Jamal Fuad, Ph.D,
Retiree, FAO and the World
Bank, International Consultant
Last year, on 15 January,2015, I published an
article in the English edition of the Rudaw,
under the same title as this, “How to
Keep Kurdistan Safe”, which was read by over 5,000 people[1].The
main point I had emphasized then was that we must not depend solely on oil for
our budgetary needs, and therefore we must find other financial venues to
supplement the oil revenue. As oil prices have been on the decline, it is
essential that we think again and try to develop other sources of income to
bolster our budget.
Firstly, we must cut down on the imports of items
we can do without. We also need to raise tariffs on imports of items that we
can produce locally. The current unhindered importation of just about
everything has weakened our financial status and has drained the national
budget which has become unsustainable.
Our finances have also been very much burdened by
an unexpected war on our doorstep, decreased oil revenues, and the lack of
other enterprises by which we can supplement our budgetary needs. I find it
appropriate to expand on the ideas I had introduced earlier and then point out
some luxuries that we could do without.
It is unfortunate that after 10 years of our self-rule
the supply of electricity remains insufficient. Water, health services, and
education facilities are still inadequate, in spite of a fair supply of funds
from the oil sector of over $100 billion over the past 10 years. The problem
has escalated to a degree that KRG (The Kurdish Regional Government) has not
even been able to pay regular government salaries to its civil service staff. We
have never faced this last situation at any other time in the history of the
KRG, including the difficult years when the Region was under sanctions from
Baghdad in the 1990’s.
Civil servants depend solely on their monthly
salaries to pay for their daily cost of living. The merchants likewise eagerly
await the end of the month to accommodate the needs of the civil servants.
Therefore, non- payment of salaries, not only paralyses the civil servants but
also jeopardizes the whole market environment.
The Kurdish Regional Government (KRG) has also
been unable to pay the hundreds of contractors who were engaged to work on
public projects. Many of
these have now been declared bankrupt and ceased
working, resulting in large numbers of unfinished rehabilitation projects and a
further increase in the rate of unemployment. In addition, as a result of unwise
financing, excessive cash flow out of the country, in addition to corruption
and excessive money laundering our banks have been left without sufficient
monies. Such banks have not been able to honor checks from their customers or
even repay them the money owed to them.
We may ask just where have we gone wrong, and why
have we failed in providing our citizens with the amenities they deserve?
Such queries are common among our people, and I do
not wish to repeat them here. However, I will try to take a positive stand and
direct my efforts to finding solutions rather than dwelling on the mistakes of
the past. I shall try to point out specific excesses that can be altogether
eliminated. I am confident that, with some courage and determination, KRG can
find ways of getting out of the current budgetary crunch. So let us first
discuss where can we save money, and then what can we do to find sources of
funds whereby the budget can be supplemented.
1. A sizeable amount of funds can be saved through
the substitution of foreign imports of food items with those produced locally,
or alternatively imposing required tariffs to eliminate competition. We have the
land, the water, and the climate to grow just about every food item we are
importing. We can also raise sufficient poultry and livestock that we require.
What we really need is a sound agricultural policy that sends farmers back to
their lands[2].
Special incentives, such as the provision of improved seeds, tools and farm
equipment, fertilizers and biological control chemicals plus improving marketing
facilities will give farmers the confidence they need return to their farms. Implementation
of a sound agricultural policy, restriction of imports, and provision of
technical and financial support, will facilitate the rejuvenation of our
agricultural sector and produce the agricultural products we need.
2. Support of a farmers' union is essential to strengthen
their bargaining power in the purchases of agricultural inputs and finding
marketing opportunities for their products.
3. With the revival of the agricultural sector,
agro-industries must be supported to produce the cooking oil we need, the
pasta, the tomato paste, fruit juices in addition to canned vegetables and
fruits.
4. Revival of the agriculture sector would also
decrease the current high rate of unemployment and it would discourage our
young graduates from seeking employment abroad.
5. Due to the political circumstances, large numbers
of our farmers have been away from their
farms for many years, some are now too old to return to their profession, while
their children never had an opportunity to engage in any farming operation.
Under the reign of Saddam, farmers were forced out of their profession and were
forced to live in collective camps, while others vanished in the Anfal campaign. Anfal: In 1988, the former Baathist Authority, depending on
a chapter in the Koran(The Anfal), uprooted 182,000 village population and sent
them to their death in the South of the country. Therefore their surviving
children need a strong extension system to re-educate them on farming
practices. Setting up adult education centers to teach farming practices to the
emerging young farmers is a step in the right direction.
6. To encourage farmers to utilize their lands, I
recommend that a
land
tax be laid on any agricultural land left uncultivated or unused.
Farmers
who do not cultivate their land, may also relinquish such lands to others who
can utilize it for agricultural purposes, or to lease such land to agricultural
companies for crop or animal production
With respect to other measures, I would like to
add the following points for consideration by the authorities:
1.
The region's banks have lost public confidence, which is an unhealthy economic
sign. It is important that the KRG takes immediate action to improve public
confidence by enacting bylaws to guarantee that monies deposited in the banks
are protected. It is vital that all
business operations are carried out through the banks and that financial
transactions go through them as well. Funds deposited at the banks can be an
important source of funding which can be borrowed for project implementation.
Furthermore banks must stop dispensing excessive loans without sufficient
collateral and thereby put their liquidity of funds in jeopardy.
2.
Transfer
all excess security staff to the Ministry of Interior. Such staff could be
reassigned to work at public facilities, become part of ongoing projects,
municipalities, parks, airports, etc. Such a program will gainfully employ the thousands
of security staff, who currently are idle and attend their work places only 50%
of the time and spend the rest in meeting their personal needs by driving
taxis, or working as laborers to gain extra cash during their leisure time.
3.
The
recruitment of a thousand of so called ”guards” or un-necessary security staff
has decreased the amount of available local labor that can be employed in
necessary local rehabilitation works.
4.
Similarly
the contingent of staff assigned under the name of “consultants” needs to be
abolished. Only highly specialized staff with proven records must be employed
for consultation duties.
5.
The
government should declare it a rule that except for the sick, old, and the
disabled, no one should be paid unless he or she is actively performing a duty.
Salaried staff must attend their designated place of work each day for the
hours required by law. “Shadow” workers must be completely eliminated.
6.
Our streets and highways have been overcrowded
with thousands of imported vehicles. A higher tariff on personal autos and
luxury cars can substantially lower imports. I suggest that importation of all
personal and luxury cars be stopped for at least one year to minimize foreign
expenses
It is important that the government initiates an
annual taxation system of its citizens whose income passes a certain threshold.
Monies received from such taxation can be used for financing certain city or
village activities such as supporting fire departments, school activities,
parks, building community halls, or to cover certain training needs of the
citizens.
Oil money must specifically be used to increase
our industrial and agricultural capabilities and to open vital venues for
decreasing imports of industrial and agricultural items.
We can produce just about every food and feed items
we need: Cereals (i.e. wheat, barley, and maize),potatoes, onion, legumes (i.e.
chick peas, lentils, fava beans, etc.), in addition to sugar beets and oil
crops of sunflower, and soybean. There is much room for expanding our dairy and
poultry farms. Vast range areas are available to satisfy our livestock, sheep,
goats, and cattle.
We may face some difficulties at the start, but
eventually, once the local producers, the farmers find out that their products
can be sold in the market, they will increase their efforts and improve production
methodology to provide for market requirements in a short time. We need not
import carrots from Australia, or lettuce from Iran, or other out of season
fruits and vegetables from our neighbours. We do not need to import poultry and
beef from South America. These items, with a minimum help from the government,
can easily be locally produced.
Here I must emphasize the need for preserving agricultural
land. We need every square metre of agricultural land and must be very careful to
cease utilising this our most precious wealth for housing projects that can be
put on any non-agricultural lands, such as rocky or barren lands of which we
have plenty. We have already lost a great deal of our prime agricultural land
in Kurdistan, and we cannot afford to lose anymore.
To generate animal feed, it is essential that we
set up feed production centers and to do so we must support the production of
maize and soybean, which are the two main ingredients of animal and poultry
feed.
A Note on Current Wheat Subsidy:
The Federal Government of Iraq has been running a
project of wheat subsidy for a number of years, with the idea that this policy
ensures the increased production of wheat essential for food security. Under
its scheme the government buys the local wheat at a price three times higher
than on the world market. The world price is in the range of US$250 to US$300/ton,
while Baghdad has set the purchasing price at about US$700/ton.
This policy not only has opened wide a door for
corruption, but it has negatively affected production of other vital cash
crops, such as maize and soybeans which are also important ingredients for
livestock and poultry feeds. This policy is not only economically unsound,
prone to corruption, but has also affected the local production of other
essential crops.
It is strongly suggested that the Federal Government
cancels this project and insure wheat is bought at the international price,
minus the cost of transportation. Rumors indicate that certain individuals
bring wheat from neighboring countries, bought at the international price of
$250 per ton, and then receive $700 per ton from the hoodwinked authorities.
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