Iraq and Gulf Analysis

Archive for February 23rd, 2012

Triumph for Maliki as Iraq Passes the Annual Budget

Posted by Reidar Visser on Thursday, 23 February 2012 23:05

It took even longer than last year, but the Iraq annual budget finally passed in parliament today with a solid majority.

Many aspects of the budget are similar to last year, with small increases to all the main posts, roughly following the draft that was introduced in December 2011. The big money still goes to the central government and Kurdistan, with some added perks for the ordinary governorates. It is noteworthy that spending on electricity is sharply up compared with 2011, which must be a good sign.

Some special features of the last-minute changes to the original draft call for comment.

The Sadrists had demanded a petrodollar scheme by which a portion of Iraqi oil revenues would go directly to Iraqi citizens. This idea has indeed been included and was celebrated by the Sadrists as a win for their leader Muqtada. However on closer inspection it seems the money that will actually go to the citizens is whatever surplus is left after deficits have been covered, meaning that unless the oil price increases enormously, there may not be that much money to distribute after all.

Money has also been specifically guaranteed for the sahwa pro-government militias in Diyala and Nineveh. This is a response to a demand from the Wasat sub-bloc of the Iraqiyya coalition, and some parliamentarians suggested it constituted the main concession by the government in obtaining Iraqiyya support for the budget.

Last year, the Kurds pressed hard to obtain cost coverage for foreign oil companies operating in Kurdistan. This heading still exists, but the main Kurdish achievement this year seems to be the privilege of having the central government financing their electricity sector outside their fixed 17% share of the budget (at least, that is how some Kurdish politicians interpret the new arrangements). By way of contrast, oil is referred to in the same way as last year but with a somewhat Delphic reference to payment of costs to foreign companies “according to all articles of agreement between the oil minister in Baghdad and the KRG energy minister”. Whether this refers to the existing pragmatic cost-oil recovery scheme or something else (and maybe future) remains unclear.

As regards the governorates, the role of the governor in implementing investment projects seems somewhat strengthened and in some cases is defined as an exclusive prerogative. The petrodollar scheme for producing governorates also continues, and there is money for the pilgrimage cities (Karbala gets the lion’s share followed by Najaf).  Not all of the enhanced governorate focus is necessarily progressive – there are now for example governorate quotas for foreign scholarships. Also, regardless of what the budget says, much of this will depend on implementation capacity in the governorates, which is often substandard.

In this way – and perhaps with the added incentive for Iraqi parliamentarians to show up and vote since they will now get their armoured cars as a result of today’s vote – the budget passed despite a pessimistic outlook earlier in the week.

What it all amounts to is something of a triumph for embattled Prime Minister Nuri al-Maliki. Critics of this interpretation will perhaps say there are individual clauses in the budget that may limit prime ministerial freedom of action more than before. Some of his own deputies soured today and said silly things (Sunayd: “I consider resigning as a deputy because the parliamentary majority defeated me on article 36!”) But that is besides the point. What Maliki has achieved is a situation in which he doesn’t really need the Iraqi parliament for a long time, providing him with the cover he needs to take a relaxed attitude to demands for national conferences and the implementation of the Arbil agreement. To have achieved passage of the budget under adverse circumstances and with Iraq literally under fire from terrorists today is nothing short of a masterful accomplishment in statecraft.

It is quite emblematic of the situation in Iraq that earlier this week, Usama al-Nujayfi, the parliament speaker of the secular Iraqiyya, characterized Iraq as a “derailed train”. Today, Nujayfi went on to play exactly the role Maliki wanted him to play by shepherding the budget vote to a successful conclusion. Maliki plays it well when he manages to buy political support over the budget instead of making political concessions.

Symptomatically, perhaps, the Iraqi media almost forgot that another preparatory meeting for the elusive national conference had to be cancelled today because of the prolonged budget debate. That cancellation might well be a bellwether for Iraqi politics for the rest of 2012.

Advertisements

Posted in Iraq - regionalism - general, Oil in Iraq | 51 Comments »