Dire Straits: Baghdad’s Financial Blockade Of Iraqi Kurdistan Has Desired Effect
Since the beginning of the year the authorities in Baghdad and Iraqi Kurdistan have had a financial stand off.
The Iraqi Kurdish have done everything they can to support themselves, from exporting oil to asking for international loans. But now the situation is getting dire: more bankruptcies, less trade, stalled projects and despairing businessmen committing suicide.
Several weeks ago Sardar Gharib turned off his mobile phone and locked himself in his house. He no longer wanted to deal with the people who had loaned him money and who were now coming to ask him where the repayments were.
Gharib is a contractor working in the semi-autonomous region of Iraqi Kurdistan and unfortunately he recently had to declare bankruptcy, with an estimated US$1.5 million in debts.
The debts have been incurred because almost all the projects that Gharib’s construction firm was working on have been postponed – a lot of them were funded by the government of the region, which has its own parliament, court system and military independent of the rest of Iraq.
And Gharib’s firm is not the only one facing these kinds of liquidity problems. The Kurdistan Investor’s Union, an association of Iraqi Kurdish businesspeople, says that, according to their count, 430 contractors and companies in a number of different fields have declared bankruptcy over the past six months. They count 250 in the Sulaymaniyah province of Iraqi Kurdistan, 110 in Erbil and 70 in the Dohuk area.
The main reason for this can be blamed on the Iraqi government in Baghdad’s so-called “financial blockade” of Iraqi Kurdistan.