Gas Week

EWN Publishing

Kurds within Iraq want to build own “feeder” oil pipelines to join the national system; Baghdad wary of independent moves as foreign oil firms look on

Posted by gasweek on 15 September, 2007

Several oil companies, mostly mid-sized and small independent ones, have signed deals with the Kurdistan regional government in Iraq, and a dozen more are in negotiation, all waiting impatiently for the government in Baghdad to give the green light, according to The Economist (8/9/2007, p.48).

Baghdad restraint on Kurdish trade: The Kurds say they can dish out export permits, though the authorities in Baghdad disagree. More to the point, the Kurds do not control the existing pipelines for export. So they want to build their own “feeder” pipelines to join the national one just before it reaches the Turkish border. Several Western firms hope to get in on this act.

Meager decade for Kurds in Iraq: Plainly, the Kurds are seeking to be independent in economics as a land-locked country can be: a huge challenge. From 1991 until 2003, when the Americans invaded, the Kurds depended on smuggling, minimal trade with neighbouring countries, foreign handouts and a share (often stingily and belatedly distributed) of the UN’s corrupt and maladministered oil-for-food programme.

New start struggles without banking, postal system: In the past few years they have tried valiantly to create an economy of their own. But they are starting almost from scratch. There is no banking (“We have no access to money” says Osman Shwani, the planning minister), no insurance, no postal service and in the past few years the Kurd’s budget has entirely lacked public scrutiny. Commercial law is less than rudimentary. There is a gaping lack of statistics. Mr Shwani freely admits he does not know the size of Kurdistan’s GDP.

“No one has ever paid taxes”: There is virtually no tax system. In theory, income tax of between 3 per cent and 10 per cent is paid by salaried earners. “But no one has ever paid taxes,” says Shwani. One of the biggest brakes on the economy is the vast proportion of people in the public payroll, which gobbles up about three-quarters of the budget.

The Economist, 8/9/2007, p. 48

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