Falling Revenues Threaten Rebuilding in Iraq

Kelsey Walker

2/27/2009

2:52 PM

With the global depression on the rise, Iraq is facing hard times. They have to cut infrastructure projects that are a major necessity in the majority of unstable places throughout Iraq. The major problem hindering the Iraqi economy is the fact that 90 percent of their economic revenues lie in oil. Iraq’s main consumer, the U.S., has to cut back in oil consumption. To keep good business Iraq must lower the cost per barrel. This forces Iraq to postpone important projects that give the Iraqi people better access to water, electricity, and education. This also hinders America in that it is crucial for Iraq to have a stable economy and government because of President Obama’s hope to slowly pull out of Iraq. Some people believe that a easy fix would be to just raise the prices and dip into the bank and use money setback for the production of oil but this will not help to provide help from inadequate services. Officials believe that another possible fix would be to lower the prices and ship out twice as many barrels however, many believe that the deficit will still be too low. On the bright side, the crisis could finally force Iraq to build up its agricultural and industrial which can create private sectors and help Iraq become producers in more that oil.
The Iraqi crisis could not have happened at a worse time. With the global recession occurring many countries are forced to give up to keep a stable economy. It is harder on countries like Iraq, where their main income lies in only one or two types of production. Especially if that production is oil, which is the one of the main focuses for the American government to cutback. The Iraqi crisis is not just going to hinder Iraq, but America’s goals for a stable economy and government in Iraq. No matter what Iraq chooses to do to try to fix its problems, the whole world will be impacted because the majority of the world’s developed countries are dependent on Middle Eastern oil.

http://www.nytimes.com/2009/02/26/world/middleeast/26reconstruct.html?pagewanted=2&_r=1&ref=world