Iraq

Once known as Mesopotamia, Iraq was the site of flourishing ancient civilizations, including the Sumerian, Babylonian, and Parthian cultures. Muslims conquered Iraq in the seventh century A.D. In the eighth century, the Abassid caliphate established its capital at Baghdad, which became a frontier outpost on the Ottoman Empire.

At the end of World War I, Iraq became a British-mandated territory. When it was declared independent in 1932, the Hashemite family, which also ruled Jordan, ruled as a constitutional monarchy. In 1945, Iraq joined the United Nations and became a founding member of the Arab League. In 1956, the Baghdad Pact allied Iraq, Turkey, Iran, Pakistan, and the United Kingdom, and established its headquarters in Baghdad.

Gen. Abdul Karim Qasim took power in July 1958 coup, during which King Faysal II and Prime Minister Nuri as-Said were killed. Qasim ended Iraq's membership in the Baghdad Pact in 1959. Qasim was assassinated in February 1963, when the Arab Socialist Renaissance Party (Ba'ath Party) took power under the leadership of Gen. Ahmad Hasan al-Bakr as prime minister and Col. Abdul Salam Arif as president.

Nine months later, Arif led a coup ousting the Ba'ath government. In April 1966, Arif was killed in a plane crash and was succeeded by his brother, Gen. Abdul Rahman Mohammad Arif. On July 17, 1968, a group of Ba'athists and military elements overthrew the Arif regime. Ahmad Hasan al-Bakr re-emerged as the President of Iraq and Chairman of the Revolutionary Command Council (RCC). In July 1979, Bakr resigned, and his chosen successor, Saddam Hussein, assumed both offices.

The Iran-Iraq war (1980-88) devastated the economy of Iraq. Iraq declared victory in 1988 but actually achieved a weary return to the status quo antebellum. The war left Iraq with the largest military establishment in the Gulf region but with huge debts and an ongoing rebellion by Kurdish elements in the northern mountains. The government suppressed the rebellion by using weapons of mass destruction on civilian targets, including a mass chemical weapons attack on the city of Halabja that killed several thousand civilians.

Iraq invaded Kuwait in August 1990, but a U.S.-led coalition acting under United Nations (UN) resolutions expelled Iraq from Kuwait in February1991. After the war, UN-mandated sanctions based on Security Council resolutions called for the regime to surrender its weapons of mass destruction and submit to UN inspections. The regime has refused to fully cooperate with the UN inspections and since 1998 has not allowed inspectors into Iraq. Iraq is allowed under the UN Oil-for-Food program to export unlimited quantities of oil with which to purchase food, medicine, and other humanitarian relief equipment and infrastructure support necessary to sustain the civilian population. The UN coalition enforces no-fly zones in southern and northern Iraq to protect Iraqi citizens from attack by the regime and a no-drive zone in southern Iraq to prevent the regime from massing forces to threaten or again invade Kuwait.

Iraq's economy is characterized by a heavy dependence on oil exports and an emphasis on development through central planning. Prior to the outbreak of the war with Iran in September 1980, Iraq's economic prospects were bright. Oil production had reached a level of 3.5 million barrels per day, and oil revenues were $21 billion in 1979 and $27 billion in 1980. At the outbreak of the war, Iraq had amassed an estimated $35 billion in foreign exchange reserves.

The Iran-Iraq War depleted Iraq's foreign exchange reserves, devastated its economy, and left the country saddled with a foreign debt of more than $40 billion. After hostilities ceased, oil exports gradually increased with the construction of new pipelines and the restoration of damaged facilities.

Iraq's invasion of Kuwait in August 1990, subsequent international sanctions, and damage from military action by an international coalition beginning in January 1991 drastically reduced economic activity. Government policies of diverting income to key supporters of the regime while sustaining a large military and internal security force further impaired finances, leaving the average Iraqi citizen facing desperate hardships. Implementation of a UN oil-for-food program in December 1996 has improved conditions for the average Iraqi citizen. Since 1999, Iraq was authorized to export unlimited quantities of oil to finance humanitarian needs including food, medicine, and infrastructure repair parts. Oil exports fluctuate as the regime alternately starts and stops exports, but, in general, oil exports have now reached three-quarters of their pre-Gulf War levels. Per capita output and living standards remain well below pre-Gulf War levels.

Agriculture
Despite its abundant land and water resources, Iraq is a net food importer. Under the UN oil-for-food program, Iraq imports large quantities of grains, meat, poultry, and dairy products. The government abolished its farm collectivization program in 1981, allowing a greater role for private enterprise in agriculture. The Agricultural Cooperative Bank, capitalized at nearly $1 billion by 1984, targets its low-interest, low-collateral loans to private farmers for mechanization, poultry projects, and orchard development. Large modern cattle, dairy, and poultry farms are under construction. Obstacles to agricultural development include labor shortages, inadequate management and maintenance, salinization, urban migration, and dislocations resulting from previous land reform and collectivization programs.

Importation of foreign workers and increased entry of women into traditionally male labor roles have helped compensate for agricultural and industrial labor shortages exacerbated by the way. A disastrous attempt to drain the southern marshes and introduce irrigated farming to this region merely destroyed a natural food producing area, while concentration of salts and minerals in the soil due to the draining left the land unsuitable for agriculture.

Trade
The United Nations imposed economic sanctions on Iraq after it invaded Kuwait in 1990. The Government of Iraq's refusal to allow weapons inspectors into the country to dismantle Iraq's weapons of mass destruction program has resulted in those sanctions remaining in place. Under the oil-for-food program, Iraq is allowed to export unlimited quantities of oil in exchange for humanitarian relief supplies, including food, medicine, and infrastructure spare parts. A robust illicit trade in oil with neighboring states and through the Persian Gulf continues to provide billions in income for the regime.