I am pleased to represent the government of Iraq at this important forum. I bring you the greetings of President Talabani and Prime Minister Maliki and their best wishes for your success. It is undeniable that the transition in Iraq has been difficult and a source of frustration for Iraqis and their friends. However, while acknowledging the challenges and the setbacks, we must also recognise the remarkable progress that has been achieved. As I reflect on that arduous journey of the last few years, we can say that a devastating civil conflict has been averted as Iraqis from all different backgrounds and identities rejected extremism and divisive ideologies. Iraqi security forces have not only grown in size and equipment, but also in skill and in confidence. Today, Iraqi soldiers and police are initiating and leading operations across Iraq, and are gaining the trust and support of the population.
The provision of security is undeniably our top priority, and a key objective. Security incidents remain at their lowest levels since early 2004. Until not so long ago, entire areas such as Anbar province were deemed lost to al-Qaeda. Now these regions have become denied to al-Qaeda terrorists, and the extensive security operations that had been implemented during the early part of this year have indicated significant progress in readiness and ability of Iraqi commanders to lead their own operations with a supporting role from the multi-national forces.
Five years on from the liberation of Iraq, it was recognised that the time had come for both the United States and the sovereign Iraqi government to define more clearly the status of the American forces in Iraq in the context of our partnership and in the battle against extremism and terrorism. The government has concluded the negotiations on a security pact, and also on a strategic framework agreement on friendship and cooperation with the United States. Our parliament has just ratified these two agreements. This has been an important achievement for us and our partnership with the United States. We also expect that very soon the Security Council will end the restrictions imposed on Iraqi sovereignty since the invasion by Saddam of Kuwait. We all say that it is time that Iraq’s normal, legal and international standing is fully restored.
The security pact also defines clearly the time lines for the redeployment and withdrawal of American troops from Iraq. American military will be leaving the urban centres of Iraq by June 2009. And all of Iraq’s provinces will be turned over to Iraqi security control. We are working on developing our security capabilities with the help of the United States and NATO, so that by the end 2011 when the US troops are scheduled to leave, our troops will be able to fully discharge their security responsibly. This agreement also clearly stipulates that Iraq will not be used as a staging post for aggressive acts against our neighbours, who we hope will understand that the objective of this agreement is to bring about an enduring stability and prosperity for Iraq, and that should be a common interest for Iraq and our neighbours.
Iraqis and their political leaders debated these agreements intensely and openly, and it was remarkable that an overwhelming majority in parliament – transcending ethnic and sectarian affiliations – voted to ratify these agreements. It was recognised that these agreements were vital to the security and long-term stability of the country, and for restoring our sovereignty. While facing off the terrorist onslaught has been a priority for Iraqis and our allies, politics remains as crucial as ever. True, we achieved significant milestones in the political arena, but we still need to resolve fundamental issues that are afflicting our society such as constitutional amendment, internal boundaries, financial resources management and oil ,for example. There is now growing recognition in Iraq of the need to address these fundamental issues, and to make sure that the various constituencies in the country can be brought together as part of a national pact. Our hope is that as we had a security surge in the last year and a half, the time has come for a political surge to fix the flaws afflicting our political system, and to resolve the underlying political issues of our country. The security gains cannot be sustained without a viable power sharing arrangement involving Iraq’s main constituents and ensuring national unity against terrorism and extremism. As Secretary Gates has just said, these security gains are reversible and precarious. We need to make sure that through a political pact, these security gains are consolidated.
The bombing in Kirkuk on the last day of Eid was a reminder to all Iraqis that terrorism knows no religion, no sect and no ethnicity. My hope is that that bombing will bring us closer together to ensure we will be able to overcome what ever political differences we have because there is a lot more that unites us than divides us. I would dare say that this national pact that we aspire to in Iraq needs the support of the international community and indeed this region. It is time that this region, and particularly our Arab brothers, embrace this emerging reality in Iraq and deal with it for what it is. In that context, I would also want to say that the time has come for our Arab neighbours to relieve Iraq of the burden of debt and reparations that have been imposed on my country as a consequence of Saddam’s aggression and mismanagement of Iraq’s economy.
Harnessing Iraq’s human and natural wealth is also critical to attaining our vision for a peaceful and democratic Iraq. Contemporary Iraq has been the most painful paradox: a country endowed with unparalleled natural and human resources, yet these were turned into means of repression, war and aggression. Iraq has been reduced to an economic wasteland as a result of decades of mismanagement, war, corruption and sanctions. Iraq’s wealth and economic potential were not harnessed for the benefit of the people of Iraq, and indeed became a problem for the entire region as well. The last five years have not been easy because of the security and political challenges that we faced.
However, despite these, significant economic developments have also taken place. We have managed to reduce annual core inflation from 36% at the end of 2006 to 12% by now. Iraq now funds almost all of its reconstruction, and the lion’s share of the cost of its security forces. Budget execution is improving. In 2006 we were only able to spend 24% of our investment budget. In 2007 this rose three times, to nearly 63%. This year we expect to spend nearly 85% of our investment budget. The per capita income in 2003 was $465. It passed $2,100 in 2007, and unemployment has been reduced from a rate of around 28% in 2003 to an estimated 17.5% by the end of 2007. Further, our economic growth rate is expected to top 9% this year. Measures to demonstrate transparency in oil-related data have been introduced. The government has also joined the Extractive Industries Transparency Initiative, and Iraq has ratified the UN convention to combat corruption. However, our economy – I have to admit – remains critically dependent on oil revenues, and the recent decline in oil prices will undoubtedly have serious implications for our economic situation. We are already revising our budget expenditure for 2009, and we expect a challenging year for 2010.
The financial crisis is giving urgency to the imperative of diversifying our economy beyond oil. We realise that, regardless of oil prices, the regeneration of our economy cannot and will not be achieved through public spending alone. We need a partnership with the private sector, and we need to promote an investment environment that can harness the amazing economic potential of our country. The government wants to encourage private sector investment and develop a strong private sector to serve as the engine of growth for the economy. The example of the Kurdistan region is instructive. Private sector investment has helped the economy of that region to make Kurdistan a hub for economic and construction activity for the whole of Iraq. Iraq welcomes foreign investment and we are working to develop an increasingly suitable climate for investors. Our message to our brothers in the Gulf: look at Iraq as an opportunity. Given the changing dynamics for security and politics, I dare say Iraq is ready for business.
The government is also actively working to remove barriers to private banking. It has agreed with the IMF to complete a comprehensive set of prudential regulations for commercial banks by the end of this year.
The economic regeneration of Iraq and its integration with the economies of the region will lift the entire region. Despite the political and security challenges, we all need to look at Iraq not as a problem but as an opportunity to help launch the entire region towards recovery and stability. There is a new beginning in Iraq today, as it emerged from the conflict, Iraq is seeking to reengage with its neighbours and the international community on the basis of mutual respect and benefit. A confident Iraq is emerging from 35 years of tyranny and the difficulties of the last five years of transition.
For the first time in contemporary history, Iraq is seeking full integration into the global economy, with all the benefits this promises to both Iraqis and their international partners. The world economy today needs Iraq and its resources more than ever before. This is truly a unique opportunity to engage with one of the most resource-rich countries in the world. Iraq is looking forward to mutually beneficial cooperation in the energy sector. Discussions on the supply of gas to Europe and laying pipelines to Turkey, Syria and Jordan are examples of such trans-regional cooperation. And Iraq has a lot more to offer in this area. Based on estimates made 30 years ago, Iraq has 115 billion barrels of proven reserve. Current estimates put Iraqi reserves at three times this stated amount. Current oil production, however, stands around 2.5 million barrels per day, a figure that has not changed in decades and should be enhanced to at least six million barrels per day in the coming 3-4 years, provided that the current internal, bureaucratic and legal impediments are resolved.
Iraq’s transportation and infrastructure systems need to be integrated into our neighbouring countries, and that will also be key to our common economic interests. We need to enhance border trade, and expand the motorway connections between Iraq and our neighbours. More importantly, we need to invest in connecting our rail systems and our electricity infrastructure. We also need to work on sharing trans-boundary resources. For example, Turkey and Iraq share the Tigris and Euphrates rivers. The rivers are a precious shared resource that is critical for revitalising Iraq’s agricultural sector and reclaiming the marshlands. Similarly, there are many other trans-regional economic opportunities for Iraq and its neighbours, especially in the Gulf, Iran and Turkey that could be seized to create a vibrant and free economic market.
Saddam’s Iraq, for nearly 35 years, has been a source of conflict and instability. Iraq has also been the domain of conflict and rivalry amongst international and regional actors. The new Iraq seeks to be at peace with itself and its neighbours. We want to emerge as a domain of converging interests, and a catalyst for wider regional security and economic cooperation. Iraq’s long-term stability cannot be assured unless the region, the United States and the international actors work together to help Iraq definitively defeat al-Qaeda and Saddamism and other forms of extremism, and the region will certainly not know peace unless Iraq is finally and definitively peaceful, and an integral part of this region.
In the framework of Iraq and its neighbours meetings, regional actors, the United States and other permanent members of the Security Council, were brought together with a focus on Iraq. This process could be expanded to discuss wider regional security, political, economic and cultural issues, and perhaps lead to a process that can help bring about a collective security arrangement and economic partnership that will hopefully bring Saudi Arabia, the GCC with Iraq, Turkey, Iran, Syria and Jordan. This will be an important forum for the regional actors, the key players in this region, Iraq and its neighbours and the international actors the United States and the other permanent members of the Security Council to debate, evaluate and pursue dialogue and regional security and economic cooperation. We hope that this could be the start for a wider regional cooperative framework.
If Europe could overcome its prejudices and centuries of conflict, I do not see why our region cannot move away from these episodes of conflict. Perhaps like Europe, it took the defeat of Nazism to harness the common economic and security interests of the European nations towards the ECC today. Perhaps the defeat of tyranny in Iraq, the defeat of al-Qaeda in Iraq, may offer us the catalyst towards a more cooperative regional framework. Harnessing Iraq’s huge economic potential will be key to this dream becoming a reality. Iraq has been the missing link, and as usual, Iraq is the ultimate paradox: it is either a source of conflict and a cause for rivalry, or a catalyst for a fundamental realignment for a cooperative regional economic and security order.
Mr Chairman, Iraq has the potential, the people and the natural resources, and now the democratic and free market institutions, albeit fragile and nascent, and the location that could make it a regional economic leader. Iraq is the land link between the vibrant economies of the Gulf and Europe. We seek your partnership in brining peace and prosperity to Iraq and the entire region.