|Iraq's economy is characterized by a heavy dependence on oil exports and
an emphasis on development through central planning. Prior to the outbreak
of the war with Iran in September 1980, Iraq's economic prospects were
bright. Oil production had reached a level of 3.5 million barrels per day,
and oil revenues were $21 billion in 1979 and $27 billion in 1980. At the
outbreak of the war, Iraq had amassed an estimated $35 billion in foreign
The Iran-Iraq War depleted Iraq's foreign exchange reserves, devastated its economy, and left the country saddled with a foreign debt of more than $40 billion. After hostilities ceased, oil exports gradually increased with the construction of new pipelines and the restoration of damaged facilities.
Iraq's invasion of Kuwait in August 1990, subsequent international sanctions, and damage from military action by an international coalition beginning in January 1991 drastically reduced economic activity. Government policies of diverting income to key supporters of the regime while sustaining a large military and internal security force further impaired finances, leaving the average Iraqi citizen facing desperate hardships. Implementation of a UN oil-for-food program in December 1996 has improved conditions for the average Iraqi citizen. Since 1999, Iraq was authorized to export unlimited quantities of oil to finance humanitarian needs including food, medicine, and infrastructure repair parts. Oil exports fluctuate as the regime alternately starts and stops exports, but, in general, oil exports have now reached three-quarters of their pre-Gulf War levels. Per capita output and living standards remain well below pre-Gulf War levels.
Importation of foreign workers and increased entry of women into traditionally male labor roles have helped compensate for agricultural and industrial labor shortages exacerbated by the way. A disastrous attempt to drain the southern marshes and introduce irrigated farming to this region merely destroyed a natural food producing area, while concentration of salts and minerals in the soil due to the draining left the land unsuitable for agriculture.
purchasing power parity - $57 billion (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
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