Some "Meat and Potatoes" figures from the "Economist"
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Rebuilding Iraq
Amid the bombs and the rubble, the country is still slowly on the mend
Oct 30th 2003 | BAGHDAD
From The Economist print edition
It is proving much harder than the Americans expected, but the rebuilding of a shattered country is still going steadily ahead
EVERY day, small propeller-driven aircraft corkscrew steeply down into Baghdad airport, lessening the risk of being hit by shoulder-fired missiles. The war-blasted facility is back in full working order, and half a dozen big airlines have been licensed to use it. But the terror threat remains too pressing to admit anything but these costly charter flights, underwritten by the American government, from Amman, neighbouring Jordan's capital.
To the motley bunch of aid workers, reporters and spies on board, the flights would give travel to Iraq a semblance of the ordinary, were it not for the sharp approach angle and the greeting party of grim, gun-toting ex-Ghurkas at Baghdad's near-deserted terminal. Similarly, life in the country, for most of its citizens, would be approaching normal patterns, were it not for uncertainty about the future, anxiety over crime and violence, and the heavy footfall of foreign soldiers.
For many Iraqis, living standards have already risen a lot. Boosted by government make-work programmes, day labourers are getting double their pre-war wages. A university dean's pay has gone up fourfold, a policeman's by a factor of ten.
Before the war, Kifah Karim, a teacher at a Baghdad primary school, took home monthly pay equivalent to just $6. Her husband earned $13 as a factory overseer. Today, with a combined income of close to $450, they no longer rely on gifts of meat from Mrs Karim's brother, a butcher, to buttress a diet dominated by government food rations. They buy 2-3 kilos of meat a week, and have recently purchased a new fridge, a television, a TV satellite dish, a VCR and a CD player.
Stacks of such goods now crowd the pavements of Baghdad's main shopping streets, shaded by ranks of bright new billboards. Prime commercial property, says a real estate broker in the Karada district, easily fetches $1,000 a square metre, four times the level this time last year. For sure, he says, there is some risk in securing proper legal title, but even under strict Baathist rule there lurked the danger that some official would take a shine to your property and seize it.
Such price rises have yet to spur much inflation. Subsidised food and petrol remain in adequate supply. Some prices have even dropped. Used cars cost one-third less than last year, the market glutted by a flash-flood of imports. Conversely, porous borders have pushed meat prices up 30%, as smugglers sneak their flocks to more lucrative markets in Saudi Arabia and elsewhere. Baghdadis complain, but Bedouin herdsmen are doing just fine.
Yet the downward trickle has not reached everyone. Estimates of unemployment range from 60-75%. Along with around 1m salaried civil servants, some 80,000 policemen and security guards now earn decent wages, 50,000 Iraqis are on long-term reconstruction projects, and double that number profit as day labourers. But Iraq's workforce numbers some 7m. The disbanding of the army alone put 400,000 on to the street, where they get a meagre and temporary dole. Some 40,000 may be rehired, but the rest are fodder for unrest or worse (see article).
The short-term economic priority, everyone concurs, is fixing the appalling infrastructure. Slowness on this score, reckon many Iraqis, has gained America more ill-will even than its soldiers' itchy trigger fingers. Yet here, at last, real progress is being made—and that is without counting the looming bonanza of $33 billion in aid that Iraq has just been promised at last week's conference in Madrid.
Brighter future?
The southern capital, Basra, for example, got only two-to-four hours of electricity a day before the war—and now has a power surplus. Baghdad still works to a regime of three-hours-on/three-hours-off, but the country as a whole is producing as much power as before the war. By spring it will be up by 25%. Within three years, if America sticks to its plan of sinking $5 billion-plus into the sector, power output should have more than doubled.
The repair trajectory for telecoms is even steeper. By February, promises Clifford Mumm, who heads Bechtel's operations in Iraq, all ten bombed Baghdad exchanges will be working, as well as the national trunk system and an international satellite link. By then, three private cellphone networks should be operating.
Oilfield repairs have also proceeded apace. Production capacity, reduced to one-third of pre-war levels by May, is now up to 75% and on target to match them by March. Exports, now at 1.2m barrels a day, have been held up by sabotage, but Iraqi oilmen see this as a temporary obstacle. It will take years, and billions in investment, before Iraq reaches its full potential. But even if it hits the modest target of 2m barrels a day in exports by mid-2004, its crude could be earning $20 billion a year.
Mr Mumm admits that his giant American engineering firm, like others contracted by USAID to kick-start Iraq's infrastructure, made a slow start. Bechtel, whose array of contracts, worth $1 billion, covers repairs of everything from ports to railroads to sewage plants, soon dropped its idea of selecting big international subcontractors and has now funnelled half the value of its work to Iraqi firms.
With Bechtel in the running for a planned second raft of big-time repair jobs worth another $1.5 billion, Mr Mumm enthuses over the challenge. Patching up the old, rather than installing new equipment, is what he calls a “geek's dream”. As for charges that the whole process has been too cumbersome, he asks how long it took Germany to knock its former communist eastern part into shape. “Iraq is far worse, and they weren't getting shot at.”
Which, unfortunately, is the point. Working in Iraq may, in fact, be little riskier than in Algeria or Colombia, but its violence certainly puts on a damper. Huge hazardous-duty bonuses for expatriate workers, war-risk insurance, $1,000-a-day bodyguards and mine-clearance needs at many worksites can add a good 10% to the cost of business. And this does not include time lost at checkpoints, in assembling convoys, or being mired in traffic when tanks block roads.
The greater cost, however, is incurred by fuzziness over Iraq's future. Big oil companies, for example, have yet to be lured. They tend nowadays to look at the lifetime capacity of a field, not at the chance of a quick profit. “You're talking about a horizon of 10-12 years, minimum,” says a European businessman searching for deals. Despite the high technical calibre of Iraq's oil ministry, outsiders are not yet confident that long-term contracts will be watertight. Similarly, the promulgation of laws to fling open the Iraqi market to foreign investment has tempted few punters.
And then there is the larger political challenge of reshaping Iraq. Plenty of well-wishers share President George Bush's vision of Iraq as a bastion of democracy to inspire the backward Middle East, but opinion polls also illustrate the ambivalence of many Iraqis. A survey out this week revealed that, while most endorse democracy and women's rights, many wonder whether democracy can work in Iraq. Most would like some form of Islamic rule—and want the coalition forces out. But three-quarters of Iraqis also think that in five years they will be better off.
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