Iraqi Industries Reviving Despite Embargo
The pavilions at the industrial fair brim with Iraqi-made goods: electrical appliances, carpets, textiles, spare parts and foodstuffs all laid out at the first such show in a decade, according to the Associated Press.
While the goods are affordable only to the elite, their presence shows that sectors of the Iraqi economy are reviving for the first time since the United Nations imposed trade sanctions after the 1991 Gulf War.
Organizers of the fair and Iraqi businesspeople say the country's industry is reaping the benefits of the UN oil-for-food program, which began in 1996 and allowed the government to export oil and use the revenue for food, medicine and other essential commodities. This freed up hundreds of millions of government dollars that are now being loaned at low interest to industrialists.
Iraq has exported more than 23 billion dollars in crude oil since its oil-for-food accord with the United Nations went into effect in December 1996, Trade Minister Mohammed Mahdi Saleh AFP said Monday.
But, "Iraq lost more than 140 billion dollars in oil exports because of the (UN) oil embargo" and the ceiling imposed on the country in the oil-for-food program, a partial alleviation of the embargo, Saleh said, quoted by the official INA news agency.
The oil-for-food deal "only corresponds to 10 percent of the needs that Iraqis have," he protested.
Despite this, industries that were idle during the early and mid-1990s are now operating again.
“All the projects and factories which were on stream before sanctions are operating now, albeit at lower capacity,” said Humam al-Shamaa, a professor of economics at Baghdad University.
Iraq's three cement factories now churn out more than 6 million tons a year, compared to less than 2 million tons two years ago. Its Company for Manufacturing of Drugs and Medical Appliances is back up to half the output of medical items it produced before 1990. Its fertilizer output has surged beyond local needs.
“Our warehouses are full and we are waiting for the chance to resume exports,” said Mohammed al-Ani, the managing director of the Iraqi Fertilizers Co.
The problem with the mini-boom is that the Iraqi market cannot absorb the products of an industrial sector running at full speed.
“The purchasing power of earnings in Iraq is currently much below the value of goods,” al-Shamaa said. As a result, warehouses at factories producing textiles, carpets, dairy, vegetable oils and fertilizer are full of stock.
At the weeklong fair, which ends Monday, thousands have come to pore over the goods. More than a hundred Iraqi companies have showed products, and many goods have been discounted by more than 50 percent. In high demand: rugs, clothes, textiles, detergents, air conditioners and foodstuffs.
On Sunday, shoppers pulled trolleys full of goods, among them woolen carpets they had bought for $90. The sum seems massive when compared with the average $2.50 monthly salary of a civil servant, but it still is affordable to those in trade and some other professions.
Iraq's industry ground to a halt soon after the United Nations imposed sweeping trade sanctions to punish the government for its 1990 invasion of Kuwait. But exemptions under the 1996 oil-for-food program enabled the government to export oil.
The exports have eased the strain on government coffers, which previously spent nearly $100 million a month on food imports. The Central Bank can now lend hard currency at low interest to businesspeople, who use the cash to import raw materials.
Iraq does not have direct access to revenues from the UN-monitored oil exports. Its hard currency is believed to come from tens of thousands of tourists who visit Shiite religious sites, illegal oil exports and the smuggling of other commodities across its porous borders.
Some industrialists blame the oil-for-food program for the low performance of certain industries.
Tariq Abullah, chairman of Iraq's dairy factories, told AP that under the program, Iraqis receive imported full-cream milk powder free of charge. “I am working at only 10 percent capacity and still cannot market all products,” he said.
Similarly, vegetable oil companies are finding it hard to sell their product even though they are operating at only one-tenth capacity. The oil program provides rations of vegetable oils, soaps and detergents free of charge – (Agencies)
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