Thursday, June 6, 2013

Violence Disrupting Iraq’s Economy

The dramatic increase in violence in Iraq is now affecting not only the lives of the public, but the economy as well. Some companies have said their sales are down, they are cutting their hours, and transferring some of their business to safer areas, while Anbar announced that it was losing investors. These are all troubling signs, because for the last several years the insurgency has been at such a low level that it did not affect the larger society. Now that is changing, and the disruption of the economy is just the latest sign that Iraq is heading towards an unsettling future.

Businesses in Baghdad’s Shorja Market have reported a drop in sales due to violence (AP)

There are increasing reports that business is running into problems, because of the increased violence. Al-Mada talked to a cosmetics company in the Shorja Market in Baghdad that said that business was down since security had deteriorated. The owner was quoted as saying that people from southern and western Iraq were beginning to fear travelling to the capital, because of all the bombings and killings. A phone salesman told the paper that businesses in his area were closing early for lack of customers. One merchant feared that prices for basic necessities would start going up as people stored up on food and drinks, so that they didn’t have to go out as much. Other companies said that they were transferring some of their business to Kurdistan since it was safer there. Al-Monitor had a similar story where firms in Anbar were switching to suppliers in Irbil out of fear of heading to Baghdad. A real estate agent claimed that prices for houses had dropped 10% in the Karkh district of the capital in the last three months due to the growing violence. A delivery driver told Reuters that he would not go to certain areas of the capital, because he was afraid of being killed for being a Shiite. Even a spokesman for the Interior Ministry blamed the worsening security situation for cutting down on commercial traffic in and out of central Iraq. Finally, Azzaman mentioned a senior official from the Anbar provincial council who said that 23 foreign companies had fled the governorate since attacks went up there. While anecdotal in nature, these stories could point to a troubling trend. During the civil war period of 2005-2008 most of Iraqi society fell apart. Businesses were barely open, families didn’t want to send their children to school, people couldn’t go to their jobs, and government offices barely operated. Iraq is not to that point yet, but the situation is definitely getting worse. That is leading to growing apprehension amongst not only the public, but businesses that are beginning to change their operations, and cut back on their work as a result. That can only be bad for the country, which needs a healthy economy to pull itself out of decades of wars and sanctions. Renewed conflict can only set that back even more.

What the future holds for Iraq is the most uncertain it has been in several years. Bombings are increasing, the monthly death toll is up, there are stories spreading that militias are back on the streets, and fear and tensions are all going up as a result. Business is the latest casualty as it is becoming apprehensive of the situation, and is changing its practices as result. If stores begin to be shuttered and customers are afraid to venture out of their homes that could only be a foreboding sign of what may lie ahead. Iraq is not in a civil war yet, but things look to be getting worse before anything improves.


Hameed, Nouriddeen, “Foreign firms flee restive province,” Azzaman, 5/20/13

Al-Mada, “Violence affects “the economic heart of Baghdad” by strokes and warnings of economic “paralysis,”” 5/31/13

Markey, Patrick and al-Salhy, Suadad, “Surging violence, sectarian fears haunt Iraq,” Reuters, 5/30/13

Al-Shaher, Omar, “Fears of Civil War Cripple Baghdad Commerce,” Al-Monitor, 5/30/13

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