Iraq as a Transition Economy
NAVAL POSTGRADUATE SCHOOL MONTEREY CA CENTER FOR CONTEMPORARY CONFLICT
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With order yet to be re-established in Iraq as these words are being written, any appraisal of its postwar economic prospects may seem premature. But it is important to begin asking how best to reconstruct the Iraqi economy--if only because broad-based economic development is one prerequisite to the creation and maintenance of a civil society. By no coincidence, much of the initial address to the nation by the interim prime minister, Iyad Allawi, focused on economic issues. Allawi, a Baathist who served in the Iraqi intelligence services until falling out with the regime in 1971, cited inflation, unemployment and weak purchasing power as the main economic problems facing the country. While he offered no specifics for addressing these issues, he did make the case that, a year after the fall of Baghdad, security and economic progress were inextricably linked. The key reason that Iraqi support for suppressing the insurgency that followed the invasion has been modest has been resentment over poverty and lack of jobs. Many of the most pressing economic decisions touch on the temptation to resort to interventionist policies in an economy currently lacking the infrastructure to support competitive markets. Washington would plainly prefer that Iraq opt for restraint, in part because free markets are more likely to deliver the goods in the long run and in part because Baathist-style intervention would undermine the prospects for democracy and political pluralism. A third plausible option, the establishment of a Saudi-style, oil-dominated economy in which stability is maintained by paying off disaffected interest groups, would hardly be likely to evolve into a prosperous, viable democracy.
- Economics and Cost Analysis
- Government and Political Science