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IRAQ: Depression Spreads to the Market
By Peyman Pejman
BAGHDAD, Aug 20 , 2004 (IPS) - Seventeen months after the fall of Saddam Hussein, many Iraqi traders say the
economy is stagnating.
Last year in August the streets of Baghdad were bustling with commercial activity.
Almost at every corner sat a man exchanging money or selling something, usually an
imported commodity.
Shops were stacked ceiling high. Many were so full that owners showcased their
goods on the pavement.
Those days seem gone. Inventories are low and shop owners spend more time
chatting with friends than pitching a sale.
Traders and merchants blame primarily the worsening security situation for the
economic slowdown.
"The security is not good. People see the explosions and killings, and they are afraid
to go out," says Nahez Abdel Wadood, manager of an airconditioners shop. "People
used to stay out till 10 pm. Now no one goes out after 7 pm."
Several times in the past few months rockets and mortars aimed at U.S. convoys have
landed in commercial areas of Baghdad, killing or injuring civilians.
Baghdad traders see other reasons too for the downturn. "Right after the war, every
company that was dealing with Iraq cut its prices because there were no customs
duties, no taxes, no borders. Things were easy. Something that used to cost 500
dollars was slashed to 350 dollars," says trader Joma Khafaji.
"And a lot of Iraqis were also curious to see what is on the market because they had
been deprived of these things for years," he added.
The dollar exchange rate had improved before the war and after the invasion of the
U.S.-led forces, he says. That meant many Iraqis had more hard currency to spend.
Another major factor for the booming economy earlier was that the U.S. forces and
administration bought a lot of goods locally. The transitional government of
appointed prime minister Iyad Allawi has not produced that kind of shopping spree.
The government has said instead that it will reinforce taxes and customs duties on
many goods. That would make them even less affordable.
The government already taxes car imports. And imports have dwindled to near zero
as a result, dealers say.
Some of the hot items on sale last year were television sets, refrigerators, deep
freezers and airconditioners. But poor electricity supply means you cannot use these
items much if you buy them.
"What is the point of buying a new television set if I cannot watch it when I want to
watch it, or getting cut off in the middle of watching something, and then I get even
more frustrated," says a Baghdad resident.
U.S. officials had declared soon after taking over Iraq that there would be sufficient
electricity for the whole country by the summer of last year. That deadline is past its
first anniversary, and much of Baghdad still suffers repeated power cuts.
U.S. and Iraqi officials point out that even in the Saddam days most of the country did
not get continuous power supply. They also point out that anti-U.S. forces have
attacked power grids.
"All they have to do is cut down one line in the middle of the night and it will take us
days if not weeks to replace the cable, and then they will do it again," says a U.S.
official.
But Iraqi businessmen remain hopeful that security will improve and economic growth
will spiral again. "I am hopeful the situation will improve. Things will get better," says
Johnson Dekhla, a supermarket manager. (END)
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