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Still fragile and reversible

The anger and bitterness over the Iraq War remain but at least the country is moving from brutal dic

The deep divisions over the invasion of Iraq remain. But as our troops return over the next four months, I hope we can begin to be as united about how we support Iraq’s future as we were divided about its past.

I hope we can agree that, whether for or against the war, we have a duty as well as an interest in helping Iraqis rebuild their lives.

A year ago, Iraqis’ number one concern was their physical safety. There are still some bent on violence, but the security situation is now fundamentally different. People’s concerns have shifted towards jobs and electricity. Progress has been driven by a number of factors: the efforts of UK and US troops, including the US surge; the huge improvement in the capability of Iraqi forces; the Sunni tribal awakening against al-Qaeda; and the cessation of Shia militia violence.

Iraq now has a decent shot at making an extraordinary transition: from regional pariah under Saddam Hussein’s brutal dictatorship to regional player within a decade. It is one of the few Middle Eastern states to make a serious, if as yet incomplete, attempt to create a federal political structure that accommodates ethnic and religious minorities. It still has some important nation-building legislation to work through, and the debate about the appropriate balance between the centre and regions has yet to be settled. But the opportunities are real.

First, after decades of repression and years of conflict and violence, “the wheel of democracy”, as Prime Minister Maliki said to me recently, “has started rolling”. More than half Iraq’s population voted in January’s provincial elections. The Sunni communities which boycotted the 2005 elections participated this time. Each of the 14 regional councils was voted out of office; the incumbents accepted defeat, and although coalitions are still being formed, the transition of power is being conducted peacefully.

Iraq’s democratic institutions are still bedding down. Political compromise is still painfully slow. But in the past year the Iraqi parliament has agreed important new laws on investment, detainees and the powers of provincial government. And the country is freer now than in living memory – as a man I met on the Basra Corniche put it, “Life is better than under Saddam: now I can talk.”

Second, although religious tensions remain and the scars of the conflict are still raw, there is reason to hope that, as the first majority Shia democracy in the Arab world, Iraq will play a bridging role between Shia and Sunni poles in the Middle East. And as an exponent of the Shia tradition of Najaf, Iraq offers a democratic alternative to the radical Shiaism being expounded by some in Iran.

Iraqis also make compelling first witnesses for the prosecution case against al-Qaeda across the Muslim world. When the 2006 al-Qaeda attack on the Golden Mosque in Samarra, a sacred shrine for Shias, sparked a wave of Sunni-Shia violence, many warned that Iraq would fracture along religious and sectarian lines. But Iraqis have seen at first hand the vicious hatred and mindless killing that al-Qaeda offers, and they have rejected it in revulsion.

Third, despite decades of economic mismanagement and the destruction of the past few years, Iraq, with the world’s third-largest oil reserves, is set to become a relatively wealthy country.

The short-term problems are real: with oil revenues accounting for 86 per cent of the government budget, the collapse in oil prices means that the Iraqi government will struggle to meet its development and reconstruction commitments this year. But the longer-term outlook is more positive. With improvements in the security situation, many more international companies are looking to invest in Iraq – and with their money will come scientific and technological expertise that the country desperately needs, particularly in
the energy sector. In time, Iraq will be able to use its energy resources to deliver effective public services for its own people and to enhance the energy security of others. Much of its oil will pass through the Strait of Hormuz, but in future some will go north into the European market, enhancing our energy security and diversity of supply.

Last year, General David Petraeus described Iraq’s progress as “fragile and reversible”. It remains so. If we want a secure and prosperous Iraq our engagement cannot end when our combat troops withdraw. As Gordon Brown has said, our future relationship will be one of partnership. We will continue to provide specialist military training to help the Iraqi armed forces provide security. We will step up our support in the education sector and on trade promotion because both are critical to Iraq’s economic prosperity. And we will maintain both a substantive embassy in Baghdad and our missions in Basra and Erbil, because this is a country that is critical not only to regional stability, but also to our counterterrorism agenda and our own energy security.

As Iraq looks ahead, the international community is putting aside the divisions of the past and helping it to build a stable and prosperous nation. President Sarkozy of France, Foreign Minister Steinmeier of Germany and the UN secretary general, Ban Ki-moon, all visited Iraq in February. The lessons of the past will need to be learned. An inquiry will begin after our troops have come home but, for Iraqis, it is also important that we focus on the future.

David Miliband is Foreign Secretary

David Miliband is the  President and CEO of the International Rescue Committee
He was foreign secretary from 2007 until 2010 and MP for South Shields from 2001 until this year. 

This article first appeared in the 06 April 2009 issue of the New Statesman, God special issue

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.