The threat of coronavirus, known as COVID 19, is knocking at the gates of Iraq, and until now, 26 cases have been confirmed in Iraq. Despite Federal Government of Iraq (FGI) and Kurdistan Regional Government (KRG) efforts to curb the spread of the virus, they are all reactionary and late. Regardless of the real impact of the new virus, Iraqis are at least mentally preparing for the worst, but one aspect that has not been thought through is the economic impact of the public fear, which may wipe out any GDP growth this year but also leave scars on the economy for years ahead.
Both FGI and KRG are taking extreme measures to contain the biggest pandemic in the 21st century; however, the efforts may be great and painful but not the most effective. The closest source of the virus for Iraq is Iran. All the reported cases are those who just came back from Iran even though it is not clear the level of the outbreak across the country. In addition, Turkey to prevent any outbreak in the country, closed border points with Iraq and cancelled all the flights. This indicates that Iraq is isolated from its main two trading partners, and the isolation can be greater if the virus spreads more.
Fearing from Supply Shortage
KRG already closed all the traffics through border-crossings with Iran except for trucks that bring oil products and other goods. FGI has done the same but with smoother hands. Both limited the number of border points to work with Iranian businesses and canceled flights from and to Iran. Meanwhile, Turkey also closed its only border-point with the KRG and Iraq. The precautionary measures immediately concerned ordinary people over supply-shortages of various basic goods such as food, vegetables, and oil products. The first signs of panic were seen when people in Sulaymaniyah waited in the long queues to fill their car-tanks, knowing that a big portion of the gasoline is imported from or through Iran. Both KRG and Iraq will face shortage of food if they close the border-points fully, as they import up to 90 percent of the needs of vegetables and fruits from Iran.
Iraq has a more than 1,000 kilometers long border with Iran, and controlling it will be impossible as many people from both sides have been interacting for decades. Also, millions of Iranians each year come to visit the holy Shiite sites in Najaf and Karbala and tourist sights of KRI. Many also come to work in Iraq. All these linkages do not just mean great economic loss for both countries but are also reshaping the whole supply chain which may need years to be fully functional.
Moreover, still the full size of this pandemic is not clear. It is very possible that the virus spreads across the region, and then what will be the both governments’ reactions? Their precautionary steps may plunge both economies into great depression.
The threat of the virus has been affecting the Iraqi economy before it reaches its borders as the demand for crude oil went down in the global market. Iraq’s economy fully depends on oil export not just to have access to hard currencies but also to function. The Iraqi market has not still recovered fully from 2014 global oil price crash and its aftermath. Despite, exporting more oil crude into the international market and higher prices globally, the local market confidence is low still. As the virus spreads in the main industrial countries, the demand for oil can easily go down much more, and Iraq till now looks clueless about that possibility.
Add-in Salt on Iraq’s Injuries
Currently, FGI is facing huge popular protests in Baghdad and major southern cities and towns of the country. They are trying to peacefully reform the political regime in Baghdad and replace the current elite and ruling political parties, blaming them for bad governance, endemic corruption, and lack of employment opportunity. Any shock in the Iraq’s revenue may put back Iraq as a state into the verge of disintegration especially since Iraqi Government promised a lot of new hiring and investment in infrastructure.
The already angry protesters find the government incapable to tackle the basic challenges in the country. Coronavirus is not just a threat to Iraqis’ health but to their economic lifeline as well, oil revenue. it could easily destabilize the whole country and cause political and economic chaos if it has not dealt with having the full picture in mind.
Currently, both Iraq and KRG are looking into options of preventing major gatherings and any other activities that might spread the virus. By now, KRG has closed schools and universities and similar steps will be taken for the Kurdish New Year (Nowruz) and many other anniversaries in March and later on. Similar steps have been taken in provinces under control of FGI by closing the Shiite pilgrims in to Shiite sites from Iran. If these steps do not curb the spread of the virus, then both FGI and KRG are in the direction to limit gatherings in public places and even service business such as restaurants, cafes and tea houses.
Local authorities have already closed cafes in Kirkuk and the town of Kalar (south of Sulaymaniyah) Sport centers, public baths, and swimming pools are closed in the majority of cities and towns. If they will keep closing services businesses, the whole service sector in Iraqi economy will be damaged. Many businesses will go bankrupt. The country’s tourist sector will be damaged. Without Iranian pilgrims Iraq’s religious tourist-sector will collapse. The Kurdistan Region’s tourism sector depends on internal Iraqi tourists; their flow also stopped as local authorities informed tour agencies to stop bringing anyone fearing from the pandemic.
The economic consequences are still not comprehensible on Iraq, but it is not fearmongering to expect a great shock in the Iraqi economy, which might leave its traces for years to come. Iraq has a very weak industrial sector (except for oil and gas sector), and its agriculture is still not supplying local market sufficiently; therefore, the service sector will be hit the hardest, and this will stop circulation of capital in the market and affecting the low-income workers and their families the most as their income will end.
The protesters in Iraq are mostly consisted of low income or unemployed youth, and the extreme precautionary measures will affect them the most. This easily can be like pouring gasoline on fire and cause great security challenges for the FGI.
For Iraq, handing coronavirus needs a comprehensive plan. It would easily develop to a huge national security and political challenges. This is a challenge for the current destabilized Iraqi state which is not clear if new elections will be held or a new person will assigned to form a new cabinet. The virus could transmit into a political and security challenge if it will not be talked in a way that will not crash local market and businesses.
Iraq Is Caught With Poor Health Infrastructure
Iraqi health sector is already facing a lot of challenges and the level of services is inefficient. The sector has been neglected for years due to internal conflicts, corruption, and mismanagement. According to the World Bank, Iraq has 1.4 hospital beds per 1,000 citizens and the number of the physicians per 1,000 people is 0.8. Both indicators show that Iraqi health sector is not ready and with that insufficient health sector, the hospitals will be packed and will become another source of infection among healthy citizens. The insufficiency in the sector has already pushed a lot of people to look into other countries or private sector to receive healthcare services. Spreading the epidemic will pressure the sector more into chaos and it is too late for any reform.
By beginning of March, the country goes through a seasonal change and temperature rise, every year thousands of people would get normal seasonal flu, but now having seasonal flu leads to many consequences. Thousands of people will be hospitalized and the seasonal flu patients and coronavirus cases will be mixed in quarantine locations which most likely spreads the virus more effectively within the neglected health institutions in Iraq. Also, Iraqis are social and the level of hygiene is low compare to the health standards normally and for this virus specifically. This is another challenge that may easily cause an out of control situation in many areas.
The spread of Coronavirus is also another test for the whole health care system and government to handle the crisis in best manner. However, the already not trusted system will push many to use other methods for solving the threat of coronavirus which can exacerbate the situations and put thousands of families in risk. Already the number of people wearing mask has skyrocketed in the public places and different messages are sent to the public through half scientific half media outlets. KRG is investing a lot to prevent a mass hysteria among the public, but with the first death because of Coronavirus, shock waves will be sent to the public, and this will cause a multi-dimensions crisis. The level of misinformation can add to a public panic and people may take similar steps as it happened in Sierra Leone with the Ebola outbreak.
Still too much is unknown about this virus and how it can be curbed. However, despite all the extreme measures by both Iraqi Federal Government and KRG, Iraq is very vulnerable. The possibility of widespread of Coronavirus may not just cause a health crisis in the country, it can easily flatten the GDP for this year and years ahead.