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Economic reform of Iraq
Economic reform in Iraq describes decisions by the Coalition Provisional Authority to dramatically change the economy of Iraq in the aftermath of the 2003 U.S.-led invasion.
Prior to US occupation, Iraq had a centrally planned economy. Among other things, it prohibited foreign ownership of Iraqi businesses, ran most large industries as state-owned enterprises, and imposed large tariffs to keep out foreign goods. After the 2003 Invasion of Iraq, the Coalition Provisional Authority quickly began issuing many binding orders privatizing Iraq's economy and opening it up to foreign investment.
Economic reform was implemented alongside reform of government institutions, the Iraqi legal system, and significant international investment to repair or replace damaged infrastructure of Iraq.
While reform efforts have produced some successes[citation needed], problems have arisen with the implementation of internationally funded Iraq reconstruction efforts. These include inadequate security, pervasive corruption, insufficient funding and poor coordination among international agencies and local communities.
Paul Bremer, chief executive the Coalition Provisional Authority of Iraq, planned to restructure Iraq's state owned economy with free market thinking. Bremer dropped the corporate tax rate from around 45% to a flat tax rate of 15% and allowed foreign corporations to repatriate all profits earned in Iraq. Opposition from senior Iraqi officials, together with the poor security situation, meant that Bremer's privatization plan was not implemented during his tenure, though his orders remain in place. In addition to approximately 200 other state owned businesses, privatization of the oil industry was scheduled to begin sometime in late 2005, though it is opposed by the Federation of Oil Unions in Iraq.
Order 39 laid out the framework for full privatization in Iraq, except for "primary extraction and initial processing" of oil, and permitted 100% foreign ownership of Iraqi assets. The Iraq oil law is a proposed piece of legislation submitted to the Iraqi Council of Representatives in May 2007.
The Iraqi government has yet to reach an agreement on the law. In June 2008, the Iraqi Oil Ministry announced plans to go ahead with small one or two year no-bid contracts to ExxonMobil, Shell, Total and BP — once partners in the Iraq Petroleum Company — along with Chevron and smaller firms to service Iraq's largest fields. These plans were canceled in September because negotiations had stalled for so long that the work could not be completed within the time frame, according to Iraqi oil minister Hussain al-Shahristani. Several United States senators had also criticized the deal, arguing it was hindering efforts to pass the hydrocarbon law.
Bremer's transitional government featured figures close to the George W. Bush administration, such as grain-trading industry lobbyist Dan Amstutz, who was put in charge of agricultural policy in Iraq.
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Economic reform of Iraq
Economic reform in Iraq describes decisions by the Coalition Provisional Authority to dramatically change the economy of Iraq in the aftermath of the 2003 U.S.-led invasion.
Prior to US occupation, Iraq had a centrally planned economy. Among other things, it prohibited foreign ownership of Iraqi businesses, ran most large industries as state-owned enterprises, and imposed large tariffs to keep out foreign goods. After the 2003 Invasion of Iraq, the Coalition Provisional Authority quickly began issuing many binding orders privatizing Iraq's economy and opening it up to foreign investment.
Economic reform was implemented alongside reform of government institutions, the Iraqi legal system, and significant international investment to repair or replace damaged infrastructure of Iraq.
While reform efforts have produced some successes[citation needed], problems have arisen with the implementation of internationally funded Iraq reconstruction efforts. These include inadequate security, pervasive corruption, insufficient funding and poor coordination among international agencies and local communities.
Paul Bremer, chief executive the Coalition Provisional Authority of Iraq, planned to restructure Iraq's state owned economy with free market thinking. Bremer dropped the corporate tax rate from around 45% to a flat tax rate of 15% and allowed foreign corporations to repatriate all profits earned in Iraq. Opposition from senior Iraqi officials, together with the poor security situation, meant that Bremer's privatization plan was not implemented during his tenure, though his orders remain in place. In addition to approximately 200 other state owned businesses, privatization of the oil industry was scheduled to begin sometime in late 2005, though it is opposed by the Federation of Oil Unions in Iraq.
Order 39 laid out the framework for full privatization in Iraq, except for "primary extraction and initial processing" of oil, and permitted 100% foreign ownership of Iraqi assets. The Iraq oil law is a proposed piece of legislation submitted to the Iraqi Council of Representatives in May 2007.
The Iraqi government has yet to reach an agreement on the law. In June 2008, the Iraqi Oil Ministry announced plans to go ahead with small one or two year no-bid contracts to ExxonMobil, Shell, Total and BP — once partners in the Iraq Petroleum Company — along with Chevron and smaller firms to service Iraq's largest fields. These plans were canceled in September because negotiations had stalled for so long that the work could not be completed within the time frame, according to Iraqi oil minister Hussain al-Shahristani. Several United States senators had also criticized the deal, arguing it was hindering efforts to pass the hydrocarbon law.
Bremer's transitional government featured figures close to the George W. Bush administration, such as grain-trading industry lobbyist Dan Amstutz, who was put in charge of agricultural policy in Iraq.