Alarm bells ring as Iraq slowly faces up to the consequences of slumping oil revenues

After six months of haggling – which is far from a record – the Chamber of Representatives’ 6 May vote has endowed Iraq with a new government. Mustafa AlKadhimi’s administration would face daunting challenges even without the sharply deteriorating economic outlook, triggered by plunging oil revenues. Iraq is one of the biggest losers from the slump: based on an average $30 a barrel ($/bbl) Brent crude price, the International Energy Agency (IEA) has forecast a 70% drop in revenues, while Fitch Ratings expects GDP to contract by almost 10% this year. Low oil prices coupled with lower production and exports threaten to drain the funding pool that Iraq’s political elites have traditionally relied on to maintain their patronage networks. But those holding power and influence in Baghdad seem unlikely to change their ways.