The War Economy
As Kurdistan gears up for sending troops to Kobani to fight off the Islamic State , the nature of the economy gears up for war too!
The market for luxury items is quickly dying down. So much so that a high-end luxury car dealership was recently slashing prices in a whole sale event in order to get a few buyers for fear that things might get worse. Whereas the market for necessity items such as staple food, fuel and so forth is still strong. Also the black market for light weapons and ammunition is on high demand mode, magazines for AK47s are becoming almost extinct!
The standard of living in Kurdistan is getting lower, but not entirely as a result of the war against I.S rather due to the withholding of the budget sent by the Iraqi central government to the Kurdistan Regional. This was the main source of the national income, and its lack has been a painful lesson for the K.R.G to stop relying entirely on Baghdad for money.
The K.R.G has been resourceful though in finding alternative means of national income by bypassing the Iraqi central government in selling crude oil directly to buyers, and by securing loans from different individuals and financial entities. It has also attempted to introduce rationing on fuel, which is a common wartime economic measure during the time of chronic fuel shortage. This, as we know, caused extended car queues before petrol stations. There are still more measures that need to be taken though such as raising taxes and introducing further rationing for scarce resources.
Is the economic forecast all doom and gloom though! Certainly not, although the short term effects of the war are negative, it appears that the long term will be positive. Political tension between Erbil and Baghdad is getting resolved and with that the return of the flow of money, which will provide some breathing space for Kurdistan to recover and work on long term strategies to build its promising oil industry.