Unrest in Iraq - the Risk of Contagion

With unrest in several Arab cities, many in the region are worried about the risk of contagion. The latest flashpoints are Egypt, Tunisia, Yemen, Jordan and Algeria; but is Iraq vulnerable as well? The people certainly have a lot to complain about.

Electricity

The heat and increased use of air conditioning put a major strain on the national grid last summer. Blackouts became increasingly common and hours with constant electricity supply became less frequent. For those who could not afford the exorbitant fees of private generators there were intense periods of difficulty, with high temperatures and no fans or refrigeration. Conditions were harsh enough to prompt unrest in several cities in the south of the country. In Basrah two protesters were killed when the police opened fire on a crowd in an attempt to control it.

Electricity projects are currently underway around the country but many are not likely to be completed for several more years. Shortages are therefore likely to persist. With Ramadan taking place in the summer in 2011, tensions are likely to be particularly high. Electricity usage increases during the religious period, particularly if it falls during warmer months, and power shortages can be more emotive during the month-long event than at other times of the year.

Water

Water supply also remains a major issue, with varying service quality in different parts of the country. Infrastructure is being improved in Baghdad but many outlining towns and rural areas remain without a reliable supply. In agricultural areas this has also led to demonstrations in the past. Shortages in provinces like Diyala have provoked local farmers into protesting against what they perceive as excessive usage of water further upriver – crucially, in areas predominantly inhabited by Kurdish Iraqis. Over-usage in the north and in Iraq's neighbouring countries may not only harm yields later in the summer, it could even lead to inter-communal tensions between Kurds and Arabs in the mixed districts of northern Iraq.

Inflation

Another driver of current unrest in the Middle East has been the rising cost of living. Good agricultural performance in Iraq would help restrict domestic inflation in 2011, but difficult logistics and underdeveloped port facilities continue to push up the price of imported goods. This is something that affects all Iraqis, regardless of sector, location and community, and while it has not prompted any major demonstrations in the country so far, it will continue to put pressure on ordinary citizens and add to public frustrations.

Unemployment

Inflation woes are made all the worse by the high unemployment rate in the country. With a battered economy the job market remains poor and those of working age face a grim outlook when searching for employment. However, foreign firms will play an important role in addressing the underutilisation of the Iraqi workforce. Investment in key sectors and the employment of national staff will not only provide foreign companies with access to an important pool of workers, it will help cement a firm’s reputation in the emerging market and tackle a major source of discontentment in the country. As such, current joblessness is a crisis, but it could be viewed as an opportunity.

Congestion

In Baghdad a regular source of complaint is that of travel difficulty. Checkpoints, congestion and route closures clog the daily lives of the city's traders and commuters. However, the removal of checkpoints and opening of roads makes it easier for terrorists, militants and criminals to move around the city. The authorities therefore face a delicate trade-off when considering their priorities. Frustrated drivers may be a better problem to face than a rise in violence in the city.

Violence

Although security conditions have gradually improved over recent years Iraqis continue to die on a daily basis. A suicide bombing against a Shi'ah funeral in the northern Baghdad district of Shu'lah killed dozens and prompted a sporadic protest by local residents on 27 January. Many are frustrated with the failure of the security forces to provide them with protection and further attacks may provoke a backlash against the police, military and government for their perceived failure at protecting the people.

One point to note in Iraq which sets it apart from North Africa is the fact that so many people have died in recent years. Unlike in Tunisia where the death of a market trader in December sparked the beginning of an uprising, the death of Iraqis is less emotive. To put it bluntly, it happens all the time. It is not that an Iraqi life is worth less than a Tunisian one, but the Iraqi public have grown more used to regular carnage. Indeed, this desensitisation, which affects an entire population may be one of the most tragic legacies of Middle Eastern turmoil over the past decade. The aftermath will almost certainly outlive the various authoritarian regimes still clinging to power in the region.

Politics

Seeking to distance himself from comparison to such regimes, prime minister Nuri al-Maliki has pledged to cut his salary in half in response to the latest regional unrest. Evidently the risk of Iraq becoming one of the 'dominoes' has not been lost on him, but his pledge has touched on an issue of particular embitterment amongst the Iraqi electorate. Many despair at the country's high rate of unemployment, particularly when well-paid politicians take eight months to form a government. This delay alone hampered foreign investor confidence and arguably had more of an inhibiting effect on the jobs market than persistent terrorist attacks in the country. The fact that Iraqis had the right to elect these politicians to deliberate without conclusion for months does little to quell their animosity.

Even though Iraq may increasingly be viewed as a stable democratic state in the Middle East, the new regime should not consider itself infallible in the face of unrest in other cities in the region. Unless the Iraqi government can oversee the rapid expansion of services and development of national infrastructure it is likely that the coming year will see more protests in the country. What is perhaps important to note from the perspective of would-be foreign investors is that you will form a major part of the solution to Iraq's current difficulties. The above outlook should not be taken as grounds for alarm. Instead, it should be taken as a call to action by those seeking to capitalise on Iraq's many opportunities, whilst providing employment, development and opportunities for the Iraqi public.

AKE ltd

John Drake is a senior risk consultant with AKE Group, a British private security firm working in Iraq from before 2003. Further details on the company can be found at www.akegroup.com/iraq

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