Basra is an important city, not just to Iraq, but to the wider Middle East. It sits atop one of the largest known oil reserves in the world. It is Iraq’s only seaport. It is sandwiched between Iran and Afghanistan to the north, Kuwait and Saudi Arabia to the south. And, just down the Gulf are the Emirates. Baghdad may be the capital but Basra is the economic engine of Iraq. This is the place that will play are large part in determining how Iraq develops post-US occupation.
There are a number of factors that support those sweeping statements.
First, Basra is a big city. The city proper is about 1.25 million people and the larger province is 3.5 million. The population is largely homogenous, over 85% of Basrawis are Shia. Big cities don’t just disappear. There is a momentum about them. Big cities that have frail underpinnings suffer but Basra is not in that category. It is Iraq’s second largest city and given its location on the Persian Gulf and its resources, the place is in early bloom.
Second, the US has not been parsimonious with Basra. Since the serious reconstruction began in 2005, the US has dropped more than $2.5 billion for infrastructure projects in the province. Water, sewer, electricity systems have been rebuilt, roads, bridges, and canals repaired and improved, schools and medical clinics built. The US has put money into training Basrawi workers, into libraries, and into the local university and the various vocational and technical schools. The money has had positive impacts. There has also been waste but that is the topic of another post.
Third, there is a reason that international oil companies are beating a path to Basra’s door. This is where the oil is. The province earns money off every drop pumped. Given how much is here, Basra’s share of the profits will be enormous. There is also trade. Basra’s Umm Qasr port is Iraq’s outlet to the sea. Iraq, much to its chagrin, imports practically everything. Manufacturing in the country is dead – for my socialist friends, look at Iraq and industry here to get a glimpse of how letting the State control things works. Importers can either fly stuff in (prohibitively expensive), drive things in (time expensive), or ship them in (quantity discount). Most opt to ship and the only port is Umm Qasr. Basra is the primary supply route to Iraq.
Fourth, one of the lessons the Iraqis learned through bitter experience is that centralized government exacts too high a cost in national progress. For a generation, Iraq was run out of Baghdad. Industries, commercial ventures, resource processors were State-owned enterprises (SOEs). The new Iraqi Constitution commits the nation to decentralize authority. Most Iraqaphiles (folks who are fascinated with all things Iraqi) dismiss any possibility of a decentralized governance of the country. They were shocked when the Council of Representatives passed a number of measures that kept faith with the Constitution. One bill broke up the traditionally powerful and monolith ministry, Municipalities and Public Works (MoMPW) and devolved its authorities and its budget allocations to the provinces. In another, the Ministry of Labor and Social Assistance was disbanded on the national level with their duties handed to the provinces. These latest enactments provide yet more credence to the views of many that the Provincial Powers Law passed a couple of years ago was no fluke.
Fifth, and closely allied with the decentralization of governance in Iraq, was the passage by the Council of two items that will have enormous impact on Basra. The first is a $1 per barrel tax on all oil drilled in the province. Current drilling produces almost a million barrels each day. That rate of drilling is bound to increase as hostilities fade into memory, the US withdraws, Iraq ceases to be an armed camp, and private investment increases here. The second windfall for Basra was approval of an 5% import fee on all items brought into the country. Between the oil tax and the import fee, Basra’s budget could easily see a $700 million increase the first year. Imagine if you expected to have $237 million but instead found yourself with almost a billion.
Sixth, because of the enormous increase in cash, the Iraqis are getting serious about governance. The place is one of the most corrupt in the world. The patience of the Basrawis is worn thin by years of deprivation. Now that money is flowing, they are beginning to demand that their elected leadership shape up. Corruption will not end; one just hopes that it can be minimized.
And, finally, what makes Basra such an exciting place and a spot to watch is that Basrawis are enterprising. They figure stuff out quickly and they find ways to profit from even bad situations. The security they enjoy, thanks to the Americans, gives the Basrawis a chance to engage with the world. Most Iraqis recognize that being cut off from the global community has retarded the country. Now they are scrambling to catch up. And, they will.
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