New Article: Food Security in Iraq

The academic journal Food Security has just published the following article of mine. It can be accessed here (read only):

Food security in Iraq: results from quantitative and qualitative surveys

Abstract:

Iraq’s food security has been profoundly affected by its oil-based economy, over three decades of conflict and its politics that have been shaped by authoritarian rentierism. The article outlines the political economy of food security in Iraq and how it has been shaped historically. It identifies various conditioning factors such as oil, conflict, environment, agricultural development strategies and institutional setups, such as the Public Distribution System (PDS), the world’s largest public food program. It then disentangles these factors in an analysis of data from Gallup, Iraq Body Count and various international organizations to give an appreciation of the Iraqi food security situation since the end of the Saddam regime. Finally, it takes a look at views of Iraqi experts on current food security issues in Iraq, using the results of an online survey that was conducted from May–October 2015 among 152 Iraqi experts from academia, ministries and NGOs. Iraqis overwhelmingly identify political instability and bad governance as major challenges to food security; it is unlikely that mere technocratic policy prescriptions can improve food security in the absence of political stability and improved governance.

Keywords: Food security Agriculture/ Iraq/ Middle East/ Authoritarianism/ Isis

Agriculture as ISIS Funding Source

The academic journal Food Policy has published an article by Hadi Jaafar and myself about

“Agriculture as a Funding Source of ISIS: A GIS and remote sensing analysis”

The article is open access and can be downloaded here:

Highlights:

– Recurrent taxation of agriculture is a crucial income source for the Islamic State in Syria and Iraq (ISIS) as extractive and non-recurrent income streams such as oil, ransom and confiscations show signs of dwindling

– ISIS has sustained agricultural production of rainfed winter crops (wheat and barley) despite the impact of conflict. Only irrigated summer crops (cotton) have suffered extensively

– We estimate that in 2015 ISIS might have derived income of $56 million from wheat and barley taxation alone. Additionally there is taxation further down the value chain of food processing and distribution

– The total value of estimated 2.45 million tons of wheat production in 2015 roughly equalled the annualized value of ISIS oil production during its height in late 2014 and early 2015

– Population in ISIS territory likely did not exceed 4 million in 2015, much lower than figures reported in the media of 8 million and more

– Iraq and Syria were wheat net-importers before the war; ISIS is not. It has an exportable surplus which it likely smuggles into the subsidized Iraqi food distribution system or to Turkey where prices are higher

– Agriculture in ISIS territory lives on bought time as supply chains for quality seeds and other input factors are disrupted. Food security and agriculture would need to have high priority in any post-ISIS reconstruction effort

Abstract

Agriculture is an important source of income for the Islamic State in Syria and Iraq (ISIS), which currently rules over large parts of the breadbaskets of the two countries. It has received limited attention compared to other sources of ISIS revenues such as oil, looting, ransom, foreign donations and various forms of taxation. We estimate winter crops production of wheat and barley in ISIS-controlled areas in both Syria and Iraq for the years 2014-2015 and irrigated summer crops production (cotton) in Northeast Syria. We show that remote sensing can give a credible estimation of agricultural production in the absence of statistics. With evidence from MODIS Aqua and Terra Satellites as well as Landsat imagery, we find that agricultural production in ISIS-controlled Syrian and Iraqi zones has been sustained in 2014 and 2015, despite the detrimental impact of conflict. After a drought in 2014 production was able to capitalize on improved rainfalls in 2015. First indications show that the winter grain harvest of 2016 in Iraqi territories of ISIS was significantly above pre-conflict mean and below pre-conflict mean in its Syrian territories. We also show how water flows along the Euphrates have impacted production. We estimate the revenue that ISIS can derive from wheat and barley production and the likely magnitude of an exportable surplus. Agricultural production gives the group a degree of resilience, although its economy is not sustainable in the longer run and could be affected by military collapse. Taxation of recurrent income streams such as agriculture will become more important for ISIS as its extractive sources of revenues show signs of dwindling. Beside non-grain food imports, agricultural production is crucial for its political legitimacy by ensuring food provision to the broader population. Food security considerations would require a high priority in any post-ISIS reconstruction effort and would need to include the rehabilitation of supply chains for agricultural inputs such as quality seeds and fertilizers.

 

Food Security of Refugees in Iraq and Syria and the EU

I have just returned from traveling in the Kurdistan Region in Iraq and CIDOB has published a short brief of mine on the Iraqi and Syrian refugee situation and implications for the EU.

Currently there are 4 million Syrian refugees in neighboring countries and 7.6 million internally displaced persons (IDPs) within the country. This is half of the entire population and almost a fifth of the global refugee population.

Iraq now has 3.2 million IDPs, mostly from the ISIS provinces Anbar and Ninewa and 250,000 refugees from northern Syria. Beyond IDPs and refugees there are non-displaced Iraqis who suffer hardship, pushing the total tally of people who are in need of humanitarian assistance to 8.2 million.

The food security situation is challenging in both countries. IDPs and refugees engage in negative coping mechanisms like eating less and cheaper, spending savings, incurring debt and selling assets. As these strategies are reaching their limits the inclination to move on towards Europe is growing.

Refugees and IDPs constitute a considerable pressure on domestic services and resources in Iraq, at a time when oil price declines have led to budget shortfalls. Besides, there are security concerns and sectarian prejudice. Meanwhile assistance programs of the World Food Programme are severely underfunded. It is high time for the EU tho step in and fund emergency relief in the region, otherwise the refugee crisis will get worse.

Food Security Situation in Iraq

This article by Hadi Fathallah for the Carnegie Endowment for International Peace offers interesting insights on the current food security situation in Iraq, based on reports by international organizations like the World Food Programme, Arabic and western press reports.

The wheat harvest in ISIS controlled territory has declined, in contrast to civil servant salaries, producer subsidies from the central government in Baghdad do not reach ISIS territory anymore. The government has not budgeted funds for procurement of wheat from ISIS areas in its 2015 budget. The coverage of the Public Distribution System for refugees in non-ISIS territory is limited.

Food imports will need to increase at a time when oil prices have declined and more spending is directed towards military and security issues. The food security situation in Iraq is about to get more critical.

Economic Crisis of ISIS: Media Overview

The main thesis of my policy brief in October “How Long Will ISIS Last Economically” has been increasingly picked up in the media and think tank papers, i.e. that the ISIS economy is a “Ponzi scheme of looting” and far from self-sustaining.

Below you find a list of media articles that expand on this theme and have quoted my policy brief:

Slate Magazine ; BBC ; CNBC ; National Post ; Die Zeit ; Carnegie Endowment for International Peace ; Democracy Digest ; Jamestown Foundation ; Business Insider ; The Marshal Center ; Al Ahram Hebdo .

These articles also contain further interesting details, most notably the sequestration of houses of retired government personnel in Deir el- Zor (Al Hayat):

Washington Post ; Al Hayat ; Der Spiegel

The Water-Energy-Food Nexus in the Arab World and Financial Challenges

Martin Keulertz and I have published a new article in the International Journal of Water Resources Development: “Financial Challenges of the Nexus: Pathways for investment in water, energy and agriculture in the Arab world.”

Abstract:

The Water–Energy–Food (WEF) nexus is a development challenge in the Arab world,
particularly in the ‘core nexus countries’ with low to mid-incomes in which limited
water endowments permit agricultural production, such as Egypt, Morocco, Tunisia,
Lebanon, Algeria, Sudan and Jordan. The WEF nexus is often conceptualized in mere
technocratic terms, yet politics matter in the implementation of projects that address it.
Internalizing hydrological externalities or leaving them as they are and financing them
as a public good requires states whose capacities have been reduced as a result of
neoliberal reform. The article explores five different pathways of how Arab countries
could finance green growth projects ranging from regional financial markets to
concessionary loans by funds from oil rich Gulf countries.

Update on Economic Issues of ISIS

Germany’s largest weekly Die Zeit has run a feature on the lack of economic sustainability of ISIS that has also been translated into English. It quotes my earlier policy brief of October: How Long Will ISIS Last Economically? and shares its conclusion that the ISIS economy is based on looting and far from self-sustaining.

Meanwhile the UN has estimated that ISIS had revenues from ransoms of $35-45 million in 2013. Revenues from such ransoms have likely decreased as I have argued, as Western journalists and aid workers have been deterred from traveling to the region and local hostages fetch lower prices.

The Die Zeit feature in fact points out that hostage taking has increasingly targeted the local population. Prices for local hostages ($20k-50k) are considerably below those for western hostages ($3-5mn).

In October David Cohen, under secretary for terrorism and financial intelligence at the US Treasury Department, estimated the ISIS income from oil at $1mn per day with a declining tendency. He also saw the revenues from ransoms reduced at $20 mn in 2014.

Cracks of ISIS’ Ponzi scheme of looting have already started to appear. Prices for meat, eggs and vegetables have doubled and tripled in some cases.  Defections of senior ISIS officials have been partly attributed to economic problems of the organization.

ISIS tried a publicity stunt when it announced its intention to introduce its own currency based on gold, silver and copper (sic) coins. Even if it managed to loot enough precious metals to issue such a currency it would likely face Gresham’s Law and the challenges of maintaining realistic exchange rates within a bimetallic currency, not to mention a tri-metallic one.

Yet ISIS is not the only organization with economic problems in Iraq: The government in Baghdad faces severe funding shortages as oil prices have declined while it needs to ramp up expenditure to rebuild its military capacities (if they ever existed given 50k “ghost soldiers” who only existed on payrolls).

The Iraqi government also continuously grapples with corruption: The Grain board chief was sacked because of a spoiled rice shipment, only to be replaced by his predecessor who took kick backs in 2009.

How Long Will ISIS Last Economically?

A new CIDOB briefing note of mine deals with some food security issues in Iraq:

How Long Will ISIS Last Economically?

· ISIS is not a mere terror organization, but an insurgency that follows a classic “Clear, Hold, Build” strategy. The aim is state building as the very name ISIS suggests. Holding territory implies provision of services to the governed population such as food, energy and water.

· Oil is the most important revenue stream for ISIS followed by various forms of looting, local taxation, extortion and ransom. Not for nothing ISIS has been likened to a mafia gang. Foreign inflows have also played a role, but have not been as dominant as often assumed.

· Energy infrastructure cuts across territories. Rebels in control of oil and gas fields have sold energy to the Assad regime, which has been in control of the gas grid and power stations. ISIS has been no exception.

· Syria’s oil industry was already ailing before civil war erupted. The more lucrative fields in the south and north of Iraq on the other hand will likely remain out of ISIS’s control.

· Gulf donors have been described as “angel investors” for jihadist groups in Syria who provided the seed financing for their domestic operations. During 2012 and 2013 Gulf countries poured hundreds of millions into the Syrian civil war, often in competition with each other. While it is unlikely that Gulf governments have ever funded ISIS directly, it has benefitted indirectly from this spending spree when fighters who had originally been with other groups joined it and brought their experience and weapons with them.

· Iraq entertains the largest public food program in the world. The Public Distribution System absorbs about a fifth of government revenues and provides basic foodstuffs to more than half of the population in most provinces. ISIS regards dams and food distribution infrastructure like wheat silos as strategic assets. Like refineries and oil installations it has targeted them specifically and has taken a keen interest in taking them over intact.

· ISIS now controls up to 40% of Iraqi wheat production. However, half of Iraq’s wheat supplies are imports, so ISIS’s share of domestic production only is equivalent to about 20% of overall supplies.

· The economic base of ISIS is a Ponzi scheme of looting that is in constant need of expansion. Yet there are signs that expansion is becoming more arduous. The early easy phase of looting is over.

Fertilizer as Strategic Assets: Canadian Bid for Israel Potash Producer Crumbles

Canadian Potash Corporation of Saskatchewan’s planned takeover of Israel Chemicals, a large producer of Potash has run into massive opposition.

Israel’s finance minister Lapid and trade unions oppose the deal vigorously as they fear loss of jobs royalties and a strategic asset.

Potash Corp itself was target of protectionist sentiment in 2010 when a bid by Australian BHP Billiton  and a possible counter bid by Chinese Sinochem led to vigorous opposition in Canada that derailed the deal.

In a world of high food prices fertilizers are increasingly perceived as strategic assets as I argue in the last chapter of Oil for Food. Asia in particular has a potash shortage.

The Middle East’s position in global phosphate reserves is more dominant than in the case of oil where it holds 60 percent of conventional reserves. Morocco alone holds over three quarters of global reserves after the recent revisions by the International Fertilizer Development Center and the US Geological Survey.

Iraq has another 9 percent, albeit its reserves are undeveloped. Syria, Jordan, Tunisia are also substantial producers as will be Saudi Arabia once its Al-Jalamid project is fully operational.

As reserves in the two largest producers worldwide, China and the US deplete, the importance of the Middle East in global phosphate markets will grow and therefore their importance for global food security.