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Country Report 1St Quarter 1998 © the Economist Intelligence Unit Limited 1998 COUNTRY REPORT Iraq 1st quarter 1998 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent Street The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 e-mail: [email protected] e-mail: [email protected] e-mail: [email protected] Website: http://www.eiu.com Electronic delivery EIU Electronic Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Moya Veitch Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases CD-ROM Microfilm FT Profile (UK) Knight-Ridder Information World Microfilms Publications (UK) Tel: (44.171) 825 8000 Inc (US) Tel: (44.171) 266 2202 DIALOG (US) SilverPlatter (US) Tel: (1.415) 254 7000 LEXIS-NEXIS (US) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1998 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 0269-5502 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK Iraq 1 Contents 3 Summary 4 Political structure 5 Economic structure 6 Outlook for 1998-99 9 Review 9 The political scene 13 Iraqi Kurdistan 15 Iraqi-UN relations 19 Economic policy and the economy 21 Oil and gas 23 Foreign trade and payments 25 Quarterly indicators and trade data List of tables 9 Forecast summary 25 Quarterly indicators of economic activity 25 Trade with major partners List of figures 9 Gross domestic product EIU Country Report 1st quarter 1998 © The Economist Intelligence Unit Limited 1998 Iraq 3 January 27th 1998 Summary 1st quarter 1998 Outlook for 1998-99: Saddam Hussein’s latest confrontation with the UN has strengthened his domestic position, although he will continue to purge the middle and higher echelons of the Baath party and the security services. The regime’s relations with the UN will continue to be confrontational, creating interruptions in the supply of crude oil and humanitarian goods. An increase in the level of UN-sanctioned aid is a possibility, though there is no prospect of a full lifting of sanctions during the forecast period. Conditions in Iraqi Kurdistan will continue to deteriorate as outside powers intensify their involvement. The regime will step up its efforts to win regional Arab backing for a lifting of sanctions, but with limited success. Inflationary pressures will increase as the regime continues to finance its spending commitments by printing money. The political scene: Saddam’s domestic position has been enhanced by the latest stand-off with the UN. But he has continued to pursue opponents, real or imagined, through purges directed at the security services and Baath party. The regime has announced that Saddam’s sons, Udai and Qusai, will head rival “alternative leaderships” should he be removed from power. This should split support for the two in the short term, further cementing Saddam’s position. Iraqi Kurdistan: Fighting between the Patriotic Union of Kurdistan (PUK) and the Kurdish Democratic Party (KDP) has continued. The PUK has proffered a peace plan but it is unlikely to be accepted by the KDP, which, with the support of Turkey, has consolidated its recent military successes and is in no mood for compromise. Iran will attempt to stop the PUK from suffering any further losses, but is reluctant to be drawn too deeply into the fighting. Iraq-UN relations: The regime remains at loggerheads with the UNSCOM inspectors. A military strike on Iraq was narrowly averted following its decision to expel the US members of the UNSCOM mission in late October. Russian mediation prompted Iraq to reverse its decision. However, relations between Iraq and the US remain tense and an early lifting of the sanctions regime is not expected. Nevertheless, the regime has recently agreed to a resumption of oil exports under the terms of the oil-for-food agreement. Economic policy and the economy: Food and medicine supplies are still subject to bottlenecks, and malnutrition, especially among children, is becom- ing acute. The Central Bank has lifted certain restrictions on citizens holding hard currency. Agricultural production is likely to have dropped 26% in 1997. Oil and gas: Crude-oil exports in the next two months could reach 1.3m b/d due to a sharp dip in prices. This will push production to the limits of capacity. The oil ministry plans to increase capacity to 4.3m b/d by 2000. Foreign trade and payments: The UAE has continued to strengthen ties with Iraq. France has announced its intention to open a trade office in Baghdad. Editor: Crispin Hawes All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 1st quarter 1998 © The Economist Intelligence Unit Limited 1998 4 Iraq Political structure Official name Republic of Iraq Form of state Arab socialist republic based on provisional constitution of 1968 Legislature National Assembly of 250 members, elected from 56 constituencies; last elections March 24th 1996 Head of state President, currently Saddam Hussein, elected by the Revolutionary Command Council (RCC), the highest national authority Executive Cabinet chosen by the president, who regularly replaces individual ministers Main political parties Arab Baath Socialist Party; Democratic Party of Kurdistan; Kurdistan Revolutionary Party. Opposition parties (illegal): Supreme Council for the Islamic Revolution in Iraq (SCIRI), comprising six Shia parties; seven Kurdish parties including the Kurdish Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK); Iraqi Communist Party; Democratic Gathering; Iraqi Socialist Party; Independent Nationals Prime minister Saddam Hussein Deputy prime ministers Tariq Aziz Taha Yassin Ramadan Mohammed Hamza al-Zubaidi Ministers & ministers of state Agriculture Abdullah Mohammed Saleh Culture & information Himam Abdel-Khaliq Abdel-Ghafur Defence General Sultan Hashim Ahmed Education Fahad Salim al-Shaqra Finance Hikmat Mezban Ibrahim Foreign affairs Mohammed Said Kazem al-Sahhaf Health Umid Midhat Mubarak Higher education & scientific research Abdel-Jabbar Tawfiq Mohammed Housing & reconstruction Maan Abdullah Sarsam Industry & minerals Adnan Abdel-Majid Jasim Interior Mohammed Zimam Abdel-Razzaq Irrigation Mahmoud Diyab al-Ahmed Justice Shabib Lazem al-Malki Labour & social affairs Abdel-Hamid Aziz Mohammed Saleh Military affairs General Abdel-Jabbar Khalil Shanshal Oil Amir Mohammed Rashid Trade Mohammed Mahdi Saleh Speaker of the National Assembly Saadoun Hammadi Central Bank governor Isam Rashid Huwaish EIU Country Report 1st quarter 1998 © The Economist Intelligence Unit Limited 1998 Iraq 5 Economic structure Latest available figures Economic indicatorsa 1993 1994 1995 1996 1997 Nominal GDP (ID m) 1,618 6,470 22,481 73,064 273,989 Real GDP growth (%) 0.0 0.0 –0.7 0.0 25.0 Consumer price inflation (av; %) 175.0 300.0 250.0 225.0 200.0 Population (m) 19.5 19.9 20.5 21.3 22.0 Merchandise exports fob ($ m) 750 771 814 1,482 5,540 Merchandise imports cif ($ m) –1,000 1,000 1,155 1,793 4,251 Current account ($ m) –250 –229 –438 –336 –541 Oil production (’000 b/d)b 480 530 550 580 1,142 Total external debt ($ bn) 97 101,184 107,185 112,986 119,295 Exchange rate (av; ID:$)b 0.311 0.311 0.311 0.311 0.311 January 26th 1998 ID0.311:$1 (official rate) Origins of gross domestic product 1989 % of total Components of gross domestic product 1989 % of total Agriculture 5.1 Private consumption 56.1 Oil 61.3 Government consumption 32.9 Industry 11.6 Gross fixed capital formation 28.7 Services 22.0 Change in stocks –20.6 Total 100.0 Exports of goods & services 26.7 Imports of goods & services –23.8 Total 100.0 Principal exports 1989a $ bn Principal imports 1989a $ bn Crude oil 14.5 Civilian 5.0 Total incl others 14.6 Military 2.7 Total 7.7 Main destinations of exports 1995 % of total Main origins of imports 1995 % of total Jordan 83.9 Jordan 48.7 Greece 5.1 Hungary 14.6 EU15 7.6 Switzerland 7.6 Germany 2.1 EU15 13.4 a EIU estimates. b Actual. EIU Country Report 1st quarter 1998 © The Economist Intelligence Unit Limited 1998 6 Iraq Outlook for 1998-99 Threats of military action By late January tensions between the regime and the international community, will not produce a particularly the US and the UK, had reached a crucial stage.
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