World Bank-Iraq Partnership

In recent years, Iraq has grown more progressive as a nation. Past interventions have had considerable successes in peacekeeping, creating political stability, institutional strengthening and capacity building. Over the past decade, Iraq has held two elections, which helped the nation solidify its political infrastructure; a third is scheduled this year. The situation in the country has been relatively peaceful and orderly — the United States withdrew the last of its troops in Iraq in 2011. But much remains to be done. As one of the world’s top oil exporters, Iraq has huge economic potential. Its overreliance on oil, however, leaves it highly vulnerable to fluctuation in crude prices and limits available job opportunities. In addition, Iraq lacks the institutional capacity to maximize oil revenues and deliver basic services. Years of conflict has also made it difficult for the country to achieve sustainable and inclusive development, a challenge that is exacerbated by sectarian violence that erupted recently in the Anbar governorate. As a key donor to Iraq, the World Bank is cognizant of the situation and, along with its implementing partners, is committed to helping the government overcome development challenges across key sectors. Funding levels For 2013-2016 funding period, the World Bank’s indicative budget for Iraq will ranges from $600 million to $900 million. Below are disbursements made to the Middle Eastern country over the past five years, broken down by funding mechanism. The bank’s $1 billion reconstruction and recovery program is slated to end during this funding period. Depending on its purpose, development aid for the period will be disbursed through the International Bank for Reconstruction and Development (catalytic investments), International Finance Corp. (advisory and investment engagement) and Multilateral Investment Guarantee Agency (aid guarantees). Funding priorities The World Bank’s country partnership strategy with Iraq focuses on creating robust government institutions and strengthening the country’s economy to catalyze job creation, reduce poverty and foster inclusive growth. Below are key focus areas: - Public financial management. - Strengthening institutions. - Private sector development. - Infrastructure. - Service delivery. Additionally, gender remains an important cross-cutting theme, along with water resource management and climate change adaptation. Below is a breakdown of the bank’s previous IDA and IBRD disbursements by sector for the 2009-2013 period: Click on the table to view a larger version. Ongoing IDA-funded projects in Iraq include: - Emergency Road Rehabilitation Project ($135 million) – Aimed at re-establishing Iraq’s road networks and enhancing capacity for its maintenance through construction and rehabilitation of damaged roads. - Emergency Water Supply Project ($109.5 million) – Designed to scale up water resource provision, both in quality and quantity, to four targeted governorates through upgrading infrastructure and working with the government in policy development for the water sector in Iraq. - Third Emergency Education Project ($100 million) – Designed to elevate the education sector through the construction of schools and provision of equipment to reduce overcrowding in primary and secondary schools. - Dokan and Derbandikhan Emergency Hydropower Project ($40 million) – Geared toward increasing access to electricity supply, mainly in the Kurdistan region and but also countrywide by way of its connection to the national grid. Devex analysis The World Bank is among the top five donors to Iraq, along with the U.S. Agency for International Development, Japan, the European Union and the Swedish International Development Cooperation Agency. The bank is instrumental in coordinating aid efforts between development partners and the Iraqi government. Increasing institutional capacity to leverage national resources is the biggest challenge for Iraq, according to the World Bank. The country also needs to reduce its reliance on oil and explore other means of generating income. Moving forward, Iraq must also seek to reintegrate itself into the international community through trade and commerce. In light of this, the bank has recalibrated its engagement strategy to focus on providing technical assistance to the Iraqi government and enhancing private sector capabilities. This has translated to smaller but targeted aid contributions, mainly for knowledge transfers. Doing so would enable Iraq’s institutions to effectively harness its already vast resources and produce maximum results. Other donors to Iraq have likewise adjusted their approach in recent years, moving from grant-based aid to loans and partnerships. Iraq has made significant strides toward achieving its development goals. Nonetheless, there remain risks in aid delivery. Proper coordination among all stakeholders is crucial to mitigate corruption, poor project management, faulty financial planning and redundancy in aid efforts. The World Bank is committed to assist Iraq in this capacity through the 2013-2016 period, while keeping aid mechanisms flexible enough to adjust to the still-volatile environment in Iraq when necessary. Recent developments prove just how volatile the situation still is. On Dec. 30, 2013, Prime Minister Nouri Malik ordered a forceful dispersal of a protest camp in Ramadi. This ignited a faceoff between the Shia and Sunni sects, which also reportedly involved al-Qaida and other militant groups. If tensions escalate, analysts fear a sectarian civil war might break out, a development that could reverse gains made in Iraq and impede aid delivery. It could also prompt a change in strategy among Iraq’s development partners. Although aid volume has dropped in recent years, the bank maintains strong ties with Iraq and will continue to do so through 2016 and beyond. This is evidenced by the World Bank’s new engagement strategy with the government – moving away from interim strategy notes to its first country partnership strategy for Iraq. Because of improved economic and socio-political conditions in Iraq, the bank had to change its role in the country’s development; the bank now focuses on overseeing development efforts and providing Iraq with the tools needed to further its development. And while Iraq remains a high risk environment for aid implementation, greater involvement can be expected from the World Bank in coming years. Contact: Mona Ziade Tel: (961-1) 987-800 Email: mziade@worldbank.org Join the Devex community and gain access to more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.