Iraq: reconstruction under uncertainty

The reconstruction process, at this critical juncture, is wrapped in uncertainties: political, economic, institutional and security, the confluence of which could result in a large number of joint outcomes. Some uncertainties, however, can be reduced to their most likely outcomes. Others, especially those emanating from the interaction between the security situation and the administrative structure of the country, are still very difficult to ascertain. Given the most likely outcomes of other uncertainties, the reconstruction process will depend largely on the joint outcomes (scenarios) of this interaction. This article identifies and analyses the national/regional economic consequences of three scenarios, noting that some eventualities are increasingly undermining the role of the central/federal government. In a federal system, however, and as regions become more responsible for their economic policies and financial resources (mainly transfers of oil revenues), federal economic management ought to promote, inter alia, regional capabilities, economic integration and reduction of the historical disparities between regional GDP generation and received incomes.