Newsweek misleadingly reports 'a booming economy' in Iraq

Dec 19, 2006
Juan Cole

Newsweek misleadingly reports 'a booming economy' in Iraq. Iraq's is a war economy, and some sectors have benefitted from the end of the old regime and of international sanctions. So there is construction, sure. And a lot of used cars and consumer goods have been imported (that is not actually necessarily a good thing). People talk on cell phones. But no new factories have been founded. There is no evidence of increased productivity. Inflation is up to 53 percent. The professional middle class is fleeing in droves, so that soon there won't be any physicians left. Electricity and fuel are scarce. Unemployment is probably 50 to 60 percent. Saying that this economy is "flourishing" (outside Kurdistan) is like saying that the US economy was "flourishing" during the Great Depression of the 1930s. There was construction going on then, too, quite a lot of it. Iraq's economy is different insofar as it functions in the midst of a civil war. War economies create pockets of wealth and activity. When a fourth to a half of your workers are unemployed, no one cares.