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Govar Ali

Dr. Akeel
ENG 203
November 14, 2016
Economic Crisis in Kurdistan
In this research paper, the concept of economic crisis will be applied
to the topic of the economic crisis in Kurdistan. An Economic crisis is a
situation in which the economy of a country experiences a rapid decline
brought on by a financial crisis. An economy facing an economic crisis will
most likely experience a falling GDP, a drying up of liquidity and
rising/falling prices due to inflation/deflation. The economy of Kurdistan
region heavily depends on the oil, tourisms, and farming products. There
is more established economy compared to other parts of Iraq because of
stronger security and open world-wide trading markets. This research is
about the current economic crisis in Kurdistan, and the debate about it
inside a Kurdish society. Therefore economic crisis as a cultural definition
is seen as a huge and affective problem in the country because teachers,
employees, workers, and every citizen who work for the government will
be affected by the decline of economy rates. I personally think that this
structure of the economy in Kurdistan in the political science and
economic science is known as a rentier state which originates all or a
large portion of its national incomes from the rent of natural resources to
external customers. Hence, a decline in the countrys economy will have a
huge negative effect on business and marketing.

Paragraph One: The term Economic Crisis is related to a sudden loss of a


large part in a countrys economy. The history of economic crisis was first

emerged in the third century, also known as the Military Anarchy in which
the Roman Empire nearly misshapen under the pressure of the civil war,
invasion, and economic depression. The empire challenged a
hyperinflation caused by years of currency deflation.

Paragraph Two: This paragraph will be mainly about the common effects
of economic crisis. There are several types of crisis and the most common
ones are banking crisis, currency crisis, international financial crisis, and
influence on population. Therefore, when a bank suffers a sudden urgency
of withdrawals by depositors, it creates a banking crisis that happened in
most of the banks in Kurdistan and put most of government employees in
a hard time because of the lack of their salary. A currency crisis happens
when the percentage depreciations in the exchange rate and monthly
percentage declines. An international financial crisis is a worldwide era of
economic struggle experienced by markets and consumers. A global
financial crisis is a difficult business situation to succeed in since potential
consumers lean towards to decrease their purchases of goods and
services until the economic situation recovers. Finally, the standard of
living will be deteriorated and an obvious share of the population will be
vulnerable to falling into poverty.

Paragraph Three: The concept of economic crisis in Iraq is usually


understood through citizenships and leaders. The Iraqi economy is facing
severe and demanding challenges. The decline in oil prices in 2014 and
2016 and the ISIS insurgency have added a sharp weakening of economic

activity and have rapidly increased the economic and current account
debits.

Paragraph Four: Kurdistans current situation through the concept of


economic crisis can be described as a period of putting an end to the
countrys future plans, peoples life, marketing, and business. The
population remains extremely vulnerable to the current security problems
and reduction in oil prices. In general, economic crisis will lead to several
negative situations such as protesting, slowing down international
services, decrease in population, or putting the citizens in a terrible
situation that might lead to going against the president. Kurdistan is
presently under an economic crisis that teacher, employees, and workers
all together are complaining about the government and asking either for
their salary or change in the presidents position.

Paragraph Five: a rentier state is equal to a weak state ss the state only
depends on the natural resources, and the economic structure did not
advanced because of the absence of diverse economy and a good
taxation system. As a consequence of this when there is the global decline
of the price of the natural resource that the country depends on it heavily
will have an economic crisis. An example of this can be seen in the Spain
during the American colonies in the 16th century.

Paragraph Six: the concept of rentier state applies on economic


structure in Iraqi Kurdistan and overall in Iraq also. KRG economy is

heavily relies on oil industry as the main source for funding the
government and infrastructure development. The oil sector become the
main segment of economy, so as KRG depends on the outside rental of its
oil and gas resources one of the most significant characteristic of rentier
state apply on its economy.

Paragraph Seven: Causes and effects of an economic crisis in the


Kurdistan Region depend on the connection between Baghdad and the
three Kurdistan great parties. As the Kurdistan region advantages more
self-sufficiency from the central government in Baghdad, the KRG
established many oil and gas contracts with the oil companies to extract
and sell oil. This leads to a great addition in the budget. However, a
conflict between Kurdish leaders and Baghdad leaders happened about
the oil policy, so the central government in Bagdad withheld budget
payment to Erbil and it affected the Kurdistans economy that leaded to
an economic crisis.

Paragraph Eight: The social media sites and television stations in


Kurdistans society are boundless discussions about the current economic
crisis. There are different ideas and plans in each party of the government
and the members of PUK and KDP usually stand against each other or
they believes that KRG is not responsible for the crisis, but the outside
circumstances is the real reason of the crisis. They rumored that
Baghdads cut for the seventeen present of budget share, plus the war
against ISIS, then the large number of Syrian and Iraqi Refugees because

of the war situation, also the declining of oil price internationally, finally
Kurdistan Parliaments focus on the political issues instead of the
economic crisis.

Paragraph Nine: The rentier state is a key problem in Kurdistan. The


economic crisis that have faced KRG that some political parties visualize
that it occurred because of the battle between Kurdish leaders and
Baghdad leaders about the oil policy, the cost on ISIS war, and the larger
number of refuges that caused an extra pressure of the KRG budget.
Beside this other parties think that the corruption inside the system and
the irresponsible management and administration of the oil revenue is
responsible for creating this unexpected situation.

Paragraph 10: Finally, who pays for all of these crisis and unusual
conditions? As it is seen, the citizens, employees, worker, farmers, and
even the future generations will have to pay for it if it will not be fixed.
Business, marketing, and import/export trade markets will get into an
unstable route that will need a hard work to get them back to the
standard method.

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