Iraq’s people yet to feel benefit of oil boom

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Iraq’s economy is expanding and government coffers are swelling, but Sabah Nuri, like many Iraqis who still struggle with poverty and poor services, has yet to see the benefits of rising oil exports.

Nuri is lucky: he has a job, albeit a relatively menial one, and a roof over his head. But he barely manages to cover the costs of rent, food and the regular payments for the neighborhood generator used to meet the vast power shortfall.

“Everything here costs a lot of money -- you always have to pay for things,” said the 45-year-old, who pushes heavy items around Bab al-Sharji, one of Baghdad’s oldest neighborhoods, on a wooden cart.

“Outside Iraq they have services, so if you have a job, life is ok.”

“Where is the oil? We only hear the numbers, but we are not getting anything.”

In the decade since the 2003 U.S.-led invasion that ousted Saddam Hussein, Iraq’s oil industry has been one of the bright spots in a country that has grappled with brutal violence and rampant corruption.

Iraq currently produces more than 3.15 million barrels of oil per day (bpd), exporting around 2.5 million bpd, according to oil ministry spokesman Assem Jihad. It has proven reserves of 143.1 billion barrels, among the most in the world.

Baghdad is widely expected to dramatically increase its export figures in the near future -- the International Energy Agency says Iraq stands to reap around $5 trillion from oil exports through to 2035, and it will be the biggest single contributor to global oil output growth in the coming years.

But Nuri’s complaint is a common one among ordinary Iraqis, a quarter of whom are reckoned to live in poverty and as many as a third are thought to be unemployed or underemployed, based on unofficial estimates.

Their frustration is tied to the fact that oil, responsible for the lion’s share of economic output, does not employ many people -- just one percent of the working-age population, according to the United Nations.

And so many residents are forced to look for jobs either in the public sector, which is riven with nepotism, or the private sector, which remains tiny.

“I am struggling,” admitted Abboud Hassan, 48, who was an air force engineer but now sells remote controls at a roadside stall. “I have nothing.”

“I just want to make some money in a decent way,” he said, referring to widespread reports of political patronage in the civil service and corruption in private business.

Hassan earns about 820,000 dinars ($680) a month from his air force pension and the remote control sales, which is barely enough for his wife and five children to survive.

According to a U.N. report last month on the oil and gas sector, “the size of Iraq’s oil revenue inhibits efforts to diversify Iraq’s economy” because of a strengthening of the currency that make exports less competitive and imports more attractive.

“Expansion of more labor-intensive non-oil sectors is therefore inhibited, limiting the ability of the Iraqi economy to create sustainable jobs and reduce poverty,” the UN report said.

“This problem... is set to increase as Iraq’s oil sector expands faster than non-oil sectors over the coming years.”

Thus far, Iraq’s government has looked to spend the vast income from energy revenues on landmark projects - a huge housing community near Baghdad, a football stadium in Basra and an airport near Najaf.

And though Hassan and Nuri are among those struggling, the Iraqi capital has also seen a rapid build-up of a consumer culture - new restaurants, malls and shops selling flat screen TVs and brand new expensive cars are all opening across Baghdad.

Among those doing well is Azad Haddad, who returned to his native Iraq, having grown up overseas, after the invasion.

Haddad recently opened two fast-food restaurants adjacent to each other in Baghdad’s wealthy Jadriyah neighborhood, and they have been packed in the evenings with young Iraqis and their families.

“You have to be resilient,” he admitted, referring to the difficulties of doing business in Iraq.

“It’s challenging, but that’s the beauty of it.”