What’s Next as Iraq Moves to End Deadlock?

Abdul Latif Rashid takes his oath of office in front of Iraqi lawmakers in Baghdad, Iraq, October 13, 2022. (Iraqi Parliament Media Office/Handout via Reuters)
Abdul Latif Rashid takes his oath of office in front of Iraqi lawmakers in Baghdad, Iraq, October 13, 2022. (Iraqi Parliament Media Office/Handout via Reuters)
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What’s Next as Iraq Moves to End Deadlock?

Abdul Latif Rashid takes his oath of office in front of Iraqi lawmakers in Baghdad, Iraq, October 13, 2022. (Iraqi Parliament Media Office/Handout via Reuters)
Abdul Latif Rashid takes his oath of office in front of Iraqi lawmakers in Baghdad, Iraq, October 13, 2022. (Iraqi Parliament Media Office/Handout via Reuters)

Iraqi lawmakers have elected a new president who swiftly named a prime minister in the hope of ending a year of political gridlock and deadly violence.

But major challenges lie ahead for the crisis-hit nation.

How will government talks play out?

Iraq's parliament, dominated by the pro-Iran Coordination Framework of Shiite factions, elected on Thursday a new president, 78-year-old Kurdish former minister Abdul Latif Rashid.

The new head of state moved immediately to task Shiite politician Mohammad Shia al-Sudani with forming a government, capping a whole year of deadlock between major parties since Iraq last went to the polls in October 2021.

In multi-ethnic, multi-confessional Iraq, where political alliances and coalitions constantly shift, divisions between feuding factions might resurface and complicate Sudani's efforts in the 30 days afforded to him to form a government capable of commanding a majority in parliament.

In the past, constitutional deadlines have been routinely missed amid protracted political wrangling.

"Once we start discussing who becomes minister, but even more critically who gains more leverage over the senior civil service, government agencies, state coffers -- that's when we will continue to see the fragmentation and stalemate play out," said Renad Mansour of British think-tank Chatham House.

He explained that Iraq is headed for "another power-sharing government", where political parties will "try and divide the country's wealth".

And the stakes are high. A colossal $87 billion in revenues from oil exports are locked up in the central bank's coffers.

The money can help rebuild infrastructure in the war-ravaged country, but it can only be invested after lawmakers approve a state budget presented by the government, once formed.

What will Sadr do?

The future government's hands may be tied by influential Shiite cleric Moqtada Sadr, capable of mobilizing tens of thousands of his supporters with a single tweet.

In June, he had ordered the 73 lawmakers in his bloc to resign, leaving parliament in the hands of the rival Coordination Framework, which now controls 138 out of 329 seats in the legislature.

This pro-Iranian alliance includes the political arm of the former paramilitary Popular Mobilization Forces (PMF), as well as Sadr's longtime rival, former prime minister Nouri al-Maliki.

Political analyst Ali al-Baidar noted the Sadrist movement has kept uncharacteristically "quiet".

It may be that their leader has been "giving the political forces a chance", but it could also be the result of "an agreement offering the movement some" government positions in return for their tacit approval of Sudani's nomination, Baidar said.

Tensions between the two rival Shiite camps boiled over on August 29 when more than 30 Sadr supporters were killed in clashes with Iran-backed factions and the army in Baghdad's Green Zone, which houses government buildings and diplomatic missions.

"It remains a precarious state of affairs," Mansour said.

"Sadr will remain on the margins of the political scene, trying to disrupt and use protests to replace the political capital" he lost in parliament, the researcher added.

Sadr is "hoping to force an early election using controlled instability as he always has, to maintain his power and leverage in negotiations.

"But mistakes in the past few months have... put him in a difficult bargaining position," Mansour continued.

Is there hope for change?

Political analyst Baidar said the "consensus" on Rashid's appointment means a government will be formed relatively easily, but stressed the "colossal tasks" ahead.

Nearly four out of 10 young Iraqis are unemployed and one-third of the oil-rich country's population of 42 million lives in poverty, according to the United Nations.

Prime minister-designate Sudani vowed on Thursday to push through "economic reforms" that would revitalize Iraq's industry, agriculture and private sector.

He also promised to provide young Iraqis "employment opportunities and housing".

According to Baidar, a "growing" global interest in Iraqi politics -- specifically from Washington, Paris and London -- could "force politicians to perform better".

"While Iraq is by no means a poor country, private and partisan interests conspire to divert resources away from critical investment in national development," UN envoy Jeanine Hennis-Plasschaert told the Security Council last week.

"Iraq's political and governance system ignores the needs of the Iraqi people," she charged.

"Pervasive corruption is a major root cause of Iraqi dysfunctionality. And frankly, no leader can claim to be shielded from it."

A pessimistic Mansour said "public life will remain as it is".

"People will still not have their basic rights, water, healthcare, electricity."



Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
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Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo

Until recently aerospace engineer Pedro Monteiro figured he'd join many of his peers moving from Portugal to its richer European neighbors in the quest for a better-paid job once he completes his master's degree in Lisbon.
But tax breaks proposed by Portugal's government for young workers - up to a temporary 100% income tax exemption in some cases - plus help with housing are making him think twice.
"Previous governments left young people behind," said Monteiro, 23, who is studying engineering and industrial management at the Higher Technical Institute in the Portuguese capital. "The country needs us and we want to stay but we need to see signs from the government that they are implementing policies that will help."
Monteiro cites in particular the cost of buying or renting a home amid a housing crisis aggravated by the arrival of wealthy foreigners lured by easy residency rights and tax breaks, Reuters said.
He is doubtful the government's new measures will be enough.
"Some of my friends are now working abroad and earn substantially more money... and have better career development opportunities," he said. "I'm a little bit skeptical concerning my job opportunities here in Portugal."
Portugal is the latest country in Europe to seek to tackle a brain drain holding back its economy. Tax breaks for young workers in the budget currently going through parliament will take effect next year and could benefit as many as 400,000 young people at an annual cost of 525 million euros.
Talent flight to wealthier countries of the north is a problem Portugal shares with several others in southern and central Europe, as workers take advantage of freedom of movement rules within the trade bloc. Countries including Italy have tried other schemes to counter the flight, with mixed results.
By exacerbating regional labor shortages and depriving poorer countries of tax revenues, it is yet another hurdle for the EU as it tries to improve its ebbing economic growth while addressing population decline and lagging labor productivity.
Donald Trump's victory in US elections this month raises the stakes, with the risk of across-the-board trade tariffs on European exports of at least 10% - a move that economists say could turn Europe's anaemic growth into outright recession.
About 2.3 million people born in Portugal, or 23% of its population, currently live abroad, according to Portugal's Emigration Observatory. That includes 850,000 Portuguese nationals aged 15-39, or about 30% of young Portuguese and 12.6% of its working-age population.
More concerning still is that about 40% of 50,000 people who graduate from universities or technical colleges emigrate each year, according to a study by Business Roundtable Portugal and Deloitte based on official statistics, costing Portugal billions of euros in lost income tax revenue and social security contributions.
DEMOGRAPHIC HELL
"This is not a country for young people," said Pedro Ginjeira do Nascimento, executive director of Business Roundtable Portugal, which represents 43 of the largest companies in the nation of 10 million people. "Portugal is experiencing a true demographic hell because the country is unable to create conditions to retain and attract young talent."
Internal migration within the EU is partly driven by the disparity in wages between its member states. Some economic migrants also say they are looking for better benefits such as pensions and healthcare and less rigid, hierarchichal structures that give more responsibility to those in junior roles.
Concerns are mounting over the long-term viability of Europe's economic model with its rapidly ageing population and failure to win substantial shares of high-growth markets of the future, from tech to renewable energy.
Presenting a raft of reform proposals aimed at boosting local innovation and investment, former European Central Bank chief Mario Draghi said in September the region faced a "slow agony" of decline if it did not compete more effectively.
Eszter Czovek, 45, and her husband are moving from Hungary to Austria, where workers earn an average 40.9 euros ($29.95) per hour compared to 12.8 euros per hour in Hungary, the largest wage gap between neighboring countries in the EU.
The number of Hungarians living in Austria increased to 107,264 by the beginning of 2024 from just 14,151 when Hungary joined the EU.
Czovek's husband, who works in construction, was offered a job in Austria, while she has worked in media and accounting at various multinationals. She cited better pay, pensions, work conditions and healthcare as motives for moving. She also mentioned her concern over the political situation in Hungary, which she fears might join Britain in leaving the EU.
"There was a change of regime here in 1989 and 30 years later we are still waiting for the miracle that will see us catch up with Austria," Czovek said of the revolution over three decades ago that ended communist rule in Hungary.
Since Brexit, the Netherlands has replaced Britain as a preferred destination for Portuguese talent while Germany and Scandinavian countries are also popular.
Many Europeans still head to the United States in search of better jobs - about 4.7 million were living there in 2022, according to the Washington-based Migration Policy Institute, which nonetheless notes a long-term decline since the 1960s.
In 2023, 4,892 Portuguese emigrated to the Netherlands, surpassing Britain for the first time, which in 2019 received 24,500 Portuguese.
At home, they face the eighth-highest tax burden in the Organization for Economic Co-operation and Development (OECD) even as house prices rose 186% and rents by 94% since 2015, according to property specialists Confidencial Imobiliario.
A single person in Portugal without children earned an average of 16,943 euros after tax in 2023 compared to 45,429 euros in the Netherlands, according to Eurostat.
Portugal will offer under 35s earning up to 28,000 euros a year a 100% tax exemption during their first year of work, gradually reducing the benefit to a 25% deduction between the eighth and tenth years.
Young people would also be exempted from transaction taxes and stamp duty when buying their first home as well as access to loans guaranteed by the state and rent subsidies.
"We are designing a solid package that tries to solve the main reasons why the young leave," Cabinet Minister Antonio Leitao Amaro said in an interview with Reuters.
'THINGS WON'T CHANGE'
Leitao Amaro said he did not know for sure if the tax breaks would work but that his government, which came into office in April, had to try something new.
"If we don't act ambitiously, things won't change and Portugal will continue down this path," he said.
The Italian government has already found that tax breaks used as incentives are costly and open to fraud.
In January, Italy abruptly curtailed its own scheme that was costing 1.3 billion euros in lost tax revenue, even as it lured tech workers such as Alessandra Mariani back home.
Before 2024, returners were offered a 70% tax break for five years, extendable for another five years in certain circumstances. Now, it plans to offer a slimmed-down scheme targeting specific skills after it attracted only 1,200 teachers or researchers - areas where Italy has a particular shortage.
Mariani said the incentives were key to persuading her to return to Milan in 2021 by allowing her to maintain the same standard of living she enjoyed in London.
"Had the opportunity been the same without the scheme, I would not have done it at all," said Mariani, now working at the Italian arm of the same large tech company.
With her tax breaks poised to be phased out by 2026 unless she buys a house or has a child, Mariani faces a drop in salary and she said she's once again eyeing the exit door.