Iraq has the third largest oil reserves in the world. It has an estimated 115 billion barrels, placing it only behind Saudi Arabia and Iran. Petroleum accounts for 65% of Gross Domestic Product (GDP). Iraq has also been the recipient of $125 billion in reconstruction aid, along with reducing half of its debt. With all this potential wealth the country should be well off. Instead, it finds itself near the median point when comparing GDPs to other countries in the region, and almost at the bottom in per capita GDP in the Middle East.
In the 1980s Iraq was a growing middle class country, but fell into disrepair in the proceeding decades. After the 1991 Gulf War the economy collapsed under international sanctions. It became poor and underdeveloped on par with countries in Africa. 60% of the population for example was dependent upon the state-run food ration system, and there was widespread malnutrition. In 2002 the GDP was at $20.5 billion, and per capita GDP stood at $802. That was a 7.8% decrease from the previous year. The 2003 U.S. invasion was another setback, dropping GDP to $13.6 billion, and per capita GDP to $518. Since then Iraq has had steady growth, largely due to the increase in the price of oil, which accounts for 90% of revenues and 65% of the GDP. By 2008 GDP was at an estimated $84.7 billion, and per capita GDP at $3,100. That was a $29.3 billion increase from the previous year.
Iraq’s GDP/Per Capita GDP
2002 $20.5 billion/$802
2003 $13.6 billion/$518
2004 $25.7 billion/$949
2005 $34.5 billion/$1,237
2006 $48.5 billion/$1,687
2007 $55.4 billion/$1,978
2008 $84.7 billion/$3,100
Breakdown of Iraq’s GDP – est. 2008
65% Oil
13% Services
7% Transportation/Communication
6% Wholesale, Retail, Hotels
5% Farming
2% Manufacturing
1% Finance/Banking
1% Construction
In early 2009 Iraq’s Planning Ministry expected the GDP to continue to grow by 10.9%, but that’s hard to believe with the collapse of the petroleum market. The Pentagon predicts that there could still be positive growth in 2009 due to government spending, but even that is going to be constrained with the budget cuts.
Despite the expansion of the economy after the U.S. invasion, Iraq has not regained the standard of living that it had in the 1980s. When comparing GDPs in the region Iraq ranked 9th out of seventeen countries in 2008. Saudi Arabia at $468.1 billion, Iran at $319 billion, and the United Arab Emirates with $240.3 billion were at the top, while Bahrain at $18.6 billion, Jordan at $20.1 billion, and Yemen at $22.3 billion were the bottom three. When broken down by per capita the comparison was even more stark. Iraq was second to last with only Yemen below it. Qatar, Kuwait, and the United Arab Emirates were the richest in the region.
Comparison Of Iraq’s GDP With Other Countries In The Region
Saudi Arabia $468.1 billion
Iran $319 billion
United Arab Emirates $240.3 billion
Egypt $159.2 billion
Algeria $152.3 billion
Kuwait $148.4 billion
Qatar $95.8 billion
Morocco $87 billion
Iraq $84.7 billion
Libya $67.9 billion
Syria $50 billion
Oman $46.4 billion
Tunisia $38.9 billion
Lebanon $28.02 billion
Yemen $22.3 billion
Jordan $20.1 billion
Bahrain $18.6 billion
Comparison Of Iraq’s Per Capita GDP With Other Countries In The Region
Qatar $58,004
Kuwait $40,826
United Arab Emirates $29,063
Saudi Arabia $23,928
Bahrain $23,702
Oman $23,654
Libya $16,431
Iran $11,748
Lebanon $10,742
Algeria $8,344
Tunisia $7,894
Egypt $5,689
Jordan $5,051
Syria $4,763
Morocco $4,405
Iraq $3,880
Yemen $2,290
Iraq has had steady economic growth and a huge increase in its GDP since the 2003 invasion. Those aggregate numbers however don’t reveal the myriad problems that the country is facing. Almost all of that expansion was due to oil. In February 2009 a barrel of Iraqi crude sold at $38, down from its peak of $113.81 in July 2008. (NOTE: Iraqi oil sells below the world average, which went from $147 per barrel in July 2008 to around $50 currently.) The government dominates the economy, which is corrupt and inefficient. Investment is up, but it is caught in a bureaucratic maze that slows its impact. U.S. reconstruction funding is also coming to an end, and Baghdad has been unable to spend most of its capital budget that goes towards infrastructure. More importantly, the benefits of the development of Iraq have not trickled down much as there is still high unemployment, especially amongst the young, and high rates of poverty.
SOURCES
Agence France Presse, “Asia Companies The New Players In Iraq’s Oil Industry,” 4/9/09
Al-Ansary, Khalid, “Iraq investors bemoan red tape and lack of credit,” Reuters, 3/29/09
Aswat al-Iraq, “GDP higher by 10.9 % in 2008,” 2/11/09
- “Oil ministry says Iraq’s exports hit $1.9b in Feb.,” 3/28/09
Baker, Luke, “Investors ready for Iraq invasion as troops pull out,” Reuters, 12/22/08
Department of Defense, “Measuring Stability and Security in Iraq,” December 2008
- “Measuring Stability and Security in Iraq,” March 2009
Glanz, James, “In Report to Congress, Oversight Officials Say Iraqi Rebuilding Falls Short of Goals,” New York Times, 10/31/07
Inter-Agency Information and Analysis Unit, “Iraq Labour Force Analysis 2003-2008,” United Nations Office for the Coordination of Humanitarian Affairs, January 2009
Lando, Ben, “Iraq oil exports drop in February,” Iraq Oil Report, 3/25/09
O’Hanlon, Michael and Campbell, Jason, “Iraq Index,” Brookings Institution, 2/26/09
Special Inspector General For Iraq Reconstruction, “Hard Lessons,” 1/22/09
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
- “Quarterly Report to the United States Congress,” 10/30/08
UPI, “Iraqi Red Crescent predicts continued need,” 10/30/08
World Food Programme, “Comprehensive Food Security And Vulnerability Analysis In Iraq,” November 2008
Review Edwin Black, Banking On Baghdad, Inside Iraq’s 7,000-Year History of War, Profit, and Conflict, John Wiley & Sons, Inc., 2004
Black, Edwin, Banking On Baghdad, Inside Iraq’s 7,000-Year History of War, Profit, and Conflict , John Wiley & Sons, Inc., 2004 Ed...
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10 comments:
I don't know if you are interested in this poll reported today of the Iraqi government-ran newspaper Al-Sabah
http://www.alsabaah.com/paper.php?source=akbar&mlf=interpage&sid=80657
46,6% said that there is no positive change since the occupation.
7,9% said there is negative change.
45,4% said there is some kind of improvement.
LB
thanks for passing that along
Joel,
Here's another point of comparison. Iowa, where I was born and raised, has around 3 million inhabitants and a state GDP of around $130 million:
Iowa Gross Domestic Product.
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Yes, I meant $130 billion, not million.
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You probably want to clarify that the GDP per capita numbers you cite are PPP or purchasing power parity numbers.
If you look at nominal figures, Iraq is doing much better than some of the other countries on your list. For example, Egypt in nominal USD has per capita GDP of around 2k.
However, Iraq's higher cost of living make its PPP number lower.
I hope you remember that these numbers are only the case because of the US-imposed UN sanctions that deprived Iraq of everything for 12 years. The purpose was to devastate the country, and it sure as hell did.
On the economic basis, the nominate GDP shrunk 75-85% in the 12 years of sanctions. Not to forget that sciences and research and development were lost, a diversifying industrial base reverted completely to oil, most agriculture was destroyed, etc. Did I mention the sanctions blocked everything? I guess that's what happens when the USSR collapsed and the US gains a sort of power monopoly in the UN. If you notice, the sanctions on North Korea and Iran come within no proportion, seeing how both countries, including Iran, have robust economic growth. Why is this? Russia is back in the seat, and China has become more influential, balancing aggressive political strategies of our own government.
Iraq's nominal GDP in 1980 was in the region of $130 billion, for a population of about 12 million people. The PPP GDP was even higher. The Iran-Iraq War stunted economic growth.
Still, if it weren't for corrupt politics, oil wars, and paranoia on the part of the USA that have devastated Iraq for the past 20 years, we could be seeing an Iraqi nominal GDP of at least $250 billion today, rather than $68 billion. Don't forget either, it wasn't too long ago when the Iraqi dinar was worth more than the USD.
I respect this blog you have here, and it doesn't seem like you're like the average person trashing foreign countries for the heck of it. But I hope you do realize Iraq is like this for a reason, and not of its own accord either. And there were never any WMDs found since inspections just following the Gulf War to the present day. Not to mention even the chemical weapons were given to Iraq by the USA and UK in the 1970s-1980s, those were all disposed of shortly after the Gulf War.
Let's say our own country had its GDP cut by 75-85% over a period of 12 years. Then say the Chinese came and we have one huge Charlie Foxtrot of a war that destroyed most of our cities, infrastructure, industries, etc. We'd have Americans pouring into Mexico and Canada twice as fast as Mexicans come into our country. It would NOT be pretty. Then let's have the Chinese saying, "America was always some shitty country."
Same deal with Iraq, except of course Iraq wasn't a first-world country, but it was developing faster than most any developing country, except maybe China and a couple others.
I think you're missing one important actor in your analysis of sanctions and their effects upon Iraq, and that's Saddam.
Saddam led Iraq into its misguided war with Iran and ranked up over $50 bil in debt in the process, plus derailed the development of the economy.
Also most of the industry that it developed were state-run and inefficient in many ways, and they never really challenged the dominance of oil.
After the war Saddam launched a economic reform program in 1987 that did more bad than good.
Saddam then invaded Kuwait on another misadventure, which led to sanctions.
He knowingly deceived the inspectors after the war because he thought he could keep his WMD programs and didn't understand how the sanctions would affect the country. Even after he secretly destroyed all of his WMD stocks he still didn't come clean because he was afraid of Iran.
Iraq's economy actually began to recover when the Oil for Food Program began and living standards began to climb back up from their low point in the mid-1990s.
Basically, if Saddam hadn't started two wars the Iraqi economy wouldn't have started to decline and been hit with sanctions.
Nice job regurgitating the news media bs. Of course, the US government is absolutely holy and flawless.
Spare me...
Khomeini called a jihad on Iraq and encouraged the Shi'a population to revolt. As early as Sept. 8, 2 weeks before the Iraqis' political declaration of war, Iranians were making raids on border towns.
The Kuwaitis were sabotaging Iraqi oil infrastructure and siphoning oil. The Iraqis went in, with US approval, only to be backstabbed.
So please don't give me your bullshit. And moving troops into a country doesn't get 12 years of UN sanctions depriving everything. The sanctions on Iran and North Korea are a joke. Iran particularly still exhibits strong economic growth, as the UN sanctions really bar nothing.
All so-called WMDs, aka chemical weapons given by the USA and the UK, were done away with in 1991. Inspectors cleared the whole country. It became when they were still nosing around everywhere for years after (despite overwhelming evidence already that there were no such weapons) that is became a huge annoyance, and as a sovereign state, the Iraqis kicked them out.
Oh, best not be hypocritical when the USA has the 2nd largest stockpile of WMDs in the world, and has used them extensively in World War 2 and the Vietnam War.
Joel, it's best to think about things or learn a bit than regurgitating the bs you hear.
Basically, if the US wasn't an Imperialist aggressor and could take the fact that Saddam sold oil the same price to everyone and that's that, there wouldn't have been sanctions.
So Saddam never did a thing it was everyone else's fault for the Gulf War. Interesting.
When the inspections started Hussein Kamal, Saddam's son-in-law was put in charge of hiding Iraq's WMD program. It denied most of the program and its nuclear program entirely, hid documents, spread materials across military facilities, etc. When it did destroy most of its WMD stocks in mid-1991 it did so in secret with no documentation. It didn't come clean about most of its WMD and nuclear program until Kamal defected in 1995. I guess that was all the U.S.'s fault as well.
Here are some numbers for Iraq's GDP in 2003 dollars that show that the sanctions at first wrecked the economy which was dominated by oil, but then began to recover after the Oil for Food program began that opened up legal and illegal oil deals and trade.
Iraq's GDP
1989 $38 bil
1996 $10.6 bil
2000 $30 bil
2001 $29 bil
The recovery and new income didn't trickle down to the average Iraqi however as government officials kept most of it and Saddam started to try to rebuild his military rather than social services.
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