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Iraq’s overreliance on oil threatens economic, political strife




With an economy so reliant on oil, Iraq has long faced a tough balancing act between the short-term gains that can come from ramping up production and the long-term problems that can arise from overproduction.

Last week, the Iraqi oil ministry announced that it was rectifying a swing too far in one direction when it announced that it would be curbing oil exports to 3.3 million barrels per day (bpd) after having exceeded since January a quota imposed by the OPEC+ oil cartel.

Production for March will be 130,000 bpd lower than in February, which will keep Iraq’s partners in the Organization of the Petroleum Exporting Countries (OPEC) content.

But future tensions could arise if Iraq hits any unforeseen economic hurdles and falls back on overproduction.

“The whole political economy is driven by oil,” an analyst, who asked to withhold their name due to the sensitivity of their work, told Al Jazeera.

“The budget is set by the oil price. If the price drops, they produce more.”

Reliance on oil

The Iraqi government needs to maximise the income it generates after parliament voted last year to pass a record-high budget of $153bn a year until 2025. It was presented as an investment in building Iraq’s future.

The country’s vast oil reserves played a huge role in its economy rebounding, a little over six years after victory was declared over ISIL (ISIS), which had previously taken over vast swaths of territory.

But some of the huge budget’s planned expenditure will also be spent on adding hundreds of thousands of jobs to an already bloated public sector to, according to analysts, gain the goodwill of Iraq’s 46 million-strong population, which grows by about a million people a year.

“That’s a fast rate of growth while the resources of the country are not only not growing at the same pace but actually, in some important areas, are in decline,” Sarhang Hamasaeed, director of the Middle East Program at the United States Institute for Peace (USIP), told Al Jazeera.

The Iraqi government relies on oil for more than 90 percent of its revenue. While non-oil gross domestic product (GDP) should grow in 2024, the overall economic outlook is tenuous.

In recent years, oil wealth led to growth, but the International Monetary Fund has predicted that growth would end due to OPEC-mandated production cuts and the shutdown of a pipeline between Iraq and Turkey.

Economists and analysts warn that the government’s plans rely on the price of oil remaining at $70 per barrel or above and production at 3.5 million bpd because any dips would derail the budget and cause myriad problems.

In short, they say, a series of short-term fixes could inflict long-term damage.

A decline could lead to serious economic instability, which would mean issues that have plagued the Iraqi federal government might return.

“This destabilising effect on the country has had and will have implications for vulnerability to employment or recruitment by violent extremists, terrorist organisations like al-Qaeda and ISIS, or armed groups,” Hamasaeed said.

Another potential issue is that the government is relying in its calculations on the inclusion of oil production from Iraq’s Kurdish region, governed by the Kurdistan Regional Government (KRG), which has not had a smooth relationship with Baghdad.

Tension with KRG

One of the key issues the Iraqi government needs to figure out, analysts say, is the complicated relationship with the KRG – a semi-autonomous region that remains legally beholden to the federal government.

One of the most contentious issues between the KRG and the federal government has been the management and sale of oil and gas.

“The KRG has interpreted its semi-autonomy to mean full autonomy at times, which has put it into conflict with Baghdad,” the analyst who asked that their name be withheld told Al Jazeera.

Last year’s massive budget passed in part because of a prior deal between Baghdad and Kurdish capital Erbil that gave Iraq’s federal government the power to monitor and audit the KRG’s oil and gas income.

However, even since the deal was agreed, the KRG has often circumvented the federal government and sold natural resources directly to foreign partners, leading to tension between it and Baghdad.

“Because of this, the federal government has used the national budget as a punitive measure: the constitution/law states that the KRG should get 17 percent of the national budget; the federal government has only been giving 12 percent until they can resolve the dispute on matters of oil and gas sale,” the analyst said.

At least some of the KRG and Baghdad’s disputes are over the relationship with Turkey. The International Chamber of Commerce ordered Ankara in 2023 to pay $1.5bn in damages to Baghdad after the KRG sent oil directly to Turkey from 2014 to 2018.

Since then, Iraq’s oil ministry and the Association of the Petroleum Industry of Kurdistan have traded blame over a lack of progress toward reopening the pipeline.

In mid-March, Iraq agreed to ban the Kurdistan Workers’ Party (PKK) – a group that has fought a war against the Turkish state since the 1980s, and that Turkey has targeted with a military operation inside Iraq since April 2022. The deal is part of a political negotiation in exchange for supporting an infrastructure project by Iraqi Prime Minister Mohammed Shia al-Sudani, the unnamed analyst told Al Jazeera.

“[Al-]Sudani is betting Iraq’s economic future on this infrastructure project that will employ people, benefit construction companies captured by security actors, and open a pathway into Turkey and Europe,” they said. “Turkey would back this project if Iraq bans the PKK.”

Water has also come up as a bargaining chip in exchange for oil between Turkey and Iraq, a situation where Iraq has little leverage, according to a report by USIP.

In recent decades, Turkey built a series of 22 dams, including the Ataturk Dam, the third-largest in the world. The dams have cut off much of the water into Iraq and led to serious environmental concerns.

While Turkey tends to help Baghdad in times of extreme water distress, there has been little incentive for Ankara to make wider concessions.

The Iraqi parliament has been debating a new oil and gas law for more than a decade. The main hold-ups are over the management of oil fields and distribution abroad.

The federal government has threatened oil companies working in federal areas that buying oil directly from the KRG would lead to the termination of their contracts.

Iraq is the world’s sixth-largest oil producer and OPEC’s second-largest after Saudi Arabia, producing around 4.2 million bpd over the last year, before the current drop in production.

The KRG produces around 400,000 barrels per day, according to the Middle East Institute, and “presides over at least 25 trillion cubic feet (tcf) of proven gas reserves and up to 198 tcf of largely unproven gas”, according to a report published last year by the Middle East Council on Global Affairs.

Regional differences

The dispute over oil and gas management and distribution is representative of a larger issue between the KRG and the federal government.

These two areas are increasingly different, not simply in terms of language and culture, but also in emerging class differences.

A 2017 referendum overwhelmingly backed the independence of the Kurdish region of northern Iraq, but was rejected by the central government and regional powers.

“The lack of social cohesion stems from the dual reality that people are living with,” Farah Al Shami, a senior fellow at the Arab Reform Initiative, told Al Jazeera. “Cities in the Kurdistan region are more developed and enjoy better living standards than the others.”

The disparity in living standards causes tension on the “political and sociological” levels, she said, adding that the “federal system is really undermining the role of the central government”.

There is also the widespread issue of corruption, which is endemic in Iraq. The country was ranked 154 out of 180 countries in Transparency International’s 2023 Corruption Perceptions Index. While it is less of an issue in the KRG, its institutions also suffer from corruption.

“In the past 20 years, the business of politics has become paralysed in Iraq,” Hamasaeed said. “Corruption has been the biggest barrier.”

The overreliance on oil and engrained corruption has made collaboration between the KRG and federal government difficult and has a discernible impact on the population of Iraq.

The lack of economic diversification also has a ripple effect on society, impacting not only what kind of jobs are available, but also internal migration, desires to emigrate, and much more.

Without serious political and economic reforms, any semblance of progress Iraq has made in terms of stability in recent years could give way. But it’s a long road ahead, as there are no quick fixes.

“This is not a sustainable economic reality, at all,” Al Shami said. “If there is a solution, it will definitely be in the long term.”

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North Korea conducts test on new ‘super-large warhead’: State media





Pyongyang says new warhead designed for cruise missiles, adding that a new anti-aircraft rocket was also tested.

North Korea has conducted a test on a “super-large warhead” designed for a strategic cruise missile, state media reports, adding that it also launched a new type of anti-aircraft missile.

“The DPRK Missile Administration has conducted a power test of a super-large warhead designed for ‘Hwasal-1 Ra-3’ strategic cruise missile”, KCNA news agency reported on Saturday, referring to North Korea by an abbreviation for its official name – Democratic People’s Republic of Korea.

North Korea also carried out a test launch on Friday afternoon of a “Pyoljji-1-2”, which state media said was a “new-type anti-aircraft missile”.

KCNA added that “a certain goal was attained” through the test without providing further details.

The weapons tests were part of the “regular activities of the administration and its affiliated defence science institutes”, KCNA reported, referencing the operation of “new-type weapon systems”.

The tests “had nothing to do with the surrounding situation”, KCNA added, but did not give any further information.

In early April, North Korea said it had tested a new medium-to-long-range solid-fuel hypersonic missile, with state media sharing a video of it being launched as leader Kim Jong Un looked on.

Cruise missiles are among a growing collection of North Korean weapons designed to overwhelm regional missile defences. They supplement the North’s vast arsenal of ballistic missiles, including intercontinental variants, which are said to be aimed at the continental United States.

Analysts say anti-aircraft missile technology is an area where North Korea could benefit from its deepening military cooperation with Russia, as the two countries align in the face of their separate, intensifying confrontations with the US.

The US and South Korea have accused the North of providing artillery shells and other equipment to Russia to help extend its warfighting ability in Ukraine.

Since its second nuclear test in 2009, Pyongyang has been under heavy international sanctions, but the development of its nuclear and weapons programmes has continued unabated.



Al Jazeera and news agencies

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Ecuador weighs security, international arbitration in latest referendum





Quito, Ecuador – He was elected president at a time of crisis, as Ecuador’s murder rate skyrocketed and gang violence seeped across the country.

Now, Ecuadorian leader Daniel Noboa is taking a plan of action to the voters, with an 11-part referendum on Sunday.

The referendum includes a wide range of proposals, from the militarisation of Ecuador’s police to tougher punishments for crimes like drug trafficking, murder and money laundering.

But Sunday’s vote is set to go beyond beefed-up security practices. One question, for example, aims to reform the judiciary system. Another considers whether arbitration should be the default approach to settling international financial disputes.

Noboa has been pushing for Ecuadorians to vote in favour of all 11 ballot measures, in an effort to streamline the economy and stamp out gang violence.

“Voting yes will strengthen our laws and leave no opportunities for those criminals who wish to joke with our justice [system] with the help of corrupt lawmen,” Noboa said in a public event on Monday.

But the broad nature of the proposals has prompted concern, with critics wondering what the consequences could be for human rights, the economy and efforts to stabilise Ecuador’s security situation.

Some have even questioned whether the referendum reflects a shift towards the “mano dura” or “iron fist” policies popular in countries like El Salvador, where human rights organisations have warned of false imprisonment and a lack of due process.

Daniel Noboa speaks into a microphone.
Daniel Noboa has made the national security referendum a goal of his presidency [Dolores Ochoa/AP Photo]

Limited opposition

Still, only one major political group in the country has consistently called for Ecuadorians to vote “no” on all 11 ballot measures: the Confederation of Indigenous Nationalities of Ecuador (CONAIE).

The group has accused the government of exploiting the referendum to further Noboa’s political ambitions, as the country approaches its 2025 general election.

Noboa — a 36-year-old politician and heir to a banana industry fortune — was sworn in last November to serve an abbreviated 18-month term, after the departure of embattled President Guillermo Lasso. But he is widely expected to run for a full term in the next race.

In a virtual forum on April 11, CONAIE president Leonidas Iza called the referendum a chance for Noboa to rally support.

“The government needs to consolidate its strength to impose neoliberal policies,” Iza said.

Referendums, he added, are costly to organise, and he called for the policies to instead be considered in Ecuador’s National Assembly.

Another CONAIE leader, Agustin Cachipuendo, was later quoted in the newspaper El Universo as saying any repercussions from the vote would disproportionately fall on marginalised groups.

“This government does not know poverty [but] makes decisions that affect the poor,” he said.

Soldiers in fatigues and combat gear walk through fields in rural Ecuador.
Soldiers patrol during a presidential visit to dairy farms in Poalo, Ecuador, on March 21 [Dolores Ochoa/AP Photo]

Rallying public support

Nevertheless, the referendum enjoys relatively broad public support. According to the research institute Comunicaliza, 42.7 percent of voters plan to back Noboa’s proposals.

Still, another 27.5 percent said they have not made up their minds yet.

Maria, a 48-year-old resident of Guayaquil who asked to use a pseudonym for her safety, is among those supporting the president’s measures to tighten security in the country.

Her city has been at the forefront of the crisis. In January, for instance, a criminal group stormed a local TV station during a live broadcast and held employees at gunpoint, generating international outcry.

Maria explained she had been targeted by a criminal group herself: They blackmailed her by threatening her children. But she said she feels safer thanks to the state of emergency Noboa imposed in January, which allowed the military to be deployed to city streets.

“Policemen and soldiers have been patrolling the borough in these months, so we can finally sleep tight at night,” Maria told Al Jazeera.

She credits the soldiers with curbing the violence in her neighbourhood. The referendum could pave the way for the military to have a permanent role in policing, something Maria hopes will happen.

“If they will leave us, what happens then? This is what everyone is worried about,” she said.

A soldier stands in shadow in front of a row of orange-clad prisoners.
A soldier guards cell block 3 of the militarised Litoral prison in Guayaquil, Ecuador, on February 9 [Santiago Arcos/Reuters]

Searching for a permanent fix

Noboa’s government has argued that the referendum is a necessary step to curb the wave of violence that has rattled the country since 2018.

Declaring a state of emergency, officials argue, is only a temporary solution.

“The general purpose of the [referendum] is to establish some permanent mechanisms, breaking the cycle of enacting emergency decrees and then going back to business as usual,” said the government spokesperson Roberto Izurieta in an interview with local television station Teleamazonas.

The state of emergency granted the government additional powers, allowing officials to impose a curfew and take stronger action against gangs.

Under the state of emergency, for instance, Noboa’s government labelled 22 criminal groups as “terrorist” organisations, clearing the way for the police and military to focus extra resources towards combatting them.

Security forces also seized 77 tonnes of drugs and detained 18,736 people, 300 of whom have since been accused of terrorism. According to the authorities, violent deaths have reduced by 26 percent since Noboa took office.

But in early April, the state of emergency came to an end. Ferdinando Carrion, a security expert, believes some of the reforms in the referendum could help Noboa to continue his campaign against the violence, but more structural reforms are needed.

“They achieved good results in the first two months,” Carrion said of the government’s state of emergency. “But it looks like the effect has been exhausted.”

He pointed to Ecuador’s prison system as a particular area of vulnerability. Investigations have shown that criminal organisations use prisons as spaces through which they can run their operations.

But under the state of emergency, the military was allowed to intervene. Carrion said that produced positive results.

“They intervened in 18 prisons out of 36, managing to sever [the gang leaders’] relations with the outside,” Carrion explained.

“But the minute the army leaves the prisons and gives them back to the national service SNAI, they will return to business as usual, since it has shown problems of efficiency, corruption and collusion.”

Carrion would like to see even greater reforms to government agencies like SNAI, beyond what is on the ballot on Sunday.

“Strengthening our institutions is paramount,” he told Al Jazeera, calling for the creation of a new body to replace SNAI.

A tank sits in front of a Guayaquil prison
The Ecuadorian government has deployed the military to control prisons like the one in Guayaquil [Santiago Arcos/Reuters]

Elections in the crosshairs

Still, some analysts question the efficacy of the referendum, even if it is successful.

Carla Alvarez, a professor studying security at the National Institute for Higher Studies, believes that the referendum will fall short of addressing the country’s gang crisis.

“No query made for public consultation will damage the structure of criminal organisations,” she told Al Jazeera.

She echoed concerns that the referendum has done more to bolster Noboa’s public image than to address the roots of crime in Ecuador.

Many experts trace the rise in the violence to Ecuador’s strategic location between the two largest cocaine producers in the world, Colombia and Peru.

They also point out that Ecuador’s economy was significantly weakened during the COVID-19 pandemic, leaving unemployed youth vulnerable to gang recruitment.

But Alvarez said Noboa’s emphasis on holding the referendum is also motivated by his future ambitions. “This vote is happening in the middle of an electoral race. And this allows the president to revive his image on social media and achieve more visibility.”

The security situation has a direct impact on the integrity of Ecuador’s democracy. In the lead-up to the snap election last August, a presidential candidate running on an anticorruption platform was gunned down outside of a rally.

And in recent months, politicians have continued to be targets of the spike in violence.

Five mayors have been shot dead since the year began, the most recent murder unfolding on Friday, just days before Sunday’s vote.

The slain mayor, Jorge Maldonado of Portovelo, was the third to be killed in less than a month. His death followed that of Mayor Brigitte Garcia of San Vicente and Mayor Jose Sanchez of Camilo Ponce Enriquez.

Suspects kneel in front of armed police officers. In front of them is a blue table with guns arrayed as evidence.
Suspects and weapons are displayed for reporters at a police station in Guayaquil, Ecuador, on January 11, shortly after a TV station was stormed during a live broadcast [Ivan Alvarado/Reuters]

Chance of a split vote

Critics like Alvarez underscore that referendums are no silver bullet to the security crisis.

Rather, they are a relatively common political tool. Since 2006, Ecuadorians have been asked to express their will through referendums nine times, on issues ranging from oil exploration to presidential term limits.

Paulina Recalde, director of pollster Perfiles de Opinion, also questions whether Sunday’s referendum will create the groundswell of support Noboa seeks.

While Noboa is angling for approval on all 11 items, Recalde’s research suggests that voters will not unanimously back all the proposals.

“Since the very beginning, we never found an overall majority. People won’t vote the same in all the 11 queries,” she said.

Recalde also said there was confusion over the vote. According to her research, 68 percent of respondents knew little or nothing about the referendum a month ago.

She added that the power outages Ecuador is currently experiencing — as well as a controversial police raid on Mexico’s embassy in Quito — could dent Noboa’s popularity, regardless of the vote’s outcome.

“If people vote yes to expand the role of the military, does it mean that they are providing strong support for the president? I would say no,” she said.

An armed soldier in a helmet stands guard on a Quito city street.
A member of Ecuador’s security forces stands guard outside the Ministry of Energy and Mines in Quito, Ecuador, on April 16 [Karen Toro/Reuters]

Arbitration on the ballot

One of the most controversial ballot measures in Sunday’s referendum asks Ecuadorians to implement a system of “international arbitration” to resolve conflicts between the state and private foreign investors.

In international arbitration, a third neutral party is used to reach a binding decision that settles any claims.

Supporters of the measure feel arbitration could safeguard foreign investment in Ecuador, thereby boosting the country’s economy.

“In a dollarised economy like Ecuador, we need an increase in strong direct foreign investments aligned with our public policies,” said Eric Vinueza, investment counsellor for the Corporation for the Promotion of Exports and Investments (Corpei) who supports the measure.

But activists have criticised this proposal as a tool to discourage the government from enacting environmental reforms that might disadvantage foreign mining interests and other overseas companies.

With arbitration, foreign investors could file complaints and negotiate settlements behind closed doors, leaving the public no recourse to appeal.

“These are private and unilateral judicial spaces which allow transnational companies to sue the states, where the states are only able to defend themselves,” said Ivonne Ramos, a mining expert at the NGO Accion Ecologica.

In the 2008 constitution, Ecuador prohibited any international agreement that would limit its national sovereignty, including through international arbitration.

Sunday’s referendum would undo that protection. Ramos added that international arbitration could come with steep expenses for taxpayers.

Ecuador already owes $2.9 trillion to foreign companies. It is currently involved in 29 different lawsuits before international tribunals, with half of the complaints related to mining and fossil fuels.

“Three of the eight pending procedures could cost more than another $10 trillion, which is our national budget for education and health for 2024,” Ramos said.

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What’s the solution to the rising tensions between Israel and Iran?





The United States says it was warned in advance of the Israeli drone strike on Iran.

Iran has shot down Israeli drones in the latest confrontation on Friday.

There have been global calls for restraint – with both East and West fearful of what further conflict could mean for the region and the world.

So, what is the thinking in Iran and Israel? And what is next?

Presenter: Elizabeth Puranam


Mohammad Marandi – Dean of the Faculty of World Studies at the University of Tehran

Gideon Levy – Columnist for the Haaretz Newspaper

Roxane Farmanfarmaian – Professor of Modern Middle East Politics at the University of Cambridge

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