Overview | Government

This series of profiles of foreign nations is part of the Country Studies Program, formerly the Army Area Handbook Program. The profiles offer brief, summarized information on a country's historical background, geography, society, economy, transportation and telecommunications, government and politics, and national security. Derived from The Library of Congress.


August 2006


Formal Name: Republic of Iraq (Al Jumhuriyah al Iraqiyah).

Short Form: Iraq.

Term for Citizen(s): Iraqi(s).

Capital: Baghdad.

Major Cities (in order of population size): Baghdad, Mosul (Al Mawsil), Basra (Al Basrah), Arbil (Irbil), Kirkuk, and Sulaymaniyah (As Sulaymaniyah).

Independence: October 3, 1932, from the British administration established under a 1920 League of Nations mandate.

Public Holidays: New Year’s Day (January 1) and the overthrow of Saddam Hussein (April 9) are celebrated on fixed dates, although the latter has lacked public support since its declaration by the interim government in 2003. The following Muslim religious holidays occur on variable dates according to the Islamic lunar calendar, which is 11 days shorter than the Gregorian calendar: Eid al Adha (Feast of the Sacrifice), Islamic New Year, Ashoura (the Shia observance of the martyrdom of Hussein), Mouloud (the birth of Muhammad), Leilat al Meiraj (the ascension of Muhammad), and Eid al Fitr (the end of Ramadan).

Flag: The flag of Iraq consists of three equal horizontal bands of red (top),

white, and black with three green, five-pointed stars centered in the white

band. The phrase “Allahu Akbar” (“God Is Great”) also appears in Arabic

script in the white band with the word Allahu to the left of the center star

and the word Akbar to the right of that star.


Early History: Contemporary Iraq occupies territory that historians regard as the site of the earliest civilizations of the Middle East. Because of its lush vegetation and ample water supply, ancient Mesopotamia (the land between the rivers, so named because the Oxus and Jaxartes rivers, now the Tigris and Euphrates, flowed through it) attracted settlers before 6000 B.C. In Sumer, or southern Mesopotamia, elements of early urban culture developed in response to the unpredictable natural rhythm of the rivers. The Sumerians introduced writing, literature, the wheel, astronomy, irrigation, and a highly developed sense of religion. Because the Sumerians worshiped the number 60, hours, minutes, and circles were divided into 60 units.

The Sumerians dominated southern Mesopotamia from 3360 B.C. until about 2000 B.C., when they were conquered by the Amorites. In the early eighteenth century B.C., the Babylonian king Hammurabi (whose dynasty took its name from the capital city of the Amorites, Babylon) established a complex law code upon which later civilizations based their laws. In the early sixteenth century B.C., the Hittite tribe destroyed Babylon and established a new kingdom, which collapsed around 1200 B.C. After a period of disunity, Mesopotamia was occupied by the Semitic Assyrians in the ninth century B.C. Hated for their cruel military rule, the Assyrians were overthrown by local tribes in 612 B.C. The Chaldeans, who succeeded the Assyrians, reestablished Babylon under King Nebuchadnezzar (ruled 605–562 B.C.). In 539 B.C., Cyrus the Great incorporated Mesopotamia into the Persian Empire. The conquest of Persian Babylon by Alexander the Great in the early 330s B.C. began a period of political disruption and brought substantial Greek influence into the region.

Iraq was conquered by the Parthians in 126 B.C. and by the Iranian Sassanians in 227 A.D. By 650 Arab tribes gained full control of the region from the Iranians, introducing Islam to what had been a mainly Christian group of tribes ruled by the Iranians in Iraq. The first great Arab dynasty, the Abbasid Caliphate, ruled the region from Baghdad between 750 and 1258. The fundamental schism of Islam, between the Shia and Sunni branches, which had occurred in the late 600s, stood in the background of the Abbasid and ensuing Islamic dynasties. A great Arab cultural flowering occurred under Al Mamun (ruled 813–33), but in the ninth and tenth centuries Turkish warriors, the Mamluks, achieved substantial influence under the Abbasids. The Mamluks’ successors, the Seljuks, built a de facto empire around Baghdad before being conquered by the Mongols in the early thirteenth century. Under the leaders Chinggis Khan and, later, Timur, the Mongols destroyed much of urban Iraqi culture.

The Ottoman Period: Beginning in the early sixteenth century, the Sunni Turkish Ottoman Empire struggled against the Shia Persian Safavi Empire for control of Iraq. The Ottoman Empire controlled Iraq for most of the ensuing four centuries. However, the Safavis made substantial inroads, and Iraq was under the de facto authority of tribal confederations beginning in the seventeenth century. This trend was reversed in the eighteenth and early nineteenth centuries as the Mamluks took control of most of modern-day Iraq. After Mamluk rule ended in 1831, the tanzimat administrative and educational reforms of the Ottoman ruler Midhat Pasha increased the influence of urban culture in Iraq. In the same period, Western Europe established commercial outposts and brought technological advances to Iraq. Beginning in 1908, the influence of the pro-Western Young Turk faction in the Ottoman government introduced democratic concepts while alienating Arab parts of the empire by a campaign to centralize and “Turkify” Ottoman holdings.

By the early twentieth century, the decrepit Ottoman Empire was an area of conflict among the European powers. In World War I, British and Ottoman forces fought on Iraqi territory. After leading a revolt by Arab tribes in Iraq, Transjordan, and Syria, in 1917 the British occupied most of modern-day Iraq. Disappointing Arab ambitions for independence after the war, the Paris Peace Conference of 1919 made Iraq a British territory under a League of Nations mandate. The postwar British government faced nationalist sentiment that evolved into terrorist activity by secret societies. The Great Iraqi Revolution of 1920 united Shias and Sunnis and brought about an Arab provisional government headed by King Faisal, son of a Saudi royal line. Faisal never established legitimacy or stability in Iraq because he was not an Iraqi by birth; he remained under British control, and his government was predominantly Sunni.

Independent Iraq: Throughout the 1920s, nationalist Iraqis pressed the British for independence. Iraq became fully independent in 1932, retaining a special relationship with Britain. However, Iraq’s formation into a state was hindered by the ongoing Shia–Sunni split, the ambitions of many factions to gain power in the new state, and the fragmenting effect of arbitrary borders and tribalism. Ethnic groups such as the Kurds and the Assyrians strongly resisted inclusion. In 1933 Assyrian resistance was marked by the massacre of several hundred Assyrian villagers by the Iraqi army. The death of Faisal in 1933 led to a successful coup against the destabilized government by General Bakr Sidqi, a Kurd, in 1936. In 1939 the death of Faisal’s son Ghazi ended a period of Iraqi pan-Arabism and increased nationalism and anti-British sentiment. Subsequent decades would be marked by nationalism at home and quickly changing relations with Iraq’s neighbors.

World War II brought new changes. In 1941 radical nationalist Rashid Ali overthrew the pro-British government of Nuri as Sad, precipitating a British invasion, restoration of the monarchy, and further alienation of the powerful nationalist factions from the Iraqi government. Beginning in 1943, Iraq was a base of Allied operations in the Middle East. The international stress of World War II exacerbated Iraq’s economic and ethnic fragmentation and set the stage for two events of importance in 1948. An uprising, known as the “Wathbah,” forced Iraq to renounce the Treaty of Portsmouth, which called for cooperation with Britain, and Iraq subsequently sent troops to fight in the first Arab-Israeli War. In the early 1950s, economic hardship increased sentiment against the government. Major protests occurred in 1952 and 1956. A new Arab secular party, the Baathists, grew from the intellectual community and gained support among the military. Inspired by Egypt’s opposition to Iraq’s membership in the British-led Baghdad Pact and by long-standing public unrest, in 1958 a revolt led by General Abdul Karim Qasim overthrew the monarchy and established a republic. Qasim’s government failed to consolidate Iraq, however, and its overthrow by the Baath Party in 1963 began a period of coups, instability, and military domination in the mid-1960s. Following Iraq’s controversial role in the Arab-Israeli War of 1967, the Baathists returned to power in 1968. In the ensuing decade, the Baath Party consolidated power under Ahmad Hasan al Bakr and Saddam Hussein. By 1970 the latter was the dominant force in Iraqi politics.

Iraq under Saddam Hussein: In the 1970s, Saddam Hussein was able to patch relations with most Arab states, substantially improve economic conditions, and in 1979 replace al Bakr as president of Iraq. Internally, he began a pattern of ruthless manipulation and extermination of enemies that would continue throughout his regime. In 1980 long-standing territorial disputes and the perception of Iran’s weakness following its 1979 fundamentalist revolution led Iraq to invade Iran. Despite international mediation efforts, the ensuing war lasted until 1988 and killed between 500,000 and 1 million people. In the same period, Kurdish insurgents in northeastern Iraq took advantage of the war to press militarily and diplomatically for Kurdish autonomy. Iraq’s invasion of neighboring Kuwait precipitated the Gulf War of early 1991 in which a United Nations (UN) force led by the United States defeated Iraq decisively. Withdrawal of that force from Iraq was followed by long-term arms restrictions, protected autonomous status for Iraq’s Kurds, and economic sanctions. Iraq’s observance of arms restrictions became the subject of international controversy in the 1990s and early 2000s.

The 1990s were marked by new moves toward autonomy by the Kurds, periodic Iraqi resistance to arms inspections and “no-fly” restrictions in northern and southern Iraq, and progressive deterioration of living standards in Iraq because of international sanctions. A UN Oil-for-Food Program, established in 1997, did not relieve the domestic crisis. The terrorist attacks on the United States in 2001 brought a reassessment of U.S. policy toward Iraq as a threat to international stability. Although Iraq agreed to unconditional arms inspections in 2002, in March 2003 a coalition force led by the United States invaded Iraq on the grounds that the regime was concealing weapons of mass destruction and had supported the attacks of 2001. The invasion quickly toppled Saddam Hussein from power.

Post–Saddam Hussein: In mid-2003, the Coalition Provisional Authority established by the United States named an interim Coalition Governing Council of Iraqis, which was empowered only to facilitate the next stage of government formation. From 2003 through early 2005, insurgent and terrorist activities blocked the normalization of government and services, primarily in Sunni-dominated central Iraq. A provisional Iraqi government assumed nominal control in mid-2004, but U.S. and coalition forces remained in place without substantial reduction in 2006. In January 2005, a national election chose members of an interim parliament charged with electing an interim president and writing a constitution. Two months after a national referendum approved a new constitution in October 2005, a permanent parliament was elected. In June 2006, the approval of a full, permanent government under Prime Minister Nouri al Maliki followed months of harsh debate about power distribution among Iraq’s major sects. The effectiveness of the new coalition government remained in doubt, however, and reconstruction of the economy and civil society remained slow. Meanwhile, the death of insurgent leader Abu Musab al Zarqawi in May 2006 was followed by an escalation of militia activity and terrorist attacks, especially on civilian targets close to Baghdad. In the early months of his administration, Maliki made sectarian reconciliation a top priority.


Location: Iraq is located in the Middle East at the northernmost

extent of the Persian Gulf, north of Saudi Arabia, west of Iran, east

of Syria, and south of Turkey.

Size: The total area of Iraq is 437,072 square kilometers, including

432,162 square kilometers of land surface.

Land Boundaries: Iraq has common borders with the following

countries: Iran, 1,458 kilometers; Jordan, 181 kilometers; Kuwait,

240 kilometers; Saudi Arabia, 814 kilometers; Syria, 605 kilometers;

and Turkey, 352 kilometers.

Disputed Territory: Iraq’s only border dispute, with Kuwait, was resolved by a United Nations commission in 1993. Both countries accepted the new demarcation.

Length of Coastline: Iraq’s coastline totals 58 kilometers on the Persian Gulf.

Maritime Claims: Iraq claims 12 nautical miles of territorial sea and an unspecified distance of continental shelf.

Topography: Iraq has four main topographical regions. The desert zone of Iraq’s west and southwest is part of the Syrian Desert, dominated by wide, flat, sandy expanses. The uplands region occupies most of Iraq’s northern part, beginning about 120 kilometers north of Baghdad and including the watersheds of the Tigris and Euphrates rivers to the Syrian border. Although primarily desert, the region is characterized by deep river valleys. The third region is the northern highlands, which includes all of Iraq’s northeasternmost territory and extends into neighboring Turkey and Iran. A series of elevation rises, interspersed with steppes, gives way to mountains as high as 4,000 meters near the Iranian and Turkish borders. The fourth region is the alluvial plain that extends from north of Baghdad southward to the Persian Gulf, following the lower Tigris and Euphrates rivers. The area, which is a large delta, includes lakes and marshlands. The extent of marshland in the alluvial plain varies according to the volume of water carried by the rivers in flood season. In their lower reaches, the two rivers break into several channels.

Principal Rivers: The Tigris and Euphrates, which rise in Turkey, form the dominant river system of Iraq. After flowing southward separately through Iraq for more than 2,500 kilometers, the rivers join about 150 kilometers north of the Persian Gulf to form the waterway known as the Shatt al Arab (literally, “Arab coast” because its southern extremity divides Arab Iraq from Persian Iran before flowing into the gulf). Several major tributaries of the Tigris flow through Iraq. The Khabur, the Great Zab, the Little Zab, the Uzaym, and the Diyala all flow into the Tigris from the northeastern highlands. The Euphrates has no tributaries in Iraq.

Climate: Most of Iraq has a desert climate with mild winters and dry, hot summers. The northeastern uplands have cold winters with occasionally heavy snowfalls. In the western desert and the northeastern foothills, average winter temperatures range from a low of 0° C to a high of 15° C, and average summer temperatures range from a low of 22° C to a high of 38° C. In the alluvial plain, the winter range is 4° C to 17° C, and the summer range is 29° C to 43° C. About 90 percent of Iraq’s rainfall occurs between November and April. Except in the northern uplands and the northeastern highlands, average annual rainfall is 100 to 170 millimeters. In the uplands, the range is 320 to 570 millimeters, and in the mountains the annual total may reach 1,000 millimeters.

Natural Resources: Iraq’s arable land has been rich and productive, particularly in the lower alluvial plain. The substantial amounts of arable land in the northwestern uplands region require irrigation. Because of its river systems, Iraq has the most abundant water reserves in its region. Hydrocarbons are Iraq’s most important natural resource. Iraq has the third largest oil deposits in the world. Confirmed oil reserves total 112.5 billion barrels. Natural gas deposits are estimated at 3.1 trillion cubic meters, about 2 percent of total world reserves. Other mineral resources include phosphates, estimated to total 10 billion tons, and sulfur deposits located near Mosul.

Land Use: About 13 percent of Iraq’s land surface is classified as arable; some 0.78 percent of the total land surface is planted to permanent crops. In 1998 some 35,250 square kilometers of cropland were irrigated.

Environmental Factors: Events of 1980–2006 have created environmental crises of emergency proportions. Military operations in three wars (1980–88, 1991, and 2003 to present) have left unexploded ordnance and land mines in exposed positions, killing or wounding an estimated 100,000 people in the early 2000s. Because of infrastructure damage, significant parts of the population do not have adequate water supply or sanitation systems, and sites where municipal and medical wastes have accumulated carry the risk of epidemic. The wartime destruction of military and industrial infrastructure has released heavy metals and other hazardous substances into the air, soil, and groundwater. Numerous spills have resulted from damage to Iraq’s oil infrastructure, and the lack of water treatment facilities at Iraqi refineries has led to pollution from those installations. In the alluvial plain, soil quality has been damaged by the deposit of large amounts of salts, borne by irrigation overflows and wind and promoted by poor soil drainage. Desertification and erosion also have reduced arable land. Transboundary pollution and a lack of river basin management by the government have led to the degradation of Iraq's major waterways. Under Saddam Hussein, the government drained the extensive marshes in the lower reaches of the alluvial plain, changing water circulation and wildlife patterns over a wide area; beginning in 2004, some restoration has occurred. Flooding danger in the alluvial plain has decreased since construction of dams upstream on the Euphrates River. Although the interim government appointed in 2004 included a Ministry of Environment, long-term environmental crises such as the depletion of marshland in the Shatt al Arab have a low priority.

Time Zone: Iraq’s single time zone is three hours ahead of Greenwich Mean Time.


Population: In 2006 Iraq’s population was estimated at 26,783,000, and the estimated growth rate was 2.7 percent per year. A general census was scheduled for late 2007. Average population density was 61.9 persons per square kilometer in 2006. The population occupies predominantly the alluvial plain and the northeast, leaving the western and southern desert regions very sparsely inhabited. The most densely populated governorate (province) is Baghdad, near the northern end of the alluvial plain, followed by Ninawa in the western section of the uplands region. Urbanization has been a strong demographic trend; between 1985 and 2005, the proportion of the population in urban areas increased from 69 percent to 79 percent. In the 1990s and early 2000s, an estimated 1 million Shias fled from southern Iraq to Iran to avoid persecution. Migration from Iraq to neighboring countries increased sharply with the overthrow of Saddam Hussein in 2003. In 2005 as an estimated 650,000 Iraqi refugees moved to Jordan and Syria; the latter received the great majority of the refugees, as it had since 2003. In 2006 the government estimated that 100,000 Iraqis had been internally displaced by sectarian violence.

Demography: In 2006 an estimated 39.7 percent of the population was 14 years of age or younger, and an estimated 3 percent was 65 years of age or older. Slightly more than 49 percent of the population was female. The birthrate was 32 births per 1,000 population, and the death rate was 5.4 per 1,000 population. The infant mortality rate was 48.6 per 1,000 live births. Life expectancy was 67.8 years for men and 70.3 years for women. The fertility rate was 4.2 births per woman.

Ethnic Groups: In 2006 an estimated 75 to 80 percent of the population was Arab and 15 to 20 percent, Kurdish. Other significant minority groups, together constituting less than 5 percent of the population, were Assyrians, Chaldeans, and Turkmens.

Languages: According to the constitution of 2005, the two official languages of Iraq are Arabic and Kurdish, which is official in regions with a Kurdish majority. Turkmen and Assyrian neo-Aramaic also are official languages in regions where they are spoken. The two main regional dialects of Arabic spoken in Iraq are Mesopotamian (spoken by about 11.5 million) and North Mesopotamian (spoken by about 5.4 million). Other languages in Iraq are Armenian, Azeri, and Chaldean neo-Aramaic.

Religion: The constitution of 2005 guarantees freedom of religion but specifies that no law may be enacted that is contrary to the teachings of Islam, the state religion. Some 97 percent of Iraq’s population is Muslim. Of that number, 60 to 65 percent is Shia and 32 to 37 percent Sunni. Although the Shias have constituted more than half of Iraq’s population throughout the twentieth century, until 2005 all governments excluded them from proportional political power. The Sunni regime of Saddam Hussein systematically repressed the Shias. In 1991 a Shia revolt in southern Iraq brought mass executions and further alienation, and in the post-Hussein era, the Shia–Sunni split remains a key political factor. The Kurds are predominantly Sunni but ethnically different from the Arab Sunnis and of a less militant religious orientation.

In 2003 an estimated 700,000 to 900,000 Christians were in Iraq, mostly belonging to the Eastern-rite Chaldean Catholic Church. However, between the late 1980s and 2004 an estimated 500,000 Christians left Iraq; in the post-Hussein era, the exodus accelerated because terrorists often attacked Christian targets. In late 2004, an estimated 40,000 Christians left after a series of bombings.

Education and Literacy: Following the regime change of 2003, the Coalition Provisional Authority, with substantial international assistance, undertook a complete reform of Iraq’s education system. Among immediate goals were the removal of previously pervasive Baathist ideology from curricula and substantial increases in teacher salaries and training programs, which had been neglected in the 1990s. The new Ministry of Education appointed a national curriculum commission to revise curricula in all subject areas. Because of underfunding by the regime of Saddam Hussein, in 2003 an estimated 80 percent of Iraq’s 15,000 school buildings needed rehabilitation and lacked basic sanitary facilities, and most schools lacked libraries and laboratories.

In the 1990s, school attendance decreased drastically as education funding was cut and economic conditions forced children into the workforce. After the regime change, the system included about 6 million students in kindergarten through twelfth grade and 300,000 teachers and administrators. Education is mandatory only through the sixth grade, after which a national examination determines the possibility of continuing into the upper grades. Although a vocational track is available to those who do not pass the exam, few students elect that option because of its poor quality. Boys and girls generally attend separate schools beginning with seventh grade. In 2006 obstacles to further reform were poor security conditions in many areas, a centralized system that lacked accountability for teachers and administrators, and the isolation in which the system had functioned for the previous 30 years. No private schools exist. Prior to the regime change of 2003, some 240,000 persons were enrolled in institutions of higher education. In 2003 the literacy rate was 56 percent for males and 24 percent for females.

Health: During its last decade, the regime of Saddam Hussein cut public health funding by 90 percent, contributing to a substantial deterioration in health care. During that period, maternal mortality increased nearly threefold, and the salaries of medical personnel decreased drastically. Medical facilities, which in 1980 were among the best in the Middle East, deteriorated. Conditions were especially serious in the south, where malnutrition and water-borne diseases became common in the 1990s. In 2005 the incidence of typhoid, cholera, malaria, and tuberculosis was higher in Iraq than in comparable countries. The conflict of 2003 destroyed an estimated 12 percent of hospitals and Iraq’s two main public health laboratories. In 2004 some improvements occurred. Using substantial international funds, some 240 hospitals and 1,200 primary health centers were operating, shortages of some medical materials had been alleviated, the training of medical personnel had begun, and the inoculation of children was widespread. However, sanitary conditions in hospitals remained unsatisfactory, trained personnel and medications were in short supply, and health care remained largely unavailable in regions where violent insurgency continued. In 2005 there were 15 hospital beds, 6.3 doctors, and 11 nurses per 10,000 population. Plans called for US$1.5 billion of the national budget to be spent on health care in 2006.

In the late 1990s, Iraq’s infant mortality rates more than doubled. Because treatment and diagnosis of cancer and diabetes decreased in the 1990s, complications and deaths resulting from those diseases increased drastically in the late 1990s and early 2000s. The collapse of sanitation infrastructure in 2003 led to an increased incidence of cholera, dysentery, and typhoid fever. Malnutrition and childhood diseases, which had increased significantly in the late 1990s, continued to spread. In 2006 some 73 percent of cases of human immunodeficiency virus (HIV)/acquired immune deficiency syndrome (AIDS) in Iraq originated with blood transfusions and 16 percent from sexual transmission. The AIDS Research Centre in Baghdad, where most cases have been diagnosed, provides free treatment, and testing is mandatory for foreigners entering Iraq. Between October 2005 and January 2006, some 26 new cases were identified, bringing the official total to 261 since 1986.

Welfare: Like the health system, Iraq’s welfare system, one of the best in the Middle East in the 1980s, suffered drastic funding cuts in the 1990s as the regime shifted funds to other priorities. Beginning in the 1990s, damage to the economy by international sanctions dramatically reduced the standard of living and left a large portion of Iraqi society in poverty, despite the United Nations Oil-for-Food Program established in 1997. Average wages decreased drastically in the late 1990s. In the early 2000s, an estimated 60 percent of Iraqis were dependent on monthly food rations (for which all Iraqis were eligible beginning in 1990) from the Public Distribution System (PDS). In early 2005, that system and subsidized fuel distribution remained the main elements of the social safety net; nationwide shortages of sugar, milk, and ghee (a type of butter) were reported at that time. The PDS was inefficient and expensive, costing the government US$4 billion in 2005 because it continued to support all Iraqis regardless of income. In 2006 international donors sought to improve the targeting, and thus the cost-benefit ratio, of the PDS. According to an Iraqi labor expert, in 2005 more than 60 percent of the workforce was unemployed.


Overview: Iraq’s economy was badly damaged during the Iran–Iraq War (1980–88), and the international sanctions imposed following the Persian Gulf War of 1991 were another major blow. Aside from those events, reconstruction of a viable economy in the early 2000s encountered a severely distorted system. Under Saddam Hussein, the levers of economic power were solely in the hands of a corrupt elite in the ruling Baath Party; for the 25 years prior to 2003, no national budget was prepared. Under those circumstances, the private sector engaged mainly in illegal economic activity. Because Iraq’s economy depends heavily on the oil industry, progress from the post-Hussein low point in 2004 depends on the rates at which that industry can be reconstructed and reintegrated into the world oil market. In 2006 economic development in Iraq depends first on improvement of the security situation, which greatly hindered economic progress in the first post-Hussein years. Most major enterprises remained in state hands when a permanent government took office in early 2006. Near-term government planning goals include budget deficit reduction, diversification of the economy through privatization, and reduction of unemployment. International grants and investments are an important source of funding for such goals. Privatization, which met strong resistance in the post-Hussein years, is to be accomplished in gradual stages. Government corruption is a serious obstacle to economic progress because it centers on agencies administering the oil industry. Iraq applied for membership in the World Trade Organization in 2004, but it had not been accepted as of mid-2006.

Gross Domestic Product (GDP): According to the World Bank, Iraq’s GDP in the crisis year of 2003, US$12.1 billion, represented a drop of about 60 percent from the 2000 figure of US$31.8 billion. Because such a low point was reached in 2003, the figure for 2004, US$25.6 billion, amounted to an increase of 112 percent. The economy experienced a 3 percent decrease in productivity in 2005, yielding a GDP of US$24.3 billion, or US$907 per capita. In 2006 forecasts of future GDP growth varied widely because of the unpredictable revival pace of the oil industry. In 2004 industry contributed 66.6 percent of GDP, services 26.1 percent, and agriculture 7.3 percent.

Government Budget: The World Bank estimated that in 2003 government revenue was US$4.7 billion and government expenditures US$8.6 billion, resulting in a deficit of US$3.9 billion. The official 2004 budget of the interim government called for expenditures of US$33.5 billion and revenues of US$19 billion, incurring a deficit of US$14.5 billion. The 2005 budget included expenditures of US$24 billion and revenues of US$19.3 billion, a deficit of US$4.7 billion. The Ministry of Finance’s Budget Directorate was scheduled for reorganization and streamlining in 2006.

Inflation: In 2003 and the first half of 2004, estimates of inflation in Iraq ranged from 25 percent to 28 percent. Although inflation was under substantially tighter control by the end of 2004, in 2005 it again rose sharply to an estimated 40 percent.

Agriculture: Historically, only 50 to 60 percent of Iraq’s arable land has been under cultivation. Because of ethnic politics, valuable farmland in Kurdish territory has not contributed to the national economy, and inconsistent agricultural policies under Saddam Hussein discouraged domestic market production. The United Nations Oil-for-Food Program (1997–2003) further reduced farm production by supplying artificially priced foreign foodstuffs. The military action of 2003 did little damage to Iraqi agriculture; because of favorable weather conditions, in that year grain production was 22 percent higher than in 2002. Although growth continued in 2004, experts predicted that Iraq will be an importer of agricultural products for the foreseeable future. The chief recipient of such imports is the Public Distribution System, which rations food to the population. Long-term plans call for investment in agricultural machinery and materials and more prolific crop varieties—improvements that the Hussein regime failed to make. In 2005 the main agricultural crops were wheat, barley, corn, rice, vegetables, dates, and cotton, and the main livestock outputs were cattle and sheep.

Forestry: Throughout the twentieth century, human exploitation, shifting agriculture, forest fires, and uncontrolled grazing denuded large areas of Iraq’s natural forests, which in 2005 are almost exclusively confined to the northeastern highlands. Most of the trees found in that region are not suitable for lumbering. In 2003, 113,000 cubic meters of wood were harvested, nearly half used as fuel.

Fishing: Despite its many rivers, Iraq’s fishing industry has remained relatively small and based largely on marine species in the Persian Gulf. In 2002 the catch was 14,500 tons.

Mining and Minerals: Aside from hydrocarbons, Iraq’s mining industry has been confined to the extraction of relatively small amounts of phosphates (at Akashat), salt, and sulfur (near Mosul). Since a relatively productive period in the 1970s, the mining industry has been hampered by the Iran–Iraq War (1980–88), the international sanctions of the 1990s, and the economic collapse of 2003.

Industry and Manufacturing: Traditionally, Iraq’s manufacturing activity has been closely connected to the oil industry. The major oil-related industries have been petroleum refining and the manufacture of chemicals and fertilizers. Before 2003, limitations on privatization and the effects of the international sanctions of the 1990s hindered the diversification of manufacturing. Since 2003, security problems have blocked efforts to establish new enterprises. An exception is the construction industry, which has profited from the need to rebuild after Iraq’s several wars. In 2004–5 growth in construction was spurred by a government program to ease Iraq’s serious housing shortage. In 2005 about 150,000 Iraqis were employed in short-term construction projects. That industry’s main material requirement, cement, was the only major industrial product not based on hydrocarbons.

Energy: Possessing the third-greatest oil reserves in the world, Iraq has the resources for complete energy independence. By world standards, production costs for Iraqi oil are relatively low. However, long-term neglect and mismanagement of the petroleum industry by the Baathist regimes left the industry’s infrastructure in poor condition. The lifting of international sanctions in 2003 allowed repairs to begin. However, since 2003 oil pipelines and installations have been sabotaged persistently, and in mid-2006 output had not regained pre-2003 levels.

In 2004 Iraq had eight oil refineries, the largest of which were at Baiji, Basra, and Daura. Sabotage and technical problems at the refineries forced Iraq to import fuels, liquid petroleum gas, and other refined products from nearby countries. In October 2004, for example, Iraq spent US$60 million for imported gasoline. In 2005 and 2006, regular sabotage of plants and pipelines reduced export and domestic distribution of oil, particularly to Baghdad. Nationwide fuel shortages and power outages resulted. In 2004 plans called for increased domestic utilization of natural gas to replace oil and for use in the petrochemicals industry. However, because most of Iraq’s natural gas output is extracted together with oil, growth in gas output depends on developments in the oil industry. An expansion program in that industry for 2006 called for an expenditure of US$2 billion on new oil pipelines, storage facilities, export terminals, refineries, and wells, together with repair of damaged infrastructure, improved security, and streamlining of the delivery system. The plan would increase oil exports for 2006 to 568 million barrels, compared with the 2005 total of 508 million barrels. However, in 2006 the Ministry of Oil estimated that some US$25 billion was needed to repair damage and replace equipment.

As much as 90 percent of Iraq’s power generating and distribution systems were destroyed in the Persian Gulf War of 1991, and full recovery never occurred. In 2006 Iraq had an estimated 5,000 megawatts of usable power-generating capacity, compared with 8,000 megawatts of demand. This discrepancy led to regular power outages, particularly in Baghdad, and to the importation of power from Iran and Syria. Although 98 percent of houses were connected to the power grid in 2005, for most customers electricity supply was extremely unreliable, and in 2006 factories received only 20 percent of the power needed to operate at full capacity. In 2005 plans called for the construction of several new power plants and restoration of existing plants and transmission lines to ease the blackouts and economic hardship caused by this shortfall, but sabotage and looting slowed expansion. In 2005 the World Bank estimated that US$12 billion would be needed for near-term restoration, and the Ministry of Electricity estimated that US$35 billion would be necessary to rebuild the system fully.

Services: Iraq’s financial services have been the subject of reforms since the fall of Saddam Hussein. The 17 private banks established during the 1990s were limited to domestic transactions and attracted few private depositors. Those banks and two main state banks were badly damaged by the international embargo of the 1990s. To further privatize and expand the system, in 2003 the Coalition Provisional Authority removed restrictions on international bank transactions and freed the Central Bank of Iraq (CBI) from government control. In its first year of independent operation, the CBI received credit for limiting Iraq’s inflation. In 2004 three foreign banks received licenses to conduct business in Iraq.

Because of the danger posed by Iraq’s ongoing insurgency, the security industry has been a uniquely prosperous part of the services sector. Often run by former U.S. military personnel, in 2005 at least 60 companies offered personal and institutional protection, surveillance, and other forms of security. The companies employed an estimated 5,000 to 10,000 Iraqis and 8,000 to 15,000 foreign operatives and workers. In the early post-Hussein period, a freewheeling retail trade in all types of commodities straddled the line between legitimate and illegitimate commerce, taking advantage of the lack of income tax and import controls.

The Iraqi tourism industry, which in peaceful times profited from Iraq’s many places of cultural interest (earning US$14 million in 2001), has been completely dormant since 2003. Despite these conditions, in 2005 the Iraqi Tourism Board maintained a staff of 2,500 and 14 regional offices.

Labor: In 2004 Iraq’s labor force was estimated at 7.4 million people. Recent figures on labor participation by sector are not available. In 1996 some 66.4 percent of the labor force worked in services, 17.5 percent in industry, and 16.1 percent in agriculture. In 2005 estimates of Iraq’s unemployment ranged from 30 percent to 60 percent. The actual figure is problematic because of high participation in black-market activities and poor security conditions in many populous areas. In central Iraq, security concerns discouraged the hiring of new workers and the resumption of regular work schedules. At the same time, in the early 2000s the return of Iraqis from other countries increased the number of job seekers. In 2005 most legitimate jobs were in the government, the army, the oil industry, and security-related enterprises. The overthrow of Saddam Hussein’s greatly overstaffed government disrupted the input of large numbers of Iraqis to the economy. However, in 2005 the government of Ibrahim al Jafari made another cut in the public sector (which nonetheless still accounted for as many as half of Iraq’s jobs), further reducing employment. In 2005 U.S. and Iraqi government authorities opened new training centers to alleviate unemployment, which threatened to augment the membership of insurgent groups. In early 2004, the official minimum wage was US$70 per month.

Foreign Economic Relations: From the 1990s until 2003, the international trade embargo restricted Iraq’s export activity almost exclusively to oil. In 2003 oil accounted for about US$7.4 billion of Iraq’s total US$7.6 billion of export value, and statistics for earlier years showed similar proportions. After the end of the trade embargo in 2003 expanded the range of exports, oil continued to occupy the dominant position. In 2004 Iraq’s export income doubled (to US$17.8 billion), but oil still accounted for all but US$340 million (2 percent) of the total. In 2004 and 2005, sabotage significantly reduced oil output, limiting total export values. In 2004 the chief export markets (in order of value) were the United States (which accounted for 52 percent), Spain, Japan, Italy, and Canada. In 2004 the value of Iraq’s imports was US$19.6 billion, incurring a trade deficit of about US$1.8 billion. In 2004 the main sources of Iraq’s imports (in order of value) were Syria, Turkey, the United States, Jordan, and Germany. Because of Iraq’s inactive manufacturing sector, the range of imports was quite large, including food, fuels, medicines, and manufactured goods.

Balance of Payments: The financial management and reporting system remained incomplete in 2005, making full evaluation of Iraq’s financial situation problematic. In 2004 the World Bank estimated Iraq’s current account balance at –US$3.8 billion after being in surplus for the previous three years. Information on the remaining elements of the balance of payments was not available.

External Debt: At the time it was deposed, the regime of Saddam Hussein had an estimated US$120 billion of external debt. In late 2004, the Paris Club of international creditors agreed to cancel 80 percent of the debt owed by Iraq to its 19 member nations, an amount estimated at US$42 billion. In 2005 a three-phase process was devised for this restructuring, which was to be conducted by the United Nations. The United States applied heavy pressure on creditor countries outside the Paris Club to take similar steps. The International Monetary Fund estimated Iraq’s external debt for 2005 as US$68 billion (2.8 times gross domestic product—GDP) and forecast that the 2006 debt would be 2.2 times GDP.

Foreign Investment: Generally, in 2005 foreign investors awaited a quieting of insurgent activities before making large commitments. Although foreign banks received permission to do business in Iraq, security risks limited their activity. The Standard Chartered Bank of Great Britain, the multinational Hong Kong and Shanghai Banking Corporation (HSBC), and the National Bank of Kuwait received licenses to conduct banking transactions in Iraq, but a limit of six such banks was set until 2008. Iraq’s Foreign Investment Law allows foreign banks to hold a 50 percent interest in Iraqi private banks. In 2005 the World Bank’s International Finance Corporation joined the National Bank of Kuwait in buying a share of the Credit Bank of Iraq, a major infusion of money into the Iraqi financial system. In 2004 Shell, BP, and Exxon Mobil signed agreements to study Iraq’s oil reserves, and an international consortium signed a small-scale oilfield development agreement with the Ministry of Oil. In 2006 Iraq set a goal of US$20 billion of foreign investment in its oil industry. In an effort to regularize procedures, in mid-2006 the Council of Ministers approved a new foreign investment law that met strong resistance in the Council of Representatives (lower house of parliament) because of its provisions for foreign ownership.

Foreign Aid: In the post-Saddam Hussein period, Iraq has received foreign aid from a number of national and international sources, but the United States has been by far the largest donor. For the period 2004–7, Iraq received pledges of US$33 billion in aid. In 2005 U.S. government aid to Iraq totaled US$10.2 billion, an increase from US$3 billion in 2004. For 2003–6 all forms of U.S. assistance totaled US$28.9 billion, 38 percent of which was designated for upgrading security and 40 percent for repairing critical infrastructure. In 2004 the U.S. Agency for International Development awarded contracts totaling US$900 million for capital construction, seaport renovation, personnel support, public education, public health, government administration, and airport management.

Among international contributors, the World Bank committed US$3 billion to US$5 billion for reconstruction over a five-year period, and smaller commitments came from Japan, the European Union, Britain, and Spain. Russia canceled 65 percent of Iraq’s debt of US$8 billion, and Saudi Arabia offered an aid package totaling US$1 billion. Effective application of reconstruction funds depends on substantial improvement in infrastructural and institutional resources. Pending full resolution of Iraq’s international debt situation, for the foreseeable future U.S. funds are expected to pay for capital investments in rebuilding. However, in 2004–6 security costs consumed an unexpectedly high percentage of aid allotments, to the detriment of reconstruction activity.

Currency and Exchange Rate: In October 2003, the new Iraqi dinar replaced the old Iraqi dinar as the official currency. In August 2006, its value, originally 1,950 to the U.S. dollar, had stabilized at 1,476 to the U.S. dollar.

Fiscal Year: Iraq’s fiscal year is the calendar year.


Overview: In the 1970s, a sustained campaign for economic development provided Iraq with elements of a high-grade ground transportation infrastructure. Further development of roads and railroads in eastern Iraq supported the war effort against Iran (1980–88). However, damage in the Persian Gulf War of 1991 was only superficially repaired, and the insurgent sabotage that began in 2003 brought another round of damage. Most of that damage was to be repaired by U.S. contractors and international aid organizations. Security conditions were a major factor determining the pace of such repairs. In 2004 the United States allotted US$500 million in aid for transportation upgrades.

Roads: In 2005 Iraq had about 39,000 kilometers of paved roads, many of which were broad highways constructed for military and commercial use in the 1970s and 1980s. Most road and bridge damage was repaired after the 1991 Persian Gulf War had targeted transportation infrastructure. However, beginning in 2003 main roads in central and northern Iraq, such as the connector between Baghdad and the Jordanian border, sustained repeated damage by saboteurs. Bridges damaged in 2003 by coalition forces were the focus of major repair operations in 2004.

Railroads: In 2005 Iraq had an estimated 2,400 kilometers of standard-gauge railroad track, connecting Baghdad with other Iraqi cities and foreign borders in several directions. In the early 2000s, only 30 percent of Iraq’s commercial traffic moved by rail, in part because only 40 percent of locomotives were operable. Most of the railroad infrastructure was in poor repair; an estimated 70 percent of track was impassable at normal speeds, and improvements were very gradual in the early 2000s. Operations on the Baghdad–Mosul and Baghdad–Umm Qasr lines were restored following the government change of 2003, although service remained unreliable. Long-term plans call for new rail links with Syria and Iran.

Ports: In the later years of the Saddam Hussein regime, Iraq’s ports suffered from poor maintenance and were littered with wreckage. In the post-Hussein years, three oil tanker terminals were operating in the Persian Gulf: Basra (the main oil port) and offshore terminals at Khawr al Amayah and Khawr az Zubayr (mainly for dry goods and natural gas). In October 2004, Basra’s capacity was 2 million barrels of oil per day, and the planned capacity of Khawr al Amayah is 1.2 million barrels per day. Umm Qasr, which has benefited from major renovation since 2002, has 23 berths on the Shatt al Arab for general commercial use and delivery of emergency supplies.

Inland Waterways: Iraq has 5,275 kilometers of inland waterways, including canals and rivers that are considered major lines of communication. The main navigable waterways are the Euphrates River (2,815 kilometers) and the Tigris River (1,895 kilometers).

Civil Aviation and Airports: In 2005 Iraq had 78 airports with paved runways, including 20 with runways longer than 3,000 meters. Another 33 airports had unpaved runways. The three major international airports are at Baghdad, Basra, and Mosul. All major airports were damaged during the war in 2003, and since that time the coalition military force has been the major user. Restoration of the Baghdad and Basra airports was a high priority of the occupation force. In 2005 the Baghdad airport had an annual capacity of 7.5 million passengers. The national airline, Iraqi Airways, resumed a limited flight schedule to destinations in the Middle East in late 2004, but service was intermittent. In 2005 Athens and Istanbul were the only European destinations on its schedule. Regular connections began with Iran in 2005 and with Guangzhou, China, in April 2006. The European and Middle Eastern routes were expanded in early 2006, but high risks continue to limit the airline’s routes and profits. After resuming service, Iraqi Airways was run by a Jordanian airline until the Iraqis severed the relationship in 2006, and the airline’s financial backing has been unstable. A German air freight company is one of the few foreign lines serving Baghdad.

Pipelines: In 2005 Iraq had an estimated 5,418 kilometers of oil pipelines, 1,739 kilometers of natural gas pipelines, and 1,343 kilometers of pipelines for refined products. The system, which nominally is capable of transporting several million barrels of oil per day, has suffered severe damage in three military conflicts and in the sabotage that followed the 2003 war. The main oil export line is the 960-kilometer Kirkuk–Ceyhan dual line, which leads to the Black Sea and has a capacity of 1.6 million barrels per day. However, since 2003 the line has been either closed or operating at minimum capacity. A major line between Iraq and the Red Sea has a similar capacity but was confiscated by Saudi Arabia in 2001. The largest natural gas pipeline connects Baghdad with the West Qurnah field in southeastern Iraq.

Telecommunications: The war of 2003 severely disrupted telecommunications in all of Iraq. Since that time, the U.S. Agency for International Development has overseen repair operations by U.S. contractors, but sabotage has delayed restoration in some areas. In 2004 Iraq had an estimated 1 million conventional telephone lines, about half in the Baghdad area. Service was restored gradually to the large percentage of those lines that were not in service in 2003. As of 2005, some 25 conventional telephone exchanges and 14 satellite-linked switching stations were in operation, but international calling remained difficult. An insufficient technical infrastructure also has delayed the replacement of conventional telephone lines with fiber-optic lines. Construction of a mobile-phone system began in late 2003, and in 2005 an estimated 2.8 million mobile phones were in use. Three consortia received contracts to establish mobile phone service in the north, center, and south, respectively. In 2004–5 work in the northern region proceeded fastest, although the regional approach left gaps in service.

Internet access expanded rapidly after the war of 2003, following the end of full state control under the Saddam Hussein regime. In 2005 an estimated 36,000 people were using the Internet, and four hosts were in operation. In 2005 the main points of access were hotels and Internet cafés in Baghdad, Basra, and Kurdistan. Domestic Internet landlines remained unreliable.

Index for Iraq:
Overview | Government


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