% Health and social Work 1.2% 2.3% Other community,social and personal services activities 5.5% 17.0% 0.8% Private households with employed persons

Extra-territorial organizations and bodies

Unknown

3.7.3 Northern Oil Producing Cluster: Salah al Deen, Kirkuk, Ninevah

Salah al Deen is a strategic governorate, crossed by the two major transports corridors linking Baghdad to Mosul and Kirkuk. It also encompasses Iraq’s largest refinery located at Baiji, 200 km north of Baghdad on the road to Mosul. The refinery produced over one third of the country’s oil output.

Bordering on Anbar and Ninevah, Salah al Deen experienced periods of prolonged conflict, particularly in 2014 when the refinery was overrun by extremists. The Iraq army retook the refinery in 2015 and established full control over the road from Baghdad to Baiji. The fighting inflicted severe damage on the refinery, as well as widespread destruction in Baiji and other towns.

Oil related activities provide 32.6% of the governorate’s GDP. This figure will be affected by the refinery’s level of operation while being repaired. Construction and public administration contribute to the GDP in the amount of 11.7% and 11.1% respectively. Building and construction constitute the largest component of employment at 19.1%, followed by public administration at 15.4% and manufacturing at 12.5%.

Figure 3.9 Salah al Deen GDP per Sector

Agriculture,Hunting&Forestry

Fishing 4.5% Mining and Quarrying 15.4% Manufacturing Industry 0.5% Electricity and Water supply 1.7% Building and Construction Wholesale & Retail Trade, repair of motor vehicles,motorcycles and 4.8% personal and household goods 32.6% Hotels and Restaurants Transport,Storage and Communications

Financial intermediation

11.1% Real estate,renting and business activities

Public administration and defence;compulsory social security

Education 4.0% Health and social Work

Other community,social and personal services activities 0.6% 4.0% 3.0% 11.7% Private households with employed persons 3.5% 2.6% 0.1% Extra-territorial organizations and bodies

Unknown

Kirkuk governorate encompasses major oil fields that produce about half of Iraq’s oil exports. The area experienced violence in 2013 and war in 2014, which caused damage to the city and energy infrastructure. The oil sector dominates the economy accounting for 51.9% of its GDP. The next largest contributor is agriculture generating 7.4% ahead of construction and public administration with 5.6% and 5.0% respectively.

Not surprisingly, agriculture is the largest provider of employment creating 19.5% of the jobs. As in other governorates, building and construction with 8.4%, trade with 7.7% and public

administration with 6.3% are major employers, although their smaller relative proportion in this case reflects the broader distribution of employment over the range of categories and the diversity of the settlements and population. The capital city of Kirkuk was named the capital of Iraq culture in 2010 by the Ministry of Culture. In Kirkuk and Salah al Deen the unknown category encompasses between 7% and 8% of the jobs recorded in the survey, exceeded only by Erbil with 9.6% and Anbar with 10.4%.

The Kirkuk oil fields are estimated to have ten billion barrels of proven oil reserves and the governorate is considered the fifth richest oil source in the world. Despite problems of technical management and conflict generated damage, Kirkuk’s economy will remain a key contributor to the national GDP once the oil sector is fully operational.

Figure 3.10 Kirkuk GDP per Sector

Agriculture,Hunting&Forestry

Fishing

Mining and Quarrying

7.4% Manufacturing Industry 18.0% Electricity and Water supply 0.4% Building and Construction 0.9% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and 1.8% personal and household goods Hotels and Restaurants

0.0% 5.0% Transport,Storage and Communications 0.3% Financial intermediation 3.0% 4.1% Real estate,renting and business activities 0.3% 51.9% Public administration and defence;compulsory social security 5.6% Education

0.6% Health and social Work

0.6% Other community,social and personal services activities

Private households with employed persons

According to the statistics oil provides 17.8% of Ninevah’s GDP, followed by building and construction with 16.15%, which is also a major source of employment providing 19.7% jobs, followed by trade with 13.8% and services with 11.9%.

Figure 3.11 Ninevah GDP per Sector Agriculture,Hunting&Forestry

3.0% Fishing 0.2% Mining and Quarrying

Manufacturing Industry 16.8% Electricity and Water supply 17.8% Building and Construction 1.8% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods Hotels and Restaurants 3.6% 3.2% Transport,Storage and Communications 5.5% 0.7% Financial intermediation Real estate,renting and business activities

Public administration and defence;compulsory social security 8.2% 16.2% Education

Health and social Work 5.1% Other community,social and personal services activities 6.6% 8.9% Private households with employed persons 1.9% Extra-territorial organizations and bodies 0.7% Unknown

3.7.4 The Kurdistan Regional Government Area: Dahuk, Erbil, Sulaymaniyah

In the Kurdistan Region, there is a marked difference between predominately rural Dahuk and the two more urbanized governorates of Erbil and Sulaymaniyah. Their two capital cities benefited from the earlier relative security of the area and attracted massive private investments in real estate and trade. Many projects were not devoid of speculative risks having assumed continued economic buoyancy. This became painfully evident when the economic downturn caused by the decline in oil revenues brought private development to a halt in Erbil’s greatly overbuilt high end residential and commercial markets. While in less affected Sulaymaniyah construction activities continued although at a somewhat slower pace.

The major contributions to Erbil’s GDP are oil production at 33.1%, and public administration and defense at 8.1%. Trade is the next important sector with 7.4%. In Sulaymaniyah oil and trade are dominant accounting for 23.9% and 11.2% of the governorate GDP respectively followed by real estate, renting and business activities at 8.11%.

Three sectors generate the bulk of the employment in Erbil, namely manufacturing, trade, and service, which at 30.1% is the dominant sector due to the presence of international and bilateral organizations and NGOs. Trade and industry at 11.4% benefit from the international airport and

particularly the connections to the Turkish border given the disruption of eastern crossings due to the ongoing conflict in Ninevah. In Sulaymaniyah, trade and services are the major providers of employment accounting for 17.9% and 17.4% respectively, followed by transport with just over 10%. In both governorates public administration provides between 7% and 9% of the employment.

Figure 3.12 Erbil GDP per Sector Agriculture,Hunting&Forestry 0.8% Fishing 3.9% Mining and Quarrying Manufacturing Industry

Electricity and Water supply

25.9% Building and Construction

Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods 33.1% Hotels and Restaurants Transport,Storage and Communications

Financial intermediation

4.2% Real estate,renting and business activities

Public administration and defence;compulsory social security

1.6% Education 2.2% 8.1% Health and social Work Other community,social and personal services activities 4.9% 7.4% 3.5% Private households with employed persons 1.1% 0.8% Extra-territorial organizations and bodies 1.4% 1.2% Unknown

Dahuk’s situation is affected by its borders with Syria and Turkey. Mining (oil) and public administration and defense account for 22.2% and 16.33% of its GDP respectively, while public administration, education, and trade provide the bulk of the employment, accounting for 19.2%, 13.9%, and 11.0% respectively. In all three governorates in the Kurdistan Region, the number of workers in the unknown category is higher than the 5% average.

Figure 3.13 Dahuk GDP per Sector Agriculture,Hunting&Forestry

Fishing

Mining and Quarrying

5.7% Manufacturing Industry 15.7% Electricity and Water supply 1.3% Building and Construction 3.1% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and 22.2% personal and household goods Hotels and Restaurants

Transport,Storage and Communications 6.7% Financial intermediation

Real estate,renting and business activities 1.6% Public administration and defence;compulsory social security 6.3% 0.9% 16.3% Education

6.3% Health and social Work Other community,social and personal services activities 4.7% 5.4% 1.1% Private households with employed persons 2.6% Extra-territorial organizations and bodies

Unknown

Dahuk’s economy has been burdened by the large inflow of IDPs and Syrian refugees including ethnic Kurds and Yazidis. With the ongoing conflict in Syria, these population movements are expected to continue.

Figure 3.14 Proportion of Syrian Refugees in the Kurdistan Region

Source: UNHCR

Figure 3.15 Sulaymaniyah GDP per Sector Agriculture,Hunting&Forestry

Fishing 0.6% Mining and Quarrying 5.4% 14.0% Manufacturing Industry Electricity and Water supply 2.5% Building and Construction 2.8% Wholesale & Retail Trade, repair of motor 23.9% vehicles,motorcycles and personal and household goods Hotels and Restaurants

5.7% Transport,Storage and Communications

Financial intermediation 6.3% Real estate,renting and business activities Public administration and defence;compulsory social security 2.6% Education 8.1% 6.6% 0.8% Health and social Work Other community,social and personal services activities 6.8% 11.2% Private households with employed persons 1.8% Extra-territorial organizations and bodies

0.9% Unknown

3.7.5 The Basrah/Baghdad Corridor: Thi-Qar, Qadissiya, & Babylon

Babylon, Qadissiya, and Thi-Qar lie along the corridor linking Baghdad to Basrah. Thi-Qar displays similar characteristics to Basrah in that oil is the dominant sector of the economy generating 55.0% of the GDP, with public administration a distant second with 10.8%. In terms of employment, public administration provides 19.3% of the jobs in the governorate, followed by building and construction with 12.8% and transport and communications with 10.9%.

Figure 3.16 Thi-Qar GDP per Sector

Agriculture,Hunting&Forestry 0.1% Fishing 0.6% 2.0% Mining and Quarrying 8.0% 3.6% 3.0% Manufacturing Industry

Electricity and Water supply

Building and Construction

Wholesale & Retail Trade, repair of motor vehicles,motorcycles and 10.8% personal and household goods Hotels and Restaurants

Transport,Storage and Communications

4.4% Financial intermediation Real estate,renting and business activities 55.0% Public administration and defence;compulsory social security Education

1.5% 6.1% Health and social Work

2.7% Other community,social and personal services activities

0.7% Private households with employed persons

1.5% Extra-territorial organizations and bodies

Unknown

Babylon and Qadisiya are predominately rural provinces benefiting from their geographic location along the rivers and encompassing the most fertile and productive agricultural land in Iraq. In Qadisiya agriculture provides 17.4% of its GDP, followed by building and construction with 12.3%. Agriculture provides the largest component of its employment for 22.6% of its labor force. Construction and services are the second and third generators of employment with 14.9% and 13.3% respectively. The two other significant sectors are transport and public administration.

In Babylon Governorate agriculture provides 19.8% of the jobs and accounts for 10.3% of the GDP. Other important sources of employment are building and construction (13.7%) trade (11.5%), and transport (10.6%). In both governorates oil is still the largest contributor to the GDP with 27.6% in Qadisiya and 44.9% in Babylon, a reflection of the disruption experienced by the agriculture sector, particularly in Qadisiya’s case. Babylon in time will be increasingly affected by its proximity to Baghdad.

Figure 3.17 Qadisiya GDP per Sector Agriculture,Hunting&Forestry

Fishing

2.0% Mining and Quarrying 8.3% 2.3% Manufacturing Industry 17.4% Electricity and Water supply

5.6% Building and Construction Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods Hotels and Restaurants 7.6% Transport,Storage and Communications

Financial intermediation

Real estate,renting and business activities 0.9% 7.2% 27.6% Public administration and defence;compulsory social security

Education 0.5% 6.4% Health and social Work Other community,social and personal services activities

12.3% Private households with employed persons

Extra-territorial organizations and bodies 0.6% 1.2% Unknown

Figure 3.18 Babylon GDP per Sector Agriculture,Hunting&Forestry

Fishing 0.6% Mining and Quarrying 2.7% 8.3% 10.2% Manufacturing Industry 2.9% Electricity and Water supply

Building and Construction

5.6% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and 0.6% personal and household goods Hotels and Restaurants 2.8% Transport,Storage and Communications

4.9% Financial intermediation Real estate,renting and business activities 0.5% 5.0% Public administration and defence;compulsory social security 44.9% Education

Health and social Work 7.6% Other community,social and personal services activities

Private households with employed persons 1.4% 1.9% Extra-territorial organizations and bodies Unknown

3.7.6 The Eastern Corridor: Misan, Wasit, & Diyala

Wedged between Baghdad and Sulaymaniyah, Diyala lies in an important transport corridor and backs in its northern part on the mountainous region along the Kurdistan border with Iran. Building and construction is the dominant economic sector accounting for 23.5% of the total GDP and 26.8% of the employment. Oil related revenue, public administration and real estate and business activities are the next significant contributors to the GDP adding 12.4%, 11.2% and 10.6% respectively. The services sector provides 15.5% and public administration provides 10.9% of employment. The southern sector of the governorate may experience spillover effects from the Baghdad’s metropolitan area.

Figure 3.19 Diyala GDP per Sector

Agriculture,Hunting&Forestry

Fishing

Mining and Quarrying 2.5% 7.4% 4.6% Manufacturing Industry 2.0% Electricity and Water supply 12.4% Building and Construction 6.2% 2.2% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and 0.8% personal and household goods Hotels and Restaurants

Transport,Storage and Communications 11.2% Financial intermediation

Real estate,renting and business activities

23.5% Public administration and defence;compulsory social security 10.6% Education Health and social Work

Other community,social and personal services activities 4.6% 5.5% 5.6% Private households with employed persons Extra-territorial organizations and bodies 1.0% Unknown

Wasit is part of Iraq’s agricultural heartland together with Qaddissia, southern Babylon and northern Thi-Qar. Agriculture contributes close to 12% of the GDP, but employs 18.8% of the labor force. As in most other governorates the oil sector makes the largest contribution to the GDP at 37.3%. Among other sectors, services, transport, and trade generate jobs for about 12% of the labor force each, while public administration and transport contribute 6.9% of the governorate’s GDP each, followed by construction and trade with 6.6% and 6.4% respectively.

Figure 3.20 Wasit GDP per Sector Agriculture,Hunting&Forestry

Fishing

1.5% Mining and Quarrying 1.8% 4.8% Manufacturing Industry 11.9% 4.5% Electricity and Water supply Building and Construction

6.9% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods Hotels and Restaurants 3.5% Transport,Storage and Communications

3.1% Financial intermediation

Real estate,renting and business activities 6.9% 37.3% Public administration and defence;compulsory social security

Education

0.5% 6.4% Health and social Work

Other community,social and personal services activities 6.6% Private households with employed persons

2.8% Extra-territorial organizations and bodies 1.5% Unknown

Similarly to adjacent Basrah, Misan’s economy is dominated by the oil sector, which accounts for 70% of its GDP. In contrast, employment shows the diversity of the secondary sectors, trailing Baghdad by only 0.3% in terms of relative importance of manufacturing as a source of employment. Its proximity to Basrah and relative security have attracted population resulting in stimulating the building and construction sector, which provided jobs for 18.4% of the active labor force. Services is the most important sector as a source of employment, providing close to 20% of the jobs in the governorate.

Figure 3.21 Misan GDP per Sector Agriculture,Hunting&Forestry 1.3% 1.9% Fishing 1.3% 0.9% 1.6% Mining and Quarrying 5.1% 2.0% Manufacturing Industry 3.1% Electricity and Water supply 0.1% Building and Construction

1.9% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods Hotels and Restaurants 6.6% Transport,Storage and Communications 2.4% Financial intermediation Real estate,renting and business activities

Public administration and defence;compulsory social security 1.8% 70.0% Education Health and social Work

Other community,social and personal services activities

Private households with employed persons

Extra-territorial organizations and bodies

Unknown

3.7.7 The Pilgrimage Centers: Kerbela & Najaf

GDP and employment in the governorates of Kerbela and Najaf reflect the special status of their capitals encompassing holy sites as pilgrimage cities, hence the similarity in their GDP and employment distribution. In Kerbela, the dominant contributors to the GDP are real estate, renting and business activities at 43.5%, building and construction at 9.7%, and public administration and defense at 8.7%. Construction with 15.5%, wholesale and retail trade with 14.8%, and public administration and defense at 11.6% provide the bulk of the employment in Kerbela.

Similarly in Najaf, real estate, renting and business activities accounted for 15.0% of the GDP, building and construction 41.4%, trade 13.2%, while the public administration component is higher at 17.5%. Four sectors also provide the majority of the jobs, namely trade with 17.5%, public administration with 15.7%, building and construction with 15.1% and transport with 12.0%. In general, employment in both cities is diversified almost equally distributed among the six sectors.

While Kerbela does not have secondary cities in its close proximity, Kufa lies only at a distance of 10 km from Najaf. The public administration figures also reflect the need for higher levels of security to protect the holy sites.

Figure 3.22 Kerbela GDP per Sector Agriculture,Hunting&Forestry

0.6% 0.2% 2.4% Fishing 3.6% 3.5% 3.9% Mining and Quarrying 4.1% Manufacturing Industry 4.9% Electricity and Water supply

9.8% Building and Construction 8.7% Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods Hotels and Restaurants

7.5% Transport,Storage and Communications

Financial intermediation 0.8% 5.4% Real estate,renting and business activities Public administration and defence;compulsory social security

Education 1.2% 43.5% Health and social Work Other community,social and personal services activities

Private households with employed persons

Extra-territorial organizations and bodies

Figure 3.23 Najaf GDP per Sector

Agriculture,Hunting&Forestry

Fishing 1.1% 0.2% 3.1% Mining and Quarrying 3.4% 6.8% 6.1% 2.4% Manufacturing Industry Electricity and Water supply 5.9% Building and Construction Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods 14.4% Hotels and Restaurants

Transport,Storage and Communications

17.5% Financial intermediation

Real estate,renting and business activities 13.2% Public administration and defence;compulsory social security

Education 15.0% Health and social Work 9.6% 0.7% Other community,social and personal services activities Private households with employed persons 0.6% Extra-territorial organizations and bodies

3.7.8 Desert Zone: Anbar

Figure 3.24 Map of Iraq showing aridity of Anbar governorate

Source: University of Texas

The governorate of Anbar bordering on Syria lies mostly within the desert zone. According to the 2014 statistics oil provided 53.3% of Anbar’s GDP, followed by agriculture at 7.4%. Agriculture is the lead employment sector providing 17.4% of the jobs, followed by services and education with just about 12.5% each. Given that the governorate is still experiencing conflict, it is not surprising that the unknown employment category is the highest among governorates at 10.4%. Its high contribution to the GDP only reflects its size. Anbar’s statistics must be fully reexamined when better data becomes available.

Figure 3.25 Anbar GDP per Sector Agriculture,Hunting&Forestry

Fishing

0.1% Mining and Quarrying 7.4% Manufacturing Industry 1.0% 16.6% Electricity and Water supply 0.9% Building and Construction

Wholesale & Retail Trade, repair of motor vehicles,motorcycles and personal and household goods 4.1% Hotels and Restaurants Transport,Storage and Communications 2.5% Financial intermediation 3.0% Real estate,renting and business activities 3.0% Public administration and defence;compulsory social security

4.1% 53.3% Education 0.1% Health and social Work

2.4% Other community,social and personal services activities

1.5% Private households with employed persons

Extra-territorial organizations and bodies

Unknown

3.8 Concluding Remarks

To achieve a rate of growth of over 6% needed for economic recovery Iraq must restore the functional efficiency of its key cities. This will require collaborative action between the national ministries, the governorates, and the city administrations, particularly the larger cities which drive growth and diversification of the economy beyond the oil sector. Redistribution of oil revenues is not sufficient to create sustainable development as became clear after the decline in oil prices.

In reviewing their structure plans with a view to developing growth strategies the governorates will require guidance to help them understand and integrate the concepts underpinning the SDGs and NUA. These concepts provide the main themes to aim for. Governorate strategies must address the challenges within their jurisdiction taking into consideration the resource linkages underscored by the World Bank and development corridors and nodes highlighted in the national spatial strategy framework. Governorates will need to integrate strategies across sectors to align proposed plans, programs, and projects as they affect their governorate.

The governorate structure plans include information on population characteristics, urban patterns, economic activity, and environmental conditions, which will provide the data base for the definition of strategic approaches towards achieving the sustainable development called for in the SDGs and NUA. The strategic components of each governorate have to interlink with similar components in adjacent governorates and cities to create efficient networks, along which key nodes and projects will be located or linked with. These networks should interconnect to shape a strategic urban growth framework. Spatially this will require highlighting development corridors and growth nodes that can generate multi-sectoral development potential to promote a badly needed diversification of Iraq’s economy.

Part II Infrastructure Systems and Resource Management

Iraq’s infrastructure planning seeks to simultaneously remedy backlogs created by damage to the systems suffered during wars, sanctions, and ongoing conflicts and keep up with the growing demand for services.

Figure 1 Topographic Map of Iraq and Surrounding Countries

Source: I2UD with base map from Google Earth

4.1 Climate Change

Iraq’s population is becoming increasingly urban, and both urban and rural populations will feel the impacts of climate change. Throughout the Mashreq region, impacts include growing fluctuations in weather patterns, disturbance of ecologic systems, water resources depletion, land degradation, shrinking marshlands and coastal mangroves, desertification and episodes of severe droughts, sandstorms and heavy rainfall and flash floods. Approximately one-third of Iraq’s area is desert and one-third cultivable of which half is threatened by increasing aridity.

Climate change has increased the variability of precipitation, geographically and annually, is affecting all water bodies. The increasing frequency of severe droughts, including the recent

droughts of 2007- 2009 and 2010-2011, has a widespread impact on the agricultural sector, affecting crop production and rural livelihoods. Water scarcity is also increasingly affecting a broad range of sectors such as industry, tourism and energy, increasing unemployment and leading to higher rates of poverty and malnutrition17.

Figure 2 Natural Water Resources and Dams

Source: I2UD

Decline in the volume of water in the Tigris and Euphrates due to hydroelectric projects in Turkey and illegal capture of water flow in the occupied areas of Syria and western Iraq have reduced availability to one-third of normal flow, creating a shortage of 33 million m3 by 2015.18

Disruptions caused by wars, conflict and turmoil and the adverse climatic conditions have generated waves of rural to urban migration, as people sought safety and opportunity to earn living wages in the cities, which the falling productivity of agriculture was unable to provide. As seen in the chart below, depleting water sources including irrigation and poor water quality have been cited as a major factor preventing the return of IDPs in a number of governorates. These

17 IAU 2013 18 IBID

population movements have contributed to the expansion of informal settlements and an increase in urban poverty which needs to be quantified and addressed.

4.2 Access to Potable Water Supply

Projected population growth entails a rising need for water which, given the current situation is unavailable resulting in an increase in shortages. Furthermore, quality will deteriorate if the distribution network is extended to cover newly urbanized areas without addressing the problems of new filtration stations, water loss due to leaks and informal connections, and pollution resulting from leaking pipes in the sewerage system and septic tanks leaching fields. As evidenced in the chart below forecasting water requirements, over 8% of water is lost due to evaporation and other losses.

Figure 3 Forecast for Water Requirements by Sector (billion m3)

Source: IAU 2013

The multiple indicator cluster survey prepared in 2006 jointly by UNICEF, COSIT and MOH indicated that 20% of Iraq’s households’ lack access to safe potable water and 16% have to deal with daily water related problems. In the rural areas, only 43% stated that they have access to safe water. A sustained effort was expended to improve living conditions in the post conflict period and, by 2012, UNICEF reported that 98% of the urban population and 77% of the rural population had access to potable water, for a national average of 91%.19

19 IAU 2012.

In addition to shortage, the quality of the water supply is below international and national standards. In 2012, IOM reported that pollution and high salinity adversely affected the rural economy and fishing activities in Muthanna, Missan, Basra, and Wasit governorates. The incidence of reported water borne diseases increased in Babil, Salah El Din, Diyala, Kirkuk, Erbil and Sulaymaniyah prompting the Interagency Information and Analysis Unit to call for the preparation of a national water management strategy.

Figure 4 Physiographic Characteristics

Source: I2UD based on Iraq: Country Profile [map], CIA, January 2003

In the rural areas, irrigation, which consumes the bulk of the water resources, requires the introduction of modern management systems. In the urban centers, system losses, scarcity of metering and low tariffs are a general feature in the MENA region where traditionally access to water was a right exercised without charge. While system losses vary among cities, they reached 30% in Baghdad in 2011 a ratio at the high end of the range in urban areas of the Mashreq and Maghreb where funds for the maintenance of systems are inadequate.20 Urban growth will put additional pressure on already stressed systems. Under UN DESA projections 15 million new

20 IAU 2013

urban dwellers will be added to Iraqi cities implying additional demand for water of upwards of 3 billion l/c/d based on average water use in the Mashreq and Mahgreb regions.

It is unrealistic to assume that the scarcity of metering and low tariff are the two major determinants of the excessive water consumption at 392 l/c/d, double the international standard of 200 l/c/d21. In a system where tariffs cover between 2% and 5% of the operating and maintenance costs, deferred maintenance and replacement are the unavoidable result. Water losses need to be addressed through renewal, rehabilitation and upgrading the production and distribution systems.

Improved water access would contribute to diffuse or at least alleviate water related tensions in both urban and rural areas. According to Interagency reports, water flow in the Tigris is projected to decline by over 25% and the Euphrates by more than 50% by 2025. This will create severe challenges to development and urban resilience in Iraq.

Although dwarfed by the oil sector, Iraq’s non-oil commodity production can provide a lever for the revitalization of agriculture, which still provides jobs for some 8% of the labor force and is critical for food security.22 As is the case elsewhere in the world, agriculture consumes over 80% of the available water resources, which in Iraq’s case are declining, affecting both agriculture production and the generation of hydroelectric power. Access to markets is essential to enable agriculture to achieve its production potential and substantially increase rural incomes while enhancing food security. Sustainable production encourages the development of food processing industries that require a reliable supply of produce and can enable private small and medium size industries to flourish to generate exports.

4.3 Energy

Reliable energy is a prerequisite of economic development without which the SDGs and New Urban Agenda (NUA) cannot be achieved. Oil fields and refineries provide fuel for electricity generation. However, severe cumulative damage to the electricity infrastructure (generation plants, transmission systems and networks) from 2001 to 2007 due to wars, sanctions and occupation have reduced Iraq’s power generation to about half its needs.

21 IBID 22 COSIT 2014

Figure 5 Oil Pipelines and Refineries

Source: I2UD

Since 20% of the energy is generated by hydroelectric plants, the scarcity of water arising from the combined effects of climate change and upstream illegal capture of waters from the Euphrates and Tigris is a serious impediment to electricity provision. Regular blackouts in the public grid system are compensated by communal and private generators, an expensive alternative that poorer households cannot afford. In 2012 the availability of electricity to residential areas ranged from about 18 hours to under four hours in the informal settlement areas.23

23 IAU. 2012.

Figure 6 Electricity Network

Source: I2UD based on Niras 2010

The economy is adversely impacted by the unreliability of power supply. To cope with shortages, cities resort to shedding and to cope with interruptions most businesses in the cities have acquired generators. It is an expensive measure that burdens their performance. In particular, lack of reliable electricity provision hampers the development of secondary cities, one of the Ministry’s strategic objectives. In a globalized economy these cities and towns have to overcome market disadvantages. They need links to major corridors, larger centers or growth nodes to prosper. Infrastructure capable of providing them with good physical and virtual connectedness is critical to their ability to achieve their development potential.

Not surprisingly, Baghdad and Basra received the largest investments to fund investments in electricity provision, but all the governorates benefitted from projects, including the Kurdistan region, which received separate capital funds from donors to improve electricity supply.

While the government has focused on covering recurrent expenditures which in principle include both operation and maintenance, capital expenditure to enhance generation capacity was in large part funded by donors and multilateral development organizations. Assuming that all the

funded projects since 2010 aiming to increase generation capacity have been completed by 2015 as planned by the Ministry of Electricity, Iraq’s power supply would be around 20,000 megawatts.24 The country would still be facing an absolute shortfall of 2000 megawatts. Most funding received was for projects boosting generation. The transmission and distribution networks still needs major rehabilitation, extension, and capital investment is needed to remedy the damage suffered since 1991 and years of delayed maintenance.

According to the Ministry of Electricity, Iraq needs to increase generation capacity by about 1000 megawatts annually between 2015 and 2030 to provide the supply needed by industry, business, and urban growth and to enable the expansion of technology, particularly ICT services. Increasing electricity supply will also allow improvement of the water distribution system and contribute to progress towards achieving the SDGs. To boost generation capacity as envisioned by the government would require capital investment similar in scale to the more than $5 billion invested in the projects since 2010.

4.4 Roads and Transport

The transportation network is the backbone of the country’s urban structure and its economic development. Protracted wars and conflict have degraded Iraq’s once good road network and disrupted key trade routes to the west towards Jordan and Syria. The current state of the road network affects the country’s economic performance. Trucking of freight accounts for about 40% of the traffic on highways.25 Their rehabilitation and improvement is critical to reducing the high cost of trade within Iraq and between Iraq and its neighbors. Enhancing the competitiveness of private enterprises and revitalizing the economy of secondary cities entails enabling improved mobility and efficient access to markets, in particular, the market areas of the larger cities. Poor road condition has also a high social cost. Iraq ranks the eighth in the world in road fatalities with 31.5 per 100,000 population.26

24 IAU 2012. 25 IBID 26 IBID

Figure 7 Road Density Pattern

Source: I2UD

Figure 8 Major Roads and Gateways

Source: I2UD

The World Bank has initiated a road rehabilitation project. It estimates that there about 32,000 km of roads of all levels in the south and central governorates and 15,000 km in Kurdistan region. Responsibility for the road network is divided between the Ministry of Construction and Housing, which has branch offices in the southern and central governorates in charge of construction and maintenance and the Ministry of Transport which is in charge of the operation of the system including transportation, ports and airports. The Kurdistan region has governorate branch offices through its own Ministry of Construction and Housing to undertake these tasks.

From the viewpoint of the NUS, the World Bank transport corridor project is important in that it will upgrade to expressway status the road between Basra and Baghdad as a limited access highway with a view to have it operated in the future as toll roads. The project will also connect and upgrade the road segments that link Baghdad to Dohuk through Baqubah, Khalis, Kirkuk, Erbil, Mosul and Dohuk, and Zakhu on the Turkish border.

While this axis can be viewed as a single North/South corridor, the southern segment is referred to as Highway 1 and the northern segment as Highway 2. Their connection to the western transport corridors leading to Syria and Jordan through Fallujah and Ramadi is at this time disrupted by conflict. Although not included in the World Bank project, a north/south corridor to the west of Highway 2 has been proposed in the 2010 outline spatial strategy for Iraq. It is an interesting proposal that is anchored by Baghdad and Mosul and should be looked at as a potential development corridor from Baghdad to Dohuk through Samarra, Tikrit, Baiji and Mosul. In the future this development corridor could extend south from Baghdad to Basra along Highway 1 as envisaged in the report. In this case larger cities off the highway should have access links and interchanges/ramps to the highway, primarily Hillah, Diwaniya and Nasiriya to the east and Kerbala, Najaf and Samawah to the west. Alternatively the corridor could be extended as a western loop through the latter three cities.

Figure 9 Proposed Road Projects

Source: I2UD based on World Bank 2013

4.5 Infrastructure Improvement Projects

Donors, including UNDP, created multilateral funds managed by the World Bank to fund reconstruction of infrastructure, improve services primarily in the health and education sectors and support the development of private enterprise through IFC’s Iraq Business Assistance Facility and access to the Multilateral Investment Guarantee Agency (MIGA). Since 2008 infrastructure repair, rehabilitation and reconstruction works sought progressive boosting of production capacity and targeted:

1. The water supply system including two treatment plants and segments of the distribution networks and sewerage lines. 2. The energy supply system including two major hydroelectric power plants and two of the Hartha Power Station units. 3. The telecommunication systems, which suffered severe damage during the wars, with a special focus on restoring the functionality of the inter-banking system.

These projects have contributed to increasing the capacity of public systems to meet demand but unmet needs remain a challenge that affects disproportionately the poor.

The social impact of disruption to service delivery systems imposes hardships on the poorer segments of the population who cannot afford the alternatives that exist. Lack of access increases social disparities and is one of the core indicators of deprivation indices. The Socio-economic Surveys from 2007 to 2013 estimated that about 20% of the population lived below or just above the poverty line of $2.20 expenditure level per capita per day27 while unemployment stood at 15.2% in 2011, underscoring the importance of economic diversification and job creation for which adequate infrastructure is sorely needed.28

4.6 Deprivation and Poverty

The 2009 National Strategy for Poverty Reduction used information on household income and expenditure patterns derived from the 2007 socio-economic survey to estimate the poverty line. The poverty level combines expenditures on food to meet nutritional requirements of 2332 calories per capita daily and the cost of non-food basic requirements including the imputed values of non-cash consumption of basic items. In 2009 this level stood at 76,896 Dinars/capita/month.

Figure 10 Poverty Gap by Governorate Percentages

Source: Iraq High Committee for Poverty Reduction Strategy. 2009.

27 Iraq High Committee for Poverty Reduction Strategy. 2009. & COSIT 2014 28 World Bank. 2016.

Accordingly, 22.9% the population was classified as poor comprising 16.1% urban and 39.3% rural dwellers. However the poverty gap, a measure of the depth of poverty i.e. the difference between poor household income and the poverty line, shown in the chart above is computed as a percentage of the consumption of the total population if every person’s consumption stood at the poverty level, was estimated to be 4.5%.29 This implies that large segments of the population are living just above and just below the poverty line. While the income distribution as expressed by the Lorenz curve changes slowly, the proportional distribution of poverty reflected in the poverty rate and the poverty gap indicators is affected by the performance of the economy.

Changes at the governorate level are more pronounced and should be documented in accordance with data availability. In 2009 GDP growth was positive and rose sharply between 2010 and 2013 with the growth rate climbing from 6.4% in 2010 to 13.9% in 2012. Falling back to 6.6% in 2013 and then into the negative range in 2014 at -2.1% due to the slump in the oil prices and the recession of the past two years30. Those urban households clustering just above the poverty line may have fallen below the line due to job loss, reduced earnings, underemployment and other reduction in income. Policies advocated for poverty reduction through increased public expenditures on basic services lagged due to the retrenchment of government expenditures.

A feature of particular importance to the national goal of balanced development are the marked differences between governorates documented in the strategy for poverty reduction, which shows a concentration of poverty in Muthana (49%), Babil (41%) and Salah El Din (40%). The poverty gap is highest where rural poverty is highest. Current levels of poverty can be estimated by using CPI to update the 2009 figure.

4.7 Estimating Deprivation Levels

The government looked at two criteria for fiscal allocations, namely population size and deprivation. However, there is a lack of agreement on the indicators to be used for the computation of a deprivation index and at this time is not used. This situation deserves to be reexamined in order to avoid increasing disparities through the attribution of larger allocation to the more populous governorates, which have the larger cities and the strongest economies.

29 Iraq High Committee for Poverty Reduction Strategy. 2009. 30 World Bank 2016.

Figure 11 Major Cities Proportional to Population Size

Source: Data from COSIT 2011

In the immediate aftermath of the war, a study of deprivation determined that about 31% of households suffered from a lack of access to basic services31. Socio-economic surveys from 2007- 2010 showed that deprivation was increasing due to the unavailability of infrastructure services.

31 Iraq High Committee for Poverty Reduction Strategy. 2009.

Figure 12 Hospitals and Universities

Source: I2UD

The deprivation index is not clearly stated, but rather looks at the correlation of indicators of human development with poverty, including:

• A measure of poverty. • Health expressed by the expectancy of life at birth to age 40 and the proportion of underweight children • Education expressed by the adult illiteracy rate • Basic services represented by access to potable water

Unemployment was not taken into consideration because the correlation with poverty was assumed to be weak since the 2007 data showed that it stood at 11% in rural areas and 12% in urban areas despite the fact that the rural poverty rate was double the urban poverty rate.32 The omission of unemployment biases the index towards the rural areas where working the land is undertaken by families or kin groups. Rural lifestyle rarely differentiates between occupation and

32 IBID

employment. In urban areas where income generation and living patterns depend primarily on earning wages and salaries, unemployment is a component of deprivation. The growth of urban population sustained by high fertility and rural to urban migration entail the need for a reformulation of the index to better reflect urban poverty.

5.0 National Urban Strategy Framework Conceptual Approach

Assessment of the issues faced by Iraqi cities indicate the need for a flexible strategy framework for urban development that takes into consideration the government’s objectives of balanced growth , reduction of disparities among governorates and development of second tier cities.

Adopting a strategic approach entails four key tasks:

1. Understanding the factors that underpin the challenges that must be addressed to achieve the desired objectives. 2. Focusing on the strategic planning and management components that can shape and drive effective responses to urgent issues without losing sight of the longer term vision. 3. Identifying development corridors and clusters of interlinked and eventually networked cities to enable second tier cities to develop. 4. Assisting governorates in developing strategic spatial plans that recognize publicly owned land as a key economic, social, and environmental asset when balancing competing uses for land and budget allocations.

The framework emphasizes an integrated medium term horizon combining flexibility in planning with building urban resilience of cities and governorates. In the global economy, public and private investors face interconnected risks, which in Iraq are compounded by the complexity of geopolitical issues and conflicts and the uncertainty about the outlook for economic recovery. The framework therefore adopts a realistic approach to the ability to generate public revenues and attract private investments to finance the infrastructure and industrial projects needed to diversify the economy.

The framework recognizes the impacts of climate change and man-made disasters which have led to socially marginalizing displacement of populations that burden host cities with IDPs that cannot be absorbed by local economies already facing high rates of unemployment, particularly among youths, Expanding informal settlements are adding to the land and infrastructure problems affected governorates and cities have to address in their urban planning and management activities.

While responding to these overriding concerns the framework shapes a development path towards the longer term vision and the achievement of the SDGs and the NUA principles. It will guide and support each governorate’s efforts to develop urban strategies that respond best to the situation they face. Engaging all stakeholders in urban planning and management will make local action more achievable despite tight budget allocations.

5.0.1 Urban Development Patterns The historic pattern of settlement and trade routes along rivers and coastlines has shaped the emergence of cities and accounts for the density and linearity of urbanization throughout the Mashreq and Mahgreb countries. This has given rise to a hierarchy of urban areas which today differ in the quality of their infrastructure and development potential. The historic urban pattern has to adapt to the imperatives of a global economy. A new hierarchy of urban centers will take shape.

Figure 13 Settlement Density Pattern

Source: I2UD

Figure 14 Heritage Sites

Source: I2UD based on UNESCO World Heritage

Figure 15 Pilgrimage Cities

Source: I2UD based on the Ahlul Bayt Digital Islamic Library Project

The core objective of the national urban strategy framework is to support the development of a functional and resilient urban structure interconnecting these different centers. The NUS framework differentiates among three categories of cities:

Key cities that have multi-sectoral development can be equipped with the infrastructure and the high technology poles needed to compete in the global economy. Dynamic land and housing markets and cultural diversity are a hallmark of these cities that anchor the country’s major development corridors, gateways and intermodal transport nodes.

Figure 16 Key Cities

Source: I2UD

First tier cities located along the development corridors have specific growth potential that should be enhanced by public investments targeted at sectors where each city has a comparative economic advantage. Sectors to be considered include industry, trade, higher education, technology, tourism, and cultural and natural heritage. Many first tier cities can become growth nodes and expand rapidly. Planning for their expansion is critical to avoid being overwhelmed by a belt of informally urbanized areas.

Figure 17 First Tier Cities

Source: I2UD

Second tier cities are facing size disadvantages in a global economy. Their historic role as market towns has been eroded by modern infrastructure and technology. They are unable to offer the economic and cultural diversity needed to compete in the Mashreq region. However they can develop nationally as interconnected clusters, particularly when they are well linked to larger growth nodes. This enables them to individually benefit from the economic spillover and induced effects within the urban impact area of the nodal anchors according to their locational advantages. As clusters their combined strength will offer economies of agglomeration and a diversity of production and business services activities.

Figure 18 Second Tier Cities

Source: I2UD

Figure 19 Key, First, and Second Tier Cities

Source: I2UD

The UN-DESA computations of the national annual average rate of growth of cities with population above 300,000 can be considered as a benchmark. The larger cities growth rates will be lower than the national average because of the size of their base population, which will require a major increment to reach rates of growth similar to those achieved by dynamic smaller cities. The map below shows cities experiencing growth rates above the national average. Cities in occupied areas or in close proximity to the conflict zones, as well as the recently liberated cities of Ramadi and Fallujah have been excluded because of the fluctuations in their populations and the lack of available data on population movements. Based on the available UN-DESA data, the rapidly growing cities include the two holy cities of Kerbela and Najaf; Erbil and Sulaymaniyah in the Kurdistan region; Kirkuk, Hillah, and Ba’qubah.

Figure 20 Fastest Growing Cities

Source: Data from United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision.

5.1 Development Corridors

Figure 21 Development Corridors

Source: I2UD

5.2 Development Clusters

The three large metropolitan areas are anchors that connect the cities within their sphere of influence and can generate functional spillover effects in these cities according to accessibility, infrastructure capacity, and land availability. There have been very few discussions of these dispersal patterns, most notably in France and none in Iraq, where oil has been the mainstay of the economy and overshadowed the other sectors and the importance of diversification in order to spur growth in all governorates and the first and second tier cities.

First and second tier cities can only grow through three major avenues:

1. Capturing spillover activity from the larger cities in their proximity;

2. Attracting businesses that can achieve production or service connections to economic activities in the closest large cities by offering lower operational cost due to their locational advantages. Land, infrastructure, construction, and transport are critical components of fixed costs particularly in Mashreq countries where the price of urban land is very high. Fiber optics and communications including mobile digital technologies are acquiring increasing importance for all categories of urban activities. Technology infrastructure should be viewed as a necessary support system in any economic diversification program. Universities and associated research centers are an important asset in fostering the development of knowledge based industries.

3. Develop a specialization by capitalizing on geographic features, cultural heritage (tangible and intangible) or particular assets or products that can be enhanced to give the city a unique character.

The current urban patterns in Iraq reflect its physiographic and historic legacy. As shown in the city and road maps. The two rivers and their alluvial plain have produced the structural frame along which urban centers emerged and grew. While the Euphrates does not receive any major tributaries as it crosses Iraq the Tigris receives six tributaries all located to the east.

This rich water system accounts for the density observed in the distribution of settlements and roads. In the eastern part of the country, the discovery of oil fields and the production of petroleum and gas added a layer of growth nodes shaped by the location of fields, refineries and pipeline crossings to neighboring countries. It also contributed to the development of the oil terminals in the port of Basrah.

To foster the growth potential of first and second tier cities that may not be directly connected to key development corridors, the cities need to be clustered to facilitate links to larger centers, as well as, benefit from economies of agglomeration.

Figure 22 Key Development Clusters

Source: I2UD

5.2.1 Kurdistan Region Clusters

Since the end of the 2003 The Kurdistan Region (Dohuk, Erbil, and Sulaymaniyah) have benefitted from relative security. The ongoing conflict in Syria and adjacent governorates has strengthened transportation connections between Kurdish cities, particularly between Dohuk and Erbil, which previously had remained underdeveloped. Traffic that followed the highway through Mosul, Highway 2, has now been diverted to Highway 3 and Amedi Seladize road.

In the past few years, the region has experienced a growing influx of IDPs and Syrian refugees, which has placed a strain on cities budget and service delivery. A significant portion of the IDPs are from adjacent governorates, particularly Ninevah. Dohuk has been a major receiving area for ethnic Kurd and Yazidi refugees due to its close proximity and to the Syrian and Turkish border. International humanitarian organizations addressing the refugee crisis are active in Dohuk and Zakho. Beyond the immediate focus on providing emergency support, there needs to be a long term shift toward addressing the needs of the significant portion of IDPs and refugees may not

return to their hometowns, preferring to pursue economic opportunities in Erbil and Sulaymaniyah. They have made a significant contribution to the skilled workforce and have invested in commercial and service enterprises.

Despite the relative security within the KRG, the economy has been affected by the region’s proximity to areas of conflict. Prior to the recent conflict, the region had a burgeoning tourism industry attracted by its archeological and heritage sites and natural areas. Erbil with its historic citadel, a UNESCO world heritage site, was designated the “Arab Tourism Capital” in 2014.33 Despite the region’s semiautonomous nature, its cities are impacted by the economic and political situation in the nation and adjacent countries, as well as global trends. The drop in oil prices and the economic downturn it created have brought to a halt the inflow of private capital into real estate projects, many of which were speculative character. This downturn has affected the entire region, although Sulaymaniyah to a lesser extent.

If unemployment continues to rise, some IDPs may consider moving to other governorates. However, at this time concern over security and socio/cultural issues are constraining mobility. Erbil, Sulaymaniyah and Dohuk will continue to grow. These larger cities, as well as the second tier towns need to refocus their attention on job creation, economic diversification, planned urban expansion areas with affordable housing and adequate urban services. To cope with the current crisis and enhance their development potential, 2nd tier cities in the clusters must not only link to the two major centers, but also initiate major improvements in administrative and financial management capacity.

• Cluster 1 consists of the cities of Zakho, Sumel, and Dohuk in the Dohuk governorate along Highway 2. Due to its strategic location Zakho is a key border crossing with Turkey and initial destination for Syrians entering the region. Dohuk, the capital of the governorate, is a key destination for IDPs and Syrian refugees, particularly given its close proximity to Mosul.

• Cluster 2 consists of the cities of Shaqlawa, Soran, and Choman in the Erbil governorate along Highway 3, a northern connection from Erbil across mountain terrain to the Iranian border. Shaqlawa lies at the base of Safeen Mountain, making it a destination for tourists.

• Cluster 3 connects Erbil to Sulaymaniyah along Highway 18 and includes the cities of Erbil, Koisnijaq, Dahuq, Dokan, and Shbazher. The corridor and particularly Dokan is adjacent to Lake Dukan, a major reservoir supplied by the Dukan Dam on the Little Zab River.

33 Bradshaw 2016

• Cluster 4, which includes Chamchamal, Sulaymaniyah, Penjwin, connects Kirkuk to Sulaymaniyah and to the Iran border crossing at Penjwin in the Sulaymaniyah governorate on Sulaymaniyah-Kirkuk Road and Highway 46.

Figure 23 Kurdistan Region Clusters

Source: I2UD

5.2.2 Development Clusters Integrating Water Resource Management

As they enter Iraq the flow of the Euphrates is larger than that of the Tigris. Both rivers exhibit large annual fluctuations, which complicates water allocation among the major non-agricultural sectors and can cause periodic floods aggravated by the flat topography34. Reservoirs and dams of which the Samarra-Tharthar is the largest system were built to store water and protect Baghdad and other cities from the Tigris spring floods, particularly the vulnerable cities at the confluence of the river and its tributaries.

Surface water is complemented by groundwater aquifers in the alluvial plains of the two rivers, the Zagros Mountains and the Kurdistan mountain area. The 2008 ESCWA survey estimated that

34 FAO 2009

withdrawals were covered by sufficient replenishment of renewable water sources35. In the following years, the imbalance grew and in 2013 the U.N. Inter-Agency Information and Analysis Unit (IAU) projected an absolute shortage emerging by 2015. Coping with the shortage is not easy.

The two Gulf Wars damaged both irrigation and transportation. Despite speedy repairs in the 1990’s, lack of machinery during the sanctions decade led to progressive deterioration of the infrastructure due to inability to maintain the systems. Agriculture suffered from a rise in salinity and water logging of lands in the central and southern governorates. Furthermore the 1999-2001 droughts severely affected the rain dependent northern governorates. The water shortage was felt throughout the country with crop outputs falling sharply. Lack of fodder and medicines devastated livestock herds. Rural migration to the cities accelerated and food prices in urban areas rose. The bad condition of the road network impeded distribution of food stuffs to areas experiencing shortages resulting in widespread malnutrition among the poor, in particular children.Both irrigation and drainage systems require major efforts at rehabilitation and reconstruction to enable the introduction of water saving practices and improved technologies needed to uplift rural incomes and improve food security.

The main drainage canal referred to as the “3rd river”, running from Mahmudia south of Baghdad to Kurmah, north of Basrah, carries agricultural drainage from the lands between the two rivers . Smaller canals are part of irrigation and water logging prevention projects. Of the 11 major wastewater treatment plants, three are in Baghdad including the two largest plants at Rushumia and Karkh. The rest are located in the vicinity of larger cities. Treated wastewater is discharged in the rivers along which the cities front. Most of the plants were damaged in the 2003 war. Despite a major rehabilitation effort, the system is still inadequate at collection and treatment, particularly in view of the uncontrolled expansion of underserviced urbanization and informal settlements.

Nonagricultural use of water is about 14.5% by the industrial sector and 6.5% by municipalities36. Adequate water supply and sanitation are key components of the Sustainable Development Goal “SDG” 11 objective five and the UN-Habitat New Urban Agenda “NUA”. They are critical to the economic development and competitiveness of cities of all tiers, as well as, growth nodes and gateways.

Fresh surface and groundwater still generate 97.7% of water used.37 Despite international protocols bilateral agreements with Syria and Turkey, Iraq’s renewable water resources in the Tigris-Euphrates river basins have been adversely affected by Turkey’s construction of dams,

35 IBID 36 FAO 2009 37 IBID

which is creating water shortages of varying severity in both Syria and Iraq and affecting their agriculture and hydroelectric power generation capacity.

Water shortages are unevenly distributed among governorates. The eastern governorates benefit from tributaries of the Tigris in addition to most aquifers and natural springs. Water management is a complex task in that it requires vertical and horizontal collaboration and coordination at all stages of planning and implementation. The Ministry of Water Resources with the SOEs under its umbrella is the entity responsible for managing and operating the water resources and their related systems including the 25 major dams, the irrigation pumping stations and the hydroelectric power generating plants. At the federal level, it has to coordinate with the Ministry of Agriculture, the Ministry of the Environment, the Ministry of Energy, the Ministry of Planning, and the Ministry of Municipalities and Public Works. All these ministries have work closely with the governorates. Furthermore water management tasks and projects will often require collaboration among adjacent governorates. As noted by FAO, universities can contribute scientific knowledge and the Iraq Foundation focuses on the restoration of Marshlands helps in this difficult task, which requires earmarked water allocations.

• Cluster 1 includes the cities of Dokan, Pshdar, Rania that are adjacent to Lake Dokan, which is supplied by the Dokan Dam on the Little Zab. The dam and reservoir are a major source of irrigation and hydroelectric power in the Sulaymaniyah governorate.

• Cluster 2 consists of the cities of Haditha and Ana on the Euphrates River in Anbar Governorate. The Haditha Dam is the second largest dam in Iraq and is a major source of hydroelectricity and water for irrigation.

• Cluster 3 includes Ramadi and Fallujah, two cities with barrages along the Euphrates River, as well as the adjacent city of Heet.

• Cluster 4 includes the cities of Ba’Quba, Al-Khalis, Al – Muqdadiya, and Khanaqin along the Diyala River, a major tributary of the Tigris River. The Hemrim Dam and Diyala Weir are utilized for flood control, irrigation and hydroelectric power generation.

• Cluster 5 consists of several cities just north of Baghdad along the Tigris River including Samarra, Balad, Tarmia, Taji, and Hossiena. The Samarra Barrage diverts water to Lake Tharthar for storage and controls flooding in the greater Baghdad area.

• Cluster 6 includes the cities of Al-Musayab, Al Mahawil, and Hillah along the Euphrates and the adjacent alluvial plains. The Hindiya Barrage, located just south of Al-Musayab provides a major source of water for the Hillah and irrigation for the adjacent region.

• Cluster 7 includes cities along Shatf Al Arab, at the confluence of the Euphrates and the Tigris including Al-Hartha, Basrah, Al-Zubayr, and Al-Khaseeb. Water sources in this area are heavily impacted by increasing salinity and decreasing fresh water flow from upstream dams.

Figure 24 Development Clusters Integrating Water Resource Management

Source: I2UD

5.2.3 Development Clusters Integrating Agriculture

Protecting the productive agricultural land a repairing the damaged irrigation systems are critical to food security and reduction of rural poverty. Enhancing agricultural productivity is key to raising rural incomes and stemming the push factor migration to the cities. South of Baghdad lays the most fertile land between the two rivers, renowned for its palm tree, date production, rice fields, sunflowers, maize and vegetables. Four clusters of cities stretching along the rivers are identified as prime areas for agriculture requiring protection of arable land. Two clusters along the Tigris in Thi Qar and Wasit and another two along the Euphrates in Qadissiya and Babylon. As shown in the employment structure agriculture provides between 18% and 22% of the jobs in these governorates, although many workers can only work a limited number of hours due to the

damage suffered by the sector. There is an urgent need to repair and modernize irrigation, drainage, and roads. The cities within these clusters, which are listed below, are centers of commerce and can provide employment opportunities through marketing of agricultural products and developing agricultural processing industries.

• Cluster 1 consists of cities of along the Tigris River in Wassit governorate including Assuwaira, Numaniyah, and Kut. Agriculture provides 18.8% of employment in Wassit. Assuwaira is noted for its fruit groves and palm orchards in surrounding areas. Kut, which is located at a strategic bend in the Tigris, is a critical node in the irrigation system. The surrounding areas are known for the cultivation of cereal grains.

• Cluster 2 includes Al-Mahawil and Hillah in Babylon and Hashimiya, Diwaniya, and Al- Shamiya in Qadissiya governorate in the irrigated alluvial plains of the Euphrates River. Agriculture provides 19.8% of employment in Babylon and 22.6% in Qadissiya. The areas surrounding these cities are notable for rice, dates, and wheat crops.

• Cluster 3 consists of cities along the Al-Gharraf Canal or the Hai River in Wassit and Thi Qar governorates. The ancient canal, with its water level controlled by the Kut Barrage, connects the Tigris River and the Euphrates near Nassiriyah. Cities within this cluster include Al-Hai, Al-Rifai, Al-Shatr, and Nassiriyah. While agriculture only provides 8.2% of employment throughout Thi Qar, the Northern section, is predominately agricultural, and shares similarities to the adjacent Wassit and Qadissiya governorates.

Figure 25 Development Clusters Integrating Agriculture

Source: I2UD

5.2.4 Oil Based Development Clusters

The five governorates encompassing oil fields are strategic locations that produce 41.5% of the country’s income38.The petroleum sector through all its stages (extraction, refining, and transport) and associated petrochemicals production is the key driver of the economy and its mid term growth prospects until a serious effort at building up other sectors is made. The oil sector provides only a limited number of jobs, but dominates the economy of the cities in these clusters. Increasing oil production takes precedence over issues of pollution and environmental degradation. Furthermore security issues arising from the proximity to the conflict in Ninevah hamper planned urban expansion while fueling IDP flows who settle informally in the towns further to the east.

Kirkuk is the dominant center in the area. Baiji has suffered from destruction and extensive damage to the refinery and the town in 201 when it was overrun before being liberated by the government in 2015. It will require a massive reconstruction and rehabilitation program extending over several years. The occupation of Mosul and the conflict in adjoining areas deprives

38 COSIT 2014

governorates from the their Highway 1 link to Syria and Jordan and has reoriented development along a north/south orientation towards gateway to Turkey through Highway 2 and Highway 1 south to Baghdad and Basrah.

Despite the dominance of oil, the cities can foster thriving commercial and services sectors if they can create and maintain a living environment with an acceptable urban quality. Under an economic diversification program, they have an inherit advantage in developing manufacturing activities.

• Cluster 1 consists of the cities of Kirkuk, Al-Hawiga, and Baiji along Highway 19 in the Kirkuk and Salah Al-Deen governorates. Kirkuk, located on one of Iraq’s highest producing oil fields, is the center of oil production in northern Iraq. Given its strategic location on the Highway 1 and connection to the rail network, Baiji is a major industrial center focused on oil refinery.

• Cluster 2 includes the cities of Tikrit, Samara, Balad, Tarmia, and Taji in Salah Al-Deen and Baghdad governorates. This corridor along Highway 1 connects several oil fields to the refineries in the Greater Baghdad area.

• Cluster 3 consists of the cities of Amara and Qal’at Saleh, which are located near the Halfaya oil field and several refineries in Missan.

• Cluster 4 includes the cities of Basrah and Al Zubayr in the Basrah governorate, which has some of the largest oil fields and a substantial number of the refineries in Iraq. Basrah’s economy is dominated by the oil and petrochemical industry. The majority of oil exports leave through the city’s port on the Persian Gulf.

Figure 26 Oil Based Development Clusters

Source: I2UD

5.2.4 Pilgrimage Cities Cluster

Pilgrimage cities share particularities. Their economic base depends on the uninterrupted flow of pilgrims. Their major objective is to enhance their ability to accommodate growing numbers of visitors to the shrines. The cities of Kerbela and Najaf, both of which encompass holy sites, anchor the cluster in this area. Both cities are rapidly growing, with annual growth rates above the national average. Between 2010 and 2015 Najaf grew at a rate of approximately 3.6% and Kerbela at a slightly lower rate of 3.1%39. A significant concern is the capacity of the urban infrastructure to carry the peaks that characterize the nature of pilgrimages. Kerbela, in particular, is the destination for the annual Arbaeen pilgrimage, which draws millions of people. The major points of entry of pilgrimages from the Iran and countries further east are through Basrah and the international airports in Baghdad and Najaf. It is anticipated that the Najaf airport will be expanded due to enduring security issues in the vicinity of Baghdad. The governorates’ economy reflects the special character of their capital cities. Commerce including hospitality and food services, building and construction, public administration and defense, and transport are

39 UN-DESA 2015

dominant sectors providing the bulk of employment. Their international role highlight’s Iraq’s as a religious node.

Figure 27 Pilgrimage Cities Cluster

Source: I2UD

Figure 28 Development Clusters

Source: I2UD

Figure 29 National Urban Strategy Outline

Source: I2UD 91

5.3 Looking to 2030

The NUS framework consists of several components which will all be affected to different degrees by the evolution of the conflict. This dynamic situation should be recognized. It underpins the flexibility that had to be built in the recommended strategic framework, particularly in its spatial dimensions. Between 2016 and 2030 aspects of the context are bound to change. The economic, social, and spatial development options in the western governments should be reviewed after the liberation of Mosul and the end of the conflict in Ninevah.

Development corridors are determined to a large extent by the topographic features of the country, its settlement pattern, its mineral resources, the trade routes, and border crossings that informed the alignment of highways and major roads. The larger cities accounting for about 26% of the population anchor these corridors and encompass the key gateways40. They also articulate other spatial components including the location of important industrial and commercial activities, the best support infrastructure and the high tech and knowledge sectors.

The clustering of 1st and 2nd tier cities was derived from the common feature challenges and development prospects they share. It seeks to enhance their economic productivity and competitiveness in those sectors where their particular context can give them advantages. The clusters also highlight the role and responsibilities that these cities carry in safeguarding important national resources especially for the protection of water sources and fertile agricultural land. In order to enhance their development potential, a special effort should be made to equip them with appropriate infrastructure to undertake the functions they need to perform and attract investments and expand their access to the technology and knowledge sectors.

The next task will involve working with selected governorates on their development strategy. This undertaking involves a structured participatory approach in coordination with UNDP, LAPDII coordinator and committees in each governorate. Local strategies are informed by the national framework and provide critical feedback information to ensure smooth coordination between the different levels of governance.

Building the resilience of second tier cities is part of improving Iraq’s performance beyond increasing the oil driven GDP towards sustainable development as defined by the SDG’s adopted by the UN General Assembly on September 25th 2015 and the UN-Habitat New Urban Agenda draft published on July 18th 2016.

40 UN-DESA 2014

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Statistical Annex

Summary of GDP and Employment at the Governorate Level GDP Employment Governorate million I.D. Percent Workers Percent DIYALA 7,522,464 2.76% 337,875 4.16%

MUTHANNA 1.42% 1.74% 3,877,971 141,411

BASRAH 14.29% 6.69% 38,958,904 542,930

NINEVEH 6.18% 8.71% 16,856,800 707,358

KIRKUK 7.53% 5.28% 20,517,381 428,300

ANBAR 5.11% 4.00% 13,924,386 324,664

BAGHDAD 19.44% 21.28% 52,994,480 1,727,032

BABYLON 5.63% 5.37% 15,340,265 436,117

KERBELA 3.28% 3.60% 8,943,477 292,241

WASIT 3.26% 3.80% 8,883,967 308,088

SALAH AL DEEN 3.63% 3.85% 9,907,017 312,313

NAJAF 2.48% 4.06% 6,758,548 329,604

QADISIYA 2.47% 3.51% 6,728,587 284,622

THI-QAR 5.57% 4.57% 15,170,268 370,932

MISAN 4.29% 2.65% 11,694,670 215,321

DAHUK 2.84% 3.54% 7,730,302 287,338

ERBIL 4.59% 6.08% 12,513,914 493,208

SULAYMANIYAH 5.24% 7.12% 14,272,959 577,685 TOTAL 272,596,361 100.00% 8,117,039 100.00%

GDP and Employment by Governorate, Sector for: 1. DIYALA 2. MUTHANNA 3. BASRAH 4. NINEVEH 5. KIRKUK 6. ANBAR 7. BAGHDAD 8. BABYLON 9. KERBELA 10. WASIT 11. SALAH AL DEEN 12. NAJAF 13. QADISIYA 14. THI-QAR 15. MISAN 16. DAHUK 17. ERBIL 18. SULAYMANIYAH

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