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Kurdish region's economy plummets

IRBIL, Iraq—Iraq's autonomous Kurdish region lost a longtime nemesis in the war, but it also lost much of the revenue sources that made its economy tick.

The Kurdish region in the north has seen its revenues fall to less than 10 percent of their prewar level, officials say. That means teachers, militiamen and government employees have gone two months without pay. About 60 percent of households depend on government salaries.

Rashid Tahir, budget director for the Irbil-based Kurdistan Democratic Party government that administers about two-thirds of the region, said 60 percent of governmental revenue came from customs duties exacted at international borders and at what before the war was the de facto border between Saddam Hussein's Iraq and quasi-independent Kurdistan. As war neared, the Turkish government squelched the lucrative smuggled oil trade that Tahir said had accounted for 40 percent of revenues.

And American troops have helped put a stop to the customs checkpoints between the Kurdish region and northern Iraqi cities like Mosul and Kirkuk. Although some checkpoints still charge passing motorists, Tahir insisted the activity was done by renegade soldiers who don't feed the regional budget.

The Kurdish region's woes highlight the complexity of governing postwar Iraq. Relatively unscarred by the war—in which Kurdish forces fought alongside American soldiers—the region is nonetheless feeling the affects of the postwar chaos, which has delayed the establishment of a central government.

For 12 years before the American invasion, this part of Iraq was outside Saddam's control, protected by a no-fly zone enforced by American and British warplanes.

Much of the region's economic success depended on its status as a buffer zone between a pariah regime and the rest of the world.

The era of subsidizing salaries with smuggling revenues "was a special situation," said Saad Othman, the agriculture minister for the Irbil government. "But now it is over."

Kurdish leaders and officials at the American-led Office of Reconstruction and Humanitarian Assistance say the region's problems will be short-lived. Once a new central government is functioning, the Kurdish region will be in line to receive its share of Iraq's national revenues from oil and other resources, and these revenues will be more dependable than the money from smuggling.

Leaders of both major Kurdish factions are in Baghdad, where they expect to wield an outsize influence on planning for the new government thanks to their alliance with victorious American forces.

Local officials say America should step in and alleviate the crisis. "Before the war, it was our responsibility," said Education Minister Abdulaziz Tayib Ahmed, "but after they became the authority, it is their responsibility."

Fadil Nabbe, dean of Irbil Technical Institute and an expert in accounting, faulted the region's American allies for not anticipating their postwar fiscal troubles. "Why didn't they have a plan?" Nabbe said. "They knew 100 percent that they'd win the war. Why not have a plan for after?"

In Irbil, the vast majority of government officials and ordinary citizens—including Nabbe—say the economic trouble is well worth it. Saddam's regime brutalized Kurds, displacing families during a campaign of "Arabization" in traditional Kurdish areas, launching poison gas attacks and brutally suppressing an uprising.

Yet many people blame their leaders for their economic problems.

"We are angry," said Abdullah Ali, 40, a high school teacher who last month participated in a rare protest march in Irbil. "When somebody lives in a country, granting his living is the main job of the government."

"We teachers, the only job we know is teaching. We entirely depend on the salary," said Ahmed Ali, 42, a high school teacher who said he had borrowed money to make ends meet for his wife and six children. Ali said he hadn't had a paycheck since March, and hadn't received his customary fees for giving extra lectures since December.

"What should I do?" Ali asked. "Sell cigarettes in the market?"


(c) 2003, Knight Ridder/Tribune Information Services.

PHOTO (from KRT Photo Service, 202-383-6099): usiraq-kurdistan