Energy and Economic News

Iraq is increasing oil output. After dropping production in September, the Oil Ministry has ordered October increases of more than 250,000 barrels per day (bpd) across eight fields, according to an Iraq Oil Report survey of nearly a dozen oil field officials. The move will almost certainly put Iraq well over its OPEC quota at a time when the OPEC-plus coalition is stressing the importance of full compliance in order to avoid another collapse in global oil prices. But the Iraqi state is also feeling competing pressures to raise production: not only is the government desperate for extra revenue, but the cuts have put a major strain on the ministry's relationship with international oil companies. Read the full story on Iraq Oil Report.

Iraq is so vulnerable to oil price shocks mainly because it has a weak non-oil economy. The Iraq Energy Institute has just released its third-quarter review of Iraq’s non-oil economy, providing valuable context for understanding the importance of the Iraqi government's recent white paper on economic reform. The IEI report highlights structural barriers to implementation: political leaders have habitually opposed tax hikes and spending cuts; and, at Iraq's border points, corrupt armed groups siphon tariff revenues. If the government can muster the political force to overcome some of those problems, there are plenty of sensible measures it can take to cut costs and revamp the economy.

A Word from Our Sponsor

Put your message here. Every week, thousands of industry leaders, government policymakers, and opinion influencers open This Week in Iraq to understand the latest developments in Iraq and its energy sector. It's a great space to promote your brand and reach clients. For sponsorship details, please e-mail us at advertise@iraqoilreport.com.

National News

Prime Minister Mustafa al-Kadhimi cannot control Iraq's network of Iran-backed armed groups. A new piece from Reuters takes readers inside Kadhimi's June attempt to arrest more than a dozen members of Kataib Hezbollah, and the paramilitary group's forceful response that showed the prime minister the limits of his own power. "During one call, a senior Iraqi leader with strong ties to Iran instructed the security chief for Baghdad’s fortified Green Zone... not to stand in the way of militiamen who were storming the area," Reuters reports, citing two Iraqi security officials familiar with the intercepted phone call. The incident highlights the difficulty of Kadhimi's balancing act, as he comes under pressure to stop rocket attacks on the U.S. embassy in Baghdad and other American interests in Iraq — without having the political foundation or military firepower to take anything except incremental steps.

This Sunday many Iraqis will be observing an infamous anniversary. One year ago, on Oct. 25, 2019, various Iraqi security forces and armed groups began a campaign of deadly violence against a protest movement advocating for an overhaul of the country's political system. At least two dozen protesters were killed in a single 24-hour period. Former Prime Minister Adil Abd al-Mahdi's mismanagement of the government's response was one major factor leading to his resignation.

The entire political class is to blame. In a new report for the Institute of Regional and International Studies, Renad Mansour says the state's behavior under Abd al-Mahdi was unusually violent largely because of structural problems that were more than a decade in the making. In response to previous protests, for example, former Prime Minister Nouri al-Maliki essentially bought peace by putting thousands and thousands of aggrieved citizens on the public sector payroll. That policy has now left the state bankrupt. "Beginning in Basra in 2018 and Baghdad and southern Iraq after October 2019, leaders no longer had the financial means nor public buy-in to rely on economic incentives and ideological levers, and thus they began resorting primarily to violence," Mansour writes. Kadhimi's efforts at reform have so far included meaningful gestures without producing major results — in large part because "he has also allowed the political parties that put him in power to continue their unaccountable politics and revenue generation, and violence against dissenters continues." The result is that Kadhimi enjoys support from neither the protesters nor the political elite. Mansour urges the prime minister to pick a side. "With another term as premier being exceedingly unlikely, the Kadhimi government should focus less on political survival and more on leveraging its remaining political capital in the year ahead."

Many Iraqi youth are calling for renewed protests. Writing for the Atlantic Council, Raghad Kasim says that, although the protest movement still has no unified leadership, and although many of the basic demands remain the same as last year — including provision of basic services and employment opportunities — the movement is now likely to be framed by national elections that are expected in 2021. “The demonstrations have evolved from a focus on socioeconomic issues to political demands, calling for the approval of the election law and the holding of early elections,” Kasim writes. The violent response to the protests last year has also created additional demands, of accountability for leaders of security forces and armed groups who oversaw the killing of more than 600 protesters.

“There’s an Iraqi saying that translates as: ‘Walk by the wall,’” writes Ali al-Baroodi, in Newlines Magazine. “It means stay off radar. Keep out of trouble. But when you grow up in Iraq, as I have, trouble has a way of finding you.” Baroodi grew up in Mosul, a city characterised by cultural and religious diversity. It suffered under Saddam Hussein, and his co-opting of religion to reinforce power. Then it suffered under the U.S. occupation and insurgency; and under the self-proclaimed Islamic State (IS) militant group; and from the devastating bombing campaign and urban warfare that ultimately ousted IS. A professor and photographer, Baroodi explains what it means to see your city hit trouble time and time again.

Sign up

Sign up here to receive This Week in Iraq in your inbox.