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Iraq's Economy after 7 years of the United Nations Embargo
(January 28, 1998)

Following seven years of United Nations sanctions, Iraq's economy is at a virtual standstill. The oil-rich country which once surfed in a sea of petrodollars, $14.8 billion of oil revenues in 1989, can now barely maintain its head above water. Massive unemployment, insignificant exports, trickling imports, malnutrition and the collapse of the public and private sector commercial activities are but a few of the ills plaguing Iraq. The middle class, including salaried employees and professionals, is destitute while members of the regime are growing rich.

The oil-for-food deal which allows Iraq to export, every six months, $2 billion worth of oil in return for food and medicine does not meet the needs of the population. The revenues from the oil sales not only cover the purchase of foodstuffs but also must satisfy Gulf War reparation payments, cost of UN operations in Iraq, education and the maintaining of Iraq supply of electricity, water, and agricultural machinery.

Seven hundred thousand (35%) of the $2 billion will go towards a UN compensation fund and other various UN costs. Of the $1.3 billion alloted for humanitarian spending, between 260 and 300 million dollars (30%) will go to the United Nations Inter-Agency Humanitarian Programme operating within the sovereign territory of Iraq in the three northern Governorates of Dihouk, Arbil and Suleimaniyeh. The remaining $1 billion (70%) is destined for the other fifteen governorates under the control of the Iraqi government. The latest census conducted by Iraq in October 1997 indicates a population of 22 million. This means that UN Resolution 986 is providing about $120 a year per capita of humanitarian relief. Consequently, hospitals cannot function properly due to lack of medicine while food shortages have caused widespread malnutrition. It is estimated that 30 percent of adults and children suffer from malnutrition causing irreparable damage or death. Furthermore, a quarter of Iraqi children are not going to school as they must work to support their family.

In January of 1998, Denis Halliday, the U.N. humanitarian coordinator for Iraq, predicted that it will take anywhere from 10 to 20 years for the economy to recover. Fifteen to twenty billion dollars of yearly revenues would be needed for the economy to properly function again. Such a figure is far from the $2 billion Iraq is currently allowed every six months.