Kurdistan finanical crisis: Replacing oil with agriculture for prosperity and independence

By Glenn Field

ERBIL, Kurdistan Region — In the midst of Iraqi Kurdistan’s economic crisis, the region is in desperate need of alternative sources for revenue other than their oil and gas industry which has struggled while at the mercy of the international market. For this reason, the Kurdistan Regional Government (KRG) is looking to revive their agriculture industry which has been part of their historical identity.

From 2004 until 2014, Iraqi Kurdistan’s economy was growing at an accelerating rate. In 2014, when the Islamic State (ISIS) established itself along the KRG’s borders, many of the international investors withdrew from the region due to the security threat. Since 2014, many of the Kurdistan Region’s industries have been suffering including their oil and gas industry. On top of everything, when the crisis hit, the Iraqi Central Government has withheld 17% of the constitutional budget mandated to the KRG.

The region’s agriculture industry however, has slowly but gradually begun to improve and Bashar Msher Aga Goran from the Kurdistan Parliament, claims that agriculture is the key to not just end the financial crisis, but is also the Kurdistan Region’s ultimate source for prosperity and independence.

The KRG even released a statement early in 2016 claiming that they plan on making Kurdistan’s agriculture industry as prosperous as oil and gas. “Agriculture is a historic element in Kurdistan’s identity,” Goran claims. “In fact, the first farm ever conceived by man was in Kurdistan with wheat plants. Goran went on to add that they must revive their agricultural industry for the sake of their own food security and end their dependence on the oil and gas market.

At the end of World War One, with the Sykes-Picot Agreement dividing the fallen Ottoman Empire including the entire Kurdistan Region into separate nation states, the leaders put in place to govern over the fractured Kurdistan, used a number of oppressive measures to suppress the Kurdish groups from uprising. These measures particularly pertained to methods for disenfranchising the Kurdish agricultural market as a means of marginalizing them economically. A common technique was sanctioning the market but also uprooting farmers from their lands, transplanting them into the cities and forbidding them to return was a common practice as well. These methods were especially apparent during Saddam Hussein's reign. “Essentially, Kurds were disconnected from their roots,” Goran explained. Such examples of “uprooting” have been a reason for the absence in internal revenue during the economic downturn.

According to the KRG’s Ministry of Agriculture, the Kurdistan Region has the perfect combination of elements for productive farming with the ideal amount of rainfall and soil type. But despite such richness in resources, rebuilding the agriculture industry has been slow, particularly after the Kurdish Civil War between the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP) in the early 1990s. When the two factions settled their differences, many returned to their agricultural villages but many more went to work for the government since the KRG also began to experience an economic surplus, taking away potential workers from farming. In addition, the KRG did not set aside any plans to directly rejuvenate the agriculture industry for the immediate or long term investment. Since the economic crisis unfolded in 2014, very few farming projects have been initiated. With international displaced persons (IDPs) to accommodate for, a war to fight with the Islamic State and the capital withheld from Baghdad, funding is currently too scarce to heavily invest in any agricultural projects.

Currently, KRG’s budget for agriculture looms at 1.8%, the lowest in 24 years. Member of the KRG Parliament Goran, states that this number is unacceptable and that “agriculture needs to be as big a priority as the oil and gas industry.” He went on to say that “only through a healthy and prosperous agricultural industry can the region be stable especially regarding food security if all other industries fail.”

Long-term food security would not be the only benefit to the agricultural industry's revival. It would also be beneficial for the environment and for creating jobs. Jamal Fuad, Ph.D, FAO and the World Bank, International Consultant claims that the agricultural industry “is the most important sector for decreasing [Iraqi Kurdistan’s] unemployment rate.” This is most vital since the region is expected to lose an additional 50k more jobs by the end of this year according to the Kurdistan Regional Government Council of Ministers.

In order to revive the agriculture industry, serious investment needs to be put in place including raising the KRG’s annual budget on farming production from 1.8%. There also needs to be an aggressive marketing campaign to encourage the public to partake in the industry’s resurgence as well which many from the Ministry of Agriculture feel that the KRG has previously lacked in prioritizing. There also needs to be a reestablishment of the market for the Kurdistan Region to export to. Years ago, crops such as rice, tomatoes and other kinds of vegetables had been exported throughout the Middle East, particularly the Gulf States. Now, Kurdistan’s market is primarily limited to the rest of Iraq but even this market has proved to be somewhat unstable due to security threats in Iraq such as illegal roadblocks and raids from the numerous militia groups operating throughout the fragmented nation.

The latest project has been the undertaking of potato farms in the Bamarze region of Iraqi Kurdistan. In 2010, a loan from a business in Holland was granted to the KRG in the form of seeds. 500 tons of seeds were planted and in return, 10,500 tons of potatoes have not just been grown but sold to the local market and throughout Iraq as well over the last six years.

This is a small step to reviving Kurdistan’s “ultimate source” for ending a region’s potential food insecurity. However, whether the KRG’s rhetoric regarding its ambitions for the agriculture industry and the amount they invest in it will align, will be made clearer the longer this economic crisis prolongs.