Will Iraq Need A Multi-Billion Dollar Bailout From The U.S. Soon?
One frightening untold story is that nearly 13 years of UN sanctions as well as serious damage done to Iraq's economy during both the 1991 and 2003 wars has left Iraq's economy almost 90% dependant on oil revenues. There are few good prospects for foreign investment or major new Iraqi business start-ups due to continued violence or fears of violence in Iraq. And the threat of murder, violence, kidnapping or other fears will keep most foreign investors out of the country for the time being. Iran becomes a major trader with Iraq, but mainly to sell goods to Iraq that it's decimated economy cannot produce itself.
But very soon Iraq could ask the U.S. for an economic bailout if the huge drop in world oil prices continues much longer. Iraq was slowly building an oil export business of 2 million barrels a day, but now with falling world oil demand due to the global economic crisis, this has fallen off by 25% down to just about 1.65 million barrels a day. And even worse, the commodity price of oil has slipped from a high near $140 a barrel only a few months ago to a close around $34 a barrel yesterday. With Iraq's economy almost entirely based on this oil revenue, this is a pure looming economic disaster compounded upon all the financial disaster caused by both wars in Iraq.
The U.S. has already spent $117 billion in aid to Iraq that included proposed massive new building projects, however a major portion of these funds were swallowed up in either Iraqi government official corruption or American contractor abuse and corruption, so little real economic development has been realized in Iraq so far. In fact, even in Baghdad, electricity service still averages less than 8 hours a day. In the more autonomous Kurdish region with less violence and slightly more economic development and investment, full time electrical service still really only means about 14 hours a day of service. It is impossible for many businesses to function under such problems as a lack of electrical service most of the time. many businesses must use gas powered generators to provide their own power to stay open or to keep food from spoiling.
Raw sewage still openly flows into the streets of Baghdad because neither the U.S. nor Iraq have managed to improve this system beyond a system that was designed only to serve 750,000 residents at most, and not 5 million residents.
There is also a serious lack of clean drinking water in Iraq. At least one third of the water is absolutely unhealthy or unfit for human consumption as well, where neither the U.S. or Iraq have substantially improved this serious public health issue.
Many in Iraq are thought to be living on less than $1 dollar a day. Unemployment may be officially noted as 17.6 percent, however as high as over 38% are actually underemployed. 17 million Iraqi families, which are larger than American families at 6 or 7 persons, live on about $210 a month. And because Iraq lacks food stamps or similar programs like the U.S., an Iraqi food assistance program known as PDS(Public Distribution System) only offers poor families a small amount of rice, cooking oil, sugar, flour and milk powder per month to help prevent as many as more than 6 million persons from dying of starvation in Iraq. But earlier this year, when oil revenues were much higher this program was substantially cut back with less persons receiving help and less food available as the government of Iraq spent the money on other needs, or waste and corruption among public officials has squandered away billions of oil revenue dollars.
The two U.S. wars in Iraq have also managed to cut the average life expectancy from 66.5 years in 1990 before the first war in Iraq down just 57 years for men and 59 years for women. And more and more Iraqi children are experiencing stunted growth due to the serious malnutrition problems that the two U.S. wars in Iraq have caused. Infant mortality has also soared from 50 infant deaths per 1,000 births in 1990 in the Saddam Hussein rule days, to 120 infant deaths today under American and Iraqi rule.
In nearly every index of human suffering, two U.S. wars in Iraq have only caused serious ruination to this society and cast people into deep poverty, hunger and sectarian violence. In fact, those that support the claimed "surge" and claim that it is working often fail to note that the U.S. is making payments in Iraq to 80,000 armed militia members not to be terrorists or blow things up, and to instead focus their energy on any known or suspected Al Qaeda activity. However. paying 80,000 radical militia members a salary to be their own judge, jury and executioner for Al Qaeda suspects is certainly not without it's share of abuses or wrongful deaths of innocent citizens by any means. It would almost be like taking a group of street thugs in the U.S., and the U.S. government paying them money to fight suspected crimes through street executions, shootings or other violent means. Such a system only promotes lawlessness, but the crime situation in Iraq is so out of control, this very dysfunctional approach to crime fighting and terrorism has actually cut crime and violence somewhat.
The fact of the matter is that Iraq may well soon need American foreign aid that will be huge compared to the auto bailout as oil revenues sink to levels that the government of Iraq had never expected. Maintaining some basic sense of public services and government operations was figured on an economic model of Iraqi oil revenues at about $80 a barrel, and not oil closing well below $40 a barrel on world commodity markets.
This deep poverty mess in Iraq, as well as the dramatic fall in oil revenues needed by this government which is propped up by the United States, are all serious problems that President Obama will soon inherit from the failed Bush Administration. And the heartstrings of Mr. Obama will be torn between his obligations to address rising poverty, hunger and unemployment in the the U.S., and even far worse conditions in Iraq as oil prices deteriorate.