Failure to pass economic laws is jeopardizing Iraq\'s economy
Experts and parliamentarians believe the delay in passing major economic laws in the current parliamentary session has cost Iraq billions of dollars in losses at a time when the country needs every penny available
Among these shelved reforms, the most important are those concerned with Iraq’s oil, according to Amira al-Baldawi, a member of the parliament’s economic committee. These are the Oil and Gas law, the law of the National Oil Company, the Oil Ministry law and Managing Oil Resources law.
In a statement to Niqash, al-Baldawi said that these laws are absolutely crucial to Iraq’s future, as the country’s has relied on oil for 83-93 per cent of its revenue since 2005. “Neglecting this very vital sector will mean neglect to other sectors because oil is of great importance for the advancement of Iraq,” al-Baldawi said.
Sami al-Atroushi, a member of the parliament’s financial committee, shared al-Baldawi’s concerns. “The delay in endorsing oil laws has brought huge financial losses to all institutions and thus it has affected citizens as well,” al-Atroushi said. “It is not only the parliament who should be blamed for the delay, but also ongoing political conflicts between the different political blocs, with each attempting to challenge the demands of other blocs. In some cases, the government is to be blamed because of the delay in submitting laws to the parliament for endorsement,” he said.
Al-Atroushi complained that many of the new investment projects Iraq is currently seeking to implement are still on hold because of the delay in endorsing the budget. “This will have fallout for investment projects that we want to implement,” he added.
Kamal al-Basri, a social scientist, said that the delay in issuing economic laws has social repercussions as well as financial ones. “The delay has led to a decrease in amounts allocated for investment and reconstruction projects with an estimated cost of $187 billion dollars. It will take twenty years to allocate such a sum, so people will continue to suffer from unemployment, poverty and deprivation,” al-Basri said.
Al-Basri told Niqash that “the delay or failure in passing economic laws such as custom duties, consumer protection and protection of local products, has had its impact on the Iraqi citizens because of the decrease in revenues.” For example, al-Basri said, the fall in revenue is not linked not just to oil but also to custom duties and other sources of taxes. Al-Basri said there were “other benefits that could be achieved if imports were controlled and if there were proper commercial protection policies to protect businesses and productive institutions.”
But the failure to endorse the new laws leaves other problems unaddressed too. Iraq’s markets sell even imported goods at rock-bottom prices. Sometimes the price of a product is lower in Iraq than in its country of manufacture. Worse still, some products are sold at a loss, proof of dumping by foreign companies, a trend which needs to be addressed.
Ragheb Bulaybel, the Head of the Iraqi Businessmen Union, complained that there is no law in place to combat the problem of dumping. “This will lead to the destruction of thousands of Iraqi factories that do not find any kind of protection,” he said. The Iraqi economy, according to Ragheb, is passing through a very bad crisis because we wanted to move away from the totalitarian type of economic policy that prevailed before 2003.
“But if we want to achieve this, we need to create an appropriate climate, that is, we need laws in place to make the transformation process a smooth and gradual one,” said Ragheb. “We should also give the private sector the opportunity to play a proactive role in this process instead of marginalizing it.”
“Drafting laws is a complicated process and takes a long time,” said Ragheb, giving the example of the not insignificant Protection of National Products law, first submitted to parliament in mid-2005 and not even discussed there until very recently.
Abu Taleb al-Hashimi, President of the Board of Directors at the Commercial Gulf Bank, stressed the importance of renewing and rethinking banking laws. “The existing ones limit the banks’ capacity to participate in the developmental process,” he said, giving the examples of the Banking law, which organizes banking operations, and the Securities law, which deals with trading in stock. “The central bank law should be reviewed and the bank should be given certain powers because the it should be responsible for monitoring the performance of commercial banks in Iraq,” al-Hashimi said.
“Our laws need to be quickly reviewed because they affect banking transactions,” said al-Hashimi. “The Iraqi justice system should be developed to deal more thoroughly with economic affairs,” he added. “There are a very limited number of institutions dealing with commercial and banking issues and we now need institutions to control violations.”
But it is not only the omissions that have harmed Iraq’s economy, according to Abdul-Razzaq al-Zuhairi, the head of the Iraqi union of the chambers of commerce. Some of the laws that were passed have been harmful too.
“This is because the laws that were passed were not implemented, such as the re-export law which will help traders avoid losses in case items delivered are not according to the needed specifications or if the products received are expired,” said al-Zuhairi. “A law like this will enable traders to re-export these materials. The Iraqi customs are not implementing this law, and the products, instead of being re-exported to the country of origin are being dumped in Iraq.”
Al-Zuhairi added that some laws had been passed but faced many challenges late in the day. The Investment law, which required time-consuming amendments, is one such example. “This law will not be helpful if other laws, which contain provisions contradicting it, are not amended, like the law which covers the sale and rental of government-owned property.”
Few disagree that opportunities have been squandered. The question now is whether the new parliament will issue the laws needed to boost the economy and, before even that, whether it can create the legislative environment where such progress is possible.