Iraq

Iraq, officially the Republic of Iraq, is a country in the Middle East. It was first formed in 1921 as a monarchy under British administration following the defeat of the Ottoman Empire in World War I, with the British choosing a king of the Hashemite dynasty. Iraq received legal independence in 1932 although the British still exerted plenty of economic, advisory, and even political influence, granting independence on the condition that Iraq would allow British advisers to take part in government affairs, allow British bases to remain, and provide assistance to the United Kingdom in wartime. Political tensions arose immediately beginning with Iraq claiming British Kuwait, stating that Kuwait was a British imperialist invention. In 1941 there was a pro-Nazi coup, with its leaders working with German intelligence and accepting assistance from Germany and Italy. This led to the Anglo–Iraqi War a month later which resulted in the country being occupied until 1947.

A republican revolution overthrew the monarchy on 14 July 1958 and pursued a nationalist program of social democratic reforms, an attitude generally followed by Iraq's various governments up to the fall of Saddam, although they were not socialist like terms such as "Arab socialism" imply, but rather "socialist-aligned"; a Soviet term for progressive countries "on the path of the construction of socialism". The first republican regime was followed by a Ba'athist coup in 1963 and a Nasserist counter-coup later that year. The Arab Socialist Ba'ath Party overthrew the government yet again in 1968 and Saddam Hussein rose to the presidency in 1979, whereupon his previously leading role in government became consolidated and formalized. Both Saddam and the party fell from power in 2003 following an invasion by a coalition of imperialist countries.

Iraq has 9% of the world's proven oil reserves, the fifth-largest. Historically, it further had plenty of agricultural potential, water resources, a relatively high literacy rate and level of skill in its populace, vast access to foreign technology and expertise, a high balance of payments surplus and plentiful foreign reserves, and many of its leaders had the determination to develop and diversify the economy. In the course of history however, Iraq would not come to enjoy long-term prosperity in spite of the advantages it had.

Western imperialist countries have a long history of offensive action and atrocities in Iraq. They used the United Nations to impose broad sanctions on the country from 1990, which significantly contributed to the impoverishment of its citizens. The US launched cruise missiles against it in 1993, 1996, and 1998, and the CIA attempted a coup in 1995, with the US finally leading a coalition to outright invade in 2003 under falsified pretenses, which directly led to the deaths of around 200,000 civilians by that measure alone. Largely because of the war's unpopularity, the US outsourced it to the private military contractor Blackwater, whose mercenaries massacred 17 civilians and injured 20 in 2007, causing the Iraqi government to revoke its license to operate in the country, however the US government reinstated the license the following year — the year after that, the Iraqi government refused to extend it. Four Blackwater employees were convicted for the shootings in 2014 but President Donald Trump pardoned them in 2020. This was only the most notable incident among many others. In 2010, documents leaked by Chelsea Manning showed that the majority of Iraqis killed by US forces were civilians. In 2016, the Obama administration dropped a total of 12,095 bombs on Iraq. In March 2017, a US air strike killed 112 civilians in Mosul.

History

Arab nationalism

A couple trends for Arab nationalism first formed around the 18th century where the ideological force of Islam wore away as justification for colonial rule. Non-Turks realized they were unequal to Turks, and European economic and political penetration demonstrated the Ottoman failure to protect from foreign invaders. Ottoman central control over its peripheral territories was in decline, which allowed local elites to assert autonomy. With the influence of European nationalism, the idea of an ethnolinguistic Arab nation arose by the 19th century.

In 1916 the Arabs revolted against the Ottoman Empire, backed by a British promise to guarantee the creation of an Arab kingdom, although the British did not intend to honor this and instead partitioned the region along with France, with the League of Nations sanctioning this by saying these areas were mandates that were expected to be prepared for political independence. The leaders of the Arab Revolt ended up in power in the mandates which they saw as somewhat of an improvement from Ottoman rule, as they became leaders of their people but with foreign powers still arranging the security of their own economic and political interests. The foreign powers established a new class of landowners to support the monarchies they previously set up, which strengthened tribal sheikhs by giving them legal ownership of land and representation in parliament. As oil wealth opened new opportunities, the landowning class acted to preserve its position and resist changes therefore. With the firm establishment of this neocolonial system the British granted Iraq independence in 1932; the Arab nationalist movement then taking as its new target these puppet-like governments.

The reorganization of land ownership as well as the industrialization that began around this time gave rise to both a rural and urban proletariat, with a petite bourgeoisie also emerging from this new economic structure that was tied to the international economy. These new classes sought a socioeconomic order whose opportunity presented in the 1948 establishment of Israel and the subsequent failure to remove this force hostile to Arab nationalism. Thus came a new generation of Arab nationalists who took power in the following years, such as in 1949 in Syria, 1952 in Egypt, and 1958 in Iraq. They destroyed the power base of the landed aristocracy, expanded the public sector, and carried out major nationalizations. They were however repressive and failed to develop their economies such that they would not longer be dependent on international interests, this being because the nationalists of this time pushed class collaboration and refused to recognize the antagonisms between classes.

Arab nationalism was a broad movement that lacked unified organization of leadership and ideology, thus enabling the mobilization of the masses while also providing appeal to conservatives concurrently. The two main manifestations of this were Nasserism and Ba'athism, with the former arising in the 1952 Egyptian coup led by Gamal Abdel Nasser that focused on eliminating the more flagrant economic injustices. Ba'athism arose in parallel to this with similar conditions and ideals, emphasizing anti-imperialism in order to unite and develop Arab countries while claiming distinction from communism by rejecting the notion of class struggle, which from its leading theoretician Michel Aflaq was considered to be dangerous to national unity.

The Arab nationalist movement as a whole lacked an articulate economic program, with one reason for this being the broad focus of its theoreticians on social and historical identity for which the materialistic economics were considered excessive. A level of economic development less than that of East Asia and Latin America, from Ottoman stagnation and European exploitation also contributed to a lack of basis for socioeconomic analysis.

Independence and monarchy

Foreign capital began seeking Iraqi oil since the late 19th century, with the first concession being given to the Iraq Petroleum Company (known before 1929 as the Turkish Petroleum Company) in 1925, which had a virtual monopoly on oil exploration and production in Iraq up to 1961. Its ownership was divided among a few of the world's largest oil companies, and it first began producing oil in commercial quantities in 1927. Iraq experienced a rapid increase in oil revenue in the post-war period as a result of increased demand for oil in the rebuilding of Europe, mechanization of industry, the rise of petroleum-based industries like plastic and asphalt, the substitution of coal for oil, the rise of fossil fuel-based transportation, and general post-war recovery. Iraq's inexpensive oil was thus in quickly increasing demand, which compelled the government to channel such gains for developmental purposes; an idea reinforced by the World Bank granting a $12.8 million loan conditional upon the creation of an "autonomous agency" for such development — reportedly, another condition was that one US citizen and one British citizen had to be members of the board. With this the Development Board was created, which was to present an economic plan for developing Iraq through projects in agriculture, industry, mining, and communications, conduct a survey of the country's resources, and hand over completed projects to their respective specialized ministry for administration. Following the 1951 Iranian nationalization of oil, recent development in profit-sharing between companies and host countries like Saudi Arabia and Venezuela, on top of persistent demand by Iraq for more royalties, negotiations were held between the IPC along with its affiliates and the government, agreeing in 1952 to split oil profits 50-50 whereas previously the Iraqi government received a smaller, fixed sum regardless of the profit made by the IPC's shareholders.

Numerous imperfections of markets impede the transformation of underdeveloped countries' economies — thus planning becomes necessary. Oil revenues finance investment projects and policies adopted to stimulate non-oil sectors of the economy. Prior to state planning of oil, 80% of the Iraqi labor force was in agriculture, which was also a quarter of the nation's GDP, and a majority of the agricultural land was owned by a couple dozen people. Landlords owned between 50-71% of the crop produced, and the practice of cultivating just half the land along with low productivity gave meager returns to peasants, who were never able to pay off their debts to landlords. Peasant relations and obligations to landlords were codified in law, essentially turning them into serfs. The rural majority had an average income less than half of the urban population, which meant the domestic economy and quality of life grew very slowly as the rural population could not afford the industrial products of cities. The landed class and their political supporters supported dominated the decision-making bodies of the country however, and made agrarian reforms like more equitable land distribution impossible. Under the monarchy, oil proceeds were concentrated on irrigation and water management, while other aspects of agriculture like the efficiency of land use and drainage of salts carried in by irrigation were neglected. The water management projects that began receiving oil money increased the value of the privileged minority's land, although the system of exploitation and agricultural backwardness remained intact and thus such investment was not productive. The government made some efforts to create settlements on its own land, however much of this land ended up in the elites' possession, with much of the land lacking completed irrigation and drainage networks due to the government's desire to show fast results, and such an endeavor is difficult to begin with especially for a state lacking the machinery and expertise to do it on a broad scale, this including the need for in-depth surveying of the land, vetting settlers for expertise, adequate equipment and credit facilities, as well as taking special measures to reduce health hazards and ensuring all public services like schools and hospitals for the new territories. In the time of these policies cultivated land expanded, and yet agricultural output was stagnant. The land tenure system and its manner of wealth distribution prevented the new-found oil wealth from enabling a proper agricultural sector that would act as a foundation for the country's economy and which was the livelihood of the majority of the nation.

Failure of the agricultural development policy led to a need to import food, and was accompanied by an undernourished industrial sector, which means its benefits of higher incomes and economic diversification were not reaped and neither has the agricultural sector mutually benefited from industrial products. In the 1950s, only 52% of the oil revenue allocated for the agricultural sector in the economic plan, and 37% of that planned for industry, was actually spent — the lowest among all other sectors on which was spent 58-91% of the plan, despite the country needing the simultaneous development of agriculture and industry so that they form the economic base for the country and mutually benefit and enable each other.

Foreign economists who studied Iraq's economy, among them the World Bank, suggested Iraq give up the idea of quick industrialization and instead pursue agriculture since agricultural product demand was expected to grow and Iraq had a competitive advantage in it. This however would have degraded Iraq's positive balance of payments since an increase in rural income without a corresponding rise in domestic industry would have led to foreign imports, otherwise causing inflation or both. Either situation happened to be a great opportunity for the World Bank and the IMF to give a predatory loan in exchange for the country's resources and political favors. Orienting the economy towards agriculture would also have left the economy lacking industry and dependent on the whims of global trade and the politics and other conditions behind it. The economists also discounted altogether from their analyses the oil capital Iraq could have used to offset the initial growing pains of rapid industrialization, such as lack of experience, by absorbing the costs of initial inefficiency or by importing skilled workers.

In 1957, prime minister Nuri al-Said not only denied the need to change the land ownership system but asserted communism was a ploy to undermine the social and political system; characterizing the landowning tribal sheikhs as fathers of their people who develop the country and increase production. On 14 February 1958, King Faisal II and his cousin King Hussein of Jordan created the Hashemite Arab Federation, which was really a confederation, in response to Egypt and Syria uniting to form the United Arab Republic, which unlike the Hashemites was left-wing and opposed foreign interference, especially from the United Kingdom. On 14 July 1958, a republican revolution led by Abdul Salam Arif and Abd al-Karim Qasim overthrew the government, executing the monarchy and al-Said, later dissolving the union with Jordan. Nonetheless Western media reported the revolution was "startling" and overthrew a benevolent king who used the nation's oil wealth for good purposes..

The Iraqi Republic

The republican government of Qasim began pursuing agrarian reforms, established ceilings on land ownership, promoting general social programs, delinked the Iraqi Dinar from the British pound, established relations with the socialist bloc and pursued strong ties to the USSR in particular, stressed the importance of industrial development, and began the process of nationalizing the oil industry. Republican leaders pointed out the absence of meaningful planning, which allowed for market forces to plunder Iraq's resources. Balance of payments and the budget were showing deficits, with the Development Board being penetrated by foreign interests who had the final say in the determination of economic policy. The same group of foreign monopolies that oversaw the country's impoverishment were in charge of development programs, with the Development Board showing this by also being lax in its accounting and tolerating foreign firms' abuse of contracts. Iraq's economy was oriented for dependence on foreign capital and thus ties with neighboring Arab countries were weakening — with the proper course of action being seem in regional unity in order to establish economic and political strength. The country was turned into a giant farm for agricultural and petroleum products that without industry, didn't diversify and thus had a vulnerable and feeble economy that was only meant to depend on and serve an elite. Thus the new regime set out to pursue economic independence and more equitable distribution of wealth and income. The main principles were that planning is important, monopolies were to be curbed, the middle class was to be strengthened, the economy was to be liberated from imperialism, the land tenure system abolished, trade relations diversified and especially close ones developed with fellow Arab countries; the public sector was to be strengthened and expanded, the private sector encouraged, and high economic growth pursued.

The Development Board was replaced by the Ministerial Committee, which received a new organizational structure in the year following the revolution with the creation of the Economic Planning Council. The old Ministry of Development was replaced by the Ministry of Planning which began preparing a detailed economic plan, which was created and made effective January 1962, providing for the first time a target rate of growth, calculations for the cost of each individual project, as well as allocating 19% of the plan's budget for housing — an unprecedented amount for this category although only part of this was low-income housing, as opposed to military housing for example. Industry was also given 29% of the budget, compared to the final monarch-era plan where it was 13%, down from the earlier 20% due to the influence of foreign advice to not bother much with industry. Oil revenues fell short of paying for the whole plan and so funding was supplemented by loans and selling equity shares in completed projects to the private sector.

The majority of agricultural land was held by a couple dozen landowners who each had over 100 km² of it, but the republicans passed a law limiting it to 2.5-5, depending on the method of irrigation. Land in excess of this limit was taken over by the government and the landowners were compensated with treasury bonds, with peasants receiving 0.075-0.15 km² each and organized into cooperatives supervised by civil servants. This process was planned to take five years.

Internal political instability had an effect on planning however, particularly on agriculture. There was a pro-UAR rebellion in the north in 1959, then a Kurdish revolt in 1961, and a coup in February 1963. Human and material costs racked up, with the economic and political apparatuses being reorganized often to suit the goals of each government while also impeding the ability of plans to last. Mobilization to put down Kurdish revolt demands top priority in resources that otherwise would have went to building up the economic, political, and social spheres. Agricultural output declined with conflict and land reform was delayed. Adjusted for inflation, the agricultural output of 1965 was projected to be over 3 times that of 1953, however ended up being under 50% more. While cultivated land area increased 7% under the Qasim government, output of the three main crops of wheat, barley, and rice fell 44%. Iraq ended up becoming a food-importing country in this, and the land reform further failed to achieve any measurable results on distribution of income. It did however succeed in destroying the political and economic power base of landlords. In the end it was prevented from broadly achieving its proclaimed targets as a result of lacking trained agricultural cadres and personnel, agricultural credit, and mechanization, along with low utilization of fertilizers and the general backward nature of the economy that was inherited.

The industrial sector fared a lot better however. The state-owned Industrial Bank that financed the sector received more capital funding, and more protective measures were provided for domestic industries. Industry received 2.5 times more capital than in the monarchy's last plan, which was likely a reaction to its particular neglect on top of demand from industrial projects. Such emphasis on industry was also due to the view that it was the only means by which Iraq could unshackle itself from dependence on foreign economies, as Iraq's oil wealth — regulated by a small group of foreign firms — was being spent on buying industrial goods from the home countries of those firms. Industrialization would further raise personal incomes, which together with agrarian reform would reduce inequalities and achieve social justice. The return on investment was also higher than in other sectors. Industrial planning had its flaws though: the ratio of actual-to-planned expenditure was still low although improved; 52% in the republic and 37% under the monarchy, with political instability noticeably having impacted performance in this sector too.

Other achievements included the expansion of social services to lower-income classes, diversification of foreign trade with the USSR and other centrally-planned economies, withdrawal from the Sterling area which pegged the Iraqi Dinar to the British pound, and the planting of the seeds in 1961 for oil nationalization with the enactment of Public Law 80, which expropriated all area not actually used that was conceded to foreign-owned oil companies at the beginning of independent Iraq.

As he had taken power, Qasim sought to strengthen his position in government, and thus temporarily allied with the Iraqi Communist Party, which opposed pan-Arabism. The Ba'ath Party, which then wanted a union with the UAR, attempted a coup in 1959 that was led by Saddam Hussein, though it failed and Saddam fled to Cairo. Qasim made a territorial claim on the majority-Arab Khuzestan province of Iran, which further contained most of Iran's oil reserves, which along with his later claim on Kuwait, that had the support of the British and the Arab League, diplomatically isolated his government.

First Ba'athist coup and the Arif regime

The Qasim regime was overthrown in February 1963 by Ba'athist members of the military, with the new leader Ali Salih al-Sa'di organizing a massacre of 300-5,000 communists while imprisoning 7,000 more. The leaders of the coup had no ready program for dealing with the country, having instead general ideas of what to do and more so united in their opposition to Qasim. They feuded amongst each other, improvised their courses of action, and some acted opportunistically rushing to achieve high status and wealth from their roles. The military headed by pro-Nasserists within the Ba'ath Party seized power themselves in November of that year, with Abdul Salam Arif becoming the new leader and purging the Ba'athists. He adopted Nasser's program of nationalizing insurance companies, banks, and essential industries like steel, cement, and tobacco. Arif eventually lost interest in a union with Egypt, which Nasser only gave lukewarm support to anyway, with Qasim's economic plan meanwhile remaining until the new government formulated its own Five-Year Plan for 1965-1969 — the most articulate and sophisticated of any developmental plan for Iraq yet. It provided general qualitative objectives and outlined specific economic and social goals, further planning for the conditions in which these targets are to be met, stressing also the importance of the particular roles of fiscal, monetary, trade, and wage policies. The plan described both public and private sectors as essential to the nation's development. The institution of private property was respected but was not allowed to be used against the interests of the people. The economic objectives were set to be: an increase in the standard of living by at least 8% per year, lessen dependence on imports, diversify the economy, grow agriculture 7.5% and industry 12% a year, achieve economic stability very soon, and economic integration and unity of Arab countries, especially Egypt. Projects were designed on the assumption of a common Arab market. Social objectives were: achieve full employment (although this was to take place beyond a single plan), expansion of social services such as health and education, wider geographic distribution of income to narrow the income gap between rural and urban, and gradually reduce the concentration of wealth and income. Fiscal policy was to limit government spending by 8% per year, control sharp fluctuations to achieve economic stability, and lessen inequality in the distribution of income. Monetary policy was to be flexible and expand money supply according to the plan to accommodate national output. The trade policy accommodated for sufficient supplies of foreign goods to stabilize prices when needed to avoid overinflation. Wages were also carefully maintained within certain limits to regular consumption and encourage saving for investment. The plan however admitted that finding employment for new entrants to the labor force would be difficult and that unemployment would go from around 3.1% to 13.5%.

Second Ba'athist coup

Abdul Salam Arif died in a helicopter crash in April 1966 and was succeeded by his brother Abdul Rahman Arif, who lacked the forcefulness and political acumen of his brother and who alienated radical Arab nationalists with his moderate stance, halting nationalizations and improving relations with the USA. On 17 July 1968 the Ba'ath Party retook power in a bloodless coup, with one of the leaders being Saddam Hussein, who became Vice President of Iraq and Vice Chairman of the Revolutionary Command Council (RCC) — the ultimate decision-making body of the country in which Saddam gradually accumulated power as his aging cousin Ahmed Hassan al-Bakr, who was the President of both Iraq and the RCC, became weaker. Saddam's tribe al-Tikriti was widely represented in government, with his half-brother for instance commanding the Iraqi Intelligence Service, also known as the Mukhabarat, which was the nation's secret police organization. As the party came to power it outlawed the use of tribal names, telling citizens that they owed their loyalty to the state rather than a local tribe and its chief, although there is wide speculation the real reason was to disguise the amount of Saddam's clan members in government.

The Ba'athists let the Five-Year Plan run its full course, and the results showed that like previous plans it only spend about half its allocation, 55%, and as such failed to reach predicted targets. Employment was higher than projected however, explained by the plan not factoring in employment generated from plans from previous projects becoming completed, and output was somewhere over half of the targets. Agriculture still suffered from lack of modern technology, fertilizers, pesticides, and extension services that would have provided research and knowledge from other fields. In industry there was idle capacity due to lack of inputs, spare parts, and skilled workers. The 1964 nationalizations also discouraged investment in the remaining private sectors. The slow-moving agrarian reforms were also deprived of knowledgeable management, stability, and growth. Lastly, the 1968 coup gave rise to planning, reorganizational, bureaucratic, and political uncertainties that slowed investment and growth. A general assessment of the FYP by the Ministry of Planning noted that oil fell from 22.8% of GDP before the plan to 20.4% at completion, yet still 85% of exports. Including private sector growth, critical sectors such as industry, agriculture, and transportation fell behind on their target growths, while others such as electricity, construction, and services outperformed their targets. It also set up projects that would have plentiful future results, as in irrigation, drainage, and land reclamation; laying a strong foundation for future plans to succeed. It also introduced modern technologies in industry, power generation, transportation, and communications. Average real income rose less than 12% in five years, with this being a result of higher-than-expected population growth on top of national income not meeting the target. The plan also failed to account for human resources and management of expertise. Resource consumption was also 87% of GNP rather than the 74% forecasted.

The Ba'athists created their own economic plan called the National Development Plan that took two years to prepare and ran from 1970–74 — the first plan to run its full course under the same government and not suffer from political revolution. It was distinctly enabled by the infrastructural developments and retrospective studies of previous plans on top of having accumulated technical and administrative expertise as well. On top of this it benefited from a period of rising oil revenues, from the Tehran price agreement of 1971 and oil explosion of 1973–74. This was the last multi-year economic plan; henceforth the Ba'ath regime ran annual investment programs instead. The NDP sought to accelerate economic and social development, which would be accomplished for one part by increasing production, labor productivity, the use of modern technology, investment, and human capital. Consumption would also be balanced with saving, which would be promoted in order to obtain capital for investments. Mass awareness campaigns were also to be carried out so people can consciously participate in the process of development as the plan calls for. Domestic raw materials were to be efficiently used by industries to diversify production and meet local needs, with exports also to be expanded and diversified. Imports would be carefully managed and oriented towards improving living standards, especially of low-income groups, and private sector investment was to be incentivized. The plan projected national income to rise 7.1% per year; twice the rate of population growth, and good-producing sectors like agriculture and industry would be concentrated on. Mineral resources were to be exploited to lessen the dependency on oil, and projects were to be more equitably distributed throughout the country, with pan-Arab economic integration also pursued. Social services were to be increased as were employment opportunities, and a more equitable distribution of income was targeted. Agriculture was to grow 7% per year to meet local demand, and industry 12%. Transportation and communication infrastructure was already well developed by previous plans, so it was just to be expanded.

Other OPEC nations gradually moved to allow purchasing of shares in oil companies, which they set to 25% in 1972 and gradually increased to 51% in 1982. Iraq however nationalized the IPC in June 1972 after twelve years of disputes and negotiations, ending the nearly half-century system of foreign control over oil resources. The crisis of the international monetary system caused by the US suspending the convertibility of dollars to gold in 1971, which caused instability in oil prices, as well as continued rise in demand for oil and prices of petroleum products, compelled OPEC to seek higher compensation from oil companies, which only offered $0.45 to OPEC's demand for a $2 rise in the price of an oil barrel, which was $3. Because of this and the ongoing Yom Kimppur War, OPEC unilaterally raised the price to $5.12. Soon after an oil shortage emerged because all Arab oil-producing countries except Iraq lowered output and imposed an oil embargo on the US in hopes of influencing the war; this caused panic-buying and oil went to new heights. OPEC took advantage of these conditions and doubled the price of oil on 1 January 1974 which resulted in $11.65 for a barrel of oil. Iraq, having already nationalized its oil, received the entire value of oil exports. The combination of nationalization policies and OPEC's actions pushed Iraq's oil revenue from 214 million Iraqi Dinar in 1970 to 1.7 billion in 1974, with 1 ID being over $3 at this time. Oil revenue went from 16% of GNP in 1970 to 57% in 1976.

The sharp rise in oil revenue, newly-acquired control over its own oil resources, which were plentifully available, convinced the government to build an integrated oil industry, which took shape in enabling the Iraq National Oil Company that was created a while back with the necessary legal and financial resources to develop the industry. The government also made a series of agreements in 1969 with the USSR, East Germany, and Hungary to receive loans, technical assistance, training, and equipment; repayed in oil. Thus a domestic specialized labor force was trained, oil infrastructure was built, oil tankers were acquired, and both domestic and international marketing networks were subsequently created. Nationalization enabled Iraq to reap full profit from oil and freed it from the uncertainty and exploitation of foreign control, but not supply and demand and dependence on the world economy and its conditions; weaknesses include a decrease in the demand for oil, new reserves being found outside Iraq, and Iraq's oil infrastructure being disrupted or destroyed, which would surely bring the whole economy down with it. Oil output was 1.7 million barrels per day (MBD) at nationalization in 1972, and 3.5 million in 1979, and the combination of higher output and prices pushed oil revenue from 219 million ID in 1972 to 8.9 billion in 1980 — a fortyfold increase within a decade.

While agriculture received 22.5% of public-sector investment, industry was to receive a new high of 40%, with the oil sector within it particularly prioritized. Meanwhile the private sector was left to dominate the housing market, with public investment in housing being less than 1 million ID. Under a quarter of the funds to be invested were for new projects, so thus the NDP was mostly an extension of previous plans. OPEC succeeded in February 1971 in negotiating to raise the tax rate on company profits from 50% to 55%, agreeing to a series of price increases over the next five years. This along with the price hikes in reaction to the instability caused by Bretton Woods system ending, along with yet further hikes because of the Yom Kippur War, ended up raising the government's oil revenue allocation to the NDP to 360% of its original value. With such wealth allowing more options, opportunities, and flexibility, restrains on spending were removed and the current plan along with planning in general were eroded. Like previous plans the NDP spent close to 60% of its allocation, with the planners' hopes of changing the structure of the economy dashed as oil ended up 60% of GDP instead of the target 26%. Oil revenues were 495% of the target, which resulted in GDP being 288% of its own projection.

The Ministry of Planning conceived a twenty-year plan that would encompass four five-year plans that would each receive annual investment programs, starting in 1975. This would provide for greater continuity, stability, and flexibility, accounting for cases of unplanned increases in development spending or oil revenue. The RCC however opted for annual investment plans only. In 1977 the RCC made a national development plan that covers the years 1976-80, and did not disclose information on sectoral allocations of investment, aggregate expenditure, or estimated revenue. It did however announce target growth rates and that oil's share of GDP was to be reduced to 51%. The Iranian Revolution that began in 1978 provided another windfall of heightened oil revenues, which largely went to unknown miscellaneous investments, which were 61 million ID in 1976 and 1.6 billion in 1980. This was likely for defense and internal security projects, which follows the pattern of increasing allocations for such in the early 1970s when detailed data was still reported. Much of the information on the results of this plan are from external sources, such as the World Bank, which reported that employment increased by 300 thousand instead of the projection 548 thousand, that goods-producing sectors contributed 67% of GDP compared to the targeted 76%, while the distribution of service sectors accounted for the remainder of each figure.

The Iran–Iraq War that began in 1980 however resulted in the destruction of exporting facilities in the south and closure of the pipeline across Syria, sending output to 1 MBD in 1982 — levels not seen since 1960. Oil prices also declined after 1981 and oil revenue was down to 2.2 billion ID in 1986, forcing the government to curtail imports, suspend development projects, introduce austerity measures, and take on huge amounts of debt. Oil exports and revenue increased after the war ended in 1988 but the 1990 invasion of Kuwait and the consequent sanctions on Iraq led the oil industry to operate at less than 10% capacity.

Saddam Hussein's rule

Saddam Hussein joined the Ba'ath Party in 1957 when he was about 20, joining what was then a small party in preference to more established parties likely due to the influence of his uncle, who adopted him and was a supporter of the Ba'ath himself. He had a militarist view and believed Iraq should be the center of the Arab world, seeking to connect modern Iraq with ancient Babyloinan and Assyrian civilizations in the region. He was critical of the notions of class conflict, the dictatorship of the proletariat, and atheism, further rejecting the claim of Marxist-Leninists that non-communist parties are automatically bourgeois. Despite this he spoke fondly of Lenin and particularly his adaptation of Marxism to Russian conditions; admiring also Fidel Castro, Ho Chi Minh, and Josip Broz Tito although for their roles in asserting national independence. Barzan Ibrahim Tikriti, one of Saddam's half-brothers and leader of the Mukhabarat, said Saddam once asked him to procure copies of works by Joseph Stalin and Adolf Hitler in order to study "the successful organization of an entire society by the state for the achievement of national goals". At times Saddam sided with hardline Islamists despite being a secularist otherwise. He was furthermore excessively cruel in his actions and paranoid to the point of noticeable detriment to the country, such as by segregating the branches of the military so as to hinder a potential coup — but which also decreased its wartime effectiveness. The invasions he launched against Iran in 1980 and Kuwait in 1990 both ended as massive failures and setbacks to Iraq as a whole despite it having the fourth-largest army in the world at the time, albeit an ineffective one.

During Saddam's vice chairmanship of the RCC from 1968 to 1979, he set up reading programs in every municipality that dramatically raised the country's literacy rate, for which UNESCO gave him an award. He also led a major push for the establishment of schools, roads, public housing, and hospitals, creating one of the best public health systems in the region. In 1978 Iraqi president and RCC chairman Ahmed Hassan al-Bakr began to make treaties with Syria that would have led to unification in July 1979, which would make Syrian president Hafez al-Assad deputy leader of the union and drive Saddam Hussein and his Sunni clique into obscurity. On 16 July the ailing al-Bakr resigned under the threat of force and transferred his positions to Saddam, who then convened an assembly of party leaders on 22 July, which he had videotaped and widely distributed. 69 alleged conspirators were said to have been part of a Syrian-backed plot, with 22 of them, including 5 RCC members, sentenced to execution with those who were spared being directed to execute the condemned (one of the 22 was sentenced to death in absentia and was "nowhere to be found").

Iran–Iraq War

Attention then turned to Iran and the ongoing revolution it was having, with the new Iraqi government wanting to seize upon its weakness and take the ethnically Arab Khuzestan province that has one of the world's largest oil reserves. There was also a fear by Iraq and other Arab states that Iranian Shia influence will spread throughout their lands. Iraq also had a dispute with Iran over the Shatt al-Arab river that empties into the Persian Gulf and is made from the Tigris and Euphrates rivers. Though Iran had more manpower, Iraq had more sophisticated weaponry and better-trained officers, as well as support from Saudi Arabia, Kuwait, other Arab states, and Western nations. The Soviet Union also viewed Iraq more favorably of the two especially since the Iranians repressed their communists harshly.

Saddam started the Iran–Iraq War in 1980 a year after ascending to the presidency, thinking he could score an easy victory against a disorganized and divided country that was still fresh from the Islamic Revolution. However his assault, besides uniting Iran, had a poor strategy; it was an offensive on a broad front despite Iran being mostly mountainous, with the war goal of Khuzestan province being the only flat area accessible to Iraqi troops on top. After taking some land, Iran counterattacked, which in turn that was repelled by Iraqi forces. At the end of the war Saddam ordered the genocidal Anfal campaign against the Kurds that was intended as a counterinsurgency operation, killing 50,000–182,000 and which involved the massacring of thousands with toxic gases.

With the opening Iraqi assault on 22 September 1980, Iran retaliated by bombing Iraq's oil exporting facilities, forcing the suspension of oil shipments from its southern fields and bringing Iraq's total oil exports down by 72%. Core parts of the industrialization program, which happened to be in the southern part of the country, were also struck, including the petrochemical and iron and steel sectors. The war was expected to be short and fast but dragged on for eight years, with disastrous human and economic consequences whose impact would last for long.

Prior to this there was the nationalization of the IPC and its affiliates in the early 1970s, along with the 1975 Algiers agreement with Iran that enabled Iraq to repress Kurdish rebels and be freed of the burden of a military expedition against Iranian-backed forces. This enabled more wealth to contribute to the rest of the economy, which was overall used to increase spending on infrastructure, goods-producing sectors, social services, imports, and military. The average annual GDP growth rate in the 1970s was 11.7%. This was unsustainable however as it was due to a temporary rise in a single commodity and the impact of a decline in the rate of growth has a multiplier effect throughout the economy — especially in wartime and even more so as the one commodity fueling this rise is targeted in this. The outbreak of war led to a quick drop in oil output from 3.4 MBD to 0.14 — a 96% drop, with oil revenue falling from $26.1B in 1980 to $10.4B the following year. Oil fell from two-thirds of GNP to one-third in that same period. The closure of Persian Gulf ports and the forced transition to overland routes through neighboring countries raised import prices (which in the 70s were already increasing by 22.5% annually). Foreign reserves were also gradually exhausted and foreign credit came to be depended on, and later on long-term foreign debt. Accumulated foreign assets and financial assistance from Arab states who preferred Iraq over Iran enabled the Iraqi government to raise imports from $4.2B in 1978 to $21.6B in 1982, with nonmilitary imports going from 61.9% to 80.1% in this time. As foreign trade was monopolized by the state, this means the share increase in nonmilitary imports was a political strategy to lessen the impact of war on living standards. Development spending also increased from 2.8B ID in 1978 to 7.7B in 1982. This was intended primarily to appease people, and failed to address existing problems and bottlenecks: inflation, inability to spend allocated investment funds, skilled manpower shortages, and inadequate infrastructure; as had manifested with the government not being able to handle the influx of imports in 1974 whose value was nearly triple that of last year's. Thus there was a great deal of delay and waste already that took another great hit from wartime rerouting of trade. Development since the 1950s was hindered not by a lack of funds primarily, but lack of skilled manpower, especially in areas of administration and management. Lack of familiarity with technical processes of projects and confidence in their ability to carry out projects forced the government to employ foreign contractors. The Ba'ath regime thus unreasonably expected wartime development to substantially increase when it struggled to do so in peacetime. Diversion of manpower from the civilian economy to war fronts added to the economy's manpower problems, especially when foreign contractors withdrew workers from a country engaged in hostilities. In 1982 the plan for dramatically overinflated allocations to development projects, which simply lacked the financial resources planned, got crushed as Iran counterattacked and the war moved to Iraqi territory, where it remained for the next six years. In 1982 16.8% of allocations to economic plans could be funded — in 1983, this was just 1.3%.

War-related oil revenue falls coincided with a decline in the demand for oil, particularly OPEC's oil, as industrial countries established energy conservation and substitution measures. Alongside this was the decline of oil prices as non-OPEC oil exports rose. Iraq's oil exports were hurt further by Syria's decision in 1982 to close its oil pipeline on its territory, leaving Iraq exporting only through Turkey and with one-fourth of its pre-war export capacity. This prompted the Iraqi government to adopt austerity measures, curtailing imports and social services as well as halting development projects not directly related to the war effort. Total economic collapse was staved off by the provision of credit from Saudi Arabia, Kuwait, OECD countries, and the Soviet Union. Saudi Arabia and Turkey also allowed the Iraqi government to build additional pipelines in their territories, with the former also making an effort to bolster Iraq's creditworthiness in the international financial markets. Although oil exports did increase 198% from 1983 to 1988, oil revenue only increased 40% because of oil prices continuing to stagnate.

By the end of the 70s the Iraqi government accumulated a favorable balance of payments that eased the underlying problems of labor shortages, stagnant agriculture, a rising urban population, persistent inflation, and rising dependence on both foreign consumer goods and the domestic oil sector. The Ba'ath regime, like many oil-producing states, failed to adequately recognize that oil demand, in the long run, is not in fact inelastic and its demand falls if prices remain high for long due to things like new oil-efficiency technologies being compelled. As oil demand fell, it took the capability of the Iraqi state along with it.

Saddam at this time was chairman of the 22-member RCC (reduced to 9 members in 1982), President of the republic, leader of the party, commander in chief, Prime Minister, and head of the intelligence services. With this concentration of power by Saddam as well as the personalization of the state around his wishes, length decision-making processes and intricate planning were viewed as burdensome. The desire of the Ba'ath and Saddam in particular now to stay in power led to a rather obsessive effort to placate the people, which with lack of expertise and oversight led to the squandering of nonmilitary spending on prestige projects like a metro system in Baghdad, a new international airport, new hotels and conference facilities, all during wartime. Saudi Arabia and Kuwait responded by cutting back assistance, seeing this.

In 1970 and 1975, 2.9% of the labor force was in the armed forces, though sharply rose to 13.4% by 1980 and by 1988 was 21.3%, making that one million people out of the total workforce of 4.7 million. The proportion of support workers in the civilian economy providing management, maintenance, and supply services to the military increased also. Worse still, many of those drawn into the armed forces were skilled workers from critical and already suffering sectors like agriculture and industry. Wheat output went from an annual average of 800,000 tons in the mid-70s to 300,000 in 1984, which led to increased food imports at a time when declining oil revenues made everything harder to afford. From 1975–88, 48.3% of labor force entrants were conscripted into the armed forces, intensifying Iraq's perennial problem of labor shortages. The government attempted to soften this effect by encouraging women to join the labor force as well as encouraging the inflow of Arab workers from Egypt and to a lesser extent Morocco and Sudan. This however was a drain on the balance of payments because of remittance transfers to the country of origin. Military spending was relatively high to begin with — 19.4% of GDP in 1970, which rose to 38.8% in 1980. Throughout the 80s, it was between one-half and two-thirds of GDP. Whereas inflation averaged 5% per year in the 60s and over 6% in the early 70s, government spending and wartime conditions rose it to 95% in 1980 and up to 369% in 1988.

Iraq failed to adequately diversify its economy and instead used the opportunity of its oil wealth to create a dependency on foreign food and consumer, military, and capital goods. Military imports were prioritized during the war from 1983 — they were 17% of total imports in 1980 and peaked at 83% in 1984, remaining at an elevated level until 1989 where they were 36%.

The public sector before the war accounted for two-thirds of GDP and existed in every part of the economy. To offset war-related economic troubles, the Iraqi government formally adopted a policy of privatization in February 1987, which featured the sale of state lands, farms, and factories to the private sector. Other measures were introduced in time, like the promotion of competition in the banking industry, deregulation of the labor market, incentivizing of private enterprise, creation of a stock exchange, and opening up the economy to foreign investment. The government further reduced subsidies to state enterprises and relaxed price ceiling policies. However even before the war the government was talking about letting the private sector expand, with Saddam himself saying in various speeches that the government was withdrawing from agriculture. One reason for this was Saddam seeking to establish his authority by fracturing the party elite and promoting the private sector which would politically support him and help legitimize his rule. State-run agriculture also failed to achieve food self-sufficiency and deal with the rising food import bill, the decline in agricultural labor, rise in the number of foreign agricultural workers and technicians, and the poor efficiency of the massive agricultural investments intended to raise productivity. Agriculture as always suffered from administrative inefficiency, aggravated by constant legal changes in land reform and by the rapid flow of people from rural areas to urban ones.

The new liberalization measures only exacerbated Iraq's already stagnating agriculture and industry suffering especially from war. Consumer goods saw a rapid increase in prices as importers took advantage of the new rules and manipulated the Iraqi Dinar's exchange rate. The rush to sell state enterprises without proper economic and legal frameworks also led to their sale at well below market prices, most often barely above the price of the land the enterprises were on. Arguably the state was also looking to concentrate on fewer, strategic projects in oil, defense, petrochemicals, and other heavy industries. Strong incentives were provided to the private sector to compel it to shift resources to the industries the state withdrew from, as they were not as profitable as the goods-producing sectors the private sector was already in. Liberal policies like declining subsidies and the discontinuation of price ceilings made this even worse, leading to yet further sinking in living standards. In the face of this the government made a partial retreat by lowering and freezing prices, renationalizing some enterprises, increasing agricultural subsidies, raising civil servant salaries, and setting lower targeted profit margins for state and mixed enterprises.

A comprehensive study of economic losses by Iraq and Iran found the combined loss to be $1.097 trillion — $644.3 billion for Iran and $452.6 billion for Iraq, with the latter divided into $91.4 billion in potential GNP losses, $197.7 billion in oil revenue losses, $78.8 billion losses in foreign exchange and paid interest, and $80 billion potential losses in foreign exchange due to high military spending. In other terms, Iraq's losses were 254% of all oil revenue the government received from 1931 to 1988. In GDP terms, war-related losses alone were 104% of GDP from 1980-1989. The annual growth rate of 11.7% in the 1970s became -8.1% from 1980-85 and -1.7% from 1985-89. Crucially, investments rose 27% annually in the 1970s but shrank about 1% each year during the war.

Modern Iraq

Ba'athist Iraq ended with the US-led invasion in 2003, which was preceded by US-UK bombings of its infrastructure in 1998. There were no weapons of mass destruction in Iraq besides 500 abandoned chemical munitions left over from the war against Iran, the use of which was approved at that time by the US and did not stop it from aiding Iraq even after receiving reports affirming the use of it on Kurdish civilians. Even Iraq’s own defense minister was unaware of any WMDs beyond this sort. The overthrow of Saddam by the American-led coalition eliminated one of Israel’s opponents in the region, with many figures such as the CEO of Chevron and the Foreign Minister of Poland expressing interest in seizing the oil wealth there, and organizations like the Global Policy Forum also pointing out that "friendly" companies expect to gain most of the lucrative oil contracts worth hundreds of billions of dollars — although countries like Russia and China instead ended up getting the bulk of those contracts.

Some Iraqi Ba'ath party members along with Iraqi generals ended up joining ISIS, which is partially a result of Saddam's actions during the Gulf War, wherein he began to emphasize an image of himself as a pious Muslim to the extent that he inked a copy of the Quran with his own blood. This was in response to the economy collapsing due to the US destroying infrastructure during the Gulf War and imposing subsequent sanctions, with Saddam attempting to garner the support of the Islamist Saudis, among other groups. As the party's socialist pretensions were no longer sufficient to maintain popularity, this renewed emphasis on Islam created more favorable ground for the spread of Salafist sentiment, but Saddam himself remained hostile to them and to Islamists in general as political forces at odds with the Ba'ath party, and they continued to face arrest as was previously. Former Ba'athists did join ISIS, partly because they felt they had no career prospects under the post-2003 Iraqi governments and partly because of actual radicalization. Ex-Ba'athists did not however create ISIS.

Both the Gulf War and Iraq War were predicated on a multitude of lies, among the most prominent being the testimony of 15-year-old Kuwaiti girl Nayirah Al-Sabah, who appeared before the Congressional Human Rights Caucus on Capitol Hill on 2 August 1990, two months after the Iraqi invasion of Kuwait. She said the Iraqis had removed 312 babies from incubators and left them to die on the cold floor. Before her testimony only 17% of Americans supported an intervention, whereas in December that figure jumped to 41%. In January of 1991 the Senate voted 52 to 47 to authorize US military force in Iraq, with seven Senators citing Nayirah's testimony. While Nayirah described herself as a nurse during the Iraqi invasion, there is no record of her actually having been so, rather actually being the daughter of the Kuwaiti ambassador to the US. The story, which was actually a rumor picked up by an American PR firm, was propagated after a front group for the Kuwaiti government paid the firm $10.8 million to galvanize US public opinion in favor of intervention, with Nayirah being being coached into telling that story in a convincing manner. The narrative began to unravel however as sources familiar with the situation on the ground began to report a lack of evidence for such, with rights groups confirming a lack of evidence after a ceasefire. Amnesty International revised the number of babies killed from 312 to 72, then 19, later discovering that those 19 had died before the Iraqi invasion. After news of the lie had broken out, many Americans were outraged, however neither Nayirah nor anyone else was punished for lying. Similarly there was a narrative around the time of the 2003 invasion of a supposed plastic shredder or wood chipper that Saddam allegedly fed his opponents into, with headlines like "See men shredded, then say you don't back war" — though this story fell apart the year after invasion from lack of evidence.

Other facts

• Saddam Hussein was given a key to the city of Detroit in 1979, following his $250,000 donation to a Chaldean church there, Chaldeans being a Catholic group from southern Iraq. This was in return for its reverend congratulating Saddam on his presidency, after which the reverend presented Saddam with the key on behalf of the mayor, with Saddam then donating a further $200,000 for the church's debt.
• In 1988 Saddam Hussein commissioned Project Babylon, a plan to produce an estimated four superguns up to 156 meters (512 feet) in length and a bore of 1 meter (3.3 feet). Some parts were seized in transit in Europe and the others destroyed following the Gulf War.
• French president Jacques Chirac opposed the Iraq War and warned the US of consequences from such; in response some US fast food restaurants and even three congressional cafeterias for a time renamed "french fries" to "freedom fries", although the term became unpopular as the ongoing war had.
• Saddam's hometown of Tikrit erected a two-meter-tall statue of a shoe in 2009 in honor of Muntadhar al-Zaidi, who famously threw his shoes at George Bush and called him a "dog" the previous year.
• In January 2001, Iraq donated $94 million for America's poor, of which there were an estimated 30 million, greater than Iraq's total population of 24 million then.

Quotes

Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.

— Jimmy Carter, State of the Union Address on Jan. 23, 1980

I think this is a very hard choice, but the price — we think the price is worth it.

— Madeleine Albright, United States Secretary of State from 1997–2001, in a 60 minutes interview where she was asked "We have heard that a half million children have died [as a result of US-led sanctions]. I mean, that’s more children than died in Hiroshima. And, you know, is the price worth it?"

Oh, no, we're not going to have any casualties.

— President Bush, discussing the Iraq war with Christian broadcaster Pat Robertson in 2003, after Robertson told him he should prepare the American people for casualties

We have never hidden our desire for Polish oil companies to finally have access to sources of commodities … [access to oil fields] is our ultimate objective

— Wlodzimierz Cimoszewicz, Polish Foreign Minister, remarking in 2003 after a group of Polish firms had just signed a deal with Kellogg Brown and Root, a subsidiary of Halliburton

People say we're not fighting for oil. Of course we are … They talk about America's national interest. What the hell do you think they're talking about? We're not there for figs.

— Chuck Hagel in 2008, Nebraska Senator and later Secretary of Defense, defending Alan Greenspan's comments regarding oil as a motivation for the Iraq War [Hagel later retracted this statement and said that Bush's motivation was instead deposing Saddam Hussein in an attempt to boost the global economy]

External links

• Remembering Why Americans Loathe Dick Cheney
• https://wikipedia.org/wiki/War_profiteering#In_the_United_States
• https://wikipedia.org/wiki/Rationale_for_the_Iraq_War#Oil
• America, Oil, and War in the Middle East
• Why the war in Iraq was fought for Big Oil