Emerging Markets / September 26, 2017

Economics and Kurdistan’s Bid for Independence

The Kurdish people are a community native to the northern Middle East that live spread out through four main countries. It is estimated that Iran has a Kurdish population of 8.1 million, Iraq has 5.5 million, Turkey has 14.7 million, and Syria has 1.7 million Kurds. Even though the Kurdish people are one of the oldest communities of the region, they have not had their own country in the modern era and the establishment of an independent Kurdistan remains a dream for millions of Kurds. The governments of Turkey and Iran are hostile and repressive against their Kurdish minorities, while the Kurdistan Regional Government (KRG) in northern Iraq enjoys large degrees of autonomy. In recent years, the Kurdish armed forces, also known as Peshmerga and based out of northern Iraq, have been at the forefront of the fight against terrorism and have become a source of Kurdish pride throughout the region. Taking advantage of its strength and autonomy, the KRG organized a controversial non-binding referendum on the issue of Kurdish independence in northern Iraq on Monday, September 25. Even though the official results are not yet known, the participation was above 70% according to official sources and the pro-independence vote is expected to achieve, at least, a modest majority. In order to better understand these dynamics, this articles explores the macroeconomic outlook of Iraq, where the KRG administers the northern third of the country.

Economics and Kurdistan’s Bid for Independence

Located at the heart of the Middle East, the Republic of Iraq achieved its national independence from the United Kingdom protectorate during the 1930s. However, issues of civil strife, lack of democratic rule, and political instability have plagued the country for decades. Desert plains and rivers as well as some mountains throughout the north and a small 58-kilometer coastline into the Persian Gulf dominate Iraq. Currently, the country has a total territory of little over 438.000 square kilometers, which is somewhat larger than three times the state of New York. Likewise, Iraq has a total population of approximately 35.2 million citizens, up to 20% of which identify as Kurdish. Similarly, some 70% of the Iraqi population lives in an urban setting, notably the capital city of Baghdad with 6.7 million inhabitants and the Kurdish capital of Erbil in the north with some 1.2 million inhabitants.

The national annual gross domestic product (GDP) of Iraq is about US$600 billion (PPP) and the country has experienced positive economic growth in recent years. The Iraqi economy is divided into 6% agriculture, 45% manufacturing, and 49% services. Similarly, it is estimated that the agricultural industry employs 22% of the national labor force, while manufacturing employs 19% and services employ another 59%. Meanwhile, the agriculture industry utilizes 18% of the national territory, while another 2% is forested. In terms of natural resources, Iraq has petroleum, natural gas, phosphates, and sulfur. Within manufacturing, the national industry is focused on petrochemicals, textiles, leather, construction materials, food processing, fertilizers, and metallurgy. Simultaneously, the country’s agricultural industry has as main products wheat, barley, rice, vegetables, dates, cotton, cattle, sheep, and poultry.

(Read more about Economics, Land Use and Agriculture in Israel)