Iraq's Shaky Economy Poses Threat To Future The Iraqi economy is mired in old patterns: Most paying jobs are with the government, which is dependent on oil for revenue. Iraqi entrepreneurs say red tape and corruption make it difficult to start a private business; one economist argues the economy is on the brink of collapse.
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Iraq's Shaky Economy Poses Threat To Future

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Iraq's Shaky Economy Poses Threat To Future

Iraq's Shaky Economy Poses Threat To Future

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RENEE MONTAGNE, Host:

NPR's Corey Flintoff begins his story on the floor of the stock exchange.

(SOUNDBITE OF CROWD CHATTER)

COREY FLINTOFF: Abdul-Salam wants to keep up that growth, but he's got a problem: It's very hard to bring new businesses onto the exchange because very few are being formed. He says one major problem is unclear and unnecessarily complex regulation.

TAHA ABDUL: How can you invite people to invest in your country? By preparing them very clear regulation.

FLINTOFF: Right now, that regulation is anything but clear.

FRANK GUNTER: To start a new business takes 11 procedures at 11 different ministries.

FLINTOFF: That's Frank Gunter, a professor of economics at Lehigh University.

GUNTER: It requires, on average - if you know what you're doing, if you have good legal advice - it takes 77 days and it costs about $2,800.

FLINTOFF: Now, with prices down, Gunter says the situation will get worse because each year, about 250,000 young Iraqis enter the job market.

GUNTER: If they don't find jobs, then these young Iraqis, mostly men, mostly young, mostly uneducated, becomes a recruiting pool for the gangs - the criminal gangs, for the insurgency, for the militias that work for the religious and political groups.

FLINTOFF: In a recent survey by Transparency International, Iraq ranked fifth from the bottom, making it one of the most corrupt countries in the world.

GUNTER: It's because the regulatory environment is so hostile, it forces businesses to be corrupt to survive. Some of the survey data we did in Iraq shows that many small businesses pay 20 or 40 percent of all their cost is in bribes.

FLINTOFF: Iraq's planning minister, Dr. Ali Baban, says he's not ready to accept Professor Gunter's diagnosis that Iraq's economy is on the brink of collapse, but he admits the situation is dire.

ALI BABAN: (Foreign language spoken)

FLINTOFF: Gunter says he's not without hope. His time in Iraq has taught him respect for the country's entrepreneurial tradition.

GUNTER: I argue that anybody who can survive as a small businessman in the underground economy in Baghdad is the ultimate entrepreneur.

FLINTOFF: Corey Flintoff, NPR News, Baghdad.

(SOUNDBITE OF MUSIC)

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