Iraqi Finance Minister Ali Allawi has sparked widespread anger following his statements about public sector layoffs after ten years, due to the decline of the oil era, given Iraq’s reliance on oil to fund its financial budgets. Allawi, a seasoned financial expert, stated in a press conference, "Oil will collapse forever in ten years, and Iraq will lay off its employees due to the continued reliance on oil, which accounts for more than 90 percent of the state's revenues."
Although the minister's remarks included the necessity to diversify economic resources and turn to non-oil resources, such as tourism and revitalizing the private sector, they provoked a significant backlash among commentators and the public, not aimed at the minister personally, but rather at the way the economy is managed in the country.
Iraq witnessed a financial crisis in June 2020 when the government first borrowed to fund salaries and projects for three months. The crisis deepened in September of that year when the government failed to pay salaries, with delays of 45 days, prompting parliament to approve a second loan for the government.
**The White Paper**
Despite the current government, led by Mustafa Al-Kadhimi, announcing a large project for economic management in Iraq in the medium and long term, known as the "White Paper," achieving this requires a long time and stringent measures. The new plan includes controlling border crossings, activating the agricultural sector, enhancing the investment environment, and reassuring foreign companies through tangible measures, along with devaluing the dinar to encourage local products.
Experts argue that the economic decline currently facing Iraq did not happen overnight; it began during the oil boom fifty years ago, when the state relied on oil revenue and neglected traditional core sectors of the Iraqi economy, namely agriculture, industry, and tourism.
In recent years, Iraq has also witnessed poor management and militarization of society, producing the dire current situation when the Iraqi economy could have held a prominent position among the strongest economies in the region.
In the same vein, Iraqi economic expert Sarhad Al-Shamari believes that "the minister’s warnings are known to all, but what is more important is to launch and establish a new phase to reinforce the foundations of the Iraqi economy, such as tourism, agriculture, and industry, with clear programs to activate these aspects. The current government has worked on parts of this, but it needs more time."
Al-Shamari added in a statement to “Sky News Arabia” that “the anxiety and reaction of the Iraqi public to the minister's statements are valid, stemming from the citizen's growing ability to diagnose issues, understand flaws, and participate in decision-making.” He pointed out the necessity of distancing the economy from political problems and party disputes, which have always hindered development projects and canceled many of them.
**Defeating Oil**
The severity of warnings has increased with the advent of vehicles powered by alternative energy, whether solar or another type, which indicates a decline in demand for crude oil, a trend that neighboring countries are preparing for through numerous projects.
The Iraqi minister faced widespread criticism, with activists holding him responsible for setting the country on the right path rather than merely identifying problems that are often already well-known. Iraqi political specialist Fadl Abu Ragheef called for solutions to avoid any economic crises Iraq might face in the future.
He tweeted that "the finance minister's statements depict a bleak future for Iraq's economy, citing disappointing numbers and warning of empty state coffers while presenting problems without offering solutions." He stressed that “his speech urges future governments to seek the world’s best economists, as we need to transform our economy from rent-based to open and from importers to producers.”
Academic Ahmad Younis wrote, “I fully support the minister’s statement. The world is moving in a second direction and towards new policies, while we continue to rely on oil, which will peak in global demand by 2030 and decline before 2050.”
As of now, Iraq is still on its way to renewing its labor laws to move away from what is described as inherited socialism, dating back to the Baath Party's era from 1968 to 2003.
