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In addition to the editorial and article run by the Economist on Friday, it linked to an economic survey prepared by the Economic Intelligence Unit. This provides a more sombre assessment than the offhand remark in the editorial that Saddam Hussein ... could return his country to respectability tomorrow if he wished, and to relative prosperity the day after. I attach the survey below. Colin Rowat ****************************************************** Campaign Against Sanctions on Iraq http://welcome.to/casi fax 0870 063 5022 ****************************************************** 393 King's College www.cus.cam.ac.uk/~cir20 Cambridge CB2 1ST tel: +44 (0)468 056 984 England fax: +44 (0)870 063 4984 Iraq: Economic turmoil 8 Mar 2000 http://www.eiu.com/latest/311792.asp COUNTRY BRIEFING FROM THE ECONOMIST INTELLIGENCE UNIT Quantifying, and hence conceptualising the Iraqi economy, is difficult. It is now almost a decade since the Iraqi government produced comprehensive national accounts. Even these were flawed, owing both to a wide margin of error and manipulation for political reasons. Indeed, it must be remembered that Baghdad had only just returned to the publication of regular figures following the eight-year war with Iran. Description and analysis of the Iraqi economy, let alone forecasting its performance, is therefore an inexact science. The country has experienced 20 years of destruction, with successive external shocks compounding those which have gone before. The economy and society have suffered terribly from the war against Iran, the intensive, US-led aerial attacks of early 1991, and the decade of international sanctions and isolation which have followed this. The industrial sector has contracted, while educational standards have collapsed. Today, the Iraqi economy is based predominantly on agriculture and smuggling (underpinned by oil revenue), neither of which provide an auspicious base for recovery. The problems that have beset the economy over the past two decades will persist well into the future, almost regardless of the political and economic policy stance adopted. Once sanctions are lifted, Iraq will have to undertake a reconstruction effort conservatively estimated at $50bn- 100bn just for essential infrastructural utilities, from a GDP base, which, even including the grey and black economies, is less than $13bn in nominal terms. External debt is another burden which is likely to plague the country for years to come. If the money borrowed from the Gulf states during the war with Iran is included in calculations, Iraq owes the world roughly $130bn. International humanitarian concern will probably see much of this written off or rescheduled, but with a long history of being unable or unwilling to service its debt, it will be enormously difficult for Iraq to borrow on the international capital markets. It follows that outside of the lucrative hydrocarbons sector, it will be extremely difficult for Iraq to attract substantial foreign investment. The country will therefore be even more reliant on its oil industry for foreign currency earnings than in the past. Looking to the more immediate future, improvements to the oil-for-food formula should benefit the Iraqi economy, while the outlook for international crude oil prices is also benign. However, this will only help to bolster a basic safety welfare net, rather than herald a return to normality. To achieve the latter, sanctions will have to come to an end. The current pattern is of a whittling away of the sanctions regime, and we expect this to continue over the next five years. The US is now less concerned with Iraq than it has been for a number of years; however, it will want to see some serious concessions from Iraq over international inspections of its prohibited weapons before it will contemplate a full lifting of sanctions. On balance, we continue to believe that these concessions will not be forthcoming while Saddam Hussein remains as president. SOURCE: Country Forecast -- ----------------------------------------------------------------------- This is a discussion list run by the Campaign Against Sanctions on Iraq For removal from list, email firstname.lastname@example.org Full details of CASI's various lists can be found on the CASI website: http://welcome.to/casi