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Iraq's Arab Spring: Protests rise against persistent poverty in oil-rich nation

Iraq claims to have the world's second-largest oil reserves, but 1 in 6 Iraqis live in poverty. Protests have already forced three provincial governors to resign.

By Jane ArrafCorrespondent / May 24, 2011

A worker walks at Zubair oilfield in Basra, 260 miles southeast of Baghdad, Iraq, on May 23. Iraqis are taking to the streets in protest to ask why millions are living in poverty in one of the most oil-rich nations in the world.

Atef Hassan/Reuters

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Baghdad

While other Arab countries are rising up against dictators, Iraq’s is already gone – Saddam Hussein, toppled eight years ago, is now almost a distant memory for younger Iraqis. But Iraqis are taking to the streets to ask why millions are living in poverty in one of the most oil-rich countries in the world.

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Cellphone repairman Majid Abdul Khalif, who is so patriotic he named his son Iraq and his daughter Baghdad, is incensed he can’t find a full-time job or buy a house.

“I’m Abu Iraq [the father of Iraq] and I don’t have a home!” says Mr. Abdul Khalif, wrapped in an Iraqi flag at Baghdad’s Liberation Square.

Like millions here, he’s grown up with the expectation that the government would take care of him. Those unfulfilled expectations and the loss of billions of dollars to mismanagement and corruption has proved a volatile combination in a country where oil revenue will barely keep pace with the growing population. Protests have already forced the resignations of governors in three southern provinces seen as particularly corrupt.

Millions of people still rely on government food rations, about 1 in 6 live in poverty on about $2 per day, and almost 40 percent of Iraq’s 30 million people are under the age of 15.

"Iraq is a difficult case,” says Simona Marinescu, senior economist with the United Nations Development Program in Iraq. “Iraq is not a country with no resources ... Iraq is a country that has the very strange situation in which the needs of this country grow at a similar pace with revenues – so no matter how much money comes into the budget, their development needs, their basic needs are growing similarly."

Iraq recently recalculated its oil reserves to reflect undated technology and now says it has the world’s second-biggest oil reserves. With oil prices topping $110 a barrel, that is an extraordinary resource.

But with billions of dollars needed to modernize the oil industry after decades of neglect, it will be years before a significant portion of Iraq's oil revenue will go to anything else. And while the oil industry provides revenue, it will never create large numbers of jobs.

“I think there’s an understanding that they have to change things; I don’t think Iraq – with a population this young and this fast growing – is ever going to be a petro-state,” says a US embassy official who asked not to be identified. “Over the next three to five years, they’re going to spend almost all the extra revenue they earn just paying for the infrastructure to get the oil out of the ground and export it.”

Transitioning out of a state-subsidized economy

In addition to the political upheaval that followed the toppling of Saddam Hussein, Iraq has embarked on a revolution of its state-run, oil-centered economy where more than 60 percent of Iraqis work in the public sector.

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