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Obstacles Facing Privatization in Iraq
 

We can summarize some of the aspects that could pose obstacles against the privatization process as follows.

First: The problem of having a strong political leadership:
Amongst the most important factors to implement privatization is the presence of those political powers that are capable to actually implement privatization and endure its side effect especially that privatization programs and other economic reform policies leave negative effects at the beginning such as unemployment, cancellation or reduction of governmental support for some categories of the population. This means that there will be an increase in the number of opponents to the reform and privatization policies. Therefore, adopting the privatization policy by a weak government or without poll or Referendum could actually mean a political suicide.

Second: Public Opinion:
This factor is linked to the first factor. It is represented in the public’s attitude towards such policies taking into consideration the changes that will occur on the public opinion attitudes towards the events, especially upon the possible emergence of some harmful side effects. This will mean a change in the public opinion against privatization programs in case of the assumption that the governmental awareness campaign on the benefits of such programs made a success. Many people perceive these programs that they: release the government from the support it extends to them. A vast number of the population grew under the country’s control of the different economic sector in addition to the presence if a large gap between the private sector and the different categories of the population in addition to the fear of the citizens that the private sector may dominate most of the economic activity because for people, the term “private sector” is linked to monopoly and greediness of quick profits on the expense of others. This relation is originated from the socialist culture which was prevailing in the Iraqi society and which was enhanced by the actions of many capitalists and intruding businessmen who were favored for officials in the previous regime.

Third: Unemployment:
In the aftermath of the last war, the Iraqi society suffers from the increase in unemployment and disguised unemployment. Although there are no accurate official statistics in this regard, some studies indicate that the percentage of unemployment may reach up to 50%. Previously, the country used to interfere a lot to withdraw unemployment from the society due to its large impact on the safety of the society. Implementing privatization may seem to some people as releasing large number of public sector employees, thus, joining the unemployed.

Fourth: Administrative Corruption & Mismanagement:
Iraq was ranked second amongst countries which suffer from administrative corruption. Corruption is widely spread into the country as a whole, especially after the fall of the previous regime. The bad security and political situations led to even a wider spread of the administrative corruption phenomenon throughout Iraq. This might hinder the privatization process, not by mean of opposing it, rather, such corruption will contribute in the selling public sector assets for the cheapest prices, thus deviating privatization from its main objective, i.e. increase the country’s resources.

As for the mismanagement phenomenon, it is even wider and more comprehensive from the corruption phenomenon based on our estimation. This has resulted from the practices of favoritism, kinship and side-loyalties in Iraq for long decades. This in turn led unqualified staff to the highest possible administrative ranks and they obtained privileges, therefore, they will oppose privatization because it will jeopardize their private privileges especially that the privatization policy links between management and production effectiveness.

Fifth: Loss of the Capital:
The lack of a private sector or a national capitalism that is capable to shoulder the burden of leading the Iraqi economy to achieve high development rates and emphasizes the values of honest competition. The Iraqi private sector does not have the financial capabilities and capacities which might enable it to replace the public sector. As for foreign investors, and in spite of the fall of the previous regime which did not believe in the role of foreign investment in improving investment reality due to many factors; such foreign investors are still worried to enter the Iraqi market because the main picture of the Iraqi situation is still incomplete not to mention the current security condition.

Sixth: Lack of an Active Fiscal Market:
There is a lack of an active or efficient securities’ market in Iraq through which one can implement the procedures of transparently selling the assets and belongings of companies to be privatized. The Iraqi securities’ market is inactive when compared to other Arab countries’ and neighboring countries’ local markets. Also, it lacks the technologies, capacities and international standards which assure easy and transparent transactions.

From Dr. Nahro Mohammad Abdul Kareem’s book “Iraq on the path of correcting its track”, Pg. 122– 124.