MERIP: The War Economy of Iraq

[Leigh Meyers <the.buffalo.in.the.midst@xxxxxxxxx>]

The War Economy of Iraq

Christopher Parker and Pete W. Moore

Christopher Parker is assistant professor of political and social
science at Ghent University in Belgium. Pete W. Moore is associate
professor of political science at Case Western Reserve University.

British Soldier on patrol in Basra province. (Toby Melville/Reuters/Landov)

On May 26, 2003, L. Paul Bremer declared Iraq "open for business."
Four years on, business is booming, albeit not as the former head of
the Coalition Provisional Authority intended. Iraqis find themselves
at the center of a regional political economy transformed by war.
Instability has generated skyrocketing oil prices, and as US attitudes
to Arab investment have hardened in the wake of the September 11
attacks, investors from the oil-producing Gulf countries are seeking
opportunities closer to home. This money, together with the resources
being pumped in to prop up the US occupation, is fueling an orgy of
speculation and elite consumption in the countries surrounding Iraq.
The sheer volume of loose change jingling around the Middle East would
be potentially destabilizing even if fighting did not persist in
Bremer's erstwhile domain.

War and profit have always gone hand in hand. In Iraq, as well, a "war
economy" is firmly rooted, yet it has gone largely unexamined in the
stacks of books and articles dissecting Washington's grandiose venture
gone bad. Armed with ideological assumptions and economic quick fixes,
US occupation officials pursued policies that, at a minimum,
aggravated the severe social dislocation wrought by war, privatization
and sanctions before 2003. Today, militias supporting or opposing the
Iraq governmentânot the government itselfâcontrol import supply chains
and, indeed, regulate whole sectors of the Iraqi economy. At the same
time, the people who earned a living through the antecedent networks
of the war economy are attacking the new US-sponsored political order.
These insurgents include not only those "Iraqis who miss the
privileged status they had under the regime of Saddam Hussein," as
President George W. Bush would have it, but alsoâindeed
mostlyâordinary working people who are protecting livelihoods they
built in the shadow of Baathist dictatorship. Countless other
civilians are caught in the crossfire as the struggle to make ends
meet has become deeply politicized.

Evidence of Iraq's war economy is fragmentary. Ammanâarguably the city
where the business of occupied Baghdad is really doneâis a veritable
rumor mill. Leads are difficult to follow and confirm, as the
individuals involved are wary of admitting to war profiteering and
economic data are uneven. But the fragments start to form a
recognizable pattern when set in a comparative frame. The Iraqi case
fits well within the large scholarly literature on the economics of
civil war. Not all civil conflicts are the same, of course; some end
quickly, while others endure. When available evidence on Iraq is
compared with the lengthy civil wars in Lebanon from 1975â1991 and in
Algeria in the 1990s, ominous parallels come into view. During those
civil wars, much of the money to fund militias and state-sanctioned
violence alike came from the control of external trade and the
taxation of regions under militia or state control. These dynamics did
not simply emerge in the chaos of war, but were grounded in longer
trajectories of international involvement, state atrophy and
grassroots political economy.

The US project in Iraq, nothing less than a forced revolution, was
more radical in its means than in its way of viewing the political
world. And while today's deepening war economy certainly owes a great
deal to the early zeal with which US officials sought to remake Iraq
as a free marketeer's paradise, any eventual autopsy of the Bush
administration's imperial fiasco needs to cut deeper than the blunders
of Bremer and his subordinates to reveal the fundamental failures of
political imagination that lay beneath.

Iraq Beyond Saddam

"In Iraq, the US fights an enemy it hardly knows," wrote the
International Crisis Group in the executive summary of a 2006 report.
"Its descriptions have relied on gross approximations and crude
categories (Saddamists, Islamo-fascists and the like) that bear only
passing resemblance to reality."[1] Over a year later, US and British
officials from Bush and Prime Minister Tony Blair on down continue to
speak in stereotypes when describing the guerrillas' motivations.
Washing their hands of any responsibility for the violence that
plagues Iraq, they present the insurgency as springing from a yearning
for lost domination on the part of groups linked to the Saddam-era
state. This is the statist narrativeâthe idea that Saddam's regime
controlled everything worth controlling before it was overthrown. More
amorphously, mainstream analysts trace the insurgency's origins to the
aggrieved "thought world" of Iraq's Sunni Arab community.[2]
Suggesting that the insurgency is rooted in the "majoritarian mindset"
of Iraq's Sunni Arabs, Fouad Ajami further notices a Sunni Arab
susceptibility to the "dark appeal" of revived histories that dredge
up anti-Shi'i prejudices and "the panic of a community that fears it
could be left with a 'realm of gravel and sand.'"[3]

To be sure, sectarian fears and religious extremismâas well as foreign
occupationâare powerful causes of the ongoing violence, but the
sectarian narrative renders invisible the everyday concerns and
struggles of people trying to survive in conditions of war. It makes
more sense to locate the roots of resistance and intra-Iraqi violence
in structures of collective action and social regulation that took
shape over the course of the 1980â1988 Iran-Iraq war, and were
consolidated during the state's economic opening in the 1980s and the
early years of the UN sanctions. Clearly, and contrary to the
assumptions of the statist narrative, the state retreated considerably
from the economy over the last two decades of Baathist rule, a period
that also witnessed plummeting standards of living for ordinary
Iraqis. Yet the social reverberations of these economic upheavals are
rarely considered.

Mainstream accounts of the 1980s and 1990s preserve the centrality of
the state by charting the rise of what Charles Tripp has referred to
as the "shadow state"âa web of informally regulated networks that
leveraged statist agency (e.g., the ability to make and enforce
internationally binding contracts or employ nominally legitimate
coercion) to create domestic enclaves for the private accumulation of
capital and power.[4] Even as the state's formal regulatory powers
began to shrink during the 1980s, the social impressions left by a
legacy of rent-fueled state centralization and militarization remained
to preserve the essence of Saddam's power. This narrative is certainly
persuasive as far as it goes. But the tendency to present the regime,
however formally weakened, as the programmer of economic and social
activity elides the agency of the Iraqâsome 27 million Iraqis, in
factâbeyond Saddam. As statist agency receded, it was replaced by
conditions of multiple jurisdiction and sovereignty: Localized social
structures, transnational trade networks and a globalized sanctions
regime came together to create new economic opportunities and impose
new constraints. Nevertheless, even if "the regime" as such controlled
less than conventional analysis would suggest, central regime figures
were elevated by their ability to mobilize the state's remaining
powers and control oil resources. In other words, the regime was able
to dominate, but not necessarily in ways of its own choosing.
Understanding the relationship between conflict and economy in
contemporary Iraq requires a recounting of the rapid economic decline
in the 1980s and 1990s.

In 1980, Iraq was a net creditor and considered home to one of the
region's most advanced economies. By early March 2003, as US and
British forces amassed on its southern border, it had become one of
the world's poorest and most underdeveloped countries. Average annual
income had fallen from between $3,600 and $4,000 in 1980 to between
$500 and $600 by the end of 2003.[5] On the eve of the invasion, Time
reported: "Industry has ceased to exist and unemployment may be as
high as 50 percent. The agricultural sector is in complete disarray,
leaving more than 60 percent of the population to rely on the UN Oil
for Food program [for basic needs]. About 40 percent of the nation's
children are suffering from malnutrition."[6]

In Full: http://www.merip.org/mer/mer243/parker_moore.html

TOC: http://www.merip.org/mer/mer243/mer243.html