By : Shatha kalel
The upcoming battle in Iraq is not merely a temporary financial shock or a salary crisis that can be resolved with an exceptional decision or short-term grant. The deeper issue, which many avoid acknowledging, is the need to transform the very model of the Iraqi economy: from a rent-dependent state that funds almost everything through oil, to a regulatory state that partners in a diversified productive economy in which society shares responsibility, rather than merely benefiting from state rent.
This is not a crisis of budget numbers, but a crisis of vision, social contract, and a whole lifestyle Iraqis have grown accustomed to for decades.
I. From Passing Crises to a Historical Turning Point
Many still believe that the situation only depends on oil prices or global market fluctuations, assuming the problem ends when prices rise or a political agreement is signed. Yet Iraq simultaneously faces:
A near-total dependence on oil revenues
Rapid population growth increasing pressure on jobs and services
Deteriorating infrastructure, healthcare, and education
Increasing threats to water and food security
A hostile investment climate and weakened internal and external confidence
These factors indicate that the crisis is not just about budget deficits, but about the exhaustion of the “state that provides everything” model.
II. Three Layers of Crisis Beyond the Budget Deficit
To understand the challenge, we must examine three interconnected layers:
1. A Rent-Based Economic Model
The state is the largest—and sometimes only—employer
Citizens wait for salaries instead of generating wealth
A weak, constrained private sector suffocated by bureaucracy and corruption
No real productive base in agriculture, industry, or technology
2. Governance and Administrative Crisis
Lack of long-term planning replaced by crisis management
Institutional systems undermined by quotas, corruption, and weak accountability
High public spending with almost nonexistent developmental outcomes
3. Societal Economic Culture Crisis
Constant expectation that the state will solve everything
A consumer culture prioritizing immediate spending over investment
Social resistance to reforms viewed as “loss of rights,” even when they protect long-term rights
These layers make the crisis ongoing, not explosive—seeping into daily life from schools and hospitals to jobs and basic services.
III. Two Choices, Two Futures
Decision-makers face two paths, each leading to a very different future:
1. The Path of Slow Collapse
This includes policies such as:
Increasing government hiring under public pressure
Expanding operational spending at the expense of investment
Borrowing to cover deficits instead of fixing root causes
Printing money and financing deficits through hidden inflation
This path creates temporary stability but leads to:
Decline in purchasing power
Weakened currency and trust in it
Burdens on future generations
Continuous deterioration of services regardless of salary availability
It keeps the state’s form while draining its ability to provide dignity and essential services.
2. The Path of Rewriting the Economic Contract
This difficult but necessary path requires:
Restructuring public spending toward investment and essential services
Fairly reforming salaries and subsidies to protect vulnerable groups rather than support all equally
Launching real tax reform linking taxes to services so citizens become partners, not burdens
Liberating and regulating the private sector instead of suffocating it
Building a smart social protection system targeting the poor and unemployed
This path will initially face resistance because it demands:
Changes in spending habits
Confrontation with deeply rooted interests benefiting from chaos
Clashes with corruption networks threatened by reform
However, the cost of reform today is far less than the cost of collapse tomorrow.
IV. Why Do Governments Delay Reform?
If reform is so important, why do governments avoid it?
Because reform means:
Short-term loss of popularity
Confronting powerful interest groups
Making decisions that cannot be easily marketed to the public
Therefore, governments often:
Buy time through “painkilling” solutions
Use media to create false reassurance
Attack and discredit experts who present data-driven warnings
Yet time in economics is unforgiving—every year of delay increases the cost of reform.
V. Society’s Role: A Partner, Not a Spectator
A sustainable economy cannot exist if:
Citizens continue to view themselves as entitled without contributing to production
The “state pays for everything” mentality persists
Entrepreneurs remain trapped by bureaucracy, extortion, and favoritism
The coming battle is not only governmental, but societal. It requires:
Promoting the value of work and production over favoritism and rent
Supporting small and medium enterprises instead of destroying them with red tape
Demanding transparency and accountability rather than surrendering to “nothing will change”
Engaging universities and experts at home and abroad in policy solutions
Conclusion: A Battle Over the Future, Not Salary Timing
The real question is no longer:
“Will there be a salary crisis?”
The real question is:
“What kind of future do we want?”
A fragile rent-based economy tied to oil and short-term political decisions
Or a diversified productive economy where responsibility is shared, the poor are protected, producers are rewarded, and the corrupt are held accountable?
The upcoming battle is not an “economic war” against citizens, but a war against delay, denial, and fear of truth. Real reform does not seek applause today, but a dignified life for today’s generation and tomorrow’s.
Those who reject reform thinking they are defending their “rights” may later discover they have lost not a right, but a historic opportunity to save an entire nation from slow, inevitable collapse.
Economic Studies Unit – North America Office
Center for Linkage Studies and Strategic Research