Erbil Shows Baghdad Path Out of Political Impasse

By Eugen Iladi.

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

The inability of Iraqi political elites to form a government more than six months after the March elections is hardly surprising given the fragmented poll results and deep divisions separating top leaders. All major parties and their representatives seem determined to hold onto power as a matter of political, economic and perhaps even physical survival.

The stalemate is aggravating the security and economic situation and threatens to drive the war-ravaged country further into political instability and massive unrest. An uptick in violence since March could signal renewed sectarian divides and a new impetus for the insurgency.

But things don’t have to escalate to that level and Baghdad need only look in its own backyard for models of a better arrangement.

Erbil, the capital of the autonomous region of Iraqi Kurdistan, has transformed itself into a haven of safety, functionality and prosperity by regional standards. The Kurdistan Regional Government, while not free of infighting and political maneuvering, is by far a more efficient administrator of local resources and services compared to the overall situation elsewhere in Iraq.

Instead of opposing further Kurdish autonomy and self-reliance, Baghdad could learn from the region and emulate some of its successes. Incorporating functional elements that work in Erbil would not only help the entire country move forward but could also foster a bond and a sense of shared values between the regions that form the emerging federal democracy of Iraq.

The two dominant political parties of Kurdistan, the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP) have between them monopolized most aspects of life in Kurdistan based on their historical and heroic fight against Saddam Hussein’s regime. When a new challenging opposition movement, Gorran, gained the second highest number of seats in the 2009 local elections, none of the players resorted to overt violence to overcome their opponents. Instead, they expressed their differences and fought at the polls.

Another stark contrast between the thriving Kurdistan region and the rest of the country is its ability to provide basic services for the population. While Baghdad continues to be plagued by massive power shortages, Erbil enjoys a constant flow of electricity with only minor interruptions. In fact, Kurdistan consumers get an average of 20 hours of constant electricity per day and projections call for closing that gap by early next year when new power plants are due to come on line.

This is in large part due to investment programs and incentives that attracted foreign operators to build generating facilities in the autonomous region, taking advantage of its vast oil and gas resources. Kurdistan estimates its oil reserves at about 45 billion barrels and its natural gas reserves at 20 trillion cubic meters.

Erbil is also welcoming of investment from abroad. The German Chamber of Commerce chapter in Erbil promotes business ties and attracts major German companies to the region. Italian, French, Austrian, American, Russian Turkish and other Arab energy, construction, apparel, and manufacturing companies are also investing in the region at an accelerated pace. RWE, Rosneft and a slew of smaller but significant players clamor for a piece of the action in this most stable of all Iraqi regions. Turkey is emerging as the premier trading partner of Kurdistan with economic ties expected to push towards $10 billion by next year, a significant development given the uneasy historical relations between Ankara and Erbil.

Cultural and travel ties are also increasing with Erbil stealing the lime light from Baghdad. France maintains a cultural center in Erbil and the German School reopened its first location in the country earlier this month after its previous Baghdad school was closed down in 1990. Austrian Airlines has a direct Vienna-Erbil link and Lufthansa resumed its Erbil route this spring, after a two-decade hiatus, while postponing indefinitely the resumption of Baghdad flights.

The Erbil Stock Market is scheduled to start trading during the first quarter of 2011 with a startup capital of nearly $10 million. With an open attitude towards investment and a legislation to match it, the KRG is forging ahead with major oil and gas, commercial and residential construction projects worth several billion dollars.

The new Baghdad central government, when one is formed again, would be well served to learn from Erbil.

The opinions expressed here are those of the author, and do not necessarily reflect the views of Iraq Business News.

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