Iraq’s economic impasse twenty years after the invasion

Adam Tooze

Saddam’s attack on Iran in the early 1980s indicated his violent ambition, but as far as Iraq’s economy is concerned it was the invasion of Kuwait in August 1990 and the US-led riposte that delivered the first devastating shock. After a measure of recovery under the more relaxed sanctions regime of the late 1990s, the invasion of 2003 delivered another devastating blow to the economy and unleashed a phase of insurgency, civil war and state disintegration. This is best tracked by the bloody graph of civilian casualties.

Today, Iraq is often described as a state on the brink of disintegration and social and economic disaster. That fragility does not begin with the 2003 invasion, it is a persistent theme in the history of a territory caught between massive power blocs.

For hundreds of years the Ottomans struggled to maintain their grip over the provinces of Mosul, Baghdad and Basra in the face of challenges from the Mamluks. Between 1915 and 1917 the forces of the British empire took three years to take Baghdad in the bloody Mesopotamian campaign. The Iraqi state created in 1921 under the British mandate struggled, from the start, to impose itself against Kurdish rebellions. In 1941 a pro-German coup, led to a large-scale invasion by allied forces who used Iraq as the base for the occupation of Iran and for defeating Vichy forces in Syria. A giant nationalist uprising against British influence over the country was suppressed in 1948 in the course of the disastrous Arab League campaign against Israel. In the 1950s Baghdad answered Egyptian and Syrian unity with abortive efforts to unify with Kuwait, which left it isolated on all sides.

In 1958 a military coup overthrew the Hashemite monarchy and declared a Republic whose political history would henceforth be dominated by various factions of the Baath party. Fighting between Baghdad and Kurdish autonomists continued until the mid 1970s. Saddam Hussein who took power in 1979 not only attacked Iran but escalated the brutal struggle to consolidate Baghdad’s grip on Kurdish and Shia regions of the country.

But, for all this political turmoil, from the 1950s onwards, benefiting from increased oil revenues, Iraq experienced rapid economic, social and cultural development. By the end of the 1980s Iraq was widely seen in the Arab world as a relatively successful oil-fueled developmental state. As a US government report on Iraq put it in June 2003:…

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