Look at life in Iraq after 7 years of war

Press, 23 September 1987, Page 10

Look at life in Iraq after 7 years of war

By

STEPHEN JUKES

of Reuters in Bagdad

A teeming mass of black-veiled women and yelling children spills over into a choked Bagdad street The daily fight for eggs is on. Iraq’s economy is on a war footing, there are shortages, power cuts and a thriving black market for everthing from butter and toilet paper to Volkswagen cars.

But Western diplomats believe a series of economic reforms, coupled with a recovery in world oil prices and drive to increase production, are lifting some of the gloom spread by a serious shortage of hard currency last year. “I think Iraq has at last come to terms with an economy at war,” said one senior diplomat in Bagdad. “Last year everything ground to a halt, but Government officials are speaking with more confidence now.” Iraqi officials make clear that the war with Iran is a matter of survival. That means Bagdad does not always play by the rules. Scarce hard currency is used to buy arms and essential imports, while repayments on Iraq’s estimated SUS6O billion of foreign debt have been systematically delayed. In spite of payments problems, main Western

Governments are ready to guarantee credits while foreign industry queues up to sell weapons and medicines and to service the oil sector. A campaign has been launched to reduce bureaucracy and shake up State industry and, in a policy turnround for socialist Iraq, some State enterprises will be turned over to the private sector. But the economy is still heavily dependent on oil. Iraq, in what stems from another long-running dispute with Iran, has flouted its O.P.E.C. quota in a bid to restore output to prewar levels of at least three million barrels a day. In the early years of the war, daily output slumped to 650,000 barrels as Iran shut off its outlets through the Gulf and Syria, Teheran’s main ally in the Arab world, halted exports through the Mediterranean. Production is now

estimated to be back to at least 2.1 million b.p.d. and oil earnings could 'reach SUSI2B this year from $7.58 in 1986. The Oil Minister Issam Abdul-Rahim al-Chalabi, awarded on Sunday a SIB contract for a second pipeline to pump Iraqi oil through Saudi Arabia. When finished in two years it will add another 1.15 million b.p.d. to Iraq’s output capacity. “Oil has priority and Iraq has succeeded in finding routes safe from Iranian attack,” said one Western diplomat. Convoys of lorries ferry Iraqi crude through Jordan and Turkey at the rate of 200,000 to 300,000 barrels a day, an expanded pipeline via Turkey can handle up to 1.5 million barrels, and 500,000 barrels already move through Saudi Arabia. Bagdad is in no mood to make concessions to 0.P.E.C., the Organisation

of Petroleum Exporting Countries, and does not recognise its ceiling of 1.54 million b.p.d. It claims a quota at least as high as Iran, now at 2.369 million barrels. While the war continues, Iraq seems assured that its Arab allies in 0.P.E.C., foremost among them Saudi Arabia and Kuwait, will resist pressure from other members bring it into line. Oil revenues are strictly controlled by the central bank and debt repayments have been reduced to a minimum. •

Iraq has been able to all but ignore repayment of loans from its main financiers, Saudi Arabia and Kuwait, which may have lent as much as S4OB.

Other debts — letters of credit, Governmentbacked lines or bank loans — have been delayed for up to six years in a string of piecemeal deals. i