Iraq’s Protests Raise Question: Where Does the Oil Money Go?

Iraq’s Protests Raise Question: Where Does the Oil Money Go?

By Samya Kullab

 BAGHDAD (AP) — Waves of violent protests have engulfed Baghdad and Iraq’s southern provinces, with demonstrators chanting for the downfall of a political establishment that they say doesn’t prioritize them.

Fueling the unrest is anger over an economy flush with oil money that has failed to bring jobs or improvements to the lives of young people, who are the majority of those taking to the streets. They say they have had enough of blatant government corruption and subpar basic services.

At least 320 people have died, and thousands have been wounded since the unrest began on Oct. 1.

“We are jobless and poor, but every day we see the flares of the oil fields,” said Huda, an activist in Basra, the province that accounts for the lion’s share of Iraq’s crude exports. She spoke on condition she be identified only by her first name for security reasons.

“Where do the millions go?” she asked.

It’s a good question. Oil accounts for roughly 85-90% of state revenue. This year’s federal budget anticipated $79 billion in oil money based on projected exports of 3.88 million barrels per day at a price of $56 a barrel. Iraq’s economy improved in 2019 due to an increase in oil production, and GDP growth is expected to grow by 4.6% by the end of the year, according to the World Bank.

FILE - In this Dec. 13, 2009 file photo, men work at the Rumaila oil refinery, near the Iraqi city of Basra. Iraq is rich in oil, but protesters say they don’t see the fruits of this wealth. Fueling the unrest is anger over an economy flush with oil money that has failed to bring jobs or improvements to the lives of young people, who are the majority of those taking to the streets. (AP Photo/Nabil al-Jurani, File)

FILE - In this Dec. 14, 2011 file photo, workers repair oil pipelines at Rumaila oil fields, near the southern Iraqi city of Basra. Iraq is rich in oil, but protesters say they don’t see the fruits of this wealth. Fueling the unrest, which began on Oct. 1, 2019, is anger over an economy flush with oil money that has failed to bring jobs or improvements to the lives of young people, who are the majority of those taking to the streets. (AP Photo/Nabil al-Jurani, File) 

The fruits of these riches are rarely seen by the average Iraqi because of financial mismanagement, bureaucratic inefficiency and corruption, experts and officials told The Associated Press. Overall unemployment is around 11% while 22% of the population lives in poverty, according to World Bank estimates. A striking one-third of Iraqi youth are without jobs.

“One of the main problems is that the oil wealth is spent on the public sector, and especially on salaries,” said Ali al-Mawlawi, head of research at al-Bayan Center, a Baghdad-based think-tank.

Iraq’s brand of sectarian power-sharing — called the “muhasasa” system in Arabic — effectively empowers political elites to govern based on consensus and informal agreements, marginalizing the role of parliament and alienating much of the Iraqi population in the process.

On the ground, this dynamic has played out through a quota system whereby resources are shared among political leaders, with each vying to increase networks of patronage and build support. To do this, leaders have relied on doling out government jobs as a foolproof method to preserve loyalty.

This tactic has bloated the public sector and drained Iraq’s oil-financed budget, leaving little for investment in badly needed social and infrastructure projects.

“That has been the approach,” said al-Mawlawi, “Patronage is based primarily on the provision of jobs rather than anything else. It’s the primary way to distribute resources — through the public sector.” In the 2019 budget, public sector compensation accounted for nearly 40% of state spending.

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