Iran war leaves Iraq running out of money

The ongoing conflict between Iran and the United States has led to a blockade of the Strait of Hormuz, severely impacting Iraq's economy. Mahmoud Waleed, a 38-year-old teacher, has noticed his salary arriving later than usual due to the government running out of cash, as Iraq cannot export enough oil through the blocked Straits.

Ahmed, a doctor from Mosul, also experienced a 10-day delay in his salary payment. The Iraqi government relies heavily on oil exports for its budget, with around 85% to 90% of its national budget coming from oil revenues. However, since the Iran bombing in February, Iraqi oil exports have plummeted by 83% in March and 97% by May, causing a significant reduction in monthly income to between $2 billion and $2.3 billion.

The government recently stated it has $83 billion in reserves and can pay salaries for the next 10 to 11 months, but this may not be sufficient. A report by Oxford Economics suggests that maritime traffic through the Straits will remain below pre-conflict levels until at least 2028. While Iraq's recent stability remains intact, prolonged salary delays could lead to sector-specific protests and potentially destabilize the country.

The government has taken steps to address the issue, such as reviving an Iraq-Lebanon pipeline and requesting special dispensation for oil passage through the Strait of Hormuz. However, addressing the root cause of the problem, Iraq's dependency on oil revenue, requires implementing realistic reforms and reducing corruption, which currently face funding challenges.