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Iraq Defence and Security Report Q3 2011
Business Monitor International, May 2011, Pages: 66
Iraq has almost no indigenous defence industry and relies greatly on the support of the US, UK and other allies to provide and fund arms and equipment. With their support, the country has ordered tanks, aircraft and helicopters in order to stand any chance of meeting the challenges they will face when the remaining US troops withdraw at the end of 2011.
Purchases include M1 Abrams battle tanks from General Dynamics in the US; armoured personnel carriers from BAE Land Systems and from Kariv Morarzov in the Ukraine and various transport and multi-role helicopters from Aeronautical Radio Incorporated in Russia and Eurocopter in France. The redevelopment of the military forces is under way and looks set on a reasonable path to achieve a capable force, albeit that it may take 10 years from now to be at full strength.
Security Risks
The security risks that Iraq faces are currently much more likely to come from within than from invading forces. The Iraqi government has made some progress since its formation in December 2010 but there is tension bubbling under the surface in many areas and with many groups – political and regional. Ambiguous language in the state’s constitution has allowed Prime Minister Maliki to rearrange the control of independent governmental entities, among other things. This has taken control away from parliament and given it to the Council of Ministers instead.
The ruling does not bode well for Iraq's economic and political outlook in our view. Reasons include central bank decisions could be based more on political needs rather than economic stability; the financial audit department and anti-corruption agency's actions may be driven by political motives and future elections could become less transparent and less fair, as the electoral commission's independence is in question.
This change in oversight will have negative implications for the country's growth prospects and give the prime minister more scope to abuse his executive powers. Iraq is at its most stable since the 2003 US-led invasion but the numerous challenges it faces present significant risks that it could descend into chaos once again.
Economic Outlook
Iraq's economy will grow an average 6.0% per year in real terms through 2015, with rapid expansion in the oil and infrastructure sectors underpinning our view. Construction is the most likely source of longer-term growth. We caution that an unstable security situation and volatility in oil prices and output pose downside risks to our forecasts.
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