Basra’s Mighty Petro-Dollar

Posted by on Mar 21, 2014 | Leave a Comment

Basra is one of the country’s wealthiest provinces in terms of oil it produces; its budget for 2014 is bigger than some small countries’. Yet somehow the money doesn’t seem to be improving locals’ lives. Provincial authorities hope this year will be different – only the central government in Baghdad seems to be standing in their way.

Authorities in the province of Basra have many plans to improve the lot of their people – the province is one of Iraq’s biggest oil producers yet somehow the revenue from oil sales never seems to return in sufficient amounts to alleviate poverty and to allow completion of projects such as roading and housing in the area.

Still maybe this year will be different. Local politicians have high hopes, saying there is more money than ever and that various deals have been done with international firms to try and circumvent local corruption and inefficiency and to improve the region’s services.

Indeed the province’s income for 2014 will be as much as US$15 billion. This includes amounts still owed from 2013 and the amount agreed upon last year when Law 21, which governs the powers that Iraq’s provinces can have, was amended. The amendments to Article 44 of the law firmed up how much an oil producing province should get per barrel of oil: five petrodollars per barrel of oil or 150 cubic meters of natural gas.

“Basra’s budget is higher than Jordan’s,” local economist Adnan Farhan, said. “This puts the province ahead of other Iraqi cities in terms of growth and construction – if the budget is properly spent,” he cautions.

Majid al-Nasrawi, the new governor of Basra since the last round of provincial elections in 2013, is enthusiastic that this can happen.

“If funds are able to be controlled by the provincial government that will make it easier for us to complete important projects here and sign off on projects we have asked international companies to undertake,” he says.

“There are some huge projects planned,” assistant to the governor, Muhannad al-Saad, explained. “Things like the building of medical, industrial and media villages. Additionally we want to build a suspension bridge over the Shatt al-Arab waterway and a hydropower project is also planned as is a programme to try and train staff to reduce administrative and financial corruption.”

Al-Saad admitted there were around 1,500 unfinished or delayed projects that were to be completed in 2014 and that this budget would be covering those too.

But of course, as always in Iraq, things are not that easy.

Local authorities are often at the mercy of central government planners. Most of the proposed provincial projects are supposed to be approved by committees in Baghdad, who can take up to six months to make a decision. Even after they do approve them – if they do – the transfer of funds to start the projects can also take time. Sometimes funding doesn’t arrive in the provinces until April.

Article 44 of Law 21 is not yet in effect – the law has been suspended by the Iraqi central government. Previously Iraqi Prime Minister Nouri al-Maliki had been supportive of the amendments, which give provincial governments a lot more power over their own affairs and mean that not every single thing needs to go through Baghdad.

But because provincial elections saw power shift from al-Maliki’s own party and partners, and because Baghdad is currently not in total control of some of Iraq’s provinces, including Anbar, the new version of Law 21 is apparently no longer so welcome.

“The Prime Minister has suspended this law in order to reduce the powers of these provinces and to get them under central control,” says Ali Faleh al-Kanaan, public relations officer for the local branch of Iraqi political party, the Islamic Supreme Council of Iraq, to which Basra’s new governor also belongs. “The Prime Minister has done this because he is heading more and more towards centralizing power in Iraq. That is even though most of the projects started in Basra by ministries in Baghdad have not been completed.”

“As a result the governor is facing a lot of obstacles,” al-Kanaan continued. “They have been put there by the central government and by parties in the province who are linked to the central government. There are some who do not want the governor to succeed,” he added.

Currently Basra’s governor al-Nasrawi is putting a lot of faith in international consultants in the hopes that he can avoid mistakes made by former local regimes.

“The presence of foreign consultants should reduce some of the dysfunctional practices here,” said Abbas al-Jurani, a leading member of the local communist party in Basra. “By making them responsible the amount of commissions, paid to people who were supposed to be managing these various projects, will be reduced.”

But al-Jurani isn’t totally sure this new strategy is going to change much because, as he says, “conflicts over the projects have a political dimension, and in fact, those conflicts are often ultimately personal ones.”

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