Interview with Dr. Ali Allawi, Iraqi Minister of Trade

Iraq's minister of trade gives Arabian Business an exclusive interview on where he sees his country's future and path to recovery

  • E-Mail
By  Massoud Derhally Published  September 23, 2003

AB: With all the laws the Iraqi interim government has implemented, it almost sounds as if you are preparing Iraq for possible GCC membership. Is that what you are aspiring to?

Allawi: We obviously see the GCC as a critical element in terms of Iraq's future economic development and in particular in terms of attracting GCC investment into Iraq. However, the structure of the economies is entirely different, I might add also the structure of the political systems is different, which will make it problematic if we ask for full membership of the GCC. What we may very well work towards is some kind of free trade area with them, whereby there will be certain harmonisation of imports and regularised tariff rates and possibly free flow of capital between the two. We will certainly be looking towards some form of association with the GCC and possibly deepening of relationships with individual countries in the GCC.

AB: The GCC plans to have a monetary union, would you be interested in joining them at some point?

Allawi: The monetary union will be part of the integration of the economies of the GCC in order to facilitate trade and exchange and to have a common unit of account for the countries. Iraq is a different kind of economy and the size of the Iraqi population and size of the economy and the special needs and requirements of a devastated developing country may not necessarily call for joining such a monetary bloc. Although if it comes about and proves to be effective I don't think it will be ruled out.

AB: Jordan has looked to Iraq in the past as a major trading partner. There was a lot of talk after the Jordanian Embassy in Baghdad was bombed that could possibly be indicative of some kind of negative sentiment towards Jordan. Do you see the current political situation in Iraq will have a negative effect on trade relations with Jordan?

Allawi: The bombing of the Jordanian embassy was a terrorist act. It has nothing to do with the policies of the [Iraqi] government for or against any country. We do not and have no intention in the future to favour countries for the sake of very narrow political objectives. The main issue I think that has to be confronted by all Iraqi trading partners is that the structure of the economy now is open. It is open to trade, open to investment and is not subject to distortion by narrow political goals. Those groups and those companies that have been dealing with Iraq as part of the economy that is directed, and are therefore used to receiving large orders from centralised decision making structures like civil servants and so on. They have to forget that. The economy is open. They have to learn to deal with the Iraqi private sector. They have to learn to deal with wholesalers and retailers and the needs of the market. Those in the past who may have made considerable amounts of revenue and profits by selling goods to large public state owned enterprises as a result of political considerations must learn to adjust to a new reality where the market is, open and competitive. If they can't provide the goods at the right price if they cant deal with the Iraqi private sector then they can't do any business but if they can and do, and we hope that they will adjust to it, then they will have a mutually profitable relationship.

AB: The Iraqi delegation to the IMF and World Bank meetings has said that Iraq would be closed to foreign investment from Israel. There have been news reports citing Adnan Pachachi as saying that once something materialises on the Palestinian-Israeli front that Iraq would step up to the plate and sign a peace treaty with Israel. Does that mirror the opinions of all the Iraqi delegation; are you all agreed on this?

Allawi: I must say this is a red herring that's always trotted out by the press as a form of entrapment. I'll give you a straightforward answer. This is an interim administration. We are a technocratic government. We are in the business of reconstruction and development. We are not in the business of settling scores or in the business of recognising or not recognising countries. With that in mind, we should not be subject to different standards of judgement than the other Arab countries. We will do what is in the best interest of Iraq as a country and as a people and specifically with regards to Israel, it is a question of how the evolution of the Israeli-Palestinian negotiations take place. If there is a consensus, Iraq will not go against that consensus. We should be subject to the same rules and same standards by which other Arab countries have been judged by public opinion. The press should not keep on bringing this issue up.

AB: But Israel is a hot issue, no?

Allawi: It's not a hot issue. It is made into a hot issue. You don't ask these questions from other foreign ministries in the GCC, or from Egypt or Morocco it's always trotted out against the Iraqi government, the IGC. It's not a fair question.

AB: I have asked it of a lot of officials. I am not singling you out. It is a valid question. There have been different figures, US $10-13 billion as to revenue from oil production once you have an uninterrupted flow of oil, could you clarify this?

Allawi: The oil revenue is a function of a number of variables; one of them is the level of production so there are technical considerations. Another one is market demand; the third one is the price level. You are bound to get these different numbers depending on what yard stick you use. We are taking the best guess estimate.

AB: While rebuilding your country, Iraqi farmers will require assistance. Do you have any agenda in terms of subsidising the farmers and how much such measures are going to cost and how are you going to build up your agriculture sector?

Allawi: The policies of the government are going to be best practice. We will move away from subsidies that are not targeted, and from subsidies that discriminate. We will try to monitise whatever subsidies are necessary. Maintaining price levels inside the country that will allow competitive farming is obviously something we will be looking at. In those areas where we have some comparative advantage and we can improve for example in wheat where yields are very low right now, so obviously the returns to the farmers are low. In an attempt to improve the yield pattern, and improve the variety may very well lead to us having a competitive wheat industry.

AB: It goes without saying, oil is going to be integral to the recovery of the country what else do you feel is Iraq's comparative advantage? Manufacturing is very low in the Arab world, Iraq can become a major manufacturer, it could become the next Malaysia in 20 years...what are your thoughts?

Allawi: It could and it should. Malaysia has managed to develop a very powerful export engine; mainly I might add through large-scale foreign investment. In the case of Iraq, Iraq is a crossroads country. It has always been historically. It has always been a country accommodating to various currents. Unfortunately the political policies of the previous regime and other regimes geared Iraq away from these natural patterns.

AB: In terms of the IMF and World Bank, if there is some kind of assistance that Iraq wants, be it in loans or debt relief, are you looking for this in the medium term, long term, what kind of package do you want?

Allawi: What we want is real transfer of resources; debt relief in the sense of acknowledging debts that have not been serviced. We need a real transfer from major western powers as well as Japan and Far Eastern countries and Arab countries. We must have the full support and backing of the international financial community.

As for debt relief, there was a lot of debt that was incurred by the former regime, most of it is military related and it has not been serviced for a long time. There are certain categories of debt that have to be serviced as quickly as possible, for example IMF and World Bank arrears.

Kuwaiti reparations are UN resolutions and we will ask our Kuwaiti friends to relinquish that and I think they will be favourable to such a request.

AB: Have the GCC countries offered to help?

Allawi: I think they will. It is in their manifest interest to see Iraq revitalised. It's an important market and important contributor to regional stability. Right now there have been strong sentiments of support. In time they will translate I think into commitments.

AB: When I asked a well-known and prominent Iraqi banker if he had one thing to say to President Bush what would it be and he said, "get the economy right and everything else will fall in place. Do you agree with that?

Allawi: I say to President Bush thank you for overthrowing Saddam because nobody else could except the US.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code