|Iraq's economy on long road to recovery
|Recent foreign aid and trade agreements provide hope that Iraq's economy, plagued by years of sanctions and violence, is on the road to recovery. Despite almost daily news of grisly atrocities, there have been a number of encouraging signs recently for Iraq's emerging economy.
GDP growth was estimated at 54 percent in 2004. This year is also expected to be strong, with GDP growth predicted at 34 percent.
Iraq's "New Dinar" currency, introduced in 2003, has been performing strongly, appreciating by about 25 percent against the dollar in the past two years.
As the fledgling government works toward drafting a constitution, a formal request for WTO membership is also pending.
But while Iraq's future holds promise through expanding trade and investment, the country's staggering unemployment rates continue to perpetuate social and economic instability.
A recent UN survey found that nearly a fifth of the Iraqi population was unemployed. Many experts argue, however, that the actual number is nearer to 50 percent because the survey was not conducted in many unstable regions of Iraq. Those with work usually hold more than one job to survive.
Numbering in the millions, Iraq's unemployed have suffered in an economy thwarted by two years of incessant insurgent attacks. U.S. and Iraqi officials agree that unemployed youth are ideal recruits for insurgents. It's believed that many insurgents commit attacks not for personal ideologies but for the hundred dollars or so earned for planting a bomb.
Therein lies the catch-22 of Iraq's economic crisis: the unemployment rate drives insurgent attacks, and the instability caused by these attacks drives unemployment.
Brigadier General Salim al-Haj Isa, head of local council in the province of Ninewa, said officials hope to conquer economic paralysis through reconstruction projects that will provide jobs for the unemployed. He claimed this was a matter of urgency due to escalating costs of goods and inflation of housing costs which are burdening Iraqis.
There continues to be concern over the lack of oversight, corruption among U.S. government contractors and within the Iraqi system, and security. Experts list the restoration of adequate security, normal functioning of basic utilities, and expansion of oil production as critical areas for redevelopment.
The key to the Iraqi economy remains, as always, the output of the oil sector, which makes up more than half of the total economy.
The oil sector is also the main source of government revenue, with the new Iraqi budget projecting an oil production rise from its current level of 1.9 million barrels per day (bpd) to 4 million bpd by the end of the decade.
Now, however, Iraq is largely dependent on foreign aid.
Up to $500 million in soft loans will be made available over the next two years to finance development projects in priority sectors. This lending package is the first to be extended by the World Bank to Iraq since 1973, after which the country 'graduated' from the Bank due to strong economic performance and an increase in per capita income.
"The proposed loans are part and parcel of the lending framework pledged in Madrid at the first international donor conference in 2003," said Christian Portman, World Bank vice president for Middle East and North Africa. "We made a commitment to support the development and reconstruction efforts using World Bank resources, if and when the Iraqi authorities request it."
As part of an interim strategy to support Iraq's reconstruction, the World Bank administers the Iraq Trust Fund to provide donor financing for priority investments and capacity-building.
Several additional operations have also been launched to reconstruct schools, restore infrastructure, support emergency health care and provide citizens with clean water.
Portman said: "We are drawing on lessons from our ongoing trust fund operations to accelerate implementation so the Iraqi people can feel the difference in their day-to-day lives, whether it is through improved school facilities, cleaner and reliable supply of water or better healthcare."
The hope is that these quieter stories, and not the stream of horrific news coming daily from Iraq, prove the most enduring.
GDP: $89.8 billion
Unemployment: 27 percent
FDI: not available
The Daily Star