South Africa / Iraq relations: Meeting with Iraq Ambassador

Economic Development

21 August 2013
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

Dr Hisham Al-Alawi, the Iraq Ambassador to South Africa, had offered to brief the Committee on the current events in Iraq and the interest for cooperation between that country and South Africa. The two countries had many similarities, faced many of the same challenges, historically and at present, and shared similar priorities. Consequently, there was great potential in working together. The Ambassador gave a brief historical background from the 1980s to 2003, and noted that this placed many challenges on the country. In October 2005, a new Constitution, which was in many ways similar to South Africa’s, was approved, and a representative Parliament was established. Iraq, like South Africa, focused on improvements in healthcare and education, wanted to decrease unemployment, improve services to rural areas, and improve law and order. In 1998 Iraq and South Africa had signed an MOU on diplomatic relations and the first Iraqi Ambassador came to South Africa in 2000. However, because South Africa lacked its own embassy in Iraq, relations were slow in building. An agreement had, however, now been signed on economic and technical appropriation, and it would be good building block for the future. Matters of focus mentioned in this agreement included energy, agriculture, housing, transportation, tourism, health care and telecommunication, and practical steps to increase trade and enhance economic cooperation were set out. The level of trade between the two countries had fluctuated over the last five years, but it was hoped that this would bolster it. Visits by South African delegations to Iraq were planned.  

Iraq’s economy had been growing at between 8% and 9%, despite its difficulties, and rates of unemployment and poverty had declined dramatically and were hoped to reduce even further below 10% in the next few years, with a bold new strategy. Most of the economic development was in the energy sector, because of Iraq’s oil resources, and identification of new gas resources that should make it self-sufficient for gas, and able to export within the next five years. However, it also recognised the need to diversify into sectors such as agriculture and tourism, and to stimulate more growth in the private sector as it would be the main contributor to reducing unemployment. Education was a major focus area for investment, with free education offered up to post-graduate level, and opportunity for students to have exchanges to overseas universities. Work was ongoing to explore possibilities in South Africa. There was also the potential for cooperation with South Africa in the fields of energy, defence, tourism, infrastructure development and training, agriculture, transportation, arts and culture, trade, telecommunication and health care.

Members sincerely appreciated the presentation, which gave them much insight into the country, and were impressed with many of the initiatives, particularly those in education, including the requirement that students “pay back” in terms of years of service post-qualification in the country, and in economic development. They asked how Iraq viewed the tensions in the Middle East, questioned its take on communications and involvement of MTN, and asked for elaboration on dialogue in the transport sector. They asked if there was any discrimination against religious or political groups, asked about the status of women, in Parliament, land ownership and any programmes for assisting vulnerable sectors, how resources were distributed, and for more details on the education programme and ownership of land and oil reserves, and assistance to small businesses. The Ambassador hoped the Committee might facilitate in setting up a meeting with the Minister of Economic Development.  
 

Meeting report

Chairperson’s opening remarks
The Chairperson expressed appreciation for the initiative by the Iraqi ambassador to call this meeting with the Committee and brief Members on the true events in Iraq and the interest for cooperation between that country and South Africa. Iraq was one of the richest countries in the world, and South African was privileged to have such cooperation and diplomatic relations.

Ambassador of Iraq ’s Address  
Dr Hisham Al-Alawi, Ambassador of Iraq, said that South Africa and Iraq had many things in common and it therefore made sense to enhance relations between the two. Both countries were rich in terms of history, natural and human resources and both countries had important roles in their respective regions and continents. South Africa had suffered under the effects of apartheid policies and Iraq had suffered under dictatorship, wars, sanctions, occupation, and terrorism in the last decade. Also, historically, Iraq played a great role in establishing the oldest human civilisation. Despite the rich history and resources, major aspects of life in Iraq had suffered from the 1980s onward, starting with the war with Iran (which lasted for eight years), followed by the invasion of Quetta in 1990, and the imposition of tough economic sanctions from 1991. During these years of sanctions several key sectors in Iraq had declined, and in 2003 the American invasion happened.

Due to the above factors, the country continued to face challenges, despite the positive changes. Despite the difficulties of the past decade, Iraq was on the right path to establish a stable and prosperous democratic state. In October 2005 a new Constitution, which had many similarities to that of South Africa, was approved by the majority of Iraqi citizens. There had been general and provincial elections, as a result of the Constitution, which had resulted in a representative parliament.

The top five priorities of South Africa were exactly the same as those of the Iraqi government – namely, to improve health care and education, decrease unemployment, improve services to rural areas, and improve law and order. Relations between the countries began at the end of the 1990s when they both signed an agreement and Memorandum of Understanding (MOU) on diplomatic relations in 1998. The Iraq embassy in South Africa was opened in 1999 and the first Iraq Ambassador to South Africa arrived at the end of 2000.

The current ambassador had been in South Africa for two years and they had been very dynamic, very rewarding and proactive years. He had engaged with various national departments and various committees of Parliament. He had also interacted with and visited seven out of the nine provinces, in addition to interactions with universities, think-tanks and NGOs. All the visits confirmed the impression that both nations had many things in common and there were great opportunities to work together for the benefit of both parties.

As a result of what happened in 2003, and because South Africa did not have an embassy in Iraq, and therefore no presence on the ground, things had been moving slowly to build the desired relations. The groundwork had been done to prepare for more agreements to be signed. The first agreement signed was on economic and technical appropriation, when the Iraqi Minister of Trade was in South Africa in November 2012, and had met with the South African Minister of Trade and Industry.  The agreement was a good platform for enhancing relations between the two countries. 

The agreement mentioned 12 key factors on which the countries would focus. These included energy, agriculture, housing, transportation, tourism, health care and telecommunication. The agreement outlined practical steps to increase bilateral trade and enhance economic cooperation between the two countries. A committee would be set up, chaired by the relevant ministers and have regular meetings. Dr Rob Davies, Minister of Trade and Industry, was expected to visit Iraq soon, and there was also an agreement that the two ministries would work together to enable South African companies and departments to participate in the Baghdad International Fair in October 2013. The Department of Trade and Industry (dti) had also done the groundwork to prepare for a visit by an advance team from Iraq, and there had been diligent engagement with other departments. Over the past five years, the level of trade between the two countries had been fluctuating, and was certainly far below the potential levels, but this agreement should bolster it.

Despite the difficulties in the last decade, the Iraqi economy had been among the top ten fastest growing economies, with an average growth rate of between 8% and 9%. This was a sign that the new socio-political system in Iraq was making best use of the available resources to serve the people and meet the priorities of the government. The rates of unemployment and poverty had decreased significantly in the past few years. In 2003 there had been 40% unemployment and in excess of 50% poverty, but recent figures indicated that these figures were respectively at 11% and 17%. A new bold strategy had been announced that sought to reduce these figures down to under 10% in the next five years. Though it was ambitious, the State thought it was possible.

Most of the economic development in Iraq took place in the energy sector, since Iraq had been identified as having the third largest oil reserves in the world. The country’s production capacity had increased drastically in the last three years. In 2003, twelve large contracts were given to big international companies to help develop the country’s oil fields. They were granted a service contract to come in and help increase the country’s production capacity, in return for which they would get an extra US$2 to US$6 for each extra barrel of oil they helped to produce. The agreement had been fruitful, as production started at two million barrels per day in 2009, but rose to three million barrels in this year. The forecast for the future predicted that it would be possible to produce six million barrels per day. Over the next decade or two, Iraq was identified as the only country in the world that had the potential to increase its capacity by over five million barrels per day. This would place the country second in the world in terms of production and export capacity. Congruent to increasing the production capacity, there had also been work to increase the export capacity, by building port terminals specifically for exportation, linking the North and South pipelines and other ambitious projects.

Iraq had also been identified as the most important country for establishing stability in the energy market and the security needed in consistent, reliable production and export of crude oil. There were also plans to work on the gas industry, as Iraq had the 10th or 11th highest proven gas reserves in the world. This position may change with increasing exploration activities. Over the next few years, the country was expected to produce enough gas to meet all of its own demands, and in five years it could reach a production capacity that would enable it also to start exporting gas.

There were challenges in meeting the plans of further economic development. The first challenge was diversification. The country needed to spend the revenue from crude oil in other key sectors like agriculture and tourism. Whilst the government had started doing so, this was a long process and would require persistent effort. Another challenge was the need to stimulate more growth of the private sector, which was the greatest contributor to decreasing unemployment. Its growth was vital to achieve the government’s ambitious targets of further reducing unemployment and poverty.

The government had been investing a lot in education and historically, Iraq had had one of the best education systems in the region and the world. Education was currently completely free up to post graduate level and was offered through a mixture of government and private institutions. Most citizens preferred going to the government institutions, not because they were free but because the standards were generally better. The new system was committed to improving education and to provide Iraqi institutions with the expertise needed. In 2009 the Prime Minister announced very ambitious project to send 10 000 of the best graduates to international recognised universities to acquire their Masters and PhD degrees. In the past three years, over 3 000 Iraqi’s had been selected by a specialist committee. The Iraqi education system was based on the British one and had many similarities with the South African system and so the average Iraqi graduate would prefer, for his education and research, to go to an English-speaking country, or one where English was the language of instruction.  Most of the graduates had been going to the UK, USA and Canada. In the last two years there had been work done with South African universities to prepare the ground for some Iraqi students to take their Masters and Doctoral degrees in South Africa. This would not only offer advantages to the students, and build up a pool of experts on South Africa and the Continent, but would further strengthen relations between the countries. A delegation from Iraq’s Education Ministry planned to visit South Africa before the end of the year to take forward the work of the universities and the South African Department of Higher Education and Training.

Other sectors where there was interest in establishing cooperation included energy, and there had also been meetings and work done with PetroSA, as both sides agreed there was great potential in cooperating in the energy sector. There were preparations for a special team from the Department of Energy and other stakeholders to visit Iraq and engage with their counterparts, and possibly discuss signing an agreement in the energy sector. There had also been work in removing some of the barriers against Iraq exporting crude oil to South Africa, which was important. Historically the country had provided South Africa with crude oil and the qualities of the Iraqi crude oil were suitable for the South African refineries.

There had also been work with the Department of Defence, and it was identified that there was good potential for cooperation, and the Ambassador would be meeting with the Portfolio Committee on Defence, which could help to move things forward faster. Other sectors of cooperation that had been brought up were tourism, infrastructure development and training, agriculture, transportation, arts and culture, trade, telecommunication and health care. Iraq would like to benefit from the experiences of South Africa in these key sectors.

Discussion
The Chairperson said the briefing by the Ambassador was very informative, and the Committee was now wiser on the situation in Iraq. The Ambassador had clarified the potential areas of cooperation and the ones that were being worked on.

Rev W Thring (ACDP) said South Africa appreciated the interaction with Iraq, understanding that both countries shared a very similar history. He noted that the Middle-East was an area known for tensions, and therefore he enquired what Iraq’s policy was in regard to those tensions and how Iraq anticipated that they may pan out in the future.

Ambassador Al-Alawi said the Middle East was indeed witnessing increasing tension and there were multiple factors that played a role in that, including the crisis in Syria, where it was saddening to see the level of destruction that had happened in the country in the last two years. In addition to that, the official figures had confirmed that there were over 100 000 casualties and over two million people that were displaced. Most of the refugees fled to Iraq. There was no doubt that the approach taken by other countries in the region had not worked. Based on the Iraqi history, military intervention to force regime change had many negative consequences when it came to casualties, displacements, refugees and the destruction of infrastructure. Iraq had continuously raised awareness about the dangers of that approach. In 2012, it had hosted the Arab League and, as the leader of the League, had advocated for an alternative approach to cease fire and get the relevant parties to meet and agree on an interim government, amend the Constitution and hold elections. The delays in the interventions in the area meant that. each month, 5 000 Syrians were dying. With regard to the Iran nuclear issue, Iraq had also tried to push through a role of diplomatic solutions. Similar to the role taken by South Africa, Iraq had always supported the legitimate aspiration of the Palestinians to have their own independent state. Many observers of the situation were, however, not very optimistic of a solution in the near future. Iraq was in a position to share its experience to democratic transition, as also the role that South Africa had also played in the region, and encourage consensus on how to move forward in a more constructive way with no violence or destruction of infrastructure.

Rev Thring referred to the matter with MTN and the accusations laid against its officials in Iran, but said that this seemed to have contributed to the growth of MTN share values and the difficulties were apparently in the past. He asked the Ambassador’s comment on the matter.

Ambassador Al-Alawi said the telecommunications sector was an important one in Iraq, where there had been rapid expansion and there was still potential for growth. Generally speaking, people were not happy with the service they were getting, and there was room for improvement. The way to do that was through the introduction of a fourth license. There were currently three existing service providers. With MTN’s experience in Iran, there had been interest shown and talks between them and Iraq to contribute to improving the service in Iraq.

Rev Thring asked the Ambassador to elaborate on the dialogue that was happening with the transport sector.

The Ambassador said that due to the economic growth and rapid growth in other sectors, the transport sector was very important. Iraq planned to build airports, seaports, roads, metros and rail networks. Iraq had noted South Africa’s experience and success in expanding roads and ports and running them, and also in establishing business development and trade centres. There had been a specific request from Iraq to get a detailed report on South Africa’s experience with the transportation sector, covering the past two decades. A transport delegation from Iraq would shortly be coming to South Africa to learn about the country’s transport system, and this also presented and opportunity for training of staff from Iraq in South Africa.

Mr K Mubu (DA) said the Committee had been following closely what was going on in Iraq, as the country had a very important role in the geopolitical situation. It was interesting to hear the Ambassador speaking of an annual growth rate between 8% and 9%, which was highly impressive under the circumstances. He asked how such economic growth was sustained in an environment with so much violence. He also commented that it was interesting to hear of Iraq’s own solutions to the current conflicts, after foreign intervention had failed and left things to the country’s own devices.

The Ambassador said when he was first asked to come to South Africa, he had been highly concerned about his own safety, on the basis of media reports that painted a bleak picture of South Africa. However, when he managed to explore the country and visit the various provinces, he was able to see the bigger picture of the country. Although crime was a concern, the media greatly exaggerated it. The worst period in Iraq was between 2006 and 2007, and at the peak of the tensions, during that period a total of 17 000 Iraqis were killed, most of whom were innocent civilians. The figures started to improve from 2009 onward, and 2011 saw the lowest number of deaths resulting from incidents and attacks, at 3 000. Recently, there had been an escalation in the number of attacks on innocent people in markets, mosques, restaurants and so forth, and there was a huge challenge in trying to prevent those. There had been an influx of extremists linked to the current situation in Syria who had been crossing between Syria and Iraq, and to some extent within the region the countries were seen as one. There should be regional efforts in fighting terrorism and this had been extensively discussed in the Arab League summit last year.

Mr Mubu also said there appeared to be serious religious conflicts in the country, particularly the suppression of minorities like Christians, and asked how would this be avoided in the future.

The Ambassador said Iraq was in a unique position to understand the importance of certain issues, and had practical solutions. Iraq was a multi-ethnic and multi-religious society, much like South Africa, but it was important to remember that there had also been a peaceful existence between the different people. For instance, the level of mixed marriages was very high, with one in four marriages being mixed marriages between the different cultures and religions. Last year there was a delegation to South Africa, which consisted of advisors from the Prime Minister’s office and other departments, to learn how South Africa was dealing with its legacy, and there were great lessons that each could learn from the other state.

Ms D Tsotetsi (ANC) asked about the status of women in governance and in ownership of property.

The Ambassador said out of 325 members of parliament, 82 were women. By law there should be no gender-based discrimination. The legal framework, set out in the Constitution, made it mandatory that at least one-third of all parties’ candidacy list must be comprised of women, which would ensure that at least a quarter of the Members of Parliament were women. Government had projects to cater specifically for the more vulnerable women. The same applied in relation to ownership of property. The Constitution clearly stated that there should be no discrimination on the basis of gender. But, like many other societies Iraq had various issues to address, like domestic violence, and these required a different approach.

Ms Tsotetsi asked whether the sectarian conflict would have an impact on distribution of resources especially in education.

Ambassador Al-Alawi explained that the annual budget had increased significantly over the last decade, and in 2013 was the largest budget in the history of Iraq, at US$116 million. The forecast for the coming year was another increase in the budget. The resources were distributed to provinces based on their population and the level of need, as some provinces had historically suffered more than others. The same principles that government applied generally had been applied here too, such as creating jobs. Each year the government and Parliament would allocate a certain amount for the creation of jobs, which would be distributed accordingly throughout the provinces, based on the population and the need.

Mr M Hlengwa (IFP) said the education exchange programme was an important component for development, particularly to respond to the needs of the job market and economic growth and development. He asked to what extent Iraq would be in a position not only to bring students, but also have South African students going to Iraq on an educational exchange programme, as the Ambassador had cited many similarities between the countries. Also, he was curious as to what approach the Iraqi government had taken on youth development, and the priorities and intervening institutions in place to deal with challenges faced by the youth.

The Ambassador said youth development had been discussed in Parliament and the Cabinet. One of the projects was to further support the students while they were studying in universities by giving them a US$100 allowance. The difference between the Iraqi and South African experience was that Iraq had done historically well as a result of its free education system, so there was therefore a better pool of skilled and qualified people to employ, and that had helped reduce unemployment drastically. Another way to reduce unemployment would be to not have only a focus on sending students to university as some students did not want to go to university. With this in mind, Iraq had developed vocational training, where mid-high school students were encouraged to do vocational training and not only look to finishing high school and going to university. This training enabled some students to acquire jobs straight after high school. Germany had been hugely successful with this approach and there, even with the tough economic climate, unemployment was still on the decrease. In terms of institutions to spearhead youth development, Iraq also had a Ministry of Youth and Sport, and there was a Youth Parliament. 40% of Iraq’s population was under 18, which made it important to invest in the youth. 

Mr Hlengwa said it would also be interesting to hear from the Ambassador what he would see as the key priorities and expectation from the Committee, based on the issues that he had brought up.

The Ambassador hoped the Committee could assist in facilitating a meeting with the Department of Economic Development as, whilst the Embassy had already initiated a meeting, it was still waiting for confirmation of an appointment with the Minister. The Committee was also asked to encourage the speedy creation of an Embassy in Iraq, as things had been moving rather very slowly.

Mr Z Ntuli (ANC) asked if there were any obligations from the state on the students after they had graduated.

The Ambassador said there were expectations from graduates to serve the government for at least the number of years they had studied. For example, a medical student that had studied for six years was expected to serve two years as a junior medical doctor at a government or public hospital, another year or two years at a rural community and after that would be placed where there was a need, to do their residency. In the past two decades there had also been more and more private institutions in Iraq, but there were no expectations from the government for the students on those institutions.

Mr X Mabasa (ANC) asked who owned primary assets, like land, and what had been the effect of the war on such ownership; did it spread ownership to more Iraqis, or were some portions of land internationally owned by those who had interests in the war? He also wanted to know who owned the oil, and whether the war had resulted in a change of ownership of oil wells, possibly even to the detriment of Iraqi people.

The Ambassador said the occupation of Iraq by America did not result in any long term commitments from the Iraqi side to the American side. No foreign companies had any ownership of Iraqi oilfields. Under the new system, in 2009, when the government wanted to develop the oilfields, the companies wanted to establish partnerships, with some asking for as much as 40% ownership of the oilfields. The government forced those companies instead to accept a service deal where they would be allowed to invest and help increase the production capacity, and for every extra barrel of oil they helped produce they would receive US$2 to US$6.

Mr Mabasa noted that South Africa had a challenge of narrowing the gap between the poor and the few rich people, and wondered if Iraq was facing the same problem and, if so, how had it addressed the problem. He asked if cooperatives were encouraged as a form of economic activity.

The Ambassador said the Iraqi Constitution had clear sections that highlighted the importance of equality. Historically, there was no discrimination in terms of colour, as had been the case in South Africa under the apartheid system, but there had been discrimination based on how loyal a person was to the regime of the time. As this system had been in place for over three decades, there were great impacts on society. To reverse the situation now there was positive discrimination introduced for the benefit of the vulnerable members of society.

Ms M Mpane-Mohososi (ANC) asked how Iraq addressed the needs of its disabled citizens.

The Chairperson said the Iraqi growth rate was interesting and impressive. It was also commendable that the State provided free education and opportunities to further education abroad, and also the fact that there were conditions placed on the graduates.

The Chairperson commented that oil was a key commodity for the world. South Africa had very high petrol prices and Iraq was the third largest oil producer, so to have cooperation and removal of the trade barriers in this respect would be beneficial.

The Chairperson thought it encouraging that there were common areas and key sectors that could be enhanced through cooperation. The fact that there were steps actually being taken forward, although slow, was a move in the right direction. She noted that there had been plans to send a delegation to Iraq, but it did not go through due to security challenges.

The Chairperson asked how many foreign nationals were affected in attacks.

The Ambassador said there had been no major attacks on foreigners in the past few years, but there were attacks on innocent civilians of Iraq.   

The Chairperson was pleased to hear that there was also a focus on private sector development, but asked what level of government intervention there was in Small Medium and Micro Enterprise (SMME) development. In South Africa, SMMEs had the potential to assist the country, grow the economy and address the challenge of unemployment.   

The Ambassador agreed that in Iraq also SMMEs were seen as part of the strategy to grow the private sector and were seen as of great importance. Some of the tools the government had tried to use were the national investment law that governed the foreign investment process, whereby there would be exemptions on taxes on any profit made in the first ten years if there was investment of a minimum of US$250 000. Also there would be a three year exemption on any customs duty imposed on any equipment being brought into the country to implement the projects. A business must employ at least 50% of Iraqi’s in implementing the project. The laws also encouraged partnership between the private and public sector; this had the advantage of tapping into logistics and knowledge of the system. Also, if the project required land, a person was able to acquire the land, almost for free, to use for the next 25 to 50 years, and this arrangement might be renewed based on the project. These were some of the tools to encourage growth in the private sector.  

The Chairperson once again expressed her appreciation that the Ambassador initiated the meeting, which was very informative and encouraging. The Committee had been enabled to interact and gain far more knowledge about the country and the relations between the two. She thanked him for the deeper understanding that Members had gained of Iraq and what was happening in the country and the region.

The meeting was adjourned.
 

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