Government Still Dominates Iraq’s Economy

In the recent quarterly report to Congress by the Special Inspector General for Iraq Reconstruction (SIGIR), there is an interview with Planning Minister Ali Baban. He noted that because Iraq lacks a strong business sector, and foreign investment has stayed away due to the violence, Baghdad plays the central role in the growth and development of the economy. This is despite the lofty goals of the Coalition Provisional Authority (CPA) that wanted to privatize Iraq and usher in free market reforms after the U.S. invasion. Saddam ran the country on a centralized, socialist model, so the effects of the CPA’s program was to shut down state run businesses and leave thousands of Iraqis out of work. Since then the government is still the largest employer in the country.

Lack of jobs remains a massive problem in Iraq today. Minister Baban said that unemployment stood at 35-40%. The SIGIR estimates that with underemployment that figure could rise to 60%. A 2008 United Nations’ survey of Iraqis from the end of 2007 found that the government still dominated the job market as a result because it is the only source of a steady paycheck. Unfortunately, many of these positions were obtained through bribes, party affiliation, and patronage. There are often reports of Iraqis having to pay to join the police for example. The Tribal Support Councils formed by Prime Minister Nouri al-Maliki are a huge patronage system as each council is given the power to hire people for the organization as well as into the local security forces.

Below is a breakdown of jobs in fifteen of Iraq’s provinces plus Kurdistan based upon the U.N. survey. In all but three provinces, Babil, Ninewa, and Wasit, the government was the largest employer. In Najaf public sector jobs were a tie with self-employment in a non-farm industry. In Muthanna, Anbar, Dhi Qar, Basra, and Kurdistan the government provided 40% or more of the jobs with Kurdistan at the top with 50%. Self-employed but not on a farm was the second largest job source in eleven provinces and Kurdistan, followed by farming in three governorates. In Muthanna unskilled workers was the second source of work.

Two Largest Employers By Province

Kurdistan: 50% work for governmet, 20% self-employed non-farm
Basra: 46% work for government, 24% self-employed non-farm
Dhi Qar: 43% work for government, 29% self-employed non-farm
Anbar: 40% work for government, 22% self-employed non-farm
Muthanna: 40% work for government, 23% non-skilled labor
Salahaddin: 38% work for government, 32% self-employed farming
Baghdad: 38% work for government, 28% self-employed non-farm
Qadisiyah: 37% work for government, 15% self-employed non-farm
Karbala: 36% work for government, 34% self-employed non-farm
Tamim: 36% work for government, 30% self-employed non-farm
Maysan: 34% work for government, 25% self-employed non-farm
Diyala: 33% work for government, 20% self-employed non-farm
Najaf: 29% work for government, 29% self-employed non-farm
Babil: 33% self-employed farming, 26% work for government
Ninewa: 28% self-employed non-farm, 24% work for government
Wasit: 26% self-employed farming, 23% work for government

SOURCES

Cave, Damien, “Nonstop Theft and Bribery Stagger Iraq,” New York Times, 12/2/07

Fairweather, Jack, “Iraqi state enterprises warily reopen,” Financial Times, 6/16/08

Middle East Online, “Iraqi professionals forced to take small jobs,” Middle East Online, 2/21/08

Rubin, Alissa, “Maliki Pushes for Election Gains, Despite Fears,” New York Times, 1/26/09

Special Inspector General for Iraq Reconstruction, “Quarterly Report to the United States Congress,” 10/30/08
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09