IRAQ; in war and peace; From an oil-rich boom country to war and financial doldrums

By , a special correspondent of The Christian Science Monitor

When Iraqi leader Saddam Hussein launched his lightning tank attacks two years ago against Iran, his country was undergoing rapid modernization. Hussein himself was poised to play a larger role as a regional leader. Now the situation is much different. Edward Girardet, special Monitor correspondent in Paris, examines the much different Iraq of today.

Hardly two years ago, Iraq was considered the boom country of the Middle East.

Bristling with cranes, Baghdad was one huge construction site. In clouds of dust, crumbling old buildings with carved balconies and hidden courtyards that could only hint at the splendors of their Oriental past vanished before the blades of bulldozers. Western-style hotels, office blocks and urban expressways began to spring up in their place.

Recommended: Could you pass a US citizenship test?

Foreign companies flocked in to benefit from an economic explosion estimated at $23 billion and considered even more impressive than any of Iraq's oil-rich neighbors. So did hundreds of thousands of workers, both skilled and unskilled, from Egypt, Pakistan, Yugoslavia and elsewhere.

From the Jordanian and Turkish borders, transcontinental trucks roared along shimmering desert roads transporting seemingly endless supplies of consumer goods to satisfy the nation's newly-acquired taste for modern comfort.

But today, Iraq is in the financial doldrums, and as a result, it is finding itself confronted with a situation that could prove politically detrimental to the present Baathist regime of President Saddam Hussein.

''While the going was good,'' said a French businessman who regularly travels to Iraq, ''he had everything going for him and his country.'' He had the population, the economic resources and the political potential to become the region's most influential leader. But caught between trying to support the war with Iran and a massive development program, Hussein's Iraq not only faces a military stalemate but can no longer pay its bills.

Government salaries have been cut and overseas embassy staffs reduced, while the bazaars, once stocked with Japanese TV sets, French perfumes and English furniture, have been visibly diminished. Imports dropped from $19 billion in 1981 to about $13 billion a year later. Food and even fuel shortages have now become a daily fact of life.

The United States, whose relations with the Baghdad regime are described by diplomats as ''correct'' despite having had no official ties since 1972, provided Iraq with a $460 million loan at modest interest for a grain purchase last December.

Several ministries responsible for most of the country's planned enterprises grossly overstepped their 1982 budgets. Construction projects have either been cancelled or temporarily retarded, inciting a clamor for compensation among many contractors.

With total foreign currency reserves reduced from $30 billion in September 1980 to roughly $6 billion to $8 billion, French, West German, Japanese, and other Western companies have been particularly badly hit.

Several factors have contributed toward Iraq's present plight. The fighting, for one, has had its negative effects both at home and abroad. Apart from the funerals of dead soldiers, military convoys and the government's TV propaganda, there are few indications in the capital that Iraq has a war along its frontier. Only in the early days of the conflict did Iranian Phantom jets shriek over Baghdad.

But since the start of the war, Iraq's oil-producing potential has suffered enmormously. From 3.3 million barrels a day in 1980, it now exports a mere 600, 000 barrels a day, slightly more than 1.7 percent of the world market. In partial agreement for its French arms purchases, Iraq has agreed to triple its oil exports to that country to 105,000 barrels a day.

Yet even if Iraq managed to drastically increase its proil14l,0,16l,10p6 duction, it would find it physically difficult to increase exports. Its pipeline through Syria has been choked off, leaving the pipeline through Turkey as its only outlet. Although another pipeline is being constructed through Saudi Arabia to the Red Sea, thus avoiding the highly-vulnerable Gulf region, Iraqi Foreign Minister Tareq Aziz reckons it would take at least three years to build up production to 1980 levels.

Furthermore, the present oil glut combined with January's price drops has hardly helped the Iraqi situation. There are also Iranian threats to undermine the world market.

Until recently, subsidies from Saudi Arabia and the Gulf countries have provided the mainstay of the Iraqi wartime economy. But these have been drastically reduced. The Arab moderates, who, according to Aziz, provided $20 billion last year rather than the $25 billion to $30 billion normally quoted in banking circles, have apparently promised to extend their subsidies only by $6 six billion over a six-month period.

The world recession, poor oil prices and a growing reluctance to continue financing Iraq's war, which Western sources figure at $1 billion a month, are all cited as reasons for the drying up of Gulf loans. But analysts maintain that the Arab moderates, while fearful of Iranian designs in the region, are also nervous about Hussein's attempts to establish himself as potentate of the Arab community.

''If they had really wanted an Iraqi victory, they could have ensured the right amount of effective aid,'' noted one European observer.

Baghdad's close relations with Cairo, for example, are regarded as part of Hussein's efforts to improve his image. In return for Iraqi sponsorship for Egypt's reintegration back into the Arab fold, Hussein sees President Hosni Mubarak as a useful support in his efforts to play peacemaker in the Arab-Israeli conflict. Though not taken seriously by Israel, Hussein has declared his willingness to accept an Israeli and a Palestinian state side by side.

Both Iran and Iraq have suffered severe war damage. It is estimated that the two belligerents will need at least 10 years for reconstruction. It is this position of weakness that favors the moderates, particularly the Saudi Arabians. It also explains their pressure on Hussein to negotiate a settlement before the war spreads any further.

Iraq's rapidly deteriorating economic situation has been causing political troubles for the Hussein regime. ''Nevertheless, it is difficult to say whether Saddam Hussein is in any danger of falling right now, but the situation promises to grow worse as the war continues,'' said Bassma Kodmani of the Paris-based French Institute for International Relations.

Some Mideast diplomats indicate that a political change is in the wind, but they refuse to elaborate.

Disillusionment with the present state of affairs has certainly increased among Iraqis who have grown accustomed to their country's new wealth. The situation is also thought to be fomenting increased dissidence, notably among clandestine factions supported by Syria and Iran.

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...