Economy Of Iraq

The economy of Iraq has been predominantly driven by the oil sector, which in 2024 accounted for approximately 89% of the country’s foreign exchange earnings. This overwhelming reliance on petroleum exports reflects the central role that oil has played in Iraq’s economic framework for decades. Historically, the oil sector has contributed an even more dominant share, with estimates indicating that it accounted for about 99.7% of Iraq’s foreign exchange earnings throughout its modern history. Such a near-total dependence on oil revenues has shaped the country’s fiscal policies, trade balances, and economic development strategies, making fluctuations in global oil prices a critical factor influencing Iraq’s economic stability. Significant agrarian development marked Iraq’s economy following the 14 July Revolution in 1958, which resulted in the overthrow of the Hashemite monarchy. This political upheaval ushered in a period of modernization and reform aimed at diversifying the economy beyond its traditional reliance on agriculture and oil. Land reform policies and investment in agricultural infrastructure sought to increase productivity and reduce rural poverty. These efforts contributed to a gradual transformation of the agrarian sector, setting the stage for broader economic expansion in subsequent decades. By 1980, Iraq had emerged as the third-largest economy in the Middle East, a status achieved partly through ambitious industrialization and infrastructure projects initiated during the 1970s under the leadership of Saddam Hussein. These initiatives included large-scale irrigation schemes designed to enhance agricultural output and reduce dependence on food imports. The government also prioritized the construction of railways and highways to improve transportation networks, facilitating the movement of goods and people across the country. Additionally, rural electrification programs expanded access to electricity in previously underserved areas, fostering economic activity and improving living standards. Collectively, these projects contributed to sustained economic growth and increased Iraq’s regional economic prominence. Despite these advances, the 1980s brought severe financial difficulties as Iraq became embroiled in the protracted Iran-Iraq War. The conflict imposed enormous expenditures on the government, draining resources and diverting funds from development projects. Furthermore, Iranian military actions inflicted significant damage on Iraq’s oil export facilities, disrupting production and reducing revenues at a time when the country most needed financial stability. The economic strain was compounded by the costs of maintaining a large military apparatus and supporting wartime logistics, placing considerable pressure on Iraq’s fiscal reserves. In response to these challenges, the Ba’athist government implemented austerity measures aimed at curbing public spending and stabilizing the economy. These policies included heavy borrowing from international creditors and the rescheduling of foreign debt payments to manage cash flow constraints. Despite these efforts, Iraq’s economy suffered substantial losses estimated at a minimum of $80 billion due to the war’s direct and indirect impacts. The prolonged conflict eroded the country’s economic base and delayed the recovery of vital sectors, particularly oil production. The cessation of hostilities in 1988 marked a turning point, allowing Iraq to gradually rebuild its oil export capacity. Reconstruction efforts focused on the construction of new pipelines and the restoration of facilities damaged during the war. These measures facilitated a steady increase in oil exports, which were critical to replenishing government revenues and financing reconstruction. However, the recovery was fragile and soon faced new setbacks following the Persian Gulf War in 1990-1991. The aftermath of the Gulf War saw a sharp decline in Iraq’s oil exports, with the country’s gross domestic product (GDP) falling to approximately 25% of its 1980 level. The destruction wrought by coalition military operations severely damaged oil infrastructure and other key economic assets. Additionally, the imposition of international sanctions further isolated Iraq from global markets, restricting trade and investment. These sanctions, enforced by the United Nations, aimed to compel Iraq to comply with disarmament requirements but had the unintended effect of deepening the country’s economic crisis. Throughout the 1990s, Iraq’s economy continued to deteriorate under the weight of these sanctions. The country faced widespread shortages of essential goods, hyperinflation, and a collapse of public services. It was not until 1997 that Iraq received some relief through the United Nations Oil-for-Food Programme, which allowed limited oil exports in exchange for humanitarian goods. This program provided a modest boost to the economy by easing the supply of food, medicine, and other necessities, although it did not restore Iraq’s economic vitality. By the year 2000, Iraq experienced modest economic growth as the government attempted to implement reforms aimed at improving the efficiency and functionality of the economic system. These efforts focused on stabilizing the currency, encouraging limited private sector activity, and enhancing public sector management. However, progress was constrained by ongoing sanctions, political instability, and the legacy of years of conflict and mismanagement. The 2003 U.S.-led invasion of Iraq marked a significant shift in the country’s economic trajectory. The Coalition Provisional Authority, which administered Iraq in the immediate post-invasion period, sought to modernize the economy through policies emphasizing privatization and the reduction of foreign debt. These reforms aimed to transition Iraq from a state-controlled economy to a more market-oriented system, encouraging foreign investment and private enterprise. Despite these intentions, the process was complicated by security challenges and institutional weaknesses. Following the invasion, Iraq’s economy expanded rapidly due to increased oil production and reconstruction efforts. However, this growth was hindered by a persistent insurgency, civil conflict, economic mismanagement, and outdated oil extraction and processing technology. These factors contributed to frequent shortages of electricity, fuel, and other critical resources, limiting the country’s ability to fully capitalize on its economic potential. Infrastructure damage and security concerns further impeded investment and development. From mid-2009 onward, oil export earnings returned to levels comparable to those before Operation New Dawn, the U.S. military drawdown in Iraq. This recovery was supported by rising global oil prices and increased government revenues, which provided the fiscal space necessary for public spending and investment. The stabilization of oil exports played a crucial role in underpinning Iraq’s broader economic recovery during this period. In 2011, Iraq increased its oil exports to more than 1.9 million barrels per day (approximately 300,000 cubic meters per day) as a result of new contracts signed with international oil companies. These agreements were designed to boost production capacity and modernize the oil sector. However, forecasts suggested that actual exports might fall short of the government’s budget target of 2.4 million barrels per day (approximately 380,000 cubic meters per day), highlighting ongoing challenges in achieving production goals. Iraq’s oil contracts with major international companies held the potential to significantly enhance government revenues, provided that substantial investments were made to upgrade oil processing facilities, pipelines, and export infrastructure. The modernization of these assets was essential to increasing production efficiency and reducing bottlenecks in the supply chain. Success in these areas would enable Iraq to better exploit its vast oil reserves and secure a more stable economic future. Improved security conditions and initial inflows of foreign investment spurred economic activity in key sectors such as energy, construction, and retail. These developments contributed to job creation and increased consumer spending, supporting a gradual diversification of the economy. Nonetheless, sustained growth depended heavily on the continuation of reforms and the resolution of structural impediments. Long-term economic stability and growth in Iraq remained contingent upon effective government policy reforms and the ongoing development of the country’s extensive oil reserves. While the oil sector offered substantial revenue potential, diversification efforts were necessary to reduce vulnerability to oil price shocks and to promote inclusive economic development. The government’s ability to implement sound policies and attract investment was critical to realizing these objectives. Despite increased interest from foreign investors in 2010, Iraq faced persistent challenges that hampered the development of new projects. Difficulties in land acquisition and regulatory barriers created obstacles for both domestic and international companies seeking to expand operations. These issues underscored the need for improved governance and streamlined administrative processes to facilitate economic growth and attract sustained investment.

During the 1960s, Iraq experienced significant economic growth, as evidenced by a remarkable increase in nominal gross domestic product (GDP) by 213%. This period marked a transformative phase in the country’s economic development, driven primarily by the expansion of the oil sector and the gradual modernization of infrastructure. The government’s increased control over oil resources, particularly following the nationalization of the Iraq Petroleum Company in 1972, laid the groundwork for sustained revenue growth. This influx of capital enabled investments in public services, industrial projects, and urban development, which collectively contributed to the robust expansion of the economy during that decade. The 1970s witnessed an extraordinary surge in Iraq’s nominal GDP, which grew by an unprecedented 1325%. This dramatic increase was largely fueled by a combination of heightened oil production and soaring oil prices on the global market. The decade was characterized by the geopolitical influence exerted by the Organization of Petroleum Exporting Countries (OPEC), of which Iraq was a key member. Notably, the 1973 oil embargo orchestrated by OPEC led to the 1973 oil crisis, causing a sharp spike in oil prices worldwide. Iraq, as a major oil exporter, reaped substantial financial benefits from this price surge, which translated into a windfall of government revenues. These revenues were channeled into ambitious infrastructure projects, social welfare programs, and the expansion of the industrial base, propelling the country’s economic growth to new heights. In contrast to the explosive growth of the previous decade, the 1980s saw a marked slowdown in Iraq’s economic expansion, with nominal GDP increasing by only 2%. This stagnation reflected the mounting challenges faced by the country, including the protracted Iran-Iraq War from 1980 to 1988. The conflict imposed severe strains on Iraq’s economy, diverting resources towards military expenditures and disrupting oil production and exports. Additionally, the war caused widespread destruction of infrastructure and diminished investor confidence, further hampering economic activity. The combination of these factors resulted in a near halt to economic growth, signaling a period of economic hardship and uncertainty for Iraq. The 1990s brought a sharp and devastating decline in Iraq’s nominal GDP, which contracted by 47% during the decade. This dramatic downturn was primarily a consequence of the Gulf War in 1990-1991 and the subsequent imposition of comprehensive international sanctions. The war inflicted extensive damage on Iraq’s oil infrastructure and other critical sectors, severely curtailing the country’s ability to generate revenue. The sanctions regime, imposed by the United Nations, further isolated Iraq from the global economy, restricting trade and access to foreign capital. These combined factors led to a deep economic crisis, characterized by hyperinflation, widespread poverty, and a collapse in living standards. The decline in nominal GDP during this period underscored the profound economic dislocation resulting from conflict and international isolation. The 2000s marked a period of substantial economic recovery for Iraq, with nominal GDP growing by 317%. This resurgence was driven by the gradual restoration of oil production capacity, increased foreign investment, and efforts to rebuild the country’s war-torn infrastructure. Following the 2003 invasion and the subsequent political transition, Iraq sought to stabilize its economy and attract international support. The lifting of sanctions and the re-engagement with global markets facilitated an expansion in oil exports, which remained the cornerstone of the economy. Despite ongoing security challenges and political instability, the decade saw a notable rebound in economic activity, reflecting the resilience of Iraq’s oil sector and the broader economy’s capacity for recovery. Real GDP per capita in Iraq, measured in constant 1990 U.S. dollars, exhibited marked increases during the 1950s, 1960s, and 1970s. This upward trend was largely attributable to rising oil production levels and the concomitant increase in oil prices, which provided the government with substantial revenues to invest in public services, education, and health care. The expansion of the oil sector not only enhanced national income but also contributed to improvements in living standards and economic diversification efforts. The steady growth in real GDP per capita during these decades reflected the country’s transition from a primarily agrarian economy to one increasingly dominated by the energy sector and associated industries. The peak of oil prices in the 1970s, particularly following the 1973 oil embargo, had a profound impact on Iraq’s economy. The embargo, led by OPEC, was a strategic response to geopolitical tensions and resulted in a quadrupling of oil prices on the international market. For Iraq, this surge in oil prices translated into a dramatic increase in export revenues, which fueled rapid economic expansion and enabled the government to finance extensive development programs. The oil windfall also enhanced Iraq’s geopolitical standing and allowed for greater investment in military capabilities. However, the reliance on oil revenues also made the economy vulnerable to fluctuations in global oil markets, a factor that would later contribute to economic instability. Despite the substantial growth in earlier decades, Iraq’s GDP per capita experienced a significant decline over the subsequent two decades, primarily due to the adverse effects of multiple wars. The Iran-Iraq War from 1980 to 1988 drained economic resources, disrupted production, and caused widespread destruction. This was followed by the Gulf War in 1990-1991, which inflicted further damage on the country’s infrastructure and economy. The prolonged conflicts, coupled with international sanctions, severely undermined economic productivity and living standards. As a result, the gains made in the mid-20th century were largely reversed, and Iraq faced a prolonged period of economic hardship and decline in per capita income. The compounded impact of warfare and sanctions during these decades left a lasting imprint on the structure and performance of Iraq’s economy.

Prior to the outbreak of the Iran-Iraq War in September 1980, Iraq’s economic outlook was notably positive, underpinned by robust oil production and substantial revenues. In 1979, the country’s oil production reached approximately 560,000 cubic meters per day, which translated to about 3.5 million barrels per day, marking Iraq as one of the leading oil producers in the region. This high level of production contributed significantly to the nation’s fiscal health, with oil revenues totaling an impressive 21 billion U.S. dollars that year. The subsequent year saw a further increase in oil revenues to 27 billion dollars, largely driven by record-high oil prices on the global market, which bolstered Iraq’s economic standing and fiscal capacity. By the onset of the war, Iraq had accumulated an estimated 35 billion dollars in foreign exchange reserves, reflecting the country’s strong balance of payments position and its ability to finance imports and development projects. These reserves were a testament to Iraq’s strategic management of its oil wealth during a period of favorable market conditions. Beyond its economic metrics, Iraq was also recognized for possessing one of the best education and healthcare systems in the Middle East at the time. The government had invested heavily in social infrastructure, resulting in widespread access to education and medical services that contributed to improvements in literacy rates and public health indicators across the country. The economic expansion was further supported by a large workforce that included thousands of migrant workers from countries such as Egypt, Somalia, and the Indian subcontinent. These workers were primarily employed in Iraq’s extensive construction projects, which encompassed urban development, infrastructure expansion, and industrial facilities. Their presence was integral to the rapid modernization efforts that Iraq was undertaking, enabling the country to build new cities, roads, and public utilities that supported both economic growth and social development. However, the outbreak of the Iran–Iraq War in September 1980 marked a turning point that severely disrupted Iraq’s economic trajectory. The prolonged conflict, combined with the global oil glut of the 1980s, had a devastating impact on Iraq’s foreign exchange reserves and overall economic stability. The war effort required massive military expenditures, which drained financial resources and diverted funds from civilian sectors. Additionally, the oil glut led to a significant decline in global oil prices, reducing Iraq’s export revenues and further straining the country’s fiscal position. As a result, Iraq’s foreign exchange reserves, which had once stood at 35 billion dollars, were severely depleted over the course of the decade. The economic consequences of the war extended beyond the depletion of reserves. Iraq’s economy was left in a state of devastation, with infrastructure damaged by military operations and industrial output disrupted by the ongoing conflict. The country also accumulated a substantial foreign debt burden, which exceeded 40 billion dollars by the end of the war. This debt was primarily incurred through borrowing from international creditors and neighboring Arab states to finance the war effort and to sustain the economy amid declining oil revenues. The heavy indebtedness constrained Iraq’s economic options in the post-war period and necessitated a focus on debt servicing that limited funds available for reconstruction and development. Despite these significant setbacks, Iraq made concerted efforts to restore its oil export capacity as a means of generating revenue and stabilizing the economy. The government undertook the construction of new pipelines to bypass damaged infrastructure and to access alternative export routes, thereby mitigating the impact of disruptions caused by the war. Additionally, repair and maintenance work was carried out on oil facilities that had been damaged during the conflict, enabling a gradual recovery in production levels. Over time, these initiatives allowed Iraq’s oil exports to increase incrementally, providing a critical source of income that supported the country’s economic resilience in the face of ongoing challenges.

Iraq’s invasion and subsequent seizure of Kuwait in August 1990 triggered a swift and comprehensive response from the international community, resulting in the imposition of stringent economic sanctions against the country. These sanctions, enacted primarily through United Nations Security Council resolutions, aimed to compel Iraq to withdraw from Kuwait and to dismantle its weapons programs. The sanctions severely restricted Iraq’s ability to conduct international trade, particularly in oil exports, which constituted the backbone of its economy. In addition to the sanctions, Iraq suffered extensive damage from military operations conducted by a U.S.-led international coalition during the Gulf War, which commenced in January 1991. The combined effects of the sanctions and the destruction wrought by military action led to a dramatic contraction of Iraq’s economic activity, disrupting industrial production, infrastructure, and the overall functioning of the economy. The Iraqi regime under Saddam Hussein exacerbated the economic hardships by prioritizing the maintenance and expansion of its military and internal security apparatus. Large segments of the national budget were allocated to support the armed forces and various security agencies, which were instrumental in preserving the regime’s hold on power. Furthermore, the government directed substantial resources to key supporters within the Ba’ath Party, ensuring their loyalty through preferential access to goods and services amid widespread shortages. This allocation of scarce resources to military and political elites intensified the deprivation experienced by the general population, deepening the economic crisis and undermining efforts to stabilize the country’s economy. In an attempt to alleviate the humanitarian crisis caused by the sanctions, the United Nations implemented the Oil-for-Food program in December 1996. This initiative allowed Iraq to sell limited quantities of oil on the international market in exchange for humanitarian goods, including food, medicine, and other essential supplies. The program was designed to provide relief to the civilian population while maintaining the pressure of sanctions on the Iraqi government. Under the terms of the program, the revenues generated from oil sales were placed under UN control to ensure that funds were used exclusively for humanitarian purposes, thereby preventing the regime from diverting resources to military or political ends. During the initial six six-month phases of the Oil-for-Food program, Iraq was permitted to progressively increase its oil exports, subject to UN approval and monitoring. This gradual escalation aimed to balance the need for humanitarian relief with the international community’s concerns about Iraq’s compliance with disarmament and other obligations. The phased approach allowed for a controlled expansion of oil exports, which in turn facilitated the procurement of essential supplies to meet the basic needs of the Iraqi population. Despite these measures, the program faced numerous challenges, including logistical difficulties, bureaucratic delays, and ongoing political tensions that affected the efficiency and effectiveness of aid distribution. A significant development occurred in December 1999 when the UN Security Council authorized Iraq to export unlimited amounts of oil necessary to meet its humanitarian needs, effectively removing previous export limits imposed under the Oil-for-Food program. This decision reflected a recognition of the persistent humanitarian challenges faced by Iraq and an effort to provide greater flexibility in addressing the country’s requirements. The removal of export caps enabled Iraq to increase its oil revenues, thereby enhancing its capacity to import food, medicine, and other critical goods. However, the program continued to operate under strict UN oversight to ensure that the proceeds were used appropriately and that sanctions remained in place against military and prohibited activities. As a consequence of the Oil-for-Food program, there were notable improvements in the availability of food and medical supplies within Iraq. Per capita food imports increased substantially, contributing to a reduction in malnutrition and food insecurity among the population. Healthcare services also saw steady improvements, with enhanced access to medicines, medical equipment, and treatment facilities. Despite these gains, the overall economic production per capita and living standards remained significantly below the levels experienced prior to the Gulf War and the imposition of sanctions. The Iraqi economy continued to struggle with structural weaknesses, damaged infrastructure, and limited industrial output, which constrained broader economic recovery and development. In a move reflecting broader geopolitical and economic considerations, Iraq changed the currency used for its oil reserve transactions from the U.S. dollar to the euro in 2000. This shift was part of a wider trend among some oil-producing countries seeking to diversify their currency reserves and reduce dependence on the dollar. The decision also had implications for Iraq’s international financial dealings and its relations with various global actors, as currency choice can influence trade dynamics and economic alliances. Under the Oil-for-Food program, approximately 28% of Iraq’s export revenues were deducted to cover costs associated with the UN Compensation Fund and UN administrative expenses. The Compensation Fund was established to provide reparations to victims of Iraq’s invasion of Kuwait, including individuals, businesses, and governments affected by the conflict. Administrative expenses covered the operational costs of managing the Oil-for-Food program, including monitoring, verification, and distribution of humanitarian goods. These deductions represented a significant portion of Iraq’s oil revenues, thereby reducing the net funds available for domestic economic needs and reconstruction efforts. The year 2001 witnessed a decline in Iraq’s gross domestic product (GDP), which was primarily attributed to the global economic slowdown and falling oil prices. The international economy experienced reduced demand for oil, leading to lower prices and diminished export revenues for Iraq. Given the country’s heavy reliance on oil exports as the main source of income, fluctuations in global oil markets had a direct and profound impact on its economic performance. The downturn in GDP underscored the vulnerabilities of Iraq’s economy to external shocks and highlighted the ongoing challenges faced in achieving sustainable economic growth amid sanctions and geopolitical constraints.

Following the removal of international sanctions on 24 May 2003, Iraq’s oil sector experienced a significant resurgence, which was further bolstered by a global increase in oil prices during the mid-to-late 2000s. Prior to this period, Iraq’s oil production had plummeted to a low of approximately 1.3 million barrels per day (mbpd) in 2003, reflecting the combined impacts of sanctions, conflict, and infrastructural degradation. However, over the subsequent years, the country managed to double its output, reaching a peak production level of 2.6 mbpd by 2011. This remarkable recovery was driven by efforts to rehabilitate oil fields, repair damaged infrastructure, and attract foreign investment, despite ongoing security challenges. The revitalization of oil production played a pivotal role in underpinning Iraq’s broader economic revival, as oil revenues constituted the backbone of government income and foreign exchange earnings. Since 2007, the Iraqi economy began to stabilize in several critical respects, with notable reductions in both inflation and violence contributing to tangible improvements in the living standards of the population. Inflation, which had previously soared due to supply disruptions and currency instability, gradually declined as monetary policies and fiscal management improved. Concurrently, although security conditions remained fragile, the relative decrease in violence compared to earlier years allowed for greater economic activity and reconstruction efforts to proceed with fewer interruptions. These developments enabled more consistent access to goods and services, improved employment opportunities, and enhanced public confidence in the country’s economic prospects. The combined effect of these factors was a gradual but perceptible uplift in the day-to-day economic well-being of many Iraqi citizens, reflecting a slow transition from crisis toward recovery. One of the most formidable economic challenges facing Iraq in the post-invasion period was the burden of its substantial foreign debt, which was estimated to be approximately $130 billion. This debt represented a significant obstacle to economic development and fiscal sustainability, as servicing such a large liability constrained government spending and limited access to international financial markets. The composition of this debt was complex, with a portion arising from unpaid obligations related to normal export contracts that had accumulated over previous decades. Additionally, a significant share of the debt originated from military and financial support provided by other countries during Iraq’s protracted war with Iran throughout the 1980s. This legacy of indebtedness not only strained Iraq’s external financial relations but also complicated efforts to secure new loans and investment necessary for reconstruction and growth. The issue of Iraq’s debt legitimacy became a subject of international debate, particularly through the advocacy of the Jubilee Iraq campaign, which argued that much of the country’s debt was odious and therefore illegitimate. The concept of odious debt posits that debts incurred by regimes without the consent or benefit of the populace should not be enforceable, especially when such debts finance oppressive or aggressive actions. Jubilee Iraq contended that debts accumulated under Saddam Hussein’s regime, especially those linked to military expenditures and human rights abuses, fell into this category. However, the concept of odious debt is not widely recognized under international law, and pursuing debt relief on this basis risked protracted legal disputes with creditors. Consequently, Iraq faced a dilemma between seeking principled debt cancellation and adopting a more pragmatic strategy to resolve its financial obligations. In response, Iraq chose a pragmatic approach by engaging directly with the Paris Club, an informal group of official creditors that coordinates debt restructuring and relief for debtor countries. Through negotiations with the Paris Club, Iraq sought to obtain debt relief arrangements that would alleviate its repayment burdens while avoiding the uncertainties and delays associated with legal challenges based on odious debt claims. This strategy aimed to restore Iraq’s creditworthiness and facilitate access to international financial assistance and investment, which were critical for the country’s reconstruction and economic development. The Paris Club’s involvement provided a structured framework for debt rescheduling, reduction, or cancellation, reflecting a recognition of Iraq’s exceptional circumstances and the need to support its recovery efforts. Amid these financial and security challenges, Iraq’s economy demonstrated surprising resilience and pockets of robust growth. A December 2006 article in Newsweek International cited a study conducted by Global Insight, a London-based economic research firm, which highlighted that Iraq’s economy was performing well despite the ongoing civil war conditions. The study identified several sectors exhibiting strong expansion, including real estate, construction, retail, and wholesale trade. These sectors benefited from reconstruction demand, increased consumer spending, and a gradual return of business confidence. The real estate market, in particular, reflected renewed investment in housing and commercial properties, while construction activity was driven by infrastructure rebuilding and urban development projects. Retail and wholesale trade sectors expanded as consumer demand grew, supported by improved security in certain areas and the influx of goods. The report also noted a significant increase in entrepreneurial activity, as evidenced by the registration of new companies. According to data from the U.S. Chamber of Commerce, the number of registered companies in Iraq soared from approximately 8,000 three years earlier to 34,000 by 2006. This fourfold increase underscored a dynamic shift in the business environment, with more Iraqis and foreign investors establishing enterprises to capitalize on emerging market opportunities. The expansion of the private sector was a critical driver of economic diversification and job creation, contributing to a more vibrant and competitive economy. Consumer behavior during this period reflected rising disposable incomes and growing access to goods, as demonstrated by a sharp rise in sales of secondhand cars, televisions, and mobile phones. The surge in secondhand car sales indicated increased mobility and purchasing power among the population, while the proliferation of televisions and mobile phones pointed to greater connectivity and access to information. These trends were indicative of broader social and economic changes, including urbanization, modernization, and the integration of Iraq into global communication networks. The availability of consumer electronics and vehicles also suggested improvements in supply chains and retail distribution systems, further supporting economic growth. Estimates of Iraq’s gross domestic product (GDP) growth during this period varied among different sources, reflecting the challenges of data collection and the volatile security environment. Global Insight projected a robust 17% increase in GDP for the year preceding 2006, followed by a 13% growth rate for 2006 itself. These figures suggested a rapidly expanding economy driven by reconstruction, increased oil revenues, and private sector development. In contrast, the World Bank reported a more conservative estimate of 4% GDP growth for 2006, highlighting the difficulties in accurately measuring economic performance amid ongoing conflict and instability. Despite these discrepancies, there was a consensus that Iraq’s economy was growing at a notable rate, which many observers found surprising given the prevailing security concerns and institutional challenges. The sustained economic growth, even in the face of persistent violence and political uncertainty, underscored the resilience of Iraq’s economy and the determination of its people to rebuild and improve their livelihoods. While security issues continued to pose significant risks to investment and development, the expansion of key sectors, increased business activity, and rising consumer demand demonstrated that Iraq was gradually emerging from the economic devastation of the 1990s and early 2000s. This period laid the groundwork for ongoing reconstruction efforts and economic reforms aimed at fostering sustainable growth and stability in the years to come.

Since 1974, the Iraqi government assumed direct control over the country’s largest private oil production operations, notably those of Mosul Oil and Basra Oil. This nationalization marked a profound transformation in Iraq’s industrial landscape, as the state consolidated its dominance over the oil sector, which had previously been operated by private and foreign companies. The move was part of a broader strategy to assert greater sovereignty over natural resources and to channel oil revenues more directly into national development projects. By bringing these critical oil-producing entities under government management, Iraq effectively centralized control over its most valuable industrial assets, which in turn shaped the trajectory of its broader industrial policies and economic priorities. Following this government intervention, the majority of Iraq’s manufacturing activity became closely intertwined with the oil industry. The industrial sector increasingly revolved around activities that supported or derived from petroleum extraction and processing, reflecting the country’s heavy reliance on hydrocarbon resources. This linkage was evident in the concentration of industrial output in areas such as petroleum refining, where crude oil was processed into various fuels and other products, and in the production of chemicals and fertilizers, which utilized petroleum derivatives as key inputs. These industries constituted the backbone of Iraq’s manufacturing base, underscoring the central role of oil not only as an export commodity but also as a critical feedstock for domestic industrial processes. The primary industries within Iraq’s industrial sector thus centered on petroleum refining and the manufacture of chemicals and fertilizers. Petroleum refining facilities transformed crude oil into gasoline, diesel, kerosene, and other essential fuels that supported both domestic consumption and export. Meanwhile, the chemical and fertilizer industries produced compounds vital to agriculture and other sectors, leveraging Iraq’s abundant hydrocarbon resources to supply inputs such as ammonia and urea. These industries remained the mainstays of Iraq’s industrial output for decades, reflecting a pattern of industrial specialization deeply rooted in the country’s resource endowment and government policies. This focus on oil-related manufacturing limited the development of other industrial sectors, creating a structural dependence on hydrocarbons. Prior to the 2003 invasion of Iraq, efforts to diversify the country’s industrial base were significantly constrained by a combination of domestic and international factors. The government maintained strict controls over the economy, including restrictions on privatization that limited private sector participation and innovation. Additionally, the imposition of international sanctions throughout the 1990s, following Iraq’s invasion of Kuwait and the subsequent Gulf War, severely restricted access to foreign investment, technology, and markets. These sanctions hindered the modernization of industrial infrastructure and curtailed the importation of machinery and raw materials necessary for expanding non-oil industries. Consequently, Iraq’s industrial development remained narrowly focused, with limited progress toward economic diversification. Since 2003, the security situation in Iraq has posed a major obstacle to the establishment of new industrial enterprises and the broader goal of economic diversification. The aftermath of the U.S.-led invasion and the ensuing years of conflict and instability created an environment of uncertainty and risk that discouraged both domestic and foreign investment in new industrial ventures. Frequent disruptions to infrastructure, shortages of skilled labor, and the threat of violence impeded efforts to rebuild and expand the manufacturing sector beyond its traditional oil-related activities. These security challenges compounded the legacy of sanctions and centralized control, resulting in a stagnation of industrial growth and a continued reliance on the hydrocarbon sector as the primary engine of the economy. The construction industry in Iraq stands out as a notable exception to the general stagnation experienced by other industrial sectors. In the year 2000, cement was identified as the only major industrial product in Iraq that was not directly based on hydrocarbons, indicating some degree of industrial diversity. Cement production supported the construction sector, which played a critical role in the country’s economic activity, particularly given the extensive need for rebuilding and development. The construction industry’s relative vitality contrasted with the broader manufacturing sector’s challenges, highlighting its importance as a source of employment and economic output independent of oil-based industries. The construction sector benefited substantially from the imperative to reconstruct infrastructure and housing in the wake of Iraq’s multiple conflicts, including the Gulf War of 1990-1991 and the Iraq War beginning in 2003. These wars inflicted widespread damage on urban centers, transportation networks, utilities, and residential areas, creating an urgent demand for rebuilding efforts. As a result, construction activities encompassed not only the repair and expansion of essential infrastructure such as roads, bridges, and power plants but also the development of new housing projects to accommodate displaced populations and growing urbanization. The sector’s growth was driven by both government initiatives and international aid programs aimed at restoring Iraq’s physical and economic foundations. During the 1990s, Iraq’s construction industry experienced notable growth fueled by government funding directed toward extensive infrastructure projects, housing developments, and the erection of elaborate palace complexes. Despite the economic hardships imposed by sanctions and conflict, the state prioritized construction as a means of demonstrating political power and sustaining employment. Large-scale infrastructure projects included the building and maintenance of roads, water supply systems, and public buildings, which were essential for maintaining basic services and supporting the population. Simultaneously, the government invested in residential construction to address housing shortages and to accommodate the needs of a growing urban population. The construction of ornate palace complexes served not only as symbols of regime authority but also as major state-sponsored undertakings that engaged significant segments of the construction workforce. This period of state-led development reflected the government’s strategic use of construction to bolster the economy and project political legitimacy amid challenging circumstances.

Agriculture in Iraq contributed approximately 3.3 percent to the gross national product, yet it employed about one-fifth of the labor force, highlighting its significance as a major source of employment despite its relatively modest share in economic output. Historically, between 50 and 60 percent of Iraq’s arable land was under cultivation, reflecting the country’s longstanding reliance on agriculture as a foundational sector. During the period of the United Nations Oil-for-Food program, Iraq imported substantial quantities of grains, meat, poultry, and dairy products to meet domestic food requirements, underscoring the challenges faced in achieving self-sufficiency amid international sanctions and economic constraints. In 1981, the Iraqi government abolished its collective farming program, which had been implemented as part of broader agrarian reforms aimed at restructuring land ownership and agricultural production. This policy reversal marked a shift toward more individualized farming practices, although the legacy of collectivization continued to influence agricultural management and land use patterns. The Gulf War of 1990–1991 inflicted significant disruptions on Iraqi agriculture, causing extensive physical damage to infrastructure and farmland. Economic sanctions imposed by the international community further curtailed imports of essential agricultural inputs and equipment, while restrictions on petroleum exports severely limited government revenues. Additionally, agricultural production was constrained by prohibitions on crops and technologies with potential military applications, compounding the sector’s difficulties. In response to these multifaceted challenges, the Iraqi government centralized control over grain and oilseed marketing, establishing a monopoly to regulate distribution and stabilize supplies. Production quotas were imposed on farmers to meet national targets, and a Public Distribution System (PDS) was created to provide basic foodstuffs to the population. By mid-1991, the government supplied a standardized “basket” of food items that provided approximately one-third of the daily caloric requirements for Iraqis, with consumers paying only about 5 percent of the market value for these subsidized goods. However, subsidies for agricultural inputs such as fertilizers, seeds, and fuel diminished throughout the 1990s, resulting in input prices that failed to cover production costs. Concurrently, taxation on agricultural production increased significantly, reaching between 20 and 35 percent by the mid-1990s, thereby placing additional financial burdens on farmers. In October 1991, the Baghdad regime withdrew government personnel from northern regions controlled by Kurdish parties, effectively ceding administrative control over the Kurdistan Region. This area developed into a “market economy essentially left alone by a fragile governing structure,” heavily influenced by substantial flows of international humanitarian aid. The relative autonomy and external assistance allowed the Kurdish region to maintain agricultural activities with less direct interference from the central government. In December 1996, under the framework of the Oil-for-Food Program negotiated with the United Nations, Iraq resumed petroleum exports, using the proceeds to finance the importation of foodstuffs and other essential goods. From 1997 to 2001, grain imports averaged $828 million annually, representing an increase of over 180 percent compared to the preceding five-year period, reflecting the growing dependence on foreign food supplies. The influx of imported foodstuffs, often priced below domestic production costs, exerted severe competitive pressure on local agriculture. Between 1997 and 2001, Iraqi production of staple cereals declined markedly: wheat production fell by 29 percent, barley by 31 percent, and maize by 52 percent. The government’s neglect of forage crops, fruits, vegetables, and livestock other than poultry contributed to uneven impacts across agricultural subsectors. While these less prioritized sectors were somewhat insulated from international market fluctuations, they suffered from environmental and biological challenges, including severe drought conditions, outbreaks of screwworm infestations, and epizootics of foot-and-mouth disease. The expansion of the Oil-for-Food Program to include agricultural inputs and machinery by around 2002 helped stabilize agricultural productivity, providing farmers with improved access to essential resources and equipment. Following the U.S.-led invasion of Iraq in March 2003, many Iraqis became increasingly dependent on government-subsidized food as the agricultural sector struggled to recover from years of conflict and sanctions. Reconstruction efforts funded by the United States focused on enhancing agricultural productivity through initiatives such as the Agricultural Reconstruction and Development Iraq (ARDI) program. Administered by Development Alternatives, Inc. (DAI) of Bethesda, Maryland, ARDI conducted field trials aimed at improving farming practices and crop varieties for a range of crops, including winter cereals like wheat and barley, summer cereals such as rice, maize, and sorghum, as well as potatoes and tomatoes. The program also introduced feed supplements and veterinary treatments designed to improve livestock reproductive outcomes, while conducting surveys of poultry growers and apple farmers to assess sector needs and opportunities. Under ARDI, nurseries for date palms and grapes were established to support the propagation of these economically important crops. The program also promoted the formation of trade associations and producers’ cooperatives, reinforcing the role of extension services as a government function to disseminate agricultural knowledge and technical assistance. With a budget exceeding $100 million, the ARDI project continued until December 2006, representing a significant investment in rebuilding Iraq’s agricultural infrastructure and capacity. Complementary efforts included USAID’s Community Action Program, which funded market analyses for sheep and wool production. Additionally, contracts were awarded to the University of Hawaii to revitalize higher education in agriculture, and to the Louis Berger Group for $120 million to promote Iraq’s private sector development, including agricultural enterprises. Beginning in 2006, Provincial Reconstruction Teams (PRTs) were deployed throughout Iraq to foster goodwill among local populations and counter insurgency activities. These teams enabled military commanders to allocate up to $500,000 for local development needs with minimal bureaucratic hurdles, facilitating rapid responses to community priorities. Civilian agencies such as the U.S. Department of Agriculture and USAID actively participated in PRT activities, contributing technical expertise and resources. However, critics of the PRTs pointed to the absence of a cohesive national agricultural strategy, arguing that the emphasis on “American-style” agricultural technologies was often inappropriate for Iraq’s unique environmental and socio-economic conditions. Post-2002 agricultural production in Iraq showed limited recovery. Data from the Food and Agriculture Organization (FAO) indicated that between 2002 and 2013, wheat production increased by 11 percent and milled rice by 8 percent. In contrast, barley production declined by 13 percent, and maize production fell sharply by 40 percent during the same period. Iraq’s per capita food production, measured in “international dollars” with a base index of 100 for 2004–2006, stood at 135 in 2002 but dropped to 96 in 2007 and further declined to 94 by 2012. Employment in the agricultural sector also decreased, although production per worker showed some improvement, with indices of 117 in 2002, 106 in 2007, and rising to 130 in 2012. The Oil-for-Food program (1997–2003) had further suppressed domestic farm production by flooding the market with artificially priced foreign foodstuffs, undermining local producers’ competitiveness. Favorable weather conditions in 2004 contributed to a 22 percent increase in grain production compared to 2002 levels, offering a temporary boost to agricultural output. Nonetheless, experts predicted that Iraq would remain a net importer of agricultural products for the foreseeable future, given structural challenges and ongoing recovery needs. Long-term development plans envisioned investments in agricultural machinery, improved materials, and the introduction of more productive crop varieties. However, these improvements had not been realized under Saddam Hussein’s regime, which had prioritized other sectors and faced persistent policy and infrastructural constraints. By 2004, Iraq’s main crops included wheat, barley, corn, rice, vegetables, dates, and cotton, while the principal livestock outputs were cattle and sheep. The Agricultural Cooperative Bank, capitalized at nearly one billion dollars by 1984, played a critical role in providing low-interest, low-collateral loans to private farmers. These loans supported mechanization efforts, poultry projects, and orchard development, facilitating modernization within the agricultural sector. Large modern cattle, dairy, and poultry farms were under construction during this period, reflecting government initiatives aimed at modernizing and expanding agricultural production. Despite these efforts, major obstacles to agricultural development persisted. Labor shortages, inadequate management and maintenance of infrastructure, soil salinization, urban migration, and dislocations caused by previous land reform and collectivization policies all hindered progress. In 2011, agricultural adviser Layth Mahdi summarized the impact of U.S. reconstruction efforts, noting that prior to 2003, Iraq imported about 30 percent of its food annually. After the invasion, reliance on imports increased dramatically to 90 percent, costing the country over $12 billion annually. This shift led to a decline in domestic production, land degradation, environmental exploitation, and widespread impoverishment and unemployment among farmers. To mitigate labor shortages caused by war and displacement, Iraq saw an increased importation of foreign workers and a greater participation of women in traditionally male-dominated agricultural roles. This demographic shift helped sustain agricultural activities despite ongoing challenges. An unsuccessful attempt to drain the southern marshes and introduce irrigated farming destroyed a natural food-producing ecosystem, with salt and mineral accumulation rendering the land unsuitable for agriculture and causing long-term environmental damage. In the Mada’in Qada region east of Baghdad, farmers organized the Green Mada’in Association for Agricultural Development, a cooperative that provided members with access to drip irrigation systems, greenhouses, and credit facilities. This grassroots initiative exemplified local efforts to improve agricultural productivity and resilience. In recent years, farmers across Iraq have faced reduced rainfall and rising temperatures, conditions that have particularly impacted small-scale farmers who lack the resources to adapt to lower water availability. Many have been forced to abandon their lands in search of alternative livelihoods, exacerbating rural economic challenges and threatening the sustainability of Iraq’s agricultural sector.

Throughout the twentieth century, Iraq’s natural forests underwent significant degradation due to a combination of human activities. Exploration efforts often led to the clearing of forested areas, while shifting agriculture practices disrupted the natural regeneration of tree populations. Additionally, frequent forest fires, both natural and anthropogenic, further damaged the woodland ecosystems. Uncontrolled grazing by livestock compounded these effects by preventing the growth of young saplings and altering the soil composition, which in turn hindered forest recovery. The cumulative impact of these factors resulted in a substantial reduction of Iraq’s forested landscapes over the course of the century. By 2005, the remnants of Iraq’s natural forests were predominantly confined to the northeastern highlands, a region characterized by its mountainous terrain and relatively cooler climate. This area, located near the borders with Turkey and Iran, provided a more suitable environment for forest survival compared to the arid and semi-arid zones that dominate much of the country. However, even within this northeastern enclave, the composition of tree species presented limitations for commercial exploitation. The majority of trees found in these highlands were not well-suited for lumbering purposes, as they tended to be smaller in size, less dense, or of species that lacked significant economic value for timber production. Consequently, the forestry sector in Iraq remained limited in scope and economic contribution. In 2002, Iraq’s wood harvesting activities amounted to a total of 112,000 cubic meters. Nearly half of this volume was utilized as fuelwood, reflecting the country’s reliance on wood as an energy source, particularly in rural areas where access to alternative fuels might have been limited. The remaining wood harvested was likely used for construction, furniture, and other domestic purposes, although the overall scale of harvesting was modest compared to countries with more extensive forest resources. This reliance on fuelwood underscored the challenges faced by Iraq in meeting its energy needs through modern infrastructure, as well as the ongoing pressures on its limited forest resources. Despite the presence of several large rivers, including the Tigris and Euphrates, Iraq’s fishing industry remained relatively small and underdeveloped. The country’s fishing activities were primarily concentrated on marine species found in the Persian Gulf, rather than freshwater species from its inland waterways. This focus was partly due to the ecological characteristics of the rivers, which, combined with pollution, water management issues, and habitat degradation, limited the productivity of freshwater fisheries. The Persian Gulf, with its diverse marine life, offered more opportunities for commercial fishing, although the scale of operations remained modest. Official government estimates indicated that Iraq’s fishing yield in 2001 was approximately 8,000 tons. This figure represented a significant decline from the period between 1981 and 1997, when annual catches averaged around 18,000 tons. The reduction in fishery output over these two decades can be attributed to a range of factors, including environmental degradation, overfishing, and the impacts of regional conflicts that disrupted fishing activities and damaged marine and freshwater habitats. The decline also reflected broader economic and infrastructural challenges that hindered the development of a more robust fishing sector. Outside of its substantial hydrocarbon resources, Iraq’s mining industry was relatively limited in scope and output. Apart from oil and natural gas, the country extracted small quantities of phosphates at Akashat, a site known for its phosphate deposits in western Iraq. Additionally, salt and sulfur were mined near Mosul, contributing modestly to the country’s mineral production. These mining operations were generally small-scale and did not constitute a major component of Iraq’s economy. The limited diversity and scale of mineral extraction highlighted the country’s heavy dependence on hydrocarbons as the primary driver of its industrial and economic activity. The mining sector experienced a period of increased productivity during the 1970s, benefiting from government initiatives aimed at diversifying the economy and developing non-oil mineral resources. However, this productive phase was short-lived, as the industry faced numerous setbacks in the following decades. The outbreak of the Iran–Iraq War from 1980 to 1988 severely disrupted mining operations, diverting resources and attention to the war effort. Subsequently, the imposition of international sanctions during the 1990s further constrained the sector by limiting access to equipment, technology, and investment. The economic collapse following the 2003 invasion of Iraq compounded these difficulties, leading to a further decline in mining activities. As a result, the non-hydrocarbon mining industry remained underdeveloped and struggled to regain its former levels of productivity.

Iraq ranks among the world’s most oil-rich nations, possessing the fifth largest proven crude oil reserves globally, which amounted to an estimated 147.22 billion barrels by the end of 2017. This vast endowment of hydrocarbons has positioned Iraq as a pivotal player in the global energy market. The country’s oil sector dominates its economy, with the majority of production directed toward exports. Out of a total daily production of approximately 4.3 million barrels, Iraq exported nearly 4 million barrels per day, making it the third-largest oil exporter worldwide. This heavy reliance on oil exports underscores the sector’s critical role in generating foreign exchange and government revenue. Despite enduring prolonged periods of conflict, including a civil war, Iraq managed to increase its oil production during 2015 and 2016. This growth was a testament to the resilience and strategic importance of the oil industry amid instability. However, in 2017, oil production experienced a decline of about 3.5 percent. This reduction was primarily attributed to ongoing disputes with the Kurdistan Regional Government over control and revenue sharing of oil fields, as well as Iraq’s adherence to production limits imposed by the Organization of the Petroleum Exporting Countries (OPEC) to stabilize global oil prices. Notably, Iraq’s oil production costs remained relatively low compared to global standards, providing the country with a competitive advantage in the international market. The oil industry’s infrastructure in Iraq has suffered extensive damage over several decades due to multiple wars and sanctions. Four major conflicts—the Iran-Iraq War from 1980 to 1988, the Gulf War in 1991, the Iraq War spanning 2003 to 2011, and the more recent civil war—have all inflicted severe harm on oil facilities, pipelines, and refineries. Additionally, the United Nations sanctions imposed between 1991 and 2003 further exacerbated the degradation of the energy sector’s infrastructure by restricting investment and maintenance activities. Consequently, much of the oil infrastructure was left in poor condition, requiring significant rehabilitation efforts in the post-sanctions and post-conflict periods. During the 1970s, Iraq’s oil production reached impressive levels, exceeding 3.5 million barrels per day. This period marked a high point in the country’s oil output, driven by state-led nationalization policies and investments in exploration and production. However, the onset of the Iran-Iraq War in 1980 disrupted production, causing a decline as oil fields became battlegrounds and infrastructure was damaged. The situation worsened dramatically following Iraq’s invasion of Kuwait in 1990, which led to the Gulf War and subsequent international sanctions. After the invasion, oil production plummeted by an estimated 85 percent, reflecting the combined impact of military conflict, destruction of facilities, and embargoes on exports. From 1991 to 1996, United Nations sanctions effectively prevented Iraq from exporting oil, with limited exceptions under the Oil-for-Food Programme. This arrangement allowed Iraq to sell oil in exchange for humanitarian aid, aiming to alleviate the suffering of the civilian population while maintaining economic pressure on the government. The sanctions regime severely constrained Iraq’s ability to generate revenue from its oil reserves, leading to economic hardship and further deterioration of the energy infrastructure. It was not until the lifting of these sanctions in 2003, following the U.S.-led invasion and subsequent regime change, that Iraq was able to restart full-scale oil production and exports. Since then, the country has gradually restored output to levels comparable to those before the Gulf War, although challenges remain. Despite the extensive damage caused by decades of conflict and sanctions, most of Iraq’s oil infrastructure has been repaired or rebuilt. However, persistent sabotage by the Islamic State of Iraq and the Levant (ISIL) and other militant groups has continued to disrupt operations. Attacks on pipelines, refineries, and export terminals have periodically reduced production capacity and export volumes. In 2004, Iraq operated eight oil refineries, with the largest facilities located in Baiji, Basra, and Daura. These refineries were critical for processing crude oil into refined petroleum products necessary for domestic consumption and export. Nevertheless, Iraq’s oil wealth has not insulated the country from frequent sabotage and technical difficulties at its refineries. These issues have compelled Iraq to import petroleum, refined oil products, and electricity, particularly from neighboring Iran, to meet domestic demand. In 2004, Iraq reportedly spent around $60 million per month on imported gasoline alone, highlighting the paradox of a resource-rich country reliant on imports for essential energy products. Sabotage incidents in late 2004 and early 2005 notably reduced oil exports and disrupted domestic distribution networks, leading to widespread fuel shortages and power outages, especially in Baghdad, the capital. The ongoing insurgency and sabotage by ISIL have further exacerbated energy sector vulnerabilities. Attacks on pipelines, power plants, and transmission lines, coupled with widespread theft of oil and electricity, have undermined the stability of energy supplies. These disruptions contributed to public discontent and protests in southern Iraq in July 2018, where citizens demanded improved electricity access and government accountability. The energy sector’s fragility remains a significant challenge to Iraq’s broader economic and social stability. In 2004, the Iraqi government initiated plans to increase domestic utilization of natural gas, aiming to reduce dependence on oil for power generation and to support the development of the petrochemical industry. However, the growth of natural gas output has been closely linked to developments in the oil sector, as most of Iraq’s natural gas is associated gas produced alongside crude oil. The lack of dedicated natural gas infrastructure and investment has limited the country’s ability to fully exploit this resource, constraining diversification efforts within the energy sector. The Persian Gulf War of 1991 inflicted severe damage on Iraq’s power generation infrastructure, destroying approximately half of the country’s power plants. Recovery has been slow and incomplete, with full restoration of capacity remaining elusive. By mid-2004, Iraq’s power-generating capacity was estimated at around 5,000 megawatts, while demand was significantly higher, at approximately 7,500 megawatts. The country’s electricity transmission system comprised roughly 17,700 kilometers of lines, but this network suffered from neglect, sabotage, and insufficient maintenance. Plans formulated in 2004 to build two new power plants and rehabilitate existing infrastructure faced numerous obstacles, including ongoing sabotage, looting, and security challenges. These factors impeded progress, keeping the country’s electricity generation capacity below 6,000 megawatts for several years. The civil war, continued sabotage, and pervasive government corruption further exacerbated electricity shortages. By 2010, electricity demand exceeded supply by an estimated 6,000 megawatts, resulting in frequent blackouts and unreliable power availability for both residential and industrial consumers. As of 2018, the oil sector remained the cornerstone of Iraq’s economy, accounting for more than 65 percent of the country’s gross domestic product (GDP) and approximately 90 percent of total government revenue. Petroleum exports dominated Iraq’s trade profile, constituting 94 percent of total exports, which were valued at $59.73 billion in 2017. This overwhelming dependence on oil revenues underscored the vulnerability of the Iraqi economy to fluctuations in global oil prices and production disruptions. Recognizing the risks associated with overreliance on oil, the Iraqi government has expressed a strategic objective to diversify the economy. Efforts to stimulate non-oil sectors have yielded mixed results; from 2014 to 2016, non-oil GDP growth lagged behind regional averages, reflecting ongoing instability and structural challenges. However, in 2017, non-oil GDP growth outpaced regional averages, indicating some progress toward economic diversification. Despite these gains, government spending on non-oil investments has declined since 2013, reaching only 34 percent of total investment expenditure at the time of the latest available data. This limited allocation constrains the pace and scale of economic diversification, leaving Iraq’s economy heavily dependent on the oil sector for the foreseeable future.

Between June 2009 and February 2010, the Iraqi Ministry of Oil undertook a significant tender process to award Service Contracts aimed at developing Iraq’s existing oil fields. This process was notable for its transparency, as the results of the tender were broadcast live on Iraqi television, allowing the public to witness the awarding of contracts in real time. The contracts awarded during this period encompassed all major oil fields under the jurisdiction of the central Iraqi government, with the exception of those located in the Kurdistan Region. The Kurdistan Regional Government had independently awarded Production Sharing Contracts for its fields, a move that remained a subject of dispute with the Baghdad government, which did not recognize the legality of those contracts. Consequently, the 2009 tender process focused exclusively on fields outside the Kurdistan Region, reflecting the central government’s efforts to assert control and attract international investment into Iraq’s oil sector. All contracts awarded through this tender process were subject to final ratification by the Iraqi government, meaning that while the initial awards were made public, they were not legally binding until formally approved by the relevant governmental authorities. Moreover, the ownership shares allocated to the participating companies were not fixed at the time of award; these shares were open to adjustment through subsequent commercial negotiations, allowing for flexibility in the final contractual arrangements. This approach acknowledged the complex nature of oil field development, where operational and financial considerations could necessitate modifications to initial terms. The contracts were structured as technical service agreements, under which companies would receive a fixed service fee per barrel of oil produced above a baseline level, rather than equity stakes or profit-sharing arrangements typical of Production Sharing Contracts. The awarded contracts covered several of Iraq’s largest and most productive oil fields, each involving a consortium of international oil companies from diverse countries, including state-owned enterprises and publicly traded corporations. Detailed data compiled from various sources provide a comprehensive overview of the fields, participating companies, their home countries, company types, ownership shares, production increase shares, service fees per barrel, and projected gross revenues at plateau production. These figures illustrate the scale and economic implications of the contracts. At the Majnoon Field, Royal Dutch Shell, a publicly traded company headquartered in the Netherlands, was awarded a 45% ownership share. Shell’s production increase share was set at 0.7875 million barrels per day (mb/d), with a service fee of $1.39 per barrel. Based on these parameters, Shell’s projected gross revenue at plateau production was estimated at approximately $0.4 billion per annum. Petronas, Malaysia’s state-owned oil company, held a 30% share in the Majnoon Field contract, with a production increase share of 0.525 mb/d and the same service fee of $1.39 per barrel. Petronas’s gross revenue at plateau was projected to be around $0.266 billion annually. These figures reflect the significant role of both Western and Asian companies in Iraq’s oil sector development during this period. The Halfaya Field contract was divided among several companies, with China National Petroleum Corporation (CNPC), a state-owned Chinese enterprise, owning 37.5% of the field. CNPC’s production increase share was 0.525 mb/d, with a service fee identical to that of Majnoon at $1.39 per barrel, resulting in a projected gross revenue of $0.102 billion per year. Petronas held an 18.75% stake in Halfaya, with a production increase share of 0.099 mb/d. Notably, Petronas’s service fee for this field was slightly higher at $1.40 per barrel, yielding an estimated gross revenue of $0.051 billion annually. TotalEnergies, a publicly traded French company, also held an 18.75% share in Halfaya, with similar production and financial parameters as Petronas, underscoring the multinational nature of the consortium operating this field. The Rumaila Field was awarded primarily to two major companies: BP, a UK-based publicly traded corporation, and CNPC. Both companies held equal ownership shares of 37.5%, with identical production increase shares of 0.7125 mb/d. The service fee agreed upon for Rumaila was higher than in some other fields, set at $2 per barrel. This fee translated into projected gross revenues at plateau of approximately $0.520 billion annually for each company. The Rumaila Field, being one of Iraq’s largest oil fields, represented a significant component of the country’s oil production capacity and attracted major international players due to its vast reserves and production potential. At the Zubair Field, the consortium was composed of ENI, an Italian publicly traded company, which held a 32.81% ownership share. ENI’s production increase share was 0.328 mb/d, with a service fee of $2 per barrel, leading to projected gross revenues of $0.240 billion per annum. Occidental Petroleum, a publicly traded company based in the United States, owned 23.44% of the field, with a production increase share of 0.2344 mb/d and the same $2 per barrel service fee, resulting in gross revenues estimated at $0.171 billion annually. The Korea Gas Corporation (KOGAS), a state-owned South Korean company, held an 18.75% stake in Zubair, with a production increase share of 0.1875 mb/d and projected gross revenues of $0.137 billion per year. The involvement of companies from Europe, the United States, and Asia in Zubair exemplified the diverse international interest in Iraq’s oil sector. West Qurna Field Phase 2 was awarded predominantly to Lukoil, a publicly traded Russian company, which held a commanding 75% ownership share. Lukoil’s production increase share was 1.35 mb/d, the highest among the fields awarded, with a comparatively low service fee of $1.15 per barrel. This fee translated into projected gross revenues of approximately $0.567 billion annually at plateau production. Equinor, a Norwegian state-owned enterprise, was also listed as a participant in West Qurna Phase 2, although specific ownership shares, production increases, and financial figures for Equinor were not publicly available at the time. The large stake held by Lukoil and the presence of Equinor highlighted Russia and Norway’s strategic interest in Iraq’s oil development. The Badra Field contract involved a consortium of companies with varying ownership shares and service fees. Gazprom, the Russian state-owned energy giant, owned 30% of Badra, with a production increase share of 0.051 mb/d. Gazprom’s service fee was notably high at $5.50 per barrel, significantly exceeding fees agreed upon in other contracts, which resulted in gross revenues projected at $0.102 billion annually. Petronas held a 15% share in Badra, with a production increase share of 0.0255 mb/d and the same $5.50 per barrel service fee, yielding gross revenues of approximately $0.051 billion per year. KOGAS owned 23% of the field, with a production increase share of 0.03825 mb/d and projected gross revenues of $0.077 billion annually. Additionally, the Turkish Petroleum Corporation (TPAO), a state-owned Turkish company, held an 8% stake in Badra, with a production increase share of 0.01275 mb/d and gross revenues estimated at $0.026 billion per annum. The high service fee at Badra reflected the field’s challenging development conditions and the risk profile perceived by the companies involved. West Qurna Field Phase 1 was awarded primarily to ExxonMobil, a publicly traded American corporation, which held a 60% ownership share. Exxon’s production increase share was 1.2276 mb/d, with a service fee of $1.90 per barrel. This arrangement projected gross revenues of approximately $0.851 billion annually at plateau production. Shell, operating as a joint UK/Netherlands public company, held a 15% share in West Qurna Phase 1, with a production increase share of 0.3069 mb/d and the same $1.90 per barrel service fee, resulting in gross revenues estimated at $0.213 billion per year. The participation of major Western oil companies in West Qurna Phase 1 underscored the field’s strategic importance and the confidence of these firms in Iraq’s oil sector. It is important to note that all ownership shares mentioned represent percentages of total ownership in each field, with the Iraqi state retaining a mandatory 25% stake in all fields awarded via service contracts. This arrangement ensured that the Iraqi government maintained a significant interest in its natural resources while leveraging international expertise and capital for development. The “production increase share” specified for each company indicates the additional millions of barrels per day that the company is responsible for producing beyond the baseline production level, which in turn generates the service fee payments stipulated in the contracts. The “gross revenue at plateau” figures represent the total annual payments each company is expected to receive once their target plateau production rate is achieved, a milestone anticipated to occur between five and eight years after the commencement of operations. These gross revenues are calculated before deducting operating costs and the recovery of development expenditures, which are typically borne by the Iraqi government under the terms of the service contracts. Collectively, the total gross revenue at plateau for all companies combined was approximately $4.34 billion per year. This estimate was based on an assumed oil price of $70 per barrel and an aggregate production increase of 9.4 million barrels per day resulting from the development projects. The scale of these contracts and their associated revenues reflected the central role of the oil sector in Iraq’s economy and the significant investments required to restore and expand production capacity following years of conflict and underinvestment. In the context of Iraq’s broader economic framework, the 2010 government budget was set at $60 billion. The total capital expenditure estimated for the development of these oil projects was approximately $300 billion, a figure that highlighted the magnitude of investment needed to realize Iraq’s oil production potential. When considered on a per capita basis, this capital expenditure equated to roughly $10,000 annually for each Iraqi citizen, underscoring the transformative impact that successful oil field development could have on the country’s economic prospects and public finances. Analyzing the distribution of increased production shares by region reveals the international dimension of Iraq’s oil contracts. Companies headquartered in Iraq accounted for 1.462 mb/d, representing 25% of the total production increase, reflecting the Iraqi state’s retained stakes. Asian companies collectively held production increase shares amounting to 1.9 mb/d, or 20% of the total, demonstrating the growing influence of Asian national oil companies in Iraq’s oil sector. UK-based firms accounted for 1.81 mb/d, or 19%, while companies from the United States held 1.462 mb/d, representing 16% of the increased production. Russian companies possessed 1.402 mb/d, or 14%, and European companies excluding those from the UK held 0.528 mb/d, equivalent to 6% of the total production increase. This distribution illustrated the diverse geographic origins of the companies involved and the global interest in Iraq’s oil resources during the post-2009 development phase.

Following the fall of Saddam Hussein’s regime, Iraq’s financial services sector underwent a series of significant reforms aimed at revitalizing and modernizing the country’s banking infrastructure. Prior to these reforms, during the 1990s, the Iraqi banking landscape was characterized by the establishment of seventeen private banks. These institutions emerged in a period marked by considerable economic hardship and international isolation. Despite their creation, the private banks primarily conducted domestic transactions and struggled to attract a substantial number of private depositors. This limited engagement reflected the broader challenges faced by the Iraqi economy, including a lack of public confidence in the banking system and restrictions imposed by international sanctions. The international embargo imposed on Iraq during the 1990s had a profound and detrimental impact on both the private banking sector and the two principal state-owned banks. These financial institutions suffered extensive damage as a result of the embargo, which severely constrained their ability to engage in international trade and financial exchanges. The sanctions not only curtailed foreign investment and access to global financial markets but also eroded the operational capacity of Iraqi banks, undermining their stability and effectiveness. Consequently, the banking sector remained fragmented and underdeveloped, with limited integration into the global financial system. A pivotal shift occurred in 2003 when the Coalition Provisional Authority (CPA), established following the U.S.-led invasion of Iraq, initiated a series of reforms designed to further privatize and expand the country’s banking system. One of the CPA’s key measures was the removal of restrictions on international bank transactions, which had previously hampered Iraqi banks’ ability to conduct cross-border financial operations. By lifting these constraints, the CPA aimed to facilitate greater participation by Iraqi banks in the global financial network, enhance liquidity, and stimulate economic growth. This liberalization was intended to attract foreign investment and rebuild confidence in the financial sector, which had been debilitated by years of conflict and sanctions. In addition to deregulating international transactions, the CPA undertook efforts to increase the autonomy of the Central Bank of Iraq (CBI). Historically, the CBI had operated under significant government control, which limited its capacity to implement independent monetary policy. The CPA’s reforms effectively liberated the CBI from direct governmental oversight, granting it enhanced independence to manage monetary policy and stabilize the national currency. This institutional reform was crucial for establishing a credible and effective central banking system capable of responding to economic challenges and fostering a stable financial environment. During its initial year of independent operation, the Central Bank of Iraq was recognized for its success in curbing inflation, a critical issue for the post-conflict economy. Although specific data or citations detailing the extent of inflation control are not readily available, the CBI’s management was credited with implementing policies that helped stabilize prices and restore some measure of economic confidence. This achievement was significant in the context of Iraq’s broader economic recovery, as inflation control is essential for maintaining purchasing power and encouraging investment. The year 2004 marked another milestone in Iraq’s financial sector reform with the issuance of licenses to three foreign banks: HSBC, Standard Chartered, and the National Bank of Kuwait. These institutions became the first foreign banks authorized to operate within Iraq, signaling a major step toward reintegrating the country into the international financial community. The entry of these established foreign banks was expected to bring capital, expertise, and international best practices to the Iraqi banking sector, thereby enhancing its efficiency and competitiveness. This development also reflected a growing openness in Iraq’s financial system and a commitment to fostering a more diverse and dynamic banking environment.

Modern-style banking in Iraq traces its origins to the early 20th century, marking the inception of contemporary financial institutions within the country. This period saw the gradual establishment of formal banking frameworks that departed from traditional moneylending and informal financial practices, aligning Iraq’s financial system more closely with global banking standards. The introduction of modern banking institutions facilitated the mobilization of domestic savings, the provision of credit to various economic sectors, and the management of government finances, thereby laying the foundation for the nation’s evolving economic infrastructure. Over time, these early developments evolved into a more structured banking sector, characterized by the emergence of state-owned banks that would come to dominate the financial landscape. Iraq’s banking sector is predominantly dominated by two state-owned banks, which stand as the largest financial institutions in the country and share a common historical lineage. These banks have played pivotal roles in shaping the nation’s economic policies and financial stability, particularly in the context of Iraq’s complex political and economic environment. Their dominance is reflected not only in the scale of their operations but also in their extensive branch networks and the breadth of financial services they provide. The state ownership of these banks underscores the government’s significant influence over the banking sector, enabling it to direct credit flows and manage monetary policy more effectively within the national economy. Rafidain Bank, established in 1941, is one of Iraq’s principal state-owned banks and has historically occupied a central position in the country’s banking system. Founded during a period of increasing economic modernization, Rafidain Bank was initially created to serve as a commercial bank that could support Iraq’s growing industrial and trade sectors. Over the decades, it expanded its operations to include a wide range of banking services, including retail banking, corporate lending, and foreign exchange transactions. The bank’s establishment marked a significant milestone in Iraq’s financial history, as it became a cornerstone institution for the development of the country’s banking infrastructure and economic growth. In 1988, a significant restructuring occurred within Iraq’s banking sector, resulting in the separation of Rafidain Bank from another entity, thereby establishing Rafidain Bank as a distinct institution. Although the available text contains a typographical error that obscures the precise details of this reorganization, it is clear that this event represented an important institutional realignment aimed at enhancing the efficiency and specialization of banking services. This restructuring likely reflected broader economic reforms and efforts to modernize the banking system in response to changing domestic and international economic conditions. The separation allowed Rafidain Bank to focus more directly on its core banking functions, thereby strengthening its role within the national financial system. Rasheed Bank, established in the same year as this restructuring in 1988, emerged as another major state-owned bank in Iraq, complementing the role of Rafidain Bank in the country’s financial sector. With a network comprising 162 branches distributed across Iraq, Rasheed Bank has developed an extensive physical presence that facilitates broad access to banking services for individuals and businesses alike. The bank’s establishment during a period of economic transition underscores the government’s commitment to expanding and diversifying the state banking sector. Rasheed Bank has since played a critical role in providing credit, managing deposits, and supporting economic activities throughout the country, particularly in regions where private banking penetration remains limited. As of the latest available data, Rasheed Bank’s total assets amount to an unspecified figure denominated in Iraqi Dinar billion, indicating its substantial scale within Iraq’s banking system. Despite the absence of precise asset figures, the bank is known to hold a significant share of the total assets, credit, and deposits within the national banking sector. This dominant position reflects Rasheed Bank’s extensive operational capacity and its importance as a financial intermediary in Iraq’s economy. The bank’s asset base and market share underscore its influence in shaping credit allocation and liquidity management, which are critical for economic development and financial stability in the country. Rafidain Bank’s total assets have been reported at 147 Iraqi Dinar billion, solidifying its status as a key player in Iraq’s banking sector. Although specific percentages regarding its share of total banking assets, credit, and deposits are not provided, the magnitude of its asset base highlights the bank’s central role in the financial system. The size of Rafidain Bank’s assets reflects its capacity to support large-scale lending operations and to serve as a major custodian of public and private deposits. This financial strength enables the bank to influence monetary flows and credit availability, which are essential for sustaining economic activities across various sectors in Iraq. Together, Rafidain Bank and Rasheed Bank constitute the core of Iraq’s banking infrastructure, with their combined size and asset holdings illustrating their dominant roles within the country’s financial landscape. Their extensive branch networks, substantial asset bases, and significant shares of credit and deposits position them as the principal institutions through which much of Iraq’s banking transactions and financial intermediation occur. The prominence of these two state-owned banks reflects the broader structure of Iraq’s banking system, where government-controlled entities play a central role in directing financial resources and supporting economic policy objectives. Their continued dominance also highlights the challenges and opportunities facing Iraq’s banking sector as it navigates the complexities of economic development, financial modernization, and integration into the global financial system.

The ongoing insurgency in Iraq has profoundly influenced the development and expansion of the country’s security industry, transforming it into one of the most prosperous and rapidly growing segments within the broader services sector. The persistent instability and frequent security threats created a high demand for specialized protection services, which in turn fostered a lucrative environment for private security firms. This surge in demand was driven by both domestic institutions and foreign entities operating within Iraq, all seeking to safeguard personnel, assets, and infrastructure amid a volatile security landscape. Consequently, the private security industry emerged as a critical component of Iraq’s economy, reflecting broader trends of privatization and outsourcing in conflict zones. A distinctive characteristic of Iraq’s private security sector has been the prominent involvement of former United States military personnel, many of whom leveraged their combat experience and tactical expertise to establish or join private security companies operating within the country. These individuals, often veterans of the Iraq War and related military operations, brought with them specialized skills in areas such as close protection, intelligence gathering, and risk assessment, which were highly valued in the challenging Iraqi environment. Their participation underscored the transnational nature of the security industry in Iraq, as well as the complex interplay between military experience and private enterprise. This reliance on ex-military personnel also raised questions about the regulation, accountability, and oversight of private security contractors operating in a conflict zone. By the year 2005, the private security landscape in Iraq had become notably structured, with at least 26 distinct companies actively providing a range of security services across the country. These companies offered comprehensive solutions that included personal protection for high-profile individuals, institutional security for government buildings and private enterprises, as well as surveillance and monitoring services designed to detect and prevent potential threats. The diversity of services reflected the multifaceted nature of security challenges in Iraq, necessitating tailored approaches to different operational contexts. The presence of multiple firms competing in the market also indicated a degree of maturation within the sector, as companies sought to establish reputations and secure contracts amid a highly competitive and often dangerous environment. The proliferation of private security firms in Iraq during this period was closely tied to the broader geopolitical and economic dynamics of the post-invasion era. International organizations, diplomatic missions, reconstruction contractors, and Iraqi governmental bodies all required reliable security arrangements to function effectively. This demand fueled the growth of the industry and attracted investment from both domestic and foreign entrepreneurs. However, the rapid expansion of the sector also highlighted challenges related to regulatory frameworks, training standards, and coordination with official security forces. Despite these complexities, the private security industry in Iraq remained a vital element of the country’s service economy, adapting continuously to the evolving security landscape and contributing to the protection of key assets and personnel amidst ongoing conflict.

In the early post-Hussein period, Iraq’s retail trade underwent a significant transformation marked by a vibrant and largely unregulated market environment. This dynamic was largely a consequence of the absence of income tax and the lack of stringent import controls, which together fostered an atmosphere conducive to both legitimate and illegitimate commercial activities. The removal of these regulatory barriers allowed a diverse array of goods to flow into the country with relative ease, encouraging entrepreneurial ventures and informal trade networks to flourish. As a result, the retail sector became a patchwork of formal businesses operating alongside black-market transactions, reflecting the complexities of Iraq’s transitional economy during this era. This period witnessed a rapid proliferation of retail outlets and shopping centers, which served as tangible indicators of the freewheeling market environment. Entrepreneurs and investors capitalized on the newfound commercial freedoms by establishing a variety of retail formats, ranging from small independent shops to larger, more modern shopping complexes. These developments were not confined to the capital but also extended to other urban centers, highlighting a broader trend of retail expansion across the country. The retail landscape was characterized by a mix of traditional bazaars and newly constructed malls, which together catered to a growing consumer base eager to access a wider range of products and services. Among the most notable shopping malls established during this time were Baghdad Mall, Dream City Mall, Zayoona Mall, and Babylon Mall. Baghdad Mall emerged as one of the premier retail destinations in the capital, offering a modern shopping experience with a variety of international and domestic brands. Dream City Mall similarly contributed to the urban retail fabric, providing a multi-purpose commercial space that combined shopping, dining, and entertainment facilities. Zayoona Mall and Babylon Mall further diversified the retail options available to consumers, each with its own unique mix of stores and amenities designed to attract different segments of the population. These malls symbolized a shift towards a more consumer-oriented retail culture, reflecting both the aspirations and challenges of Iraq’s post-conflict economic recovery. Beyond Baghdad, retail development also took root in other regions, exemplified by the establishment of a mall in Basra and the Basra Times Square complex. The growth of retail centers in Basra signified the city’s emergence as a key commercial hub in southern Iraq, leveraging its strategic position as an oil-rich province with access to the Persian Gulf. Basra Times Square, in particular, represented a significant investment in regional retail infrastructure, offering a modern shopping environment that aimed to meet the demands of an increasingly urbanized population. These developments underscored the decentralization of retail growth from Baghdad to other important cities, illustrating the broader geographic spread of economic activity during this period. Collectively, the expansion of retail trade and the establishment of new shopping centers in the early post-Hussein era reflected the complex interplay of economic liberalization, regulatory gaps, and regional development priorities. The retail sector became a microcosm of Iraq’s broader economic transition, embodying both the opportunities and uncertainties that accompanied the country’s efforts to rebuild and modernize its economy after decades of conflict and isolation.

The tourism industry in Iraq historically capitalized on the country’s wealth of cultural and archaeological sites, which attracted visitors interested in its rich heritage. Prior to the outbreak of conflict, particularly during peaceful periods, the sector generated notable revenue; in 2001 alone, tourism earnings amounted to approximately US$14 million. This income reflected the appeal of Iraq’s ancient cities, religious landmarks, and historical monuments, which drew both regional and international tourists. The industry benefited from Iraq’s unique position as the cradle of civilization, with sites such as Babylon, Ur, and Nineveh serving as significant attractions that underscored the country’s historical and cultural importance. However, the onset of the Iraq War in 2003 precipitated a dramatic downturn in the tourism sector, rendering it largely dormant. The widespread instability, security concerns, and damage to infrastructure severely restricted travel and visitation to the country’s cultural sites. The conflict led to the closure of many historic locations and museums, while ongoing violence and political uncertainty discouraged both domestic and international tourists. As a result, the tourism industry experienced a significant decline, with many businesses and institutions related to tourism ceasing operations or operating at minimal capacity. The deterioration of security conditions and the destruction of cultural heritage sites further compounded the challenges faced by the sector. Despite these adverse conditions following 2003, efforts to sustain the tourism infrastructure persisted. By 2005, the Iraqi Tourism Board maintained a workforce of approximately 2,500 employees and operated 14 regional offices distributed throughout the country. This organizational presence was indicative of attempts to preserve institutional knowledge and lay the groundwork for future revival. The regional offices were responsible for promoting tourism, managing cultural sites, and coordinating with local authorities to ensure the protection of heritage locations. The persistence of such a sizable administrative apparatus during a period of widespread instability highlighted the government’s commitment to maintaining the tourism sector as a potential driver of economic recovery and cultural preservation. Between 2009 and 2010, there were signs of limited but ongoing international interest in Iraq’s historic sites, as evidenced by the visitation of 165 tourists from 16 different countries. This modest influx of visitors underscored a cautious but tangible resumption of tourism activities, despite the continuing security challenges. The tourists primarily sought to explore Iraq’s ancient ruins and cultural landmarks, demonstrating the enduring global fascination with the country’s archaeological heritage. These visits were facilitated by incremental improvements in security and infrastructure in certain regions, as well as targeted efforts by Iraqi authorities and international organizations to promote and protect key sites. Nonetheless, the scale of tourism remained small relative to pre-war levels, reflecting the complex realities of operating in a post-conflict environment. In January 2011, the United States Department of State provided a grant of US$2 million dedicated to the preservation of the ancient city of Babylon, one of Iraq’s most renowned archaeological sites. This financial support was instrumental in facilitating restoration and conservation projects aimed at safeguarding Babylon’s ruins from further deterioration. Additionally, the grant enabled efforts to reopen one of the city’s two museums, which had been closed due to damage and neglect during the years of conflict. The reopening of the museum was a significant step toward revitalizing cultural tourism in the region, offering visitors access to artifacts and exhibits that illustrate Babylon’s historical significance. This initiative reflected broader international recognition of the importance of protecting Iraq’s cultural heritage as a means of fostering national identity and supporting economic development through tourism.

Between 2003 and 2008, Iraq underwent a dramatic transformation in its telecommunications sector, particularly in the area of mobile phone usage. During this five-year period, the number of mobile phone subscriptions in the country increased by more than one hundred times, marking one of the most rapid expansions of mobile telecommunications in the world at that time. This explosive growth was largely driven by the reconstruction efforts following the 2003 invasion of Iraq, which dismantled much of the existing telecommunications infrastructure but also opened the market to new private sector investments and technological advancements. The introduction of competitive mobile service providers, coupled with the increasing affordability of mobile handsets and prepaid plans, contributed significantly to the widespread adoption of mobile phones across urban and rural areas alike. By the year 2008, the total number of mobile phone subscriptions in Iraq had reached approximately ten million, a remarkable figure considering the country’s population and the state of its infrastructure just a few years prior. This surge in mobile connectivity not only facilitated improved communication among Iraqis but also played a crucial role in economic development, social interaction, and access to information. The proliferation of mobile phones helped bridge the gap created by years of conflict and underinvestment in fixed-line telephone networks, which had remained limited and unreliable. Mobile telephony became the primary means of communication for many Iraqis, enabling them to stay connected despite ongoing security challenges and infrastructural constraints. The Brookings Institution, a prominent American research organization, documented this significant growth in Iraq’s mobile telecommunications sector, providing detailed analysis and data that highlighted the scale and speed of the expansion. Their research underscored the importance of mobile phone adoption as a key indicator of Iraq’s broader economic recovery and modernization efforts during the post-war period. The institution’s findings illustrated how telecommunications served as a critical enabler for other sectors of the economy, including commerce, finance, and public services, by enhancing connectivity and facilitating information exchange. The Brookings Institution’s documentation also emphasized the transformative impact of mobile technology on Iraqi society, noting that it contributed to greater social cohesion and economic opportunity in a country emerging from years of conflict and isolation. This rapid increase in mobile phone subscriptions between 2003 and 2008 reflected a broader regional and global trend towards mobile telephony as a preferred communication medium, especially in developing countries where fixed-line infrastructure was often inadequate or damaged. Iraq’s experience during this period demonstrated the potential for telecommunications to act as a catalyst for reconstruction and development, even in challenging post-conflict environments. The expansion of mobile networks was supported by both domestic and international investments, regulatory reforms, and technological innovations that lowered barriers to entry for service providers and consumers alike. As a result, by the end of the first decade of the 21st century, Iraq had established a robust mobile telecommunications market that laid the foundation for continued growth and integration into the global digital economy.

In 2002, Iraq’s labor force was estimated to comprise approximately 6.8 million individuals, reflecting the segment of the population actively engaged in or seeking employment. This figure provided a baseline for understanding the country’s employment dynamics prior to the significant political and economic upheavals that would follow. The composition of this labor force in earlier years, such as 1996, revealed a distribution heavily weighted towards the service sector, which accounted for roughly 66.4% of employment. Industry employed about 17.5% of the workforce, while agriculture, despite Iraq’s historical reliance on farming, involved only 16.1% of workers. This distribution underscored the structural shifts in Iraq’s economy, where services had become the dominant employer, reflecting urbanization trends and the expansion of government and public sector roles. Following the 2003 invasion and the subsequent regime change, Iraq faced a dramatic transformation in its labor market conditions. Estimates of the unemployment rate in 2004 varied widely, highlighting the challenges in obtaining accurate data amid ongoing instability. Some assessments placed unemployment between 30% and 60%, indicating severe labor market distress. The Coalition Provisional Authority (CPA), which governed Iraq in the immediate post-invasion period, reported an unemployment rate of approximately 25%. However, the Iraqi Ministry of Planning provided a slightly higher figure of 30%, while the Ministry of Social Affairs suggested an even more alarming rate of 48%. These discrepancies reflected the difficulties in measurement and the rapidly changing economic environment. Other sources proposed that unemployment might be closer to 20%, but with under-employment potentially reaching 60%, a situation complicated by widespread participation in the informal economy and black-market activities. The prevalence of under-employment suggested that many Iraqis were engaged in work that did not fully utilize their skills or provide sufficient income, often as a result of the deteriorated security situation and limited formal job opportunities. Security concerns, particularly in central Iraq, significantly affected employment patterns by discouraging new hiring and disrupting the resumption of regular work schedules. The ongoing violence and instability created an environment where businesses were reluctant to expand or rehire workers, and many enterprises operated below capacity or intermittently. This insecurity not only suppressed demand for labor but also constrained the mobility of workers and the functioning of markets. Additionally, the return of Iraqis from abroad, many of whom had fled during earlier conflicts or the sanctions period, increased the number of job seekers competing for limited employment opportunities. This influx added pressure to an already strained labor market, exacerbating unemployment and under-employment challenges. By late 2004, the majority of legitimate employment opportunities were concentrated in a few key sectors. Government employment remained a significant source of jobs, encompassing administrative roles, public services, and security functions. The army and other security-related enterprises also absorbed a considerable portion of the labor force, reflecting the emphasis on rebuilding national security institutions. Furthermore, the oil industry, Iraq’s economic backbone, provided employment for a segment of the workforce, although its capacity to generate widespread jobs was limited due to the capital-intensive nature of the sector. These sectors collectively formed the core of formal employment, while private sector development remained constrained by instability and infrastructural challenges. Under the regime of Saddam Hussein, the government was known for maintaining an overstaffed bureaucracy, which resulted in many of the highest-paid workers being employed by the state. This approach served as a means of social control and political patronage, ensuring loyalty and stability through employment. The overthrow of Saddam Hussein’s regime in 2003 disrupted this system, leading to significant economic dislocation. The reduction in government payrolls and the dismantling of state institutions removed a substantial source of income for many Iraqis, thereby diminishing their economic contribution and exacerbating unemployment. The transition period saw a contraction in public sector employment, which had previously acted as a buffer against labor market shocks. In response to the urgent need for workforce development and economic stabilization, the U.S. Agency for International Development (USAID) committed US$1 billion in 2004 to a worker-training program aimed at enhancing the skills of Iraqi laborers. This initiative sought to equip Iraqis with vocational and technical competencies necessary for employment in emerging sectors and to support the country’s reconstruction efforts. The program represented a significant investment in human capital, recognizing that sustainable economic recovery depended on improving the employability of the population amid challenging conditions. During the early months of 2004, the minimum wage in Iraq was set at US$72 per month. This wage level reflected the economic realities of the time, characterized by inflationary pressures and a fragile labor market. The minimum wage served as a benchmark for low-income workers, although its adequacy in meeting living costs was subject to debate given the prevailing economic hardships. The wage policy was part of broader efforts to stabilize the labor market and provide a basic standard of living for employed Iraqis during a period marked by uncertainty and reconstruction.

Iraq played a pivotal role in the global petroleum industry as a founding member of the Organization of Petroleum Exporting Countries (OPEC), an intergovernmental organization established in 1960 to coordinate and unify petroleum policies among member countries and ensure the stabilization of oil markets. The significance of petroleum to Iraq’s economy was profound, with the hydrocarbon sector constituting approximately 99.7% of the country’s exports. In 2016, the value of Iraq’s petroleum exports reached an estimated $43.8 billion, underscoring the overwhelming dependence of the national economy on oil revenues. During the 1990s and up until 2003, Iraq’s external trade was severely constrained by international sanctions and trade embargoes imposed in response to the Gulf War and subsequent political developments. These restrictions limited Iraq’s ability to diversify its export portfolio, effectively confining its export activity almost exclusively to crude oil. Despite these limitations, oil exports remained the cornerstone of Iraq’s foreign trade, as other sectors were unable to develop sufficiently under the embargo conditions. In 2003, the year marking the end of the embargo following the US-led invasion and the fall of Saddam Hussein’s regime, Iraq’s oil exports were valued at approximately US$7.4 billion, nearly matching the total export value of US$7.6 billion for that year. This close correlation reflected the continued dominance of oil in the export economy, a pattern consistent with earlier years when oil revenues constituted the vast majority of foreign exchange earnings. Following the lifting of the trade embargo in 2003, Iraq sought to expand its range of export commodities, attempting to diversify its trade portfolio. However, oil exports remained overwhelmingly dominant. In 2004, export income doubled to US$16.5 billion, with oil accounting for all but US$340 million, or approximately 2%, of the total exports. This expansion was driven by increased oil production and export capacity, as well as the gradual reopening of trade channels. Nonetheless, the nascent diversification efforts were minimal in comparison to the scale of petroleum exports. Late in 2004, Iraq’s oil industry faced significant challenges due to sabotage and attacks on oil infrastructure, which substantially reduced output levels. These disruptions prompted experts to forecast that both oil production and exports would remain below the country’s full capacity throughout 2005. The sabotage not only affected Iraq’s export revenues but also highlighted the vulnerability of its oil infrastructure amid ongoing security concerns. In 2004, the chief export markets for Iraqi oil were dominated by the United States, which accounted for nearly half of all exports. Other significant export destinations included Italy, France, Jordan, Canada, and the Netherlands, reflecting a diverse but concentrated set of trading partners primarily from Western and regional markets. The United States’ substantial share underscored the strategic economic relationship between the two countries in the post-invasion period. During the same year, Iraq’s total imports were valued at US$21.7 billion, resulting in a trade deficit of approximately US$5.2 billion. This deficit highlighted the country’s reliance on foreign goods and the challenges of rebuilding its domestic economy. In 2003, the main sources of imports included Turkey, Jordan, Vietnam, the United States, Germany, and Britain, indicating a broad geographic spread of trade partners supplying a wide range of goods. The range of imports was notably broad due to Iraq’s largely inactive manufacturing sector, which had been debilitated by years of conflict and sanctions. Consequently, Iraq depended heavily on imports for essential commodities such as food, fuels, medicines, and manufactured goods. This dependence on external suppliers underscored the structural weaknesses in Iraq’s industrial base and the urgent need for economic reconstruction and diversification. By 2010, Iraq’s external trade had expanded significantly, with exports increasing to US$50.8 billion and imports rising to US$45.2 billion. This growth reflected the gradual recovery and expansion of Iraq’s oil production capacity, as well as an increase in domestic demand for imported goods. The expanding trade volumes also indicated Iraq’s reintegration into the global economy after years of isolation. In 2009, the chief export partners for Iraq included the United States, India, Italy, South Korea, Taiwan, China, the Netherlands, and Japan. This list demonstrated Iraq’s efforts to diversify its export markets beyond traditional Western partners, tapping into emerging Asian economies and maintaining strong ties with established European markets. The diversification of export destinations was a strategic move to mitigate risks associated with dependence on a limited number of buyers. On the import side, Iraq’s main partners in 2009 were Turkey, Syria, the United States, China, Jordan, Italy, and Germany. These countries supplied a wide array of goods necessary for Iraq’s reconstruction and economic development, including machinery, consumer products, and raw materials. The inclusion of regional neighbors such as Turkey, Syria, and Jordan highlighted the importance of geographic proximity and established trade routes in Iraq’s import strategy. In March 2022, trade relations between Iraq and Iran reached a volume of US$10 billion, reflecting a significant increase in bilateral economic engagement. Joint ventures between the two countries grew substantially, although their expansion was still constrained by international sanctions imposed on Iran. These sanctions, enforced by the United States and the European Union, included a trade embargo on goods originating from Iran, complicating the scope and scale of economic cooperation. Despite these challenges, Iraq and Iran sought to strengthen their economic ties, culminating in the signing of a memorandum of understanding (MOU) on economic cooperation in January 2021. This agreement aimed to facilitate greater collaboration across various sectors, including trade, energy, and infrastructure development. The MOU represented a formal commitment to enhance bilateral economic relations amid a complex geopolitical environment shaped by sanctions and regional dynamics.