Iraqi Kurdistan, once known for its rich soil, is rapidly becoming identified with its rich oil. War News Radio’s Amy DiPierro explains how these two fields reflect economic equality in the region.
DIPIERRO: In the 1950s, Iraq was a major exporter of wheat, and the Kurdistan Region was the center of its agricultural sector. That order ended when Iraq began to rely more heavily on oil production.
NATALI: As Iraq petrolized its economy, it became what other rentier states are: a food importer.
DIPIERRO: That’s Denise Natali, the Minerva Fellow at the Institute for National Strategic Studies at National Defense University in Washington, DC. A former Information Officer for the U.S. Office of Foreign Disaster Assistance, she first traveled to Kurdistan in May 1992, and has conducted independent research in the Kurdistan regions of Iraq, Turkey, Iran, and Syria from 1994 to 2005.
Natali says this trend towards a rentier economy—one in which the government exports oil and uses the royalties to import food and most other commodities—is unlikely to change.
NATALI: I don’t-I don’t know of a case where countries have turned back and developed their agricultural infrastructure. I don’t see it. Iraq hasn’t done it.
DIPIERRO: But in the long term, what’s the effect of developing oil over other resources? In many ways, Kurdistan’s wealth and poverty can only grow, quite literally, from the ground up. The story of oil and agriculture—how oil propels the Region’s economic growth while village farmers make a subsistence living—is the story of Kurdistan’s successes and failures. In the big picture, it may also affect the unity of federal Iraq.
Here’s a more local perspective on agriculture.
STACY: Our host took us down to his orchard, and we walked around for hours…We walked through all these amazing apple trees. […] And there were pears and quinces. And just kilometer after kilometer of just gorgeous fruit.
DIPIERRO: Rachel Stacy is a member of the Christian Peacemaker Teams, a service organization based in Chicago which visited impoverished villages in the Kurdistan Region of Iraq during October 2011. In one village, they stayed with an Assyrian-Christian farmer who simply couldn’t find a place to sell his crops.
STACY: Eventually our host broke it to us that there isn’t a market for his fruit. That really describes the reality, the economic reality of this region where a lot of produce is much cheaper when it’s imported from Turkey or from Iran.
DIPIERRO: Natali says the rising cost of food is a consequence of the Kurdistan Regional Government’s policies, which seek to bring foreign firms into the region rather than bring crops out to market. But when wealthy firms—not just those owned by foreigners, but by expatriates and locals—do business in Kurdistan, prices rise for everyone.
NATALI: Why is the cost of living increasing—! You’ve got international businesses coming in, you’ve got oil companies coming in, you’ve got hundreds of internationals coming up, needing housing, driving up the housing market, the rental market…so prices, food prices, they’re astronomical.
DIPIERRO: According to Natali, this foreign demand removes incentives for the KRG to invest more evenly. Rather than generate other sources of revenue, she says the KRG relies on sign-on bonuses the federal government in Baghdad earns from oil firms and other developers. While this money often funds legitimate development projects like education and infrastructure, Natali says a lack of budget transparency means that only a limited slice of the population—usually those with a personal connection to KRG officials—reaps the benefits of investment. Additionally, the KRG spends much of its revenue on
NATALI: Jobs. Seventy-six percent of the public sector, is the public sector salaries–of the budget. That’s huge.
DIPIERRO: So even though the KRG does not provide food subsidies or directly employ Stacy’s Assyrian host,
STACY: Our host does get funds—in this part of Kurdistan—funds from the government. From his Kurdish government.
DIPIERRO: But overall, Natali says these subsidies are meager in comparison to the dividends reaped by a few influential interests.
NATALI: There has been a concentration of wealth in certain families’ hands, in certain political parties’ hands, it is not being redistributed—this was going on before. …The oil rents have just allowed it to quadruple in strength.
DIPIERRO: New agricultural policies might narrow the divide between those who receive oil royalties and those who do not. In a 2011 pamphlet, “Kurdistan: Invest in Democracy,” KRG Minister of Agriculture and Water Resources Jamil Haider outlined a five-year plan for the farming sector. It mirrors the KRG strategy for developing oil: attract foreign firms, and let them bring modern techniques and machinery.
But Rachel Stacy feels ambivalent about foreign intervention in Kurdistan’s agriculture, noting that many species of plants native to Kurdistan are no longer farmed there.
STACY: Most of the seeds that people are planting are the cucumbers and the tomatoes and the onions that we see in mass quantities in our grocery stores.
DIPIERRO: At the same time, she’s a proponent of adding foreign expertise to local knowledge.
STACY: What would it mean to… offer the piece—bits and pieces—that we know around…permaculture or growing rates or water conservation?
DIPIERRO: But before the KRG looks for agricultural partners in the international community, it will need to resolve oil disputes with the federal government in Baghdad. Natali says the KRG has neither the financial independence, nor the physical infrastructure to transport the goods.
NATALI: You can scream that you want independence, but who’s paying your bills? The Kurds have—ninety-five percent of the Kurds’ revenue comes from Baghdad. […] Who controls the pipeline? Not the KRG. Baghdad does.
DIPIERRO: Further still, Natali suspects the need for oil will soften the KRG’s will to compromise on territorial disputes and federal funding for Kurdistan’s army, the Peshmerga.
NATALI: I’ve been saying this for years: they will cut a deal.
DIPIERRO: In the interest of preserving federal Iraq, a deal could mean the KRG ceding some disputed territory to federal control in exchange for greater authority over resources. Whether any hypothetical governance change would also bring an Assyrian farmer’s pears and quinces to market remains an open question.
For War News Radio at Lodge 6, I’m Amy DiPierro.