Iraq privatization push hits legal and structural barriers

BAGHDAD, Iraq — Iraq's push to privatize state assets and expand the private sector is running into structural and legal obstacles, with officials warning the economy cannot absorb the hundreds of thousands of graduates entering the labor market each year. The country of 46 million people has one of the highest youth unemployment rates in the region, and officials caution that the domestic market cannot employ the 160,000 to 250,000 new graduates joining it annually. Prime Minister Mohammed Shia' al-Sudani's government is pursuing a structural overhaul under the "Iraq 2050" framework, backed by financing from the Iraq Development Fund. The initiative, however, faces resistance from Parliament's separate legislative track and from a private sector that officials say remains dependent on public spending. In an economy valued at $280 billion, 70% of the budget is allocated to public-sector salaries, according to official figures. Unemployment reached 15.5% in the first half of 2026, with youth unemployment above 28% to 32% and female unemployment at around 18%. Iraq Development Fund Director General Mohammed al-Najjar said the private sector produces unsustainable employment and needs new laws to operate free of state pressure. Prime Ministry financial and economic adviser Mazhar Mohammed Salih noted that oil revenues make up 90% to 95% of the budget, limiting growth in productive sectors.