Thursday, November 06, 2008

The Iraqi Economy: A Tough Road Ahead

Sources: Iraq and U.S. Confer on Iraqi Economy, New York Times; The Iraqi Government Formed a Ministerial Committee to Review the Economic Policy, Iraq Updates

Representatives from the U.S. and Iraq met on Saturday to discuss ways to stimulate investment in business ventures in Iraq. Almost ninety-five percent of Iraq’s revenues currently come from oil exports, so with oil prices less than half of what they were this summer, officials are searching for new sources of money to help jump-start Iraq’s economy.

Prior to the meeting on Saturday, the Iraqi government formed a ministerial committee to review national economic policy and international perceptions of Iraq’s economy in light of the credit crisis and the decline in oil prices.

International perception is important to Iraqi finance minister, Bayan Jabr, as he emphasizes that foreign investment will be important to the country’s economic well-being. There are already talks of large reductions to Iraq’s 2009 budget, so Iraqi officials hope that foreign investment will help to prevent further budget cuts.

Iraqi officials note that the recent decline in violence should make investing in the country safer, although the United States is quick to point out that Iraq’s delay in signing a new security pact with the U.S. could effectively keep away investors.

Discussion: Do you think that investors will consider putting money into Iraq in the near future? If the global economy was not currently experiencing a credit crisis, would your answer be any different? Do you believe that the election of President Obama will play a role in the minds of those considering investing in Iraq?

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