The miserable conditions in the south of Iraq are the origin of the current protests, as Patrick Osgood, writing here, has very well explained.
With Basra set to hit 49° C this week, the lack of reliable electricity and clean water is intolerable. Utopian solutions will not work, handouts do not tackle the source of the problems – so what can be done?
The US occupation authorities and subsequent Iraqi governments have all battled with this problem. Electricity generation has risen sharply since 2012, but has been unable to catch up with a rising population, growing demand and the backlog of war damage and decrepitude. Of 26 gigawatts installed generation, theoretically enough to meet the current 23 GW of demand, less than 17 GW is operable because of lack of fuel, maintenance and transmission capacity. In turn, inadequate electricity causes economic stagnation and unemployment outside the oil sector, another key source of anger.
Under the stress of lower oil prices, the national budget fell from $150 billion in 2014 to $88bn in 2017, despite running a large deficit and cutting most investment spending. This has held up the completion of power plants ordered from GE and Siemens, and slowed progress in capturing flared gas, a by-product of oil production, for fuel. Meanwhile Iraq is buying gas from Iran, a helpful expedient but at a high cost. Unable to pay cash, it has been sending some oil consignments from Kirkuk to Iran in exchange.
Iraq was also buying 1 GW of power from Iran, but this has been cut off owing to unpaid bills and shortages in Iran itself – themselves triggered by the heatwave and a lack of water in hydroelectric dams. As a temporary expedient, the Baghdad government has reduced supply to Ninewa, in the north, to supply more electricity in the south, but this just raises the risk of more discontent in the areas recently liberated from ISIS.
Studies have indicated that worldwide, higher temperatures lead to increased political violence – perhaps because of physical stress leading to anger. In Iraq’s case, this is exacerbated by the lack of reliable air-conditioning, and by poor-quality, insufficient water. Climate change will make Iraq up to 2°C hotter in summer by 2040, with rainfall 10-20 per cent lower.
Much is written about “international water wars”, but the first impact of water shortages is being felt in the internal fabric of fragile states. Dams in Iran and Turkey have cut the flow of the Tigris and Euphrates. Both are struggling with drought themselves and not likely to spare more water for their downstream neighbour.
To deal with these problems, Iraq needs to strengthen itself within while building relations abroad. At home, the government needs more reliance on the private sector and international investment. To build some patience and trust, and bypass the sclerotic federal and provincial patronage networks, devolution to the local level is essential for smaller-scale projects.
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Read more:
North Korea can play a role in energy markets
How Saudi Arabia plans to price its oil
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The conundrum is that power plants cannot be built in a day, but the protestors are tired of previous empty promises. The government may do better to start small. Local solar power installations could be provided quite quickly, and would at least run air-conditioning during the daytime heat. Under community management, with automatic meters to cut off non-payers, this could give ordinary people some agency, provide local jobs, ease the problems of sabotage and electricity theft, and undercut the “mafia” that runs noisy, polluting, costly diesel generators. Similarly, drip irrigation schemes would save on the wasteful use of water.
Megaprojects in the oil and electricity sectors are beset by mismanagement and corruption. For problems that can only be solved by large-scale schemes – finishing the large power plants, gathering gas, fixing dams, building water treatment and desalination – Iraq could experiment with a blend of approaches. Two possible approaches would be an empowered agency outside the bloated structure of ministries; or the restart of the stalled creation of special economic zones, which can act as laboratories and demonstrations for new approaches.
On the political side, Baghdad will find assistance and goodwill. International mediators can help it strike a deal with the autonomous Kurdish region. Because of its openness to private investment, the Kurdistan region has more available gas and power capacity. Some of this could be transferred to the national grid, while Baghdad also needs to use the Kurdish pipeline to export oil from the Kirkuk area to Turkey. In return, Erbil needs oil revenue-sharing to pay its bills.
The GCC has long complained about excessive Iranian influence in Iraq, but it will welcome some recent signs of change. Protesters have chanted slogans against Iran and attacked offices of two of the militias closest to Tehran. In a sensible outreach, Saudi Arabia reopened its embassy in Baghdad in 2015 and the Arar border crossing last August. Crown prince Mohammed bin Salman received Muqtada Al Sadr in July 2017; Mr Al Sadr’s list went on to head the elections.
A delegation from the Iraqi ministry of electricity was due to visit Riyadh last week to discuss importing electricity, although it would take some time to construct an interconnection. A link to the Kuwaiti grid for 200 megawatts was in progress in February, while Iraq is meant to be exporting some gas to Kuwait, creating a mutually-beneficial trade.
Solutions are obstructed by patronage politics, bureaucrats’ statist mindset, and the temptation to placate the protesters with unaffordable giveaways. But after miserable turnout in the last elections, the political reward is there for the party that can break the past’s failed mold.
Robin M Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis
HOSTS
T20 WORLD CUP
2024: US and West Indies; 2026: India and Sri Lanka; 2028: Australia and New Zealand; 2030: England, Ireland and Scotland
ODI WORLD CUP
2027: South Africa, Zimbabwe and Namibia; 2031: India and
Bangladesh
CHAMPIONS TROPHY
2025: Pakistan; 2029: India
UAE currency: the story behind the money in your pockets
What is a Ponzi scheme?
A fraudulent investment operation where the scammer provides fake reports and generates returns for old investors through money paid by new investors, rather than through ligitimate business activities.
UAE currency: the story behind the money in your pockets
Results
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SPEC%20SHEET%3A%20APPLE%20IPAD%20PRO%20(12.9%22%2C%202022)
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The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Tree of Hell
Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla
Director: Raed Zeno
Rating: 4/5
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Day 1 results:
Open Men (bonus points in brackets)
New Zealand 125 (1) beat UAE 111 (3)
India 111 (4) beat Singapore 75 (0)
South Africa 66 (2) beat Sri Lanka 57 (2)
Australia 126 (4) beat Malaysia -16 (0)
Open Women
New Zealand 64 (2) beat South Africa 57 (2)
England 69 (3) beat UAE 63 (1)
Australia 124 (4) beat UAE 23 (0)
New Zealand 74 (2) beat England 55 (2)
Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
COMPANY%20PROFILE
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North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
