Iraqi Kurds Seek to Diversify Economy

An Iraqi worker operates a machine at Hend steel company in Erbil, the capital of the northern Iraqi Kurdish autonomous region, on October 1, 2020. AFP / SAFIN HAMED
An Iraqi worker operates a machine at Hend steel company in Erbil, the capital of the northern Iraqi Kurdish autonomous region, on October 1, 2020. AFP / SAFIN HAMED
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Iraqi Kurds Seek to Diversify Economy

An Iraqi worker operates a machine at Hend steel company in Erbil, the capital of the northern Iraqi Kurdish autonomous region, on October 1, 2020. AFP / SAFIN HAMED
An Iraqi worker operates a machine at Hend steel company in Erbil, the capital of the northern Iraqi Kurdish autonomous region, on October 1, 2020. AFP / SAFIN HAMED

On a rugged hillside some 50 kilometers east of Erbil, the booming regional capital, vineyards are ripe for harvesting as a new source of income.

Iraq's Kurdish region has for decades lived off its oil wealth, but plummeting energy prices amid the pandemic and financial mismanagement are forcing locals to return to long abandoned farms.

Civil servants from the northern region's bloated public sector have gone without pay and many are now turning back to agriculture and other businesses to make ends meet.

Abdallah Hassan, 51, a civil servant from the nearby village of Mam Rostam, has returned to harvest the grapes, used to produce raisins and vine leaves, for the first time in almost 20 years.

"There is hardly any work left for us and there are no salaries," he said, complaining that the regional government now "only pays wages every couple of months".

"It's better for farmers to tend to their fields than wait for the payday or for charity," he added, AFP reported.

Hassan recounted how before the 2003, when Saddam Hussein's regime was toppled, the Kurdish region had survived on farming during years of painful sanctions.

Since then, in its drive to secure lucrative oil revenues, the autonomous Kurdistan Regional Government (KRG) had mostly abandoned agriculture.

Big investments from multinational energy companies have transformed the region, and Erbil has become an urban hub with skyscrapers and luxury hotels.

This year, however, the Covid-19 pandemic and tumbling oil prices have taken a heavy toll, worsened by budget disputes with the central government in Baghdad.

The Iraqi economy, one of the world's most oil-dependent according to the World Bank, saw its gross domestic product contract by about 10 percent this year.

Mohammed Shukri, chairman of the Kurdistan Board of Investment, said putting all of the regional economy's eggs into the energy basket had proven costly.

"We're rich when the oil price is high, and we're poor when the oil price is low," he told AFP.

Kurdish economist Bilal Saeed argues the region's leaders had made a strategic blunder by letting other sectors fall by the wayside.

"Instead of using that revenue to develop the agriculture, health and tourism sectors, the government of Kurdistan has focused mostly on developing its oil sector and ignored the rest," he said.

Over-reliance on energy has also had a corrosive effect on Iraq's state apparatus and fueled corruption.

A World Bank report this year pointed to Iraq's "failure to equitably share the benefits of oil wealth" and described a murky patronage system.

With its budget now bled dry and the KRG facing some $28 billion in debt, it decided in June to slash civil servants' salaries by 21 percent.

But despite this, it has been unable to pay all of their wages on time, with the outstanding pay, accumulated over years, estimated at $9 billion.



Gold Prices Hold Steady as Investors Await US Fed Policy Cues

A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
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Gold Prices Hold Steady as Investors Await US Fed Policy Cues

A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)
A participant shows gold bars during the 21st edition of the international gold and jewelry exhibition at the Kuwait International Fairgrounds in Kuwait City on May 23, 2024. (Photo by Yasser AL ZAYYAT / AFP)

Gold prices remained steady on Wednesday, as investors awaited the US Federal Reserve's decision on interest rates due later in the day, while also focusing on US President Donald Trump's trade policies following his tariff threats.

Spot gold eased 0.2% to $2,758.49 per ounce by 09:55 a.m. ET (1455 GMT), while US gold futures rose 0.3% to $2,775.60, widening the premium over spot gold rates.

The Fed is scheduled to release its latest policy decision and statement at 2 p.m. EST (1900 GMT), with Fed Chair Jerome Powell due to hold a press conference half an hour later to elaborate on the meeting.

The US central bank is widely expected to hold interest rates steady as it awaits further inflation and jobs data and more clarity on the economic impact of Trump's policies before deciding whether to cut borrowing costs again.

"However, the Fed's commentary in regards to the potential for an interest rate cut in the March meeting is going to be in focus," said David Meger, director of metals trading at High Ridge Futures.

Gold prices neared all-time highs last week after Trump called for lower interest rates. Bullion tends to thrive in a low-interest-rate environment as it yields no interest.

Prices, however, retreated sharply on Monday as a sell-off in technology stocks, driven by Chinese AI model DeepSeek, sparked a rush to liquidate bullion to counter losses, according to Reuters.

The sell-off in the stock market seen on Monday may not be over and the unpredictability of Trump's policies is contributing to an increased demand for gold as a safe-haven, said Jim Wyckoff, a senior market analyst at Kitco Metals.

Trump still plans to make good on his promise to issue tariffs on Canada and Mexico, and his policies are widely seen as inflationary.

Elsewhere, spot silver gained 1.7% to $30.92 per ounce, platinum also added 0.5% to $946.45. Palladium was up 0.8% to $962.50.