The global economy has suffered enormous losses with the spread of COVID-19. After the outbreak, trade and domestic production stopped and the world witnessed a sharp decline in oil prices which caused an economic crisis especially for countries that are completely dependent on oil revenues.
The decline in revenue and, consequently, the rise of unemployment and the bankruptcy of manufacturing firms and industries do not offer a good prospect for the global economy in the near future.
Meanwhile, emerging economies in oil-dependent regions, such as the Iraqi Kurdistan region, have suffered irreparable and crippling losses.
In an interview with Mehr News Agency, A parliamentary member of the Iraqi Kurdistan Region’s Natural Resources Commission Karavan Gaznei discussed the current economic condition of the Kurdistan Region and the decline in oil revenues as follows;
To what extent has the spread of the coronavirus in the Iraqi Kurdistan region affected the emerging economy of this region?
The Kurdistan Region, like other parts of the world, has also been affected by this virus and has suffered severe economic losses. In order to prevent the spread of the COVID-19, the Region has implemented preventive measures such as public quarantine, blocking borders and border markets, closing educational, commercial, production and industrial centers, and severely limiting city and interprovincial traffic.
This has led to a sharp decline in domestic revenues and the closure of businesses which is a severe blow to the region's economy. On the other hand, the termination of border trade and the reduction of oil revenues have also had a direct impact on the economy of the Kurdistan Region.
How do you assess the damage to the exports and import sector of the Kurdistan Region after the outbreak?
Undoubtedly, for places such as the Kurdistan Region, which provides a large number of its daily necessities through imports and a huge part of its revenue comes from cross-border exchanges and oil exports, stopping and restricting these activities will be a heavy blow to the economy. However, after the containment of COVID-19 and returning to normalcy, the Kurdistan Region and the Iraqi central government, and perhaps the rest of the world, must prepare themselves for a severe psychological and economic crisis, as all the trades are either suspended or restricted and in some cases totally destroyed.
According to economic experts, after controlling the pandemic, in addition to other damages, there will be a large wave of unemployment and poverty in most parts of the world. What is your prediction about the situation in Iraqi Kurdistan Region after containing the Coronavirus?
Unemployment stems from a crippled economy. An economy that is seriously endangered by coronavirus will result in large unemployment in the near future. Undoubtedly, if we fail to adopt necessary measures for the faltering economy of the Kurdistan Region as soon as possible, unemployment will increase which will be catastrophic for Iraq.
Based on the decision of OPEC Plus, the Kurdistan region must reduce 23 percent of its oil production which is 103 thousand barrels a day. How much does this reduction in oil production affect the revenue of the Kurdistan Region?
In recent days, the Kurdistan Region and the Iraqi central government have agreed to reduce oil production. The economy of the Kurdistan Region is dependent on oil, and this reduction will consequently cause a decrease in oil revenues and create new problems for the region.
However, the logical and effective solution to this difficult economic situation is that the Kurdistan Region reach an agreement with the Baghdad government so that the 103,000 barrels reduction will be deducted from the 250,000 barrels, which is the central government's share of the Kurdistan Region’s oil, not the share of the region itself. Although, ultimately, any decline in revenue will have a negative impact on both Iraq and the Kurdistan Region. But the effective solution is to sit at the negotiating table and reach a logical agreement.
Iraqi economic and political experts maintain that the damages caused by COVID-19 and the sharp fall in oil prices can heavily destroy the economy of the Kurdistan Region more than other regional economies. What is your assessment of this issue as an economic expert?
The economic impact of these issues will be severe, and they will affect all of the Middle East and most of the world. There is no doubt that the Kurdistan Region will also be affected.
However, I have a different opinion regarding the economic collapse. I believe that the effects and losses will be relative. No economy in the world will collapse due to the coronavirus and the decline in oil prices even when they are negative.
Nonetheless, hard days and bankruptcy are predicted for some countries and regions. The Kurdistan region will also be part of these crises, but it will not collapse. The Iraqi Kurdistan Region must learn from these difficult times and pursue a new approach to governing the region.
Interview by Halimeh Molaei
MNA/ 4907052