Iraqi Kurdistan struggles to rebuild tattered economy

SULAIMANIYAH - The oil-rich Iraqi region of Kurdistan is struggling to rebuild its economy, a year after an ill-fated independence referendum that Baghdad deemed illegal.

A massive yes vote in the September 2017 plebiscite provoked a furious backlash by the central government, turning a long-cherished dream of the Kurds into an economic nightmare.

Federal forces retook oilfields, depriving the mountainous northern enclave of its economic lifeblood, while Baghdad also imposed a six-month air blockade.

And in another blow, Iraq's parliament in March passed a budget that saw Kurdistan's slice of the federal cake drop from 17 percent to less than 13 percent.

Outmanoeuvred, Kurdish lawmakers boycotted the vote.

But the Kurds are now gearing up for another poll; an election on Sunday for the regional parliament.

The local economy -- and relations with Baghdad -- top the agenda.

Rawa Burhan, 20, intends to vote. He hopes that the new parliament and future government of Kurdistan "will open a new page in relations with the Iraqi government".

Burhan said Kurdish authorities must "negotiate a (new) budget (with the federal government) in order to end the suffering of the people".

He said his parents, both state employees, have seen their combined monthly income of around $1,700 (1,470 euros) drop to $800, due to the economic hardships that have hit the region.

Saman Qader, who has worked for Kurdistan's ministry of electricity for 15 years, has seen his paycheck shrink from nearly $500 a month to $300.

The 51-year-old father of four said trying to make it to the end of the month is a real battle as he struggles to pay his bills, medical costs for his sick wife and school and university fees for his children.

'Economic catastrophe'

"At the onset of 2017, the economic crisis was a catastrophe," said Adel Bakawan, director general of the Kurdistan Centre for Sociology at the Soran University near the Iraqi Kurdish capital of Arbil.

"Civil servants, who represent 60 percent of the active workforce, saw their salaries halved. For some the salaries dropped by 75 percent," he said.

This sparked demonstrations while investors "massively pulled back and thousands of investment projects were shelved".

Bakawan said the proportion of people living in poverty in Iraqi Kurdistan rose to 15 percent.

Many analysts and residents blame the economic meltdown on the September 2017 independence referendum.

But even before that controversial vote, Iraqi Kurdistan was suffering economic hardship.

The region had initially enjoyed an economic boom after the 2003 US-led invasion of Iraq, as the rest of the country sank into violence.

But the emergence of the Islamic State group in 2014 coupled with tumbling global oil prices battered the economy.

Since 2014, Iraqi Kurdistan has borrowed more than $4 billion to stay afloat, according to some experts, and before the doomed referendum it had chalked up debt of around $12 billion.

Business slowly returns

According to official figures, 87 percent of households across Iraqi Kurdistan -- home to around six million people -- eke out a living on less than $850 per month.

And there is an enormous gap between rich and poor, according to Bakawan.

Low-income groups who feel marginalised "have no hope that their condition will improve by voting for any one party" in the election, he said.

But some entrepreneurs say they see a light at the end of the tunnel, even if the economy is struggling to diversify.

"This year there were between 400 and 500 new projects launched in the fields of tourism, construction, services and industry," said Nawzad Ghafour at the Sulaimaniyah Chamber of Commerce.

"40,000 jobs will be created within four years," he added.

But according to a recent UN report, more than 20 percent of unemployed Iraqi Kurds said they have lost hope of finding a job.