Kurdistan’s independence an economic point of view

[Anthea]

Kurdistan’s independence referendum from an economic point of view

This is not a political opinion, but an economic point of view.

Some people in the Kurdistan Region oppose the proposed referendum for independence just because it's adopted by a certain party, while others argue that this isn't the right time for a serious step like that as the Region is suffering from severe economic crisis.

However, looking at the current economic situation of the Kurdistan Region, we can conclude that the best solution is Independence.

The economic situation in the Kurdistan Region is the worst has ever been, since 2014, the main reason being its, and Iraq’s, dependence on oil for 95 percent of its revenues. Yet for Kurdistan the crisis was way bigger than it was for the rest of Iraq.

There are of course several other factors that could be summarized as follows:

1. Despite an increase in overall oil production, oil revenues have decreased significantly since 2014 due to a sharp decline in oil prices.

2. Disputes with the central government over oil, where the central government opposes KRG’s independent exports, which the KRG claims to be its “constitutional right” to manage its resources. As a result relations between Erbil and Baghdad have worsened. 17% of the national annual budget is earmarked for to the KRG, but since the beginning of 2014 when the federal government blocked Erbil’s budget no funds have been disbursed. Even when the KRG was supposedly getting its 17% share of Iraq’s budget, in reality it received much less than that. In addition it has had to care for hundreds of thousands of Iraqi refugees.

3. The expansion of the Islamic State (ISIS) and its war against the Kurdistan Region.

4. A big wave of internally displaced people (IDPs), and refugees to the Kurdistan Region, amounting to 1.8 million.

These were other factors that led to this financial crisis, which has halted nearly 6,000 projects and led to a market slowdown. According to some estimates, the Kurdish Government’s debts had reached $20 billion by January 2016.

In the midst of all this, KRG's hands are tied. It cannot adopt any methods that other countries can in rescission times, because the KRG is not an independent country. It has to turn to Baghdad for everything, and we all know there is no hope for any solution through Baghdad, as relations between Erbil and the center have been worsening day after day.

Not being an independent country the KRG:

1. Cannot print money.

2. Cannot reevaluate exchange rate

3. Cannot borrow money.

4. Does not have control over monetary policy.

Once the Kurdistan Region declares independence it can adopt all the abovementioned methods that any country could do to overcome an economic crisis. The present situation of being tied to Iraq lessens any hope for a recovery.

In the meantime, long-term solutions to the economy is that the KRG improves and develops other economic sectors such as: agriculture, industry, commerce, banking, and tourism.

The Kurdistan Region should therefore be very serious and active in declaring independence and shouldn't worry about approval from the international community. No country would ever come and help or encourage the Kurdistan Region to become independent, as the international community has its own obligation towards Iraq as a sovereign country.

Once the Kurds insist on independence, most countries, especially the United States and European countries will support them. These countries have democratic systems and would be unlikely to oppose the will of the Kurdish nation in pursing their dream for independence.

http://rudaw.net/english/opinion/28052016

[Londoner]

A short term solution for financial crisis in S. Kurdistan is for KRG to go for an electronic monetary system, by which KRG generates an amount of electronic money to make for the shortfall of the money owed by Baghdad to KRG and KRG uses the amount of the money owed by Baghdad to KRG as support to this generated electronic money by KRG. This is similar to the use of gold to support national currency.

KRG uses this electronic money to pay the salaries of all its employees from the president to a simple worker. For this purpose, at the end of each month KRG credits Central Bank of Kurdistan with an amount of electronic money equal to the monthly wages of all its employees. For the employees to collect their wages, each one gets a debit card. These debit cards should use finger prints instead of pin numbers to prevent fraud like an official getting multiple wages. Now each employee can use this debit card at shops or collect cash at Central Bank of Kurdistan. To ensure cash liquidity at central bank of Kurdistan, Central Bank of Kurdistan can borrow money from private sector and an interbanking currency trade created in Kurdistan.

The asset, equipment, for this electronic monetary system can be franchised to private sector. So it doesn’t cost KRG anything, rather it gains a lot of royalty from the franchise.

[Anthea]

A short term solution for financial crisis in S. Kurdistan is for KRG to go for an electronic monetary system, by which KRG generates an amount of electronic money to make for the shortfall of the money owed by Baghdad to KRG and KRG uses the amount of the money owed by Baghdad to KRG as support to this generated electronic money by KRG. This is similar to the use of gold to support national currency.

KRG uses this electronic money to pay the salaries of all its employees from the president to a simple worker. For this purpose, at the end of each month KRG credits Central Bank of Kurdistan with an amount of electronic money equal to the monthly wages of all its employees. For the employees to collect their wages, each one gets a debit card. These debit cards should use finger prints instead of pin numbers to prevent fraud like an official getting multiple wages. Now each employee can use this debit card at shops or collect cash at Central Bank of Kurdistan. To ensure cash liquidity at central bank of Kurdistan, Central Bank of Kurdistan can borrow money from private sector and an interbanking currency trade created in Kurdistan.

The asset, equipment, for this electronic monetary system can be franchised to private sector. So it doesn’t cost KRG anything, rather it gains a lot of royalty from the franchise.

Sadly the same rule as applies to printing money, would also apply to electronic money

One reason why Kurdistan so desperately needs to declare Independence

[Londoner]

Sadly the same rule as applies to printing money, would also apply to electronic money

One reason why Kurdistan so desperately needs to declare Independence

Certainly the same rules apply but KRG doesn't break any of these rules if it goes for electronic money, which should revitalise the economy and bring back the prosperity Kurdistan had before. This prosperity should create faith for independence. Now politically it is the right time to declare independence because the free world has to accept it and protect Kurdistan because of ISIS. But economically, we don't have a sound foundation. Because of that it would be a gamble.

[Anthea]

Certainly the same rules apply but KRG doesn't break any of these rules if it goes for electronic money, which should revitalise the economy and bring back the prosperity Kurdistan had before. This prosperity should create faith for independence. Now politically it is the right time to declare independence because the free world has to accept it and protect Kurdistan because of ISIS. But economically, we don't have a sound foundation. Because of that it would be a gamble.

Kurdistan struggles financially because:

1) It has taken in and is supporting in excess of 2 MILLION internally displaced people and Kurdish refugees from Syria

2) It is spending vast amounts keeping itself and other parts of middle east free from ISIS, while helping to free other parts from ISIS occupation

The time to declare independence is NOW

Because once Independent Kurdistan as an Independent Country has many more options open to it

Also, Kurdistan will receive international support and respect

[Londoner]

While we have ISIS card we can declare independent without fear. Economically we wouldn't be worst than present time.

[Anthea]

While we have ISIS card we can declare independent without fear. Economically we wouldn't be worst than present time.

The sooner the better before the vile Gorran manage to cause too many problems