Double Tap Blog » Yes, the Iraq economy is growing

Yes, the Iraq economy is growing

January 2nd, 2007 by Double Tap

I’ve written previously about the booming Iraqi econom y, and of course, the liberals commented against it, doubting how good the economy could be. Very well, let’s try this on for size, an article in the New York Post by Amir Taheri:

Wherever some measure of security is assured - that is to say in more than 80 percent of Iraq - towns and villages long left to die a slow death are creeping back to life.

Hmm, sounds reasonable.

Newsweek has just hailed the emergence of a booming market economy in Iraq as “the mother of all surprises,” noting that “Iraqis are more optimistic about the future than most Americans are.” The reason, of course, is that Iraqis know what is going on in their country while Americans are fed a diet of exclusively negative reporting from Iraq.

Sounds good. More?

The growing dynamism of the Iraqi economy is reflected in the steady increase in the value of the national currency, the dinar, against the three currencies in direct competition with it in the Iraqi marketplace: the Iranian rial, the Kuwaiti dinar and the U.S. dollar, since January 2006.

No doubt, part of the dinar’s strength reflects the rise in Iraq’s income from oil exports to almost $40 billion in 2006, an all-time record.

Sounds like I should invest in the Iraqi dinar. What about numbers of companies and investors?

Since the fall of Saddam Hussein in 2003, the number of private companies in Iraq has increased from a mere 8,000 to more than 35,000 this year. Each week an average of 60 new companies spring up in Iraq’s booming areas. A good part of the investment in southern Iraq, including in Um Qasr, comes from Kuwait and the United Arab Emirates.

“Whatever happens, Iraq is Iraq,” says a Kuwaiti businessman, building hotels in the south. “Iraq will always remain the country with the world’s largest oil reserves and the Middle East’s biggest resources of water.”

But what about all those terrorist attacks?

Most foreign investors coming to make money in Iraq shrug their shoulders. “Doing business in any Arab country is always risky,” says a Turkish investor who has set up a trucking company and a taxi service. “In some Arab countries, you risk nationalization or straight confiscation by the ruler. In other Arab countries, you must give a cut to one of the emirs. Here, you face possible terrorist attacks. But such attacks are transitory.”

Iraq was a state-run economy where many things were subsidized under Saddam, and is slowly becoming market-based capitalism. What’s the effect there?

The end of government subsidies on virtually everything - from bread and sugar to gasoline and water - is also causing hardship.
But, judging by the talk in teahouses and the debate in Iraq’s new and pluralist media, most people welcome the switch to capitalism and regard it as an exciting adventure.

As trucks are loaded with a variety of imports destined for Baghdad, I ask the drivers what they think would happen if the multi-national force, led by the United States, left Iraq soon. Most shrug their shoulders.

“Why leave?” one driver asks. “Do I abandon the goods that have come from such a long way before they reach their destination?”

Hmm, sounds like that’s a vote for “stay the course”.

(H/T Newsbusters)