War with Islamic State, low oil prices cripple Iraq's Kurdish region

IRBIL, Iraq - Less than two years ago, Iraq's northern Kurdish region was booming, as oil revenues poured in and foreign investors flocked to a rare island of stability in a turbulent region, but that all began to change when the black flags of the Islamic State group darkened the horizon.

See Full Article

Kurdish forces backed by U.S.-led airstrikes repelled an IS assault in the summer of 2014 and have been among the most effective forces battling the extremists. But low oil prices and a longstanding dispute with the central government over revenues, along with an influx of refugees, have crippled the local economy.

The regional capital, Irbil, is littered with half-finished or abandoned building projects -- hotels, offices and apartments that many had hoped would one day transform the largely autonomous region into a Kurdish Dubai. Foreigners attracted to the region by business opportunities and liberal social mores are leaving, civil servants haven't been paid for months and day labourers gather on street corners, hoping for work.

"The economy today has very bad indicators. Savings are running out, people are starting to borrow and cut their expenses, which is directly affecting the market's direction," said Nabil al-Ethari, an economic analyst and chairman of Development Iraq, a consultancy firm based in Irbil.

"The housing sector is declining in a way that has never been seen before, the trade sector, including car sales, is also seeing declines, and all this is connected to the important fact that the region's market is disconnected from its customers and markets in central and southern Iraq."

The relatively secure region was largely spared the unrest that convulsed Iraq following the 2003 U.S.-led invasion, but local authorities have been locked in a longstanding dispute with Baghdad over the sharing of oil revenues.

Kurdish officials say the regional government is entitled to 17 per cent of Iraq's budget, or about $12 billion a year. But the central government has withheld much of those funds to punish the region for exporting oil independently, and in the first half of 2015, the government received just $2 billion.

Low oil prices have exacerbated the economic crisis, as have fears about the IS group, which is manning front lines some 24 miles (38 kilometres) from Irbil. The region has also taken in more than a million refugees from Syria and other parts of Iraq, costing local authorities some $1 billion last year.

"It's all interrelated. The Daesh issue is connected to the economic situation," said Amjad Rafat, 35, a household appliances salesman in Irbil, using the Arabic acronym for the IS group. "You have the government employees, who have not been paid, along with the war, and these have all had a negative impact on us."

Economic growth in the Kurdish region was just 3 per cent last year, down from 8 per cent in 2013, and the poverty rate has climbed from 3.5 per cent in 2012 to more than 8 per cent last year, according to the World Bank.

"Before Daesh, our sales were very high. And that was only two years ago," said Rafat. "Now our sales have dropped dramatically. It's 5 per cent compared to 80 per cent before."

The region has no reliable statistics on unemployment, but experts estimate that the rate has doubled in the last two years.

"It has been two years that I haven't been able to find a job. There is nothing at all. Because of the war there is not much room for work and jobs," said 30-year-old Ayoub Tayib, an unemployed gardener.

"In 2013, 2012, and back to 2008, things were not bad at all. But now everything has disappeared, which makes me very worried," he said. "You almost prefer death to this life."

-----

Associated Press writer Salar Salim contributed to this report.



Advertisements

Latest Canada & World News

  • Peace parades mark 25th anniversary of Los Angeles riots

    World News CTV News
    LOS ANGELES -- Twenty-five years ago, a jury acquitted four white police officers in the beating of black motorist Rodney King, sparking looting and violence that would turn into one of the deadliest race riots in American history. Source
  • 'I just want to see her breathe': Woman meeting mom who got twin sister's lungs

    Canada News CTV News
    Strangers are meeting in Winnipeg this weekend, more than a year after a tragic event changed their lives forever. One night, in February 2016, 23-year-old Leanne Germain, 23, died of complications from taking the drug ecstasy. Source
  • Tories launch campaign rally as N.S. waits for election call

    Canada News CTV News
    HALIFAX -- Nova Scotia's opposition parties have officially launched their campaigns in anticipation of an election call that could come as soon as this weekend thanks to an apparent gaffe by the governing Liberal party. Source
  • Pope urges against war with North Korea: 'I don't think humanity today could bear it'

    World News CTV News
    Pope Francis is warning that "a good part of humanity" will be destroyed if tensions with North Korea escalate, and he is calling for diplomacy and a revived United Nations to take the lead in negotiating a resolution. Source
  • Halifax mother who gave birth in Superstore didn't know she was pregnant

    Canada News CBC News
    The husband of the woman who gave birth in a Halifax grocery store says the arrival of little Ezra was even more of a surprise than it first seemed: the mother didn't know she was pregnant. Source
  • Samantha Bee gets star support for her Not The Correspondents' Dinner event

    World News CBC News
    Washington's once-glitzy "nerd prom" is about to get overshadowed. Late-night TV star Samantha Bee was pulling in celebrities for the first Not the White House Correspondents' Dinner on Saturday — a tongue-in-cheek play on the real bash, where journalists, the president and, in recent years, lots of bold-face names have mingled. Source
  • Calculators included in places where teens stash their drugs

    World News Toronto Sun
    Does your teen spend a lot of time with his graphing calculator? That could be a sign of a drug problem, according to the DEA. On April 20, the Drug Enforcement Administration tweeted out a link with a simple imperative: Find out where kids hide drugs. Source
  • Teens face murder charges in death of Saskatchewan restaurant owner

    Canada News CTV News
    LA RONGE, Sask. - Three teens are facing murder charges in the death of a Saskatchewan restaurant owner who police say was fatally assaulted during a robbery at his business earlier this month. RCMP say three males, aged 18, 17 and 14 were arrested Friday afternoon without incident in the La Ronge area. Source
  • Ex Montreal borough mayor convicted of sexual touching released after 1 month

    Canada News CTV News
    MONTREAL - A lawyer for a former Montreal borough mayor says her client has been allowed to return home after serving a sixth of his sentence for sexually touching a minor. Renee Millette says Gilles Deguire was released from jail earlier this week after serving one month of a six-month sentence. Source
  • Chronicles of crime [Photos]

    World News Toronto Sun
    RANDY RINK RAT’S RAGE Thomas Clayton never stopped being a rink rat at heart. The girls, the parties, the fun. The former minor league hockey player couldn’t seem to grow up. Now, he’ll mature into old age in Attica. Source