The Iraqi Economy

The Iraqi economy is slowly starting to recover from the damage done to it by many years of war. Fortunately they have the advantage of having a very large reserve of oil to help make this easier. Iraq has depended heavily on oil exports as its main source of income for years. However after the first Gulf War there was an embargo placed on Iraqi oil which seriously hurt the economy. There then followed another war which made the situation even worse. Iraq has started to export oil again and is starting to see its revenues increase by a raising amount of tourists coming to Iraq. However there is still a long way to go before the Iraqi economy will be back on stable footing.

Right now the biggest issue facing the Iraqi economy are security issues. There is the constant threat of attack as the fighting is still going on in parts of the country. This has discouraged a great deal of foreign investment and made it much harder for the economy to expand. Most foreign companies operating in Iraq are actually working on contracts with the United States to rebuild the country. While this is important it is going to take direct investment in Iraq if the economy is to grow.

The other big problem facing the Iraqi economy is that almost all of the infrastructure has been destroyed by the fighting. Efforts are being made to rebuild it all but it is going to take quite a bit of time for this to happen. Until it does there is little chance that new businesses are going to set up shop in Iraq. That will limit the government’s plans to diversify the economy. Right now almost all of the income in Iraq is due to oil production. Clearly if the country is to have a strong economy this has to change.

In order to diversify the Iraqi economy the government has made an effort to pass new legislation to encourage foreign investment. In the past it was almost impossible to invest in Iraq because of the excessive regulation and red tape. This is still a problem but less so than it used to be. The bigger problem is the corruption of the bureaucrats who actually enforce the rules. The government can pass all the laws they want to liberalize the economy but if the people who enforce those rules are corrupt the situation will not improve.

Probably the biggest factor that is currently hurting the Iraqi economy is the uncertainty about the future. Nobody knows what is going to happen in the United States leaves Iraq. There is a fear that civil war will be the result. Even worse would be a new dictator seizing power. The fear of not knowing what will happen has meant that very little money has been invested by foreign companies. Until a certain level of stability returns this is unlikely to change.