The NYT must have hated to run this
Iraq
The Salaries Must Be Paid. Or Else.
By JAMES GLANZ
The New York Times
December 31, 2006
BAGHDAD
SEEMINGLY everything went wrong in this dirty, crumbling and traumatized city in 2006. Thousands of citizens died violently. Daily electrical outages left neighborhoods in the dark. Sewers overflowed. But there is a seldom-discussed indicator of something that went remarkably right in Baghdad and throughout Iraq in 2006: $27.99 billion.
That was the government’s operating budget, dominated by salaries, subsidies for food and fuel and pensions. What went right is that through violence, political turmoil and governmental turnover, nearly all of that money was actually paid to Iraqi citizens.
The same could not be said of the portion of the budget devoted to capital expenditures, known more intuitively as the reconstruction budget. Some Iraqi ministries were able to spend no more than 15 percent of their capital budgets in the face of attacks on employees and work sites and a brain drain of personnel trained to handle contracts and large construction projects.
Somehow money for the salaries made it to the banks and then found its way to millions of employees in a government-dominated economy. If it hadn’t, a state teetering on the edge would certainly have collapsed.
So this is the determinative question for 2007: will Iraq keep paying its salaries? If so, there is at least a wan indication that a few basic ganglia of the national organism are still twitching.
Sinan al-Shabibi, director of the Central Bank of Iraq, says Iraq is likely to stay financially healthy in 2007 because of oil revenues, a large cash reserve and a powerful bank to guard against failures. Only a big run on the local currency or destabilizing flows of cash could cause major problems.
Still, banks are increasingly the targets of heists, and bank executives are being killed and kidnapped. The salaries they pay may be the last canary in the coal mine: the last approximation of stability in an enterprise gone toxic. As salaries go, so goes the last hopes for the new government of Iraq. |
