Analysis:
This article points out the fact that insurgent violence has been responsible for reductions in economic growth, both as a result of direct attacks on targets such as oil pipelines and also through creating a dangerous environment that discourages business and investment. Now, while this is true, it is certainly not the only factor that has limited Iraq’s economy, something the article fails to mention. The article frames the question of Iraqi economic recovery as a simple black and white duality; to quote “insurgents work to wreck the economy as fast as the U.S. and Iraqi governments can restore it.” No where in the article is the assumption that U.S. policies are working to restore the Iraqi economy for the benefit of the Iraqi people challenged or justified.
Other factors contributing to the failure of the Iraqi economy are left out of this article. One factor not mentioned is the damage done to Iraq’s infrastructure over the last thirteen years due to sanctions. According to numerous think tanks, such as Foreign Policy in Focus, these sanctions, imposed by the U.S. and U.K. did serious damage to the Iraqi economy through out the nineties, and severely hindered efforts to rebuild after the first Gulf War in 1991. While the article claims that Iraq has become one of the world’s poorest countries, it should be realized that, as clearly shown in a graph that accompanied the article, GDP per capita before the 2003 war was about the same is it is now. Iraq, as a result of sanctions, already was an impoverished nation before the U.S. Invasion.
Also not addressed in this article is where reconstruction money is coming from and who it is benefiting. The article points out that the insurgents have cost the Iraqi government about 7 billion in lost oil revenue, revenue that was earmarked for reconstruction. Much of this reconstruction money is to American corporations such as Halliburton and Bechtel, where much of this reconstruction money has been wasted, misappropriated or just fraudulently stolen. Much of this financial malfeasance has been documented by websites such as Iraq Revenue Watch, Halliburton Watch.org and War profiteers.com. Nowhere in the article was the waste of Iraqi oil revenues by U.S. companies addressed.
Nor does the article address the question of who is setting the economic agenda for Iraq. Many of the major economic policies that have and will continue to shape postwar Iraq were put in place by the U.S. occupational authority before last summer's hand over to the provisional government. These policies include the privatization of as much of the Iraqi economy as possible and the implementation of supposed “free trade” policies, while at the same time keeping in place the Saddam era laws prohibiting labor organizing. Now, these type of “neo-liberal” economic policies, emphasizing investor rights over workers rights, or environmental protections, have had a very mixed record in other countries when they have been tried, particularly to working people. This question, that U.S. imposed economic policy in Iraq may be more beneficial to business interests rather than to the bulk of the populace, is not at all addressed in this article.
Story:
Two years after the U.S.-led invasion of Iraq, the tattered and dangerous country has become one of the world's poorest, ranking at the level of Haiti and Senegal, with insurgents working to wreck the economy as fast as the U.S. and Iraqi governments can restore it.
Economists see little hope for big improvements in 2005: Overall, Iraq has less electricity each day than a year ago. Oil production so far this year has slipped even below 2004's disappointing levels. And 60 percent of the people depend on food handouts.
Yet some Iraqis say parts of their lives are finally getting better. The country now boasts a freewheeling consumer economy flush with cell phones, Internet cafes and independent newspapers, along with a slew of high-paying government jobs.
"I think things will get 100 times better," said Abdul Radha al-Quraishi, 65, who owns a Baghdad bookstore where Saddam Hussein-era stamps and bank notes are sold as souvenirs. "Merchant trade has increased unimaginably."
His counter clerk, Nassim Mahr Rashid, 28, agrees, but with a caveat: "The problem is, we don't know whether we are going to live or die."
Rashid's point is critical; the economy has emerged as one of the country's chief battlegrounds.
Iraq's 20,000 or so guerrillas launch 60 to 80 attacks a day, doing their best to tear down an economy that the U.S. and Iraqi governments are struggling to rebuild with $18.4 billion in U.S. taxpayer money.
Security has become a key economic variable. Improve it, and Iraq can fight its way to recovery. Let it slip, and Iraq wallows in violence and poverty.
"What's likely for the coming year is increased attacks," said Tamara Makarenko, a senior analyst with Global Risk Strategies, a London firm handling security at Baghdad's airport and other sites in the capital. "It's becoming quite indiscriminate. You don't know where they're going to go."
Iraq's chief income source, exported oil, has been a primary casualty.
Despite stratospheric prices, Iraq has earned only about $31 billion from oil exports since the invasion, far below the prewar predictions of U.S. Deputy Defense Secretary Paul Wolfowitz, who said Iraqi oil could generate $50 billion to $100 billion over two or three years.
Production has yet to regain Saddam-era levels. In 2005 it has even slipped from low 2004 levels. Insurgent sabotage cost Iraq $7 billion in oil revenue last year alone, according to the oil ministry.
In 1979, Iraq's best year, production averaged roughly 3 million barrels a day. This year, analysts say, it might not reach an average of 2 million. Oil Minister Thamer al-Ghadban's target of 2.9 million barrels a day by year's end - and 3.5 million by mid-2006 - is "totally out of the ballpark," said Sharif Ghalib of Energy Intelligence Research in New York.
The International Monetary Fund predicts Iraqi production won't reach 3.5 million barrels until 2009.
Despite that, Iraq's economy overall in 2004 expanded by a booming 52 percent and is expected to grow another 17 percent this year, buoyed by the high price of oil, the IMF says.
Economists caution that such growth is not unusual in postwar economies, and is mostly a recovery from a disastrous 2003, when the United States and Britain invaded and the economy shrank by a quarter. The CIA figures the average Iraqi lost $1,500 in income that year.
Text from the original article ommitted from the Grand Rapids Press version:
Buildings in Baghdad and whole neighborhoods in Fallujah sit in ruins, awaiting rebuilding from U.S. bombardment.
The country groans under $80 billion in external debt while 60 percent of the population depends on government food handouts, the IMF says.
"If security improves, you should see pretty rapid growth," said Keith Crane, a Rand Corp. economist. "But if store owners are getting shot and trucks are getting hijacked, growth will be slower."
Iraq has tumbled a long way from the late 1970s and early 1980s, when it was considered the Arab world's most advanced society. The average income was $3,000 a year then. Last year it was $800.
The country now ranks near the bottom of the world's economies in per capita income.
Sputtering electrical power is another ordeal for Iraqis, paralleling the country's long economic decline.
Before U.S. bombing knocked out 60 percent of Iraq's generation capacity in the 1990-91 Gulf War, Iraq churned out as much as 9,000 megawatts of electricity a day, Iraqi power officials have said. After Saddam hurriedly patched the grid, it produced around 4,400 daily megawatts.
U.S. engineers promised to increase production to 6,000 megawatts of consistent power by last June.
Instead, the reverse happened. On March 4, a U.S. reconstruction official said that just 3,850 megawatts were generated the previous day.
Iraq now averages just 8.5 hours of electricity a day, with some provinces getting as little as five hours, according to U.S. State Department figures. Last June, there was power 12 to 14 hours a day.
Attacks on repair sites, pylons and oil pipelines have cut power and sent contractors fleeing. Workers have been killed and kidnapped.
"The reality is that's still an area that's targeted by insurgents," said Charlie Hess, director of the U.S. Project and Contracting Office in Baghdad.
Iraqis appear to have given up waiting for Americans to make good on promises to fix the grid.
"We don't depend on the government's power," said Rashid, the Baghdad bookstore clerk. "We depend on generators."
