Consequences of the Iraq War

¶ … Consequences of the Iraq War

Military action has not only aggravated a humanitarian crisis, but also had major economic, legal, political, strategic and military repercussions in Iraq. This paper will summarize the economic reasons and consequences of the war. Pre-war speculation that Saddam Hussein had weapons of mass destruction, that he would set fire to Iraq's oil fields or attack Israel with rockets have never proven true, but the resultant fighting in Iraq has had serious economic results in both the U.S. And in Iraq, leading to a generally weakened world economy.

Oil production in Iraq has always been a source of conflict since the day it was discovered, igniting arguments within and without the country. Since Iraq was invaded and occupied in 2003, there have been changes concerning oil production. With Washington running the war, companies friendly to the United States are expecting most of the lucrative deals, which will mean trillions of dollars of profits in the decades to come.

Ever since the invasion of Iraq, the U.S. has advised the Iraqi government to adopt policies opening the country up to foreign investors, and to disband state-owned factories and enterprises. The 2005 Iraqi constitution, influenced by U.S. advisors, has language guaranteeing major roles for foreign investors. Negotiations, soon to be completed, deal with Production Sharing Agreements giving these companies control over certain oil fields, including the super-giant, Majnoon. But their Parliament has yet to pass a new "oil sector investment law" letting foreign companies assume major roles in the country's economy. The United States is withholding funding, as well as promised military and financial support if they do not pass it soon. Though the Iraqi cabinet did endorse a draft law in July of 2007, the Iraqi Parliament has still not passed full legislation. The holdup is that most Iraqis want a national company to have control and the main Iraqi union of oil workers opposes denationalization. (U.N.).

The systematic destruction of Iraq's normal economy by constant war, foreign impositions of new national guidelines and civil strife has created a 60% unemployment level with over 4 million externally and internally displaced refugees. The country has suffered from the economic, cultural and governmental structural changes which have been imposed on it since the beginning of the invasion.

In December of 2005, the Iraqi government, encouraged by the United States, borrowed $685 million from the International Monetary Fund (IMF). In return, the International Monetary Fund has currently imposed economic reforms, which includes an end to health, food, and fuel subsidies. As the country suffered then, and still does, from the consequences of an ongoing U.S. occupation and a decade of economic sanctions, those food rations and fuel subsides allowed millions of Iraqis to barely survive. Now, without looking at the national economy which includes inflation, rising unemployment, and malnutrition, the IMF has said Iraq's economy is a sign of "success" (Button 1).

As for the U.S., occupation of and plans for a long-term military presence in Iraq will eventually cost the U.S. over $4 trillion. Even though the U.S. had put $600 billion into the war effort before 2007, President George W. Bush requested an additional $196 billion for the wars in both Iraq and Afghanistan in 2007. The Democratic-dominated Congress has tried to restrict spending, but experts say that Iraqi war costs this year will come to more than the Korean War and Vietnam War together. Even though the president has pointed proudly to his budget and tried to downsize spending, funds supporting the war are not included in the national budget and are therefore not controlled by Congress, but by the president.

Under Saddam Hussein, Iraq experienced years of turmoil, resulting in a war with Iran, economic mismanagement, and U.N.-imposed sanctions. Now, after 4 years of occupation by the U.S., Iraq experiences extreme poverty, unemployment and has millions of homeless. The country's infrastructure is in ruins and U.S. plans for reconstruction of its schools, infrastructure and civic buildings have been mired in fraud, mismanagement and incompetence. Commentators expect the country to suffer from the effects the war for years to come.

On November 15, 2007, the House of Representatives passed a bill that provides $50 billion to fund the war in Iraq and attached a timetable for the withdrawal of troops by the end of 2008. The bill prevented the White House from using funds to construct permanent bases in Iraq or assert U.S. control over Iraq's oil. President Bush vetoed the bill, while Republicans supported this move. Congressional Democrats countered that the bill responded to the concerns of U.S. citizens about the length and the costs of the war. "The president has threatened to veto all spending bills that exceed his budget request, a move aimed at boosting his standing with fiscal conservatives. Democrats say his position is hypocritical, given the cost of the war, which has far exceeded Bush's initial estimates" (Williamson 1).

An article in Reuters by Bull assessed the consequences of the U.S.-led war on Iraq's domestic economy up to August of 2006: In spite of being the world's third-largest oil reserves, possessing an abundance of valuable resources including water and offering a well- educated workforce, Iraq's economy declined. Security conditions, corruption and inefficiency reduced employment and brought poverty to the nation. Inflation was still "sapping the living standards of Iraqis as they cope with bombs and sectarian killings which kill 100 [civilians] every day" (Bull 1).