Twenty years after the invasion of Iraq, international reports are raising alarm, pointing to the country’s bleak economic and social outlook amid the deterioration of basic services such as health, education, and electricity.
This is coupled with the deterioration of agriculture, industry and private sector, as more and more Iraqis find themselves without jobs. Sifting through the figures, one can find two decades worth of evidence left by the horrors of the disaster that befell the country.
A World Bank report titled “Iraq Human Development Public Expenditure Review” released in May 2021 noted that the Iraqi economy remains fragile — especially in light of “a complex patronage network, whereby oil rents are distributed among selected groups instead of being used to build infrastructure and improve the quality of education services.”
This is despite Iraq’s wealth and the fact that the country’s resources accumulated over two generations are valued at hundreds of billions of dollars thanks to the booms in oil prices witnessed over the past years — most notably in 2008 when oil prices reached $147 a barrel.
A rentier economy
Iraq relies on oil revenues to manage its economy, which exhausts its production infrastructure and reinforces a rentier spending policy that hinders economic and social development. The government has spent hundreds of billions of dollars since 2003 on thousands of projects, of which only a few dozen have ever been implemented.
The figures issued by the IMF indicate unstable growth during the years following the US invasion, a reality reflected in the turmoil witnessed in Iraq, where the economy remains in the grip of security threats.
The Iraqi economy is now seen as a centre for financing terrorism. It has become known for rampant corruption, a pervasive black market, crumbling administrative institutions, and the absence of a unified state.
According to a World Bank report on Iraq issued in April 2022, the country’s GDP fell by 11.3% in 2020. Growth returned to a record high of 7.7% in 2021, before continuing to rise to 9.3% in 2022, reaching a value of about $283 billion according to the IMF. Forecasts indicate a slowdown in growth in the coming years.
Meanwhile, the Central Bank of Iraq’s foreign exchange reserves increased to around $100 billion in March 2023, the highest level recorded since 1960, compared to $60 billion in 2021.
However, the increase in cash reserves does not reflect the reality of the Iraqi economy as the latter is experiencing the effects of the rise in oil prices against the backdrop of the Russian invasion of Ukraine, which pushed prices to $100 a barrel in the past year after recovering from the Covid-19 pandemic.
Nevertheless, while unemployment is still rampant and the poverty rate is still high (nearly 25% of the 42.2 million people living in Iraq in 2022, according to the Iraqi Ministry of Planning), there is still no serious interest in infrastructure development or the diversification of national income.
Tens of billions of dollars are being distributed annually to supporters of the ruling coalition for narrow partisan and personal interests, while poor and marginalised groups, whose numbers continue to increase, suffer from extremely difficult living conditions.