Iraqi Kurdistan and Sub-State Economics

When the situation in Iraq is being discussed and analyzed, it’s important to not forget that there are many different sub-state factions in Iraq that are working together (and also against each other) to try to put the country back on its feet. One of these groups, the ethnic section of Iraq known as Iraqi Kurdistan, is absolutely crucial to the success of the country has a whole. This is a challenging situation, as there have often been difficulties, and even flat-out violence between the Kurds and other Iraqi Arabs. However, working together is the only way to work the country through its tumultuous situation. Here’s some information on the state of Iraqi Kurdistan…

Ethnic tensions put the Kurds in an unfinanced situation

Due to the fact that the Iraqi Arab government in Baghdad has had immense disagreements over the Kurds in Iraq, the budget of Iraqi Kurdistan was drastically cut down in the federal budget, which has made the financial prospects of the sub-state even more dim. This has led to a section of the country (and a large one at that) that is even more economically depressed than the rest of the country. One little known fact about the current refugee crisis in the Middle East is that many of the northbound refugees are actually Iraqi Kurds. The fact that almost as many people are fleeing from a democratic country with U.S. support as from the war torn country of Syria should show us how dire this economic situation is becoming.

Relying on oil prices has been disastrous

Another huge issue that is facing the region is that so much of Iraq, and especially Iraqi Kurdistan, is largely dependent on oil to fuel their economy. This is an incredibly risky situation to be in, as whenever oil prices begin to drop on the global market, it means the entire economy can be thrown into contraction. This is the exact situation that we are witnessing now, as oil prices are now hovering around $43 per barrel. This failure to diversify is actually something that has hurt many Middle Eastern economies, such as Saudi Arabia. Without diversification of industries and energy sources, the Iraqi Kurdistan economy will be unable to stabilize without being dependent on the global marketplace.