Economic Woes Threaten Iraq's Stability

Declining oil prices and aid cancel urgently needed rebuilding
By Jason Farago,  Newser Staff
Posted Feb 26, 2009 7:56 AM CST
Iraq's parliament is debating the annual budget this week, as the government said it would tap into oil surpluses to fund shortfalls.   (AP Photo/APTN)
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(Newser) – Countries around the world are suffering budget shortfalls and declining exports, but few nations have seen as calamitous a fall in revenues as Iraq. As oil prices have plummeted and American financial support has dried up, Iraq is canceling projects and struggling to pay government employees. As the New York Times reports, many in Iraq worry that the economic crisis could threaten the hard-won stability crucial to President Obama's plan to withdraw troops.

As the Iraqi parliament debates the budget this week, the country's treasury said it would withdraw about $20 billion in oil surpluses to cover shortfalls. But that sum is insufficient for the reconstruction projects and improvements to public services, like water and electricity, that Iraqis are demanding. "It’s a disaster," said one Iraqi MP of the country's limited savings. "What are we going to do in 2009, 2010, 2011?"