Oil-Rich Iraq Now One Of The World’s Least Developed Countries

VOL. XLV

No 40

7-October-2002

IRAQ

Oil-Rich Iraq Now One Of The World’s Least Developed Countries

Iraq is endowed with abundant economic and human resources and owns the second highest proven oil reserves in the world. But despite this wealth it has witnessed continuous economic deterioration since 1980 and has become one of the least developed countries in terms of gross domestic product (GDP) per capita, according to Sabri Zire al-Saadi, an economic advisor, ex-United Nations employee and former holder of senior economic and planning posts in Iraq. In a paper entitled Economic Deterioration, Waste of Oil Wealth and Widespread Poverty in Iraq to be published in the Iraqi File (October, 2002), a monthly political documentary issued by the Iraqi Studies Center in London, Dr Saadi says that the country’s poor position highlights the gravity of policy failure on Iraq and misuse of public finance by the ruling regime.

Iraq’s plight is illustrated in the discrepancies between Iraqi Government and independent GDP estimates, Dr Saadi says. For decades, Iraq had systematically published GDP estimates valued in Iraqi dinars, in both current and constant prices. After 1980, the government stopped producing these estimates in order to avoid exposing the high rate of inflation. Instead, a series of GDP estimates in current US dollars was published in the authoritative annual Arab Unified Economic Report prepared and edited by the Arab League, Arab Fund for Economic and Social Development, Arab Monetary Fund, and the Organization of Arab Petroleum Exporting Countries.

Dr Saadi says his statistical review of these figures, part of his “Economic Project for Change in Iraq”, reveals that the Baghdad authorities have deliberately concealed the real value of domestic economic activities from the public, with the aim of covering up the deep economic crisis of the 1980s and 1990s. For this politically motivated purpose, it used the official arbitrary fixed foreign exchange rates in converting GDP values of the non-oil sectors from Iraqi dinars to US dollars.

Based on the real foreign exchange rates of the Iraqi dinar in the free market during the period under consideration, the government estimates of non-oil contribution were highly overvalued and had to be corrected, resulting in a significant reduction of both the published GDP and GDP per capita figures. The extent to which the government’s GDP estimates have been misleading is illustrated by comparing official and independent GDP data for Iraq with that of other countries. According to the government’s estimate for 2000 ($83,544mn), Iraq would have ranked in third highest position after Saudi Arabia ($173,286mn) and Egypt ($95,801mn) and would have been ahead of the UAE, Libya, Morocco, Kuwait, Qatar, and the rest of the 18 Arab countries for which statistics are available.

However, the author’s adjusted estimates of Iraq’s 2000 GDP ($6,597mn) put it third from the bottom and ahead of only Djibouti ($549mn) and Mauritania ($986mn). Iraq’s real GDP was thus below Saudi Arabia ($173,286mn), Egypt ($95,801mn), UAE ($66,117mn), Algeria ($53,801mn), Libya ($35,600mn), Morocco ($32,903mn), Kuwait ($27,780mn), Oman ($19,773mn), Tunisia ($19,435mn), Syria ($18,770mn) Lebanon ($16,491mn), Qatar ($16,454mn), Yemen ($8,532mn), Jordan ($8,340mn), and Bahrain ($7,971mn).

The independent GDP per capita estimate for 2000, at $289, placed Iraq below all other Arab countries – even trailing the fragile economies of Mauritania ($373), Sudan ($413) and Djibouti ($807). It was well behind Yemen ($1,033), Morocco ($1,145), Syria ($1,150), Egypt ($1,513), Jordan ($1,655), Algeria ($1,751), Tunisia ($2,033) Lebanon ($4,380), Libya ($6,312), Saudi Arabia ($7,864), Oman ($8,375), Bahrain ($11,569), Kuwait ($12,469), UAE ($21,273), and Qatar ($29,278).

The main conclusion from the analysis of such data, Dr Saadi says, is that Iraq has witnessed continuous economic deterioration and its people have experienced severe economic hardship, especially during the 1990s. The real GDP per capita data not only classifies the country as one of the least developed countries in the world, but also shows that the Iraqis are living below the $360 poverty line.

In order to address this problem, Dr Saadi continues, Iraq must diversify its economic activities and lessen its very high dependence on the oil sector. “Serious thought should be given to the moral legitimacy of the politically imposed war reparation and the economic viability of the current government’s commercial and financial agreements,” he says, adding that the privileged oil grants and preferential export arrangements made with foreign countries and companies should also be re-examined.

GDP Estimates

($Mn)

	Gov GDP Estimate	Author’s GDP Estimate	Gov GDP Per Capita	Author’s GDP Per Capita Estimate
Year	Current Prices	Current Prices	Estimate Current Prices	Current Prices
1980	53,590	28,368	3,688	2,143
1981	37,291	13,731	2,579	1,005
1988	64,443	14,783	3,142	857
1989	67,638	16,975	3,364	970
1990	74,933	12,975	4,252	718
1991	66,130	1,803	2,998	97
1992	66,130	407	3,973	21
1993	75,533	247	4,078	13
1994	76,668	458	3,910	23
1995	77,815	445	3,822	22
1996	78,064	949	3,748	46
1997	78,856	2,195	3,701	103
1998	79,530	3,288	3,649	151
1999	81,916	4,851	3,674	218
2000	83,544	6,597	3,663	289

For further statistical information, contact Dr Sabri Zire al-Saadi on sabri_saadi@hotmail.com

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