The Kurdistan Region has undergone impressive economic developments between 2009-2014. However, the Region has faced considerable economic challenges since early 2015. At the same time, new opportunities are rising which have the potential to become decisive for the necessary reforms. Which immediate reforms are needed to respond these challenges?
Kurdistan Region’s economy is that of a typical rentier state, with almost total dependence on oil revenue. The KRG needs to commit itself to a range of radical structural reforms and adopt a credible overall economic vision, a long term strategy and a serious plan of implementation. Several initiatives must be adopted in parallel in many key areas to regain the confidence of the business community. These include obvious ones, such as re-balancing the budget deficit, through increasing revenues and maximizing efficiency, and revitalizing the dormant sectors such as the agriculture, tourism, manufacturing and banking.

In addition, better legislation and policies are needed to integrate the entire economy, and provide long-term security to international investors. The KRG ministries must be subject to scrutiny and performance assessments as very few are guided by clear visions or strategies and fewer still are working to their maximum potential. Inaction is not an option and the consequences can be dire.

MERI has recently been awarded several grants by the European Commission and United Nations to study the fast-changing political and socio-economic dynamics and their future implications on the landscape in the Middle East.

MERI held its second inaugural Forum in November 2015 with the participation of leading players from Erbil and Baghdad. Could any workable solution be reached between the both sides in the short term?
Relations between Baghdad and Erbil are likely to be more stable than the past years. They have too many crises in common, including (among many) the war on ISIS, a financial crisis, and dissatisfied public. The only way of managing these crises is by reducing tension between the both governments. Fortunately, there are clear efforts from political parties on both sides to mend fences and normalize relations.

That said, I do not expect any breakthroughs in relations. They have lost trust and confidence in each other, and Baghdad’s political system is increasingly dysfunctional. Except for some disputed oil and land issues, Baghdad has accepted the KRG’s de facto economic, political and military independence and the KRG parties will not settle for anything less than what they have already earned. Therefore, we may see that both sides remain unhappy but tolerate each other.

It is now time to think about the long-term future of these displaced populations and adopt new policies to promote economic resilience and social cohesion, because the signs indicate that many are here to stay.

MERI conducted a research project on Kirkuk that remains one of the unsolvable problems between Erbil and Baghdad. Could you please highlight some key findings of the project?
We found that the political stalemate has become too chronic to yield miracles, and, if left alone the communities’ leaders are too divided to negotiate win-win solutions. Meanwhile, Kirkuk will remain depressed, polarized and ready to ignite further conflicts.

In our policy report, we took a bottom-up approach and considered the Kirkuk communities as the key actors in proposed solutions. Following extensive interviews and focus group debates, we highlighted the issues and possible solutions. We designed a roadmap and made specific policy recommendations to local, national and international stakeholders. We presented the report to Kirkuk’s leaders at the Provincial Council and urged them to seize the initiative, own its leadership and lobby for a lasting solution.

Kurdistan hosts over 2 million refugees and IDPs. The influx of refugees & IDPs are imposing substantial economic and social costs. How do refugees & IDPs affect the social, security and economic environment in the Kurdistan Region?
Population displacements have become fact of life in our neighbourhood, and there is no end in sight. The people of Kurdistan demonstrated their generosity and tolerance, despite a long history of tension between them and the Arab Sunni communities where the vast majority of the IDPs come from.

The presence of refugees and IDPs has clearly added to financial and security burden, at a time when the KRI itself has numerous existing crises. However, the refugees can be a source of growth and long-term development in the Kurdistan Region. So far, the KRG has concentrated mainly on the urgent and short-term needs of these displaced populations, and due to its limited financial capacity it has relied mainly on international help to accommodate these needs. However, it is now time to think about the long-term future of these displaced populations and adopt new policies to promote economic resilience and social cohesion, because the signs indicate that many are here to stay.

What will be the key projects & areas of focus of MERI in 2016?
The key projects will include acting as catalysts for economic reform, institutionalisation of Peshmerga and enhancing relations between political parties within the KRG, and between Erbil, Baghdad, Tehran and Ankara. We will continue our studies on displaced populations and promoting human rights, women’s rights, rule-of-law and democracy in Iraq. MERI has recently been awarded several grants by the European Commission and United Nations to study the fast-changing political and socio-economic dynamics and their future implications on the landscape in the Middle East.