Analysis: The fate of Iraq's middle class

By SAM VAKNIN, UPI Senior Business Correspondent

SKOPJE, Macedonia, March 31 (UPI) -- Iraq had no middle class to speak of until the oil boom of the 1960s and 1970s.

At the turn of the previous century, Baghdad sprawled across a mere tenth of its current area. However, since then and as late as 1987, the Iraqi capital was renowned throughout the Arab realm for its superior infrastructure, functioning services, splendor, conspicuous consumption and educated populace.


"Baghdadi," in many Arab dialects, meant "big spender."

Two-thirds of all Iraqi children attended secondary school, thousands studied abroad, and women actively participated in the workforce. The oil wealth attracted hundreds of thousands of menial laborers from Africa and Asia.

It was Saddam Hussein, the country's tyrant, who rattled the moribund and tradition-bound entrenched interests and ratcheted up living standards by imposing land reform, increasing the minimum wage and expanding healthcare.

Even the Iran-Iraq war, which decimated tens of thousands of intellectuals and professionals, barely dented this existence. Rather, the -- mostly Sunni -- middle class was done in by the sanctions imposed on Iraq, the aggressor in the first Gulf War, after 1991.


Iraq's relatively affluent and well-traveled urban denizens had access to all the amenities and consumer goods -- now proffered by the impoverished owners in improvised curb markets. As wages and the dinar plummeted, once-proud Iraqis were reduced to agonizing, humiliating and sometimes life-threatening penury.

Prostitution, street kids and homelessness have flourished. Divorce and crime rates are sharply up. Young couples cannot afford to marry, so promiscuity and abortions are in vogue. On the other extreme, Islam -- both moderate and fundamentalist -- is making headway into a hitherto devoutly secular society. Head-scarved women no longer are a rarity.

Official unemployment is about 20 percent but, in reality, it is at least double that. Polyglot professionals with impressive resumes drive taxis, moonlight as waiters, or sell vegetables from rickety stalls.

According to Humam Al Shamaa, professor of economy and finance at Baghdad University, quoted by the Asia Times, one in every two Iraqis are employed in agriculture -- most of it subsistence farming, raising cattle and poultry. Many an urbane urbanite now tends to tiny plots, trying to eke a living out of the fertile banks of the two rivers -- the Euphrates and the Tigris.

Industry -- cement, petrochemicals -- is at a standstill due to the dearth of raw materials oft proscribed by the ponderous sanctions committee.


The Boston Globe recounts the tale of an Iraqi Airlines pilot whose monthly earnings plunged from $1,500 to $2.50. Malnutrition and disease prey on the traumatized and destitute remnants of the bourgeoisie, the erstwhile nobility of the Arab world. The virtual elimination of the purchasing power of one of the richest Middle Eastern countries has had a profound impact on neighbors and trade partners across the region.

The U.N. Human Development Index has chronicled the precipitous decline of Iraq's ranking to its 127th rung. The New York-based Center for Economic and Social Rights says that "Iraqis have been extremely isolated from the outside world for 12 years. The mental, physical and educational development of an entire generation has been affected adversely by the extraordinary trauma of war and sanctions."

Public services -- from primary healthcare through electricity generation to drinking water -- were roughly halved in the past 12 years. Quality has also suffered.

Gross domestic product plunged by four-fifths. With infectious diseases on the rampage and a debilitating stress load, life expectancy dropped -- men now survive to the ripe old age of 57.

Infant mortality, at 93 in 1,000 live births, soared. Three-fifths of the population depend on an efficient system of government handouts. An exit tax of more than $350 virtually fenced in all but the most well-heeled Iraqis.


The U.S. administration, in the throes of preparations for the reconstruction of a post-bellum Iraq, acknowledges that the rehabilitation of the war-torn country's middle class is the cornerstone of any hoped-for economic revival.

But income inequality and a criminalized regime led to huge wealth disparities. The tiny, fabulously rich elite beholden to Saddam (the "war rats") is removed from the indigent masses. They make the bulk of their ill-gotten gains by maintaining Saddam-blessed import monopolies on every manner of contraband from building materials and machine spare parts to cars, televisions and beauty products.

The United States estimates that the dictator and his close, clannish circle have secreted away more than $6 billion in illicit commissions on oil sales alone.

But the proceeds of smuggling and intellectual property piracy have trickled down to a growing circle of traders and merchants. So has the $30 billion influx from the oil-for-food scheme, now in its eighth year -- though, as Hans von Sponeck, head of the program between 1998-2000, observed in the Toronto Globe and Mail: "Until May of 2002, the total value of all food, medicines, education, sanitation, agricultural and infrastructure supplies that have arrived in Iraq has amounted to $175 per person a year, or less than 49 cents a day ...


"This has made postwar reconstruction impossible, and ensured mass unemployment and continuing deterioration of schools, health centers and transportation. 'Smuggled' oil revenues represent only a small fraction of oil-for-food funds. Even here, an estimated three-quarters of these funds have been directed to social services."

Still, the economy has been partly remonetized and is less insulated than in 1996. Even the stock exchange has revived.

Whatever the length of the war, its outcome is said to be guaranteed -- the ignominious demise of the hideous terror regime of Saddam. Then, the scenario goes, U.S. and British "liberators" will switch from regime-change mode to the nation-building phase. Iraq will once again become the economic locomotive of the entire region, prosperous and secure.

But the bombed and starved denizens of Iraq may be holding a different viewpoint. Quoted in The Californian, Terry Burke and Alan Richards, professors at the University of California, Santa Cruz, noted that "the invasion and air attacks are forging intense hatred against the United States that will undermine any hope of gracefully replacing Saddam Hussein's dictatorship."

It would be instructive to remember that the 1958 overthrow of the monarchy by the Free Officers, followed by the Baath party in 1968 and, later on, by Saddam, represented the interests of the lower middle class and the petty bourgeoisie: shopkeepers, low- and mid-ranking officials and graduates of training schools, law schools, and military academies.


The most important economic policies in the past four decades -- agrarian reform and nationalization of oil -- catered to the needs and aspirations of these socio-economic strata. The backbone of Saddam's regime is comprised of bureaucrats and technocrats -- not of raving rapists and torture-hungry sadists, as Western propaganda has it.

Saddam's days might well be numbered. But the levers of power -- based on tribal affiliation, regional location, religious denomination and sectarian interests -- will survive intact. If the West really aspires to resuscitate a stable Iraq, it has no choice but to collaborate with the social structures spawned by the country's long and erratic history. The Ottomans did, the British did -- the Americans will do too.

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