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[casi] Iraq will be poor 'for years'

I missed this article. Perhaps naively I still hope that we can make
our governments accountable for what they've done to Iraq with 2 wars
and the sanctions. They should pay reparations.

Last Updated: Thursday, 2 October, 2003, 15:28 GMT 16:28 UK

Iraq will remain impoverished for years to come because oil will not
fund public spending, aid will fall short of what is needed and few
companies will want to invest there, a report leaked to Reuters news
agency has said.

Even if oil prices are favourable, stability is achieved and debts
are largely written off, Iraq's economy will not reach even half the
size it was in the 1970s, the US-based Institute of International
Finance (IIF) said in a document sent to its members and quoted by

The grim predictions come as governments and international agencies
meet in Madrid to prepare for an Iraq donors' conference later this

Reconstruction costs in Iraq are estimated to amount to at least
$75bn but so far pledges stand at $20bn from the US and a mere $230m
from the EU.

The IFF - a leading banking body in Washington - did not deny
circulating the report quoted by Reuters but refused to comment on
its contents.


The report said that Iraq's GDP (gross domestic product) per head
would not surpass $3,500 in the next 10-15 years.

The country's GDP per head reached $7,000 in the late 1970s, but
economic mismanagement, three wars and 13 years of sanctions has
pushed that to around $1,000 per capita, a level which rates it among
the world's poorest countries.

Elsewhere in the region, Saudi Arabia, for example, has had GDP per
capita of $9,000 over the past five years.

Iraq has massive debts which the IIF estimates at $134bn, or 400% of
gross domestic product.

The report said that assuming an oil price of $25 a barrel in 2004
and oil exports reaching no more than 2.5 million barrels per day by
the end of next year, export revenues would be $10bn.

Investors reluctant

"Given that it could take up to $15bn to cover recurrent public
expenditure in 2004, this would leave the government with a financing
gap of around $5bn," the report said.

"If reconstruction costs are added, the public financing gap in 2004
is set to be far larger, perhaps as much as $15 bn," it added.

Foreign investment is expected to fill some of the gap, but the IIF
said private companies would be reluctant to invest in Iraq until
stability is achieved.

"Reconstruction is therefore likely to be a slow process, ensuring
that Iraq remains a poor country for years to come," the report said.

Mark Parkinson

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