The New Levant Project and Dimensions of Iraqi Economy Integration into the Global Economy

Jaafer Sadiq Ali*

The global economic theory explains that countries get richer when integrated into the global economy, because integration can facilitate reaching to a larger consumers’ base, a bigger group of qualified labors, additional financing resources and new reforming techniques.

This is especially important for Iraq, whose economy is still lagging behind the income levels achieved by other economies of similar size from the Arab world countries, as per capita high income is closely related to trade openness, especially with an increasing population. However, even for an economy the size of the UAE, which is ranked 30th on the global list in the category of very high development, following the development path of newly opened economies such as: Saudi Arabia, Bahrain, Qatar, Oman, and Kuwait, is a promising option.

While the six economies of the Arab Gulf states have made great progress towards opening up their economies, they usually continue to follow their regional peers in the Middle East, as these economies join the ranks of high-development countries, they will certainly expand their exports and raise their GDP.

The question that arises here is, what prevents Iraq from following the path that these countriesF have followed? To some extent, it is the historical legacies such as, the relatively limited productive base (income) which now need more care, as well as the conflicts that have affected regional trade and integration into the global economy.

In 2014, realizing the unachieved potentials of economic integration and as a mean of growth, the World Bank launched a study for the New Levant Project. According to the study, the project includes Syria, Lebanon, Jordan, and the Palestinian territories, in addition to Turkey, Iraq and Egypt. This project lasted as a theoretical study for about 5 years. In 2019 Iraq, Egypt, and Jordan began to think about creating political and economic understandings, especially these countries all suffer from high poverty and a decline in growth indicators, where the per capita GDP is much lower than its counterparts in the Middle East such as Turkey Not to mention the Gulf states.

Confronting crushing debts and low growth rates, Jordan has been placed in an increasingly intolerable position following the wave of normalization of Gulf Arab relations with “Israel” and the recent coup that shook confidence in its internal affairs and Arab relations, in addition to its economic problems. Egypt is now having a tense confrontation with Ethiopia due to the latter’s insistence on moving forward with the second phase of filling the Nahdha Dam. As for Iraq, it seems as if it is in a state of permanent internal and regional crisis, due to ethnic and sectarian rivalries, as well as weakness in building an inclusive national identity, containing and building international balances that take into account its internal interests at the expense of the interests of other countries on its soil.

The leaders of Iraq, Egypt, and Jordan met in June 2020, to give priority to the economy at the Baghdad summit, but of course Egypt and Jordan have nothing economically to offer to Iraq, as much as they are two Arab countries that are important to Iraq and are internationally important, and the rapprochement and coordination between them benefits Iraq and enhances its regional and international position on the political level only.

For the economic and livelihood conditions in Iraq, which are becoming increasingly difficult and increasing the country’s tensions, it calls for partners that are capable of providing more effective economic solutions, as the COVID-19 pandemic and the oil price shock have starkly thrown at how much Iraqis have lost in the past two decades.

The education system, which used to be near the top in the MENA region, is now approaching its lowest levels, with a labor force participation rate of 42% along with one of the lowest rates of female labor force participation in the world, in addition to a global orientation of a zero-carbon economy which necessarily means to stop global oil consumption, which represents the main product for Iraqi budgets.

One of the core problems in the Iraqi economy is how to reform a system that deeply resists the solutions which it desperately needs. The Iraqi economic system is resisting change because of the fragmentation of political groups and the spread of corruption in most institutions due to the rivalry political activities that refuse to create new paths for economic reform, which led to economic-societal stagnancy.

The new economic models require innovative political arrangements that establish instructions and balances to allow the Iraqi economy to enter the real competition realm, and of course there are winners and losers in every comprehensive program of economic reform. However, the implementation of key measures such as: improving transparency and governance, advancing law enforcement, developing motives for entrepreneurship and creating jobs in the private sector which will over time lead to improving economic performance and reducing rates of unemployment.

Therefore, it is necessary for Iraq’s leaders to focus on the complex political economy of the country and not to focus on the economy and politics separately, as shedding light on political settlement and development at the same time will have a significant impact on the societal reality in Iraq, as well as eliminating the idea of ​​isolation to integration with the global economy, which would facilitate the emergence of a new development model and a new social contract between Iraq and the world

There can be four areas of joint work between Iraq and the world in the context of a new phase of the process of convergence and integration, and they are: increasing organizational cooperation and reducing technical obstacles to trade, facilitating the attraction of investment opportunities, progressing towards building a digital marketplace and cooperating in developing statistics on trade in services, in order to give Iraq more responsibilities and more rights, which is necessary for the successful growth of both sides.

* Jaafer Sadiq Ali/ An Iraqi Researcher