Iraq

From Leftypedia
Jump to navigation Jump to search

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, resulting in the occupation of the country until 1947.

A republican revolution overthrew the monarchy on 14 July 1958 and pursued a nationalist program of social democratic reforms, an attitude more or less followed by Iraq's various governments up to the fall of Saddam — some governments, despite rejecting Marxism, spoke of and enacted policy for actual socialism, doing things such as establishing workers' representation on the boards of directors of nationalized companies and speaking of working towards a society without classes. The Soviets considered Iraq "socialist-aligned", a 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 also 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. Least of all, constant changes in leadership entailed changes in priorities and direction, negating many benefits of planning as there were delays and disruptions in the formulation, adoption, execution, follow-up, and accountability of such. This is particularly true in a country with immature civil institutions that have further not been insulated against political upheavals. Dissenting voices, no matter how useful, were discouraged in the context of governments insecure about their own existence. Even more disruptive were the purges and firings that extended to those beyond the upper levels of bureaucracy, like project managers, engineers, and economists — in a country already in dire need of highly skilled specialists.

From 1951 to 1980, only 64% of allocations to economic plans were spent. One of the biggest reasons was that planning was driven by oil revenue, with the price of oil constantly changing, thus compelling the frequent modification of plans since they were initially created with the most optimistic anticipations — rather than setting firm, more modest goals. A lack of understanding of the concept and purpose of economic planning also manifested in a decreasing portion of oil revenue going to planning — from 100% to 70% in the early 1950s to 50% in the late 50s and repealed altogether in 1974, as planners failed to use oil revenue surpluses for future years. Plans were also asked to "lend" funds and fund projects of different ministries, establishing this precedent as opposed to raising taxes. Data about non-oil revenue as part of the ordinary budget (separate from the planning budget) reveals this further — it was 63% in 1966, 17% in 1971, and 13% in 1980.

Government investment manifested not only in plans but state-owned enterprises, which had their own separate budgets that combined exceeded the ordinary state budget as well as the development plan allocations. Private sector investment augmented its public counterpart and was 46% of total investment from 1957 to 1970, declining in the 1970s due to state oil revenue spending. Altogether, investments were 15.5%-27.7% of Iraq's GNP from 1957 to 1970.

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.[clarification needed] 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.[1] 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.[2] In 2016, the Obama administration dropped a total of 12,095 bombs on Iraq.[3] In March 2017, a US air strike killed 112 civilians in Mosul.[4]

History

Arab nationalism and Mandatory Iraq

The Ottoman Empire captured Baghdad in 1638 in a war with the Safavid Empire, effectively granting control over Iraq. Around the 18th century, a couple trends for Arab nationalism first formed when 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, which along with their occupation led to rebellion in June 1920 that was put down the following February. In August 1921 the British installed a king of the Hashemite dynasty along with an Iraqi cabinet but retaining real exercise of power for themselves, with the League of Nations sanctioning this by saying this area was a mandate that was expected to be prepared for political independence. The leaders of the Arab Revolt ended up in power in the mandate 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 materialistic economics was 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.

Background conditions

From World War I to the end of the monarchy, Iraq was characterized by the demands and costs of being a British appendage, with even economic planning concerned with infrastructure for exporting goods, while domestic industries necessary for the development of economic independence and stability were left to the private sector. Further still was the effect of Israel's establishment in 1948, which made inevitable extra costs and new direction in the military, politics, and economy that take influence from what became the Arab–Israeli conflict, manifesting in the various conflicts Iraq and fellow Arab states have had with Israel. Iraq was affected also by the disputes over its border with Iran in the Shatt al-Arab river, with Kuwait in precise border demarcation, and with Syria and Turkey over the division of waters of the Tigris and Euphrates. The conflict with Iran was particularly costly and drew resources from the civilian economy to the military, culminating in 1980 with an eight-year-long war that decisively sunk Iraq's fortunes, momentum, and advantages; further done in, along with prospects of recovery, by the fallout from the invasion of Kuwait.

Regionally, it was a major challenge establishing pan-Arab unity because until the creation of the Arab League in 1945, many Arab lands were still under foreign domination or were in early development as countries. The Arab League when established however was structurally weak and failed to carry out the projects it approved, as it focused on the prerogatives of individual states and lacked, for example, punitive measures for non-complying states and left implementation of agreements up to its members' own interpretations and good will. Material differences in population size, oil reserves and other natural resources, geographical location, and other such made the Arab world split apart in different orientations with this lack of a strong unifying body — and also made it harder to come into being to begin with. Moreover, there was no serious plan for Arab economic integration despite it being the goal of economic plans from 1965 to 1974.

Independence and monarchy

The first king Faisal I died a year after independence in 1933, marking the beginning of a period of violence from various groups. One of the most serious was a 1941 coup which aimed for greater independence from the UK and for closer relations with Germany, which distraught the British-educated and -oriented leadership and which prompted an invasion by the British, who reinstated the rule of the monarchy whose head fled to one of their bases. Following this the leadership leaned more heavily towards the British and tribal sheikhs for security, developing an ever-firmer vested interest with this status quo. This alienated most of the political class and emerging urban population, contributing to multiple fierce uprisings.

From independence to the end of the monarchy, the economy was generally laissez faire and most of its output was in the agricultural sector, with most of the population living in rural areas. Industry was small-scale and grew modestly, seeking to produce locally what had to be imported, with only 2,000 employed in industrial plants by the end of the 1940s.

Foreign capital began seeking Iraqi oil since the late 19th century, with the first concession being given to the Iraq Petroleum Company (IPC; 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 and 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. Laborers, receiving between one-fourth and one-fifth of overall product, were also required to perform other tasks for their landlords without compensation. Peasant relations and obligations to landlords were codified in law in 1933 where laborers were not permitted to leave the land if indebted to the landlord; and as they were perpetually indebted, they essentially became 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 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.[5] 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.[6]

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 seen in regional unity in order to establish economic and political strength. Under monarchy, the country was turned into a giant farm for agricultural and petroleum products that without industry, did not 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.

Data from 1957 shows that 1.7% of landowners had 63.1% of agricultural land while the bottom 84% of owners had 15.3%. A 1952-53 census revealed 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 and beginning of diplomatic relations with the USSR and other centrally-planned economies, withdrawal from the Sterling area which pegged the Iraqi Dinar to the British pound, withdrawal from the Western dominated and anti-communist Baghdad Pact, expanding the role of the public sector, 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. This was on top of his open feud with Nasser, who had many supporters in Iraq, as well as the at times even hostile division within the Iraqi military.

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. While it is rumored the CIA had a direct role in this, declassified documents and testimony from former CIA officers indicate otherwise. However, the CIA was indeed beginning to plan efforts against Qasim from mid-1962 and was developing contacts in the Iraqi opposition.[7] 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. Their ideological leaders wrote too generally and failed to objectively analyze the conditions of Iraq, instead trying to compensate with sheer repression. 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. The most significant economic change in the Arif regime came in July 1964, modeled after the actions of Nasser. Thirty industrial and trading firms producing crucial goods like steel, cement, and tobacco, along with all commercial banks and insurance companies, were nationalized. The decrees of this time, call "socialist laws" by the government, also established employee representation on the boards of directors in nationalized companies, also earmarking 25% of company profits for employees. This was done partially for social justice but was primarily political — the government pursued economic, social, and political symmetry with Egypt to lay the grounds for political unity.[5] Arif eventually lost interest in a union with Egypt though, which Nasser only gave lukewarm support to anyway.[8]

In its first year the Arif regime expanded the powers of the Planning Board, allowing it to formulate fiscal, monetary, and commercial policies necessary for carrying out economic plans. Qasim's economic plan remained 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.[9] The Ba'ath had greater success staying in power than other regimes because of a combination of rewards, coercion, and unprecedented use of internal security methods, along with ending the dispute with oil companies by nationalizing them as well as receiving plenty of oil revenue. Whereas the Arif regime greatly expanded the public sector but left it the lesser share of the economy, the Ba'ath proclaimed its ultimate goal was to establish a socialist economy, focusing on expanding the public sector in agriculture and industry, taking over foreign and domestic trade, and managing social services according to the requirements of transitioning to socialism. This was largely successful and the public sector came to dominate the economy up to the 1980s, though the construction sector remained largely in the private sector and involvement in agriculture was scaled down from the mid-70s.

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 to 1974 — 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.[5]

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. Saddam 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.[10] 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.[11]

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 to 1988, 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. Spending was ramping up with oil profit windfalls and a focus on the military, but domestic output was not developed enough yet to meet supply, and import infrastructure was lacking.

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.

The war ended up lowering male life expectancy by 10 years. 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 to 1989. The annual growth rate of 11.7% in the 1970s became -8.1% from 1980 to 1985 and -1.7% from 1985 to 1989. Crucially, investments rose 27% annually in the 1970s but shrank about 1% each year during the war. The country was now in ruin and the people were impoverished, with privatization coming short of expectations and foreign investors unwilling to flow into the country. Foreign debt consumed a significant portion of foreign exchange earnings, and the economy grew dependent on the oil sector though its performance was insufficient. Oil revenue was $14.5 billion in 1989, 55% of what it was in 1980. Oil-based economies are particularly dependent on the success of long-term planning, as otherwise all the spent oil profits will continue creating an upward pressure on prices domestically while a productive base is lacking and cannot counter with increased supply, thus necessitating imports — placing the heart of the economy at the whims of oil and foreign trade. The Ba'ath Party made outsized investments into the oil sector in the 70s, which wouldn't have been so bad if there were no war to disrupt oil and the revenues from it used in planning. Inflation rose throughout this period as spending increased without proportionate domestic output or imports — and even if imports could be afforded, the state of infrastructure was worse than before. Foreign companies were also competing with the government over technicians and civil servants, leading to the government decreeing that foreign firms may not pay Iraqi employees more than the government does. The increasingly large military also consumed manpower and wages while being a non-productive sector. Politicians were focused on rapid industrialization and spectacular projects, in spite of planners advocating more gradual development and emphasizing the need for the creation of managerial and technical cadres. Even when funds were allocated to things like agriculture it was uneven, resulting in water-control structures with few links to local areas which resulted in more food having to be imported. Civilian sector resources were diverted to the military, with wartime damages hurting the ability to import, which because of a lacking base especially made it difficult to stem the decline in output. Tax revenue was insignificant to begin with and raising it during and after the war would be particularly bad. There was no financial system outside the state-owned one to borrow from either, thus the state borrowed from its own banking system; tantamount to money printing. This increased the budget deficit which compelled yet more borrowing, resulting in 400% inflation in 1989. Iraq was one of the few developing countries that managed to avoid foreign debt, save from a few loans from the Soviet Union and other centrally planned economies paid in oil. If Iraq was to pay off its debt over a period of five years, it would essentially require the entire oil revenue for that period. Among all these worries, the restoration of development planning mechanisms was considered a low priority, with the Planning Board itself being replaced in 1987 with the Planning Body, whose role was merely consultative.

Invasion of Kuwait and sanctions

Iraq was experiencing currency depreciation and a lack of funds for reconstruction after the war. During the war it built up the largest military industry in the Arab world after Egypt, using plenty of its own chemical weapons and surface-to-surface missiles, producing also a wide range of arms, weapons systems, munitions, and electronics. Very many components had to be imported despite the attempt to avoid dependence on foreign arms suppliers. Even after the war, military spending did not slow down and was prioritized in receiving skilled workers. Before the war ended Saddam decided to begin an eight-year construction of a new presidential palace, also very costly. Corruption was widespread on top of this and was publicly acknowledged by Saddam. Government spending lowered by 7% in 1990 and government department staff was halved. Oil incomes were insufficient to turn the economy around. OPEC countries lost market share in the 80s as the 70s panic demand conditions were satisfied, leading to an oil price collapse in 1986 as OPEC abandoned restraints on output in order to regain market share — especially by countries such as Saudi Arabia which were already advocates of low prices. The price of oil was $29 per barrel in 1983 and fell to under $10 in 1986, with combined oil revenues of OPEC plummeting from $131 billion in 1985 to $77 billion in 1986; while oil exports went up 17% meanwhile. OPEC backtracked in October 1986 and returned to its oil quota system, and set the price target to $18 per barrel, however some countries, including Kuwait, failed to abide and allowed their output to rise, exerting downward pressure on the price, which was $13.67 in mid-1990, hurting other countries' profits and market shares. Iraq was not in a position to expand output itself since its export outlets were severely limited, adding on to existing frustrations of the continuing economic crisis. Kuwait's oil minister Ali Khalifa Al-Sabah said the $18 per barrel target would not be adjusted for inflation or dollar depreciation for at least three to four years. Kuwait also had vast oil reserves and a small population, invested plenty in oil infrastructure in Europe, and had a large investment portfolio that produced more income that its oil revenue some years, meaning it was not as dependent on oil. Thus Kuwait sought maximum oil output. Iraq meanwhile had no investments in foreign oil outlets nor an investment portfolio, but rather a large population and was becoming more dependent than ever on oil revenue. Saddam expressed the Iraqi government's belief that the oil price could be raised to $25 per barrel without harming export levels, calling Kuwait's oil policy economic warfare and likening the damage to that inflicted in conventional wars. Kuwait and the United Arab Emirates were pressured by several countries to lower output, with the former letting out 2.5 MBD — 1 MBD above its quota. In mid-July 1990, Iraq accused Kuwait and the UAE of collaborating to flood the market with excess production and characterized Kuwait's actions as tantamount to military aggression whose determined goal was the collapse of Iraq's economy as part of an imperialist Zionist campaign. Furthermore, it was claimed Kuwait was attacking by drilling on Iraqi territory as well as slant drilling from its own, with the former claim supported by Kuwait's Director General of the State Security Department writing to Kuwait's Minister of Interior that in his visit with the CIA, there was agreement on the importance of taking advantage of Iraq's economic situation by pressuring it to accept the delineated border Kuwait set out. The Iraqi government also called the financial assistance Kuwait extended during the war as grants, whereas Kuwait maintained they were loans. Iraq argued the loans should have been written off because Iraq was holding off Iran from the entire Arab world, with Kuwait also profiting from selling more oil at higher prices during the war; and the length, thus the cost of the war not being foreseen.

On 27 July, as Iraqi troops moved along the Kuwaiti border, OPEC increased the target price of oil to $21 per barrel and disallowed any member country from exceeding its quota. But on 2 August, Iraq invaded Kuwait and announced its annexation on the 8th, with the ensuing blockade on Iraqi exports leading the US to demand that OPEC suspend oil quotas, with this then being done on the 29th. The deputy prime minister for the economy stated Iraq would now be able to pay its debts in less than five years, the "new Iraq's" oil reserves doubled and its oil production quota would be 4.6 MBD instead of 3.1 MBD, that oil income would reach $38 billion per year and would soon rise to $60 billion. Moreover, there would be considerable expansion in the private sector once the two economies were integrated, and Iraq would be able to vastly increase spending on development projects and imports. But this would not come to pass — already on the day of the invasion, UN Security Council Resolution 660 was passed, condemning the invasion and urging the withdrawal of Iraqi troops. The US, UK, and France froze Iraqi assets and banned trade with it, with the USSR also halting arms deliveries. On 6 August UNSCR 661 was passed, imposing sanctions and an embargo on Iraq that banned all transactions with it — all the while Iraq's economy remained entirely dependent on the world market for oil exports, foreign exchange earnings, food imports, consumer goods, raw materials and other inputs, technology, and capital goods. In subsequent months Iraq's oil output fell 86% — enough to meet local consumption needs. 90% of imports were shut off as were 97% of exports. Embargo-induced loss in six months was estimated to be $17 billion. A coalition led by the US began a six-week bombing campaign on 16 January 1991, aimed at military targets as well as civilian infrastructure, industries, hospitals, and civilian buildings. A special United Nations mission to Iraq noted the results were "near-apocalyptic" and that "Iraq has, for some time to come, been relegated to a pre-industrial age, but with all the disabilities of post-industrial dependency on an intensive use of energy and technology". Within 42 days, Iraq, a country of around 438,000 square kilometers and a population of 18 million, was subjected to 106,000 bombing sorties.

Iraqi military deaths were estimated to be around 82,000, about one-third to one-half the amount in the war with Iran which lasted over 77 times longer. Between 94,000 and 281,000 Iraqis lost their lives during the war and subsequent March 1991 uprising against the Ba'ath regime. In late March 1991 more than 2 million people fled to Iran or Turkey or sought refuge in the marshes near the border with Iran. Healthcare delivery systems broke down and there became a lack of medicines, food, and purified water, with the destruction of power-generation plants contributing to more civilian deaths, especially of children. In 1991, the Harvard Study Team Report projected 170k children under the age of 5 would die over the next year from the effects of the war, a doubling of prewar figures. Another report asserts 170k people have died as a result of the embargo. The child mortality rate for those under 5 rose to 92.7 per 1,000 births in 1992 compared to 29.5 in 1988. Many have also been injured and have come to characterize Iraq's economy and society although no figures on this were ever officially published. In the Gulf War, US military planners were constantly expanding their list of targets, including their variety, in order to amplify the economic and psychological impact of the UN sanctions. Moreover, some targets were selected to be bombed primarily to create post-war leverage, with planners intending to make Iraq dependent on the West for reconstruction by destroying facilities it could not repair itself. A major example of this was the destruction of power-generating plants, which would have required $20 billion in imported equipment. Overall loss of assets in the war was estimated to be $232 billion, with the replacement cost certainly more than this and several times Iraq's GDP even in 1979. This is on top of the $67 billion lost in assets during the war with Iran, to which Iraq also owed reparations of around $97 billion (though which were not enforced by the UN unlike the reparations to Kuwait). Reparations to Kuwait for their part were estimated to be $100 billion, with foreign debt also being $86 billion by the end of 1990 (Iraq maintained its foreign debt was only $75.1 billion including interest). In sum, Iraq was to pay $586 billion, nearly 60 times its 1993 GDP. Moreover, there is lost output, inflation-related losses, depreciation of the Iraqi Dinar, lost imports, lost export earnings, and brain drain. The clearest measure of loss is in oil revenue, which was $22 billion per year, or nearly 40% of Iraq's total GDP, this reverberating heavily throughout private and public consumption, development spending, and investment. Shortages from the embargo resulted in a further decline in output and rising inflation, with GDP falling by two-thirds from 1990 to 1994. As Iraq is totally dependent on foreign trade and cannot recover without, the longer that sanctions are in place, the greater their impact as a result of the multiplier effect. Within a year of sanctions, inflation had reached a record height of 2,000%, wages had not risen for three years, and government rationing only provided 55% of caloric requirements. The regime's leadership meanwhile actually benefited from profiting off the private sector. Iraq's per capita GDP went from $1,745 in 1970 to $4,083 in 1980 to $1,756 in 1988 and $627 in 1991 — a level unseen since the 1940s and which is made worse by the military becoming an increasing part of GDP expenditure. Real monthly earnings after a year of sanctions fell to 5-7% of their starting level, enough to qualify for government support for "destitute households" on the basis of a benchmark before the war.

The fate of the country and its prospects were thus externally determined, given the key factors of oil revenue, foreign debt, war reparations, and duration of sanctions. The terms of lifting of sanctions were broad and defined through various UN Security Council resolutions, with the Ba'ath regime seeing them too harsh to be complied with, with there being no hope of staying in power after complying with them — thus the Ba'ath refused and hoped for a total removal of sanctions. One of the most serious features of these sanctions was the requirement of Iraq to apply to the UNSC for permission to engage in trade, stating what, how much, and where to export or import. 30% of Iraq's oil was earmarked for paying compensation claims against the state, with another part taken to fund various UN agencies. The limited foreign exchange gains, along with prewar stocks of certain goods and Iraqi skilled workers, enabled the country to repair some damage inflicted upon the infrastructure, with some Western newspaper remarking positively on the speed. Though, the nature of repair was limited and focused on providing for Baghdad at the expense of other cities. Cutbacks in production led thousands of factories to close and unemployment to soar. The depreciating value of the dinar compelled many to convert liquid monetary assets into things like real estate, goods, and gold, driving up their price; people also converted their dinars into foreign currency and deposited it abroad (capital flight), with transactions coming to be done increasingly in US dollars. Other factors that contributed to currency devaluation were the freezing of Iraqi assets, shortages of all kinds of goods, emigration of those who could afford to (who also sold off their dinars in the process), and the import of goods paid with smuggled dinars, as other countries' supply of dinars increased which made their exchange rate decrease. Whereas the Iraqi dinar was $3.21 in 1983, in the 90s it was just a couple cents — at one point just one cent.[5]

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.[12] 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.[13]

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 10 October 1990, two months after the Iraqi invasion of Kuwait. Introduced with only her first name, 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 1991 the Senate voted 52 to 47 to authorize US military force in Iraq, with seven Senators citing Nayirah's testimony in their decisions. 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 — with her family, the House of Sabah, being the ruling dynasty of Kuwait. The story, which was actually a rumor picked up by American PR firm Hill & Knowlton, was propagated after a front group for the Kuwaiti government called Citizens for a Free Kuwait paid the firm $10.8 million to galvanize US public opinion in favor of intervention, with Nayirah 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 initially verified her story but then revised the number of babies killed from 312 to 72, then 19, later discovering that those 19 had died before the Iraqi invasion; in line with other human rights organizations which also refuted her story. After news of the lie had broken out, many Americans were outraged, however neither Nayirah nor anyone else was punished for lying.[14] There is also California Representative Tom Lantos, co-chairman of the Congressional Human Rights Caucus and who has a long history of promoting interventionism to "prevent another Holocaust", who constantly stressed his victimhood as a Holocaust survivor and then as a refugee when communists took power in Hungary, and who decried congressmen who wanted to scale back support for Israel as anti-Semites. Lantos knew of Nayirah's true identity but concealed it under the pretense of protecting her family. Though Lantos says her being the Ambassador's daughter did not alter her credibility, her story certainly would have drawn more scrutiny and skepticism had people known she was not a simple civilian. Moreover, the Congressional Human Rights Foundation that Lantos led rented space in Hill & Knowlton's Washington headquarters at a reduced rate, with Hill & Knowlton taking a donation from Citizens for a Free Kuwait and being known to have financed travel for people such as Lantos and his wife.[15] 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 the donation 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.[16]
  • 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.
  • In January 2001, Iraq donated $94 million for America's poor, of which there were an estimated 30 million,[17] greater than Iraq's total population of 24 million then.
  • 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.[18]
  • The Kuala Lumpur War Crimes Commission, created by former Malaysian Prime Minister Mahathir Mohamad as an alternative to the International Criminal Court in response to its purported bias in selection of cases, convicted in absentia Tony Blair, George W. Bush, Dick Cheney, former US Defense Secretary Donald Rumsfeld, former US Deputy Assistant Attorneys General John Yoo and Jay Bybee, former US Attorney General Alberto Gonzales, and former US counselors David Addington and William Haynes II of conspiracy to commit war crimes, specifically torture. As a civil society tribunal it could not enforce its outcome, but rather intended to demonstrate the legal basis for this situation.[19]

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[20]

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?"[21]

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[22]

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[23]

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][24]

External links

References

  1. "U.S. Contractor Banned by Iraq Over Shootings". The New York Times. 2007-09-18. Archived from the original on 2020-10-18.
  2. "Baghdad War Diary". Wikileaks. 2010-10-22. Archived from the original on 2022-01-27.
  3. "Shocking Map Shows Where Barack Obama Dropped His 26,000 Bombs". Sick Chirpse. 2017-01-23. Archived from the original on 2017-07-15.
  4. "Mosul: 112 civilian bodies pulled from site of coalition airstrike". CNN. 2017-03-28. Archived from the original on 2021-10-13.
  5. 5.0 5.1 5.2 5.3 The Economy of Iraq: Oil, Wars, Destruction of Development and Prospects, 1950–2010. Abbas Alnasrawi.
  6. Iraq's Monarchy Overthrown - 1958 | Today In History | 14 July 17
  7. Gibson, Bryan R. (2015). Sold Out? US Foreign Policy, Iraq, the Kurds, and the Cold War. Palgrave Macmillan. pp. xxi, 45, 49, 57–58, 121, 200. ISBN 978-1-137-48711-7.
  8. Coups, Coup Attempts, and Foreign Policy. countrystudies.us
  9. Words: Woe and Wonder. CBC News.
  10. Tales of the Tyrant. The Atlantic.
  11. When Saddam gassed 5,000 Kurds at Halabja. The Express Tribune.
  12. U.S. Links to Saddam During Iran-Iraq War, NPR.
  13. A Pedigree of Terror: The Myth of the Ba’athist Influence in the Islamic State Movement. terrorismanalysts.com.
  14. The Great Lie of the First Gulf War. Ozy.
  15. Deception on Capitol Hill. The New York Times.
  16. Saddam Once Received Key to Detroit. AP News.
  17. Iraq Offers $94 Million for Poor Americans. Los Angeles Times.
  18. Shoe monument for man who threw footwear at Bush. Reuters.
  19. Are George W. Bush and Dick Cheney war criminals? Malaysian court says 'yes'. NewJerseyNewsroom.com.
  20. America, Oil, and War in the Middle East. Journal of American History.
  21. ‘We Think the Price Is Worth It’. FAIR.
  22. What I Heard about Iraq. London Review of Books.
  23. Poland seeks Iraqi oil stake. BBC News.
  24. Hagel Skewers Iraq War, Defends Greenspan's Oil Comments. CNS News.