5 Economic development in southern
Iraq
45. It is clear to us that the establishment of security
in southern Iraq and the development of the Iraqi Security Forces
is only one link in the chain of rebuilding Iraq. The creation
of economic prosperity is an essential accompaniment to security,
and will in turn contribute to it. The area has enormous economic
potential due to its massive natural resources, but these must
be efficiently and effectively harnessed.
46. The economy in Basra is difficult to assess at
the current time. There are perhaps more than 10,000 small businesses,
many operating at the fringes of legality. Equally, it is difficult
to estimate accurately the level of unemployment, but one source
told us that it is as high as 90%. This is a massive and pressing
challenge. It is clear, however, that Basra has enormous economic
potential because of its strategic location in terms of shipping
and its role in the oil industry.
47. During our recent visit, we met Mr Munadhil Abid
Khanjar, the co-Chairman of the Basra Development Committee. He
told us that the overall security situation in Basra, which had
improved immeasurably as a result of Operation Charge of the Knights,
was acceptable, and that the improvement was already having an
economic impact. Major companies were exploring the possibility
of investing in the city, and unemployment was falling, though
it remained a significant problem. We also met a number of local
Basrawi politicians. They reinforced the message that economic
development and the alleviation of unemployment were now the overriding
priorities, given the improvement of the security situation.
48. We were also briefed on the reconstruction and
development efforts of the Coalition. Funding for these projects
derives from a number of sources, and in several areas in southern
Iraq it is UK Forces delivering effects funded by US money. Two
major funding streams are the Commander's Emergency Response Program
(CERP), which is paid for by the US, and the Iraqi counterpart,
I-CERP, which uses revenue from Iraqi sources. Many of the projects
which are supported from these sources use local labour and work
through traditional tribal hierarchies.
49. The UK operates a Provincial Reconstruction Team
(PRT) in Basra, the only UK-led PRT in Iraq. Unlike the US-led
teams, which are embedded with a brigade combat team, the Basra
PRT is separate from the military. It is headed by the Foreign
and Commonwealth Office but also draws staff from the Department
for International Development. The primary focus of the Basra
PRT is on working with the provincial government to access and
prioritise existing Iraqi funds and implement good governance.
Many of the staff have served comparatively long tours, up to
three years, and so often know their Iraqi counterparts well.
50. The different streams of funding and development
generally separate by mission. The military-led teams are concentrating
on short-term tactical projects. This is intended to buy time
in which longer-term projects can be carried out both by the PRT
and by local government structures. Assistance from the US Agency
for International Development (USAID) fall within the purview
of the PRT.
51. Another important factor in the economic revival
of Basra will be the handing over to Iraqi control of Basra International
Airport, which we were told is scheduled for later in 2008. When
we visited Basra in July 2007, we were told that the commercialisation
of the airport, which had begun in early 2005, was proceeding
slowly but steadily, with between 150 and 200 civilian air movements
each month, both passenger and freight. This important work is
continuing. We were shown round the airport during our recent
visit, and the signs of progress were evident. It is important
that the 'civilianisation' of Basra International Airport continues,
and the UK Government must take account of this in any plans to
draw down UK Forces and to reorientate the COB.
52. Economic prosperity and increasing security
and stability are inextricably linked. The proper harnessing of
oil revenues will provide the Iraqi government with an invaluable
source of income, which will in itself contribute to the development
of the ISF. At the same time, growing prosperity and the reduction
of unemployment in Basra will have a serious impact on the popularity
of the militias. Unemployment and poverty are among their greatest
recruiting sergeants. Iraq is not inherently a poor country, and
the UK Government has the opportunity to help Iraq realise and
reap the benefits of its potential wealth.
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