Report finds falling oil prices big problem for Iraq
Plummeting oil prices may present Iraq with a budget shortfall, slowing ambitious reconstruction plans and possibly reversing security gains, USA Today reported Wednesday.
"We’re in a situation where Iraq is … potentially going to be in a deficit mode next year," Paul Brinkley, who leads Pentagon efforts to aid Iraq’s economy, told the paper.
The trend worries U.S. officials who say a strong economy is needed to lock in the security gains made over the past year. "The long-term stability of the country heavily depends on a vibrant economy," Brinkley is reported as saying.
Iraq sits on the world’s third-largest oil reserves and gets at least 90 percent of its revenue from oil sales, USA Today noted. Crude oil prices have dropped about 70 percent since July when they topped $147 a barrel.
Iraq’s government is considering slowing, but not canceling, major reconstruction projects, Brinkley told the paper. Many projects were planned during Iraq’s massive oil windfall earlier this year.
Responsibility for funding most large projects was shifted to Iraq from the U.S. government, and the recent drop in oil prices has Iraqi officials worried, USA Today wrote.
"For next year, with the oil prices going down, we’re going to have a problem," the paper reported Samir Sumaidaie, Iraq’s ambassador to the United States, saying Tuesday. If prices decline after that, "it’s not even going to be enough to pay salaries, never mind reconstruction of the infrastructure."