The ever-increasing number of refugees from other countries like Syria and from within Iraq are also placing an extra burden on the local authorities.
Interestingly before the security crisis, caused mostly by Sunni Muslim extremists from the Islamic State, or IS, group, worsened, members of the Iraqi Kurdish government had been suggesting that their region could go it alone and did not need Baghdad’s help. They thought they could make enough from exporting oil and from local revenue streams.
Sources inside the Iraqi Kurdish Parliament also say that the region’s government had approached foreign banks and companies for loans, including Italian, Japanese, Austrian and Turkish institutions. However it had only received one positive answer and that was from a Japanese bank.
Politicians in Iraqi Kurdistan have blamed Baghdad for the whole scenario but some local experts say that Iraqi Kurdish politicians started exporting oil without being prepared for the consequences.
“The region’s government should have had a backup plan,” says Mohammed Karim, an economics professor at the University of Sulaymaniyah. “They needed to ensure that funds were available from the beginning and the government should also have put more effort into developing the agricultural and industrial sectors.”
The increasing numbers of bankruptcies being caused by the financial problems represents a major social and economic threat to Iraqi Kurdistan and will halt reconstruction efforts in the region, Karim argued.