Iraq
No End to Impasse
The withdrawal of the last US troops in late 2011 has not triggered a descent into civil war, but Iraq remains far from achieving the degree of political stability needed to address key issues affecting the future of the Iraqi state. Sectarian tension continues to be fueled by terrorist attacks carried out by Sunni extremist groups linked to Al Qaeda. More worrisome, in terms of the prospects for long-term stability, is the mounting evidence that the cohabitation of Sunnis, Shiites, and Kurds within the national government, which most observers agree is essential to Iraq’s survival as a unified state, is incompatible with effective governance.
Prime Minister Nuri al-Maliki has fended off attempts by his own coalition partners to topple him, but his strategy highlights the dilemma that will confront any leader of a broad-based coalition, namely, the fact that satisfying the demands of any one group is bound to alienate one or both of the others. Confronted by that reality, Maliki has sought to use it to his advantage, wooing each of his coalition partners in turn, thereby keeping them divided and consolidating his own power at their expense.
For now, it appears that the status quo will be maintained. Iraqiyya will struggle to reach the required number of votes to oust the prime minister, and Maliki has warned that he will call an early election if the Sunni bloc persists in its efforts to remove him from office. In that event, it is quite likely that Maliki’s State of Law will emerge as the largest bloc, ensuring that Maliki gets first crack at forming the next government.
Most evidence suggests that Maliki remains the preferred choice of both the US and Iran to head the government, if only because there are no alternatives with a proven record of success at sustaining a national unity coalition, which, despite it obvious weaknesses, remains the least bad option.
Forecast Summary
SUMMARY OF 18-MONTH FORECAST
| REGIMES & PROBABILITIES | National Unity Coalition 45% | Divided Government 35% | Civil War 20% |
|
| RISK FACTORS | CURRENT | |||
| Turmoil | Very High | SLIGHTLY LESS | SLIGHTLY MORE | MORE |
| Investment | ||||
| Equity | High | SLIGHTLY LESS | Same | Same |
| Operations | Very High | SLIGHTLY LESS | SLIGHTLY MORE | MORE |
| Taxation | Low | Same | Same | Same |
| Repatriation | High | SLIGHTLY LESS | SLIGHTLY MORE | MORE |
| Exchange | Moderate | Same | SLIGHTLY MORE | MORE |
| Trade | ||||
| Tariffs | Low | Same | Same | SLIGHTLY MORE |
| Other Barriers | Very High | SLIGHTLY LESS | SLIGHTLY MORE | MORE |
| Payment Delays | High | Same | MORE | MORE |
| Economic Policy | ||||
| Expansion | Low | SLIGHTLY MORE | MORE | MORE |
| Labor Costs | High | Same | Same | SLIGHTLY MORE |
| Foreign Debt | Low | Same | SLIGHTLY MORE | MORE |
SUMMARY OF FIVE-YEAR FORECAST
| REGIMES & PROBABILITIES | National Unity Coalition 40% | Divided Government 35% | Formal Partition 25% | |
| RISK FACTORS | BASE | |||
| Turmoil | High | SLIGHTLY LESS | MORE | SLIGHTLY MORE |
| Restrictions | ||||
| Investment | High | SLIGHTLY LESS | Same | SLIGHTLY LESS |
| Trade | Moderate | Same | SLIGHTLY MORE | Same |
| Economic Problems | ||||
| Domestic | High | LESS | SLIGHTLY MORE | Same |
| International | Moderate | Same | SLIGHTLY MORE | Same |
| * When present, indicates forecast of a new regime | ||||
For more information, check out the Iraq Full Report!
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