Will Iraq Fall Victim to the Oil Curse?

Judith Miller
Wall Street Journal
August 10, 2010

BAGHDAD – Since America toppled Saddam Hussein in 2003, Iraq has had three free-wheeling, relatively fraud-free national elections. Its military has been reconstituted, its soldiers and some of its police retrained. The infrastructure has been partially rebuilt. Iraq, with its 30 million people and the world’s third-largest oil reserves, could one day be fabulously rich.

• A d v e r t i s e m e n t

But the country’s bountiful oil supplies could also be a curse. They encourage Iraq’s government to continue running an oil-centric, top-down command economy and to largely pay lip service to creating private-sector jobs and economic diversification. Oil now accounts for almost 95% of all government revenues and over 60% of gross domestic product, while employing only 1% of the Iraqi workforce.

“In liberal economies,” says Kanan Makiya, an Iraqi professor at Brandeis who travels often to Iraq, “governments are accountable to individuals who produce wealth that is taxed. In oil or ‘rentier’ societies, there’s a built-in independence of the political class, an indifference to the will and needs of the people.”

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This article was posted: Tuesday, August 10, 2010 at 5:03 pm

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