meepas - Iraq country profile: Economy and Politics

Prior to the Baathist revolution of 1968 monarchist Iraq and the US had full economic and diplomatic relations. Relations between the two countries was strengthened by their common perception of the USSR as a threat to their western style economy and interests. Full diplomatic relations between the two countries continued after the rise of Baathists in 1968. However both Baathist leaders (Al Bakr and Saddam Hussein)'s socialist – pan Arab style of government, close military links with the USSR and open condemnation of US support for Israel reduced the level of relations between the two countries to a point where Washington started to view Iraq as a potential threat against its interests in the region. America's close military and political relations with the Shah of Iran whom Iraq viewed as an enemy produced suspicion in Iraq with regards to America's intentions towards Baghdad.

The Iranian revolution of 1979 and the rise of Ayatollah Khomeini's vehemently anti US government changed the aspect of relations between Iraq and US – covertly. Henry Kissinger's famous quote "shame both countries can't lose" regarding the Iraq v Iran war is a perfect illustration of how the US tried to portray an image of viewing both countries as threats against the US. However to the US Saddam Hussein's Iraq and his war against Iran became a very useful tool in keeping ayatollah Khomeini's revolution in check. Consequently despite a US embargo on weapons sales to both countries, the US actively encouraged weapon sales to Iraq by European countries such as France. This was done so as means of countering Iran's numerical advantage in the battlefield. The US provided loans and credit to Iraq for "agricultural" purposes, which in reality was used by Iraq to purchase weapons from other countries. At the same time in order to protect its own interests in the region, the US increased its ams sales to its allies, primarily Saudi Arabia and the Gulf countries. The US also provided political backing of Saddam's regime in the international arena. This was confirmed by the fact that Iraq escaped sanctions in the UN despite its use of weapons of mass destruction (Chemical and Biological weapons) against Iran's military forces and against its own Kurdish citizens which caused the death of 3000 innocent civilians.

Relations between Iraq and the US started to deteriorate after the end of Saddam's war against Iran. This was due to the fact that the US and UK governments discovered Iraqi efforts to purchase equipment to be used for production of nuclear weapons, as well as plans to build the Super Gun which could have been used against US allies and interests in the region.

Relations between Iraq and US entered their lowest point after Saddam's invasion of Kuwait. Despite several requests, followed by warnings from the US and UN, Saddam still refused to withdraw his forces from Kuwait. Angered by invasion of one its own allies and feeling threatened by possible Iraqi disruption of oil supplies to the US economy, the US started to build a massive coalition in Saudi Arabia with the goal of recapturing Kuwait from Iraqi forces. The US provided a deadline for Iraq to leave Kuwait, however after Iraq's repeated refusal to withdraw its forces the coalition forces lead by US attacked Iraqi forces in Kuwait and recaptured the country.

Subsequent to the end of the conflict relations between Iraq and the US were still marked by open hostility. After the war the US accused Iraq of developing weapons of mass destruction . Furthermore the US also accused Iraq of committing genocide against its Shiite and Kurdish population. As result with the backing of the UN, sanctions were placed against Iraq, plus a no fly zone across the southern and northern parts of the country. The goal of the no fly zone was to stop Iraqi aircraft from attacking the Kurds in the north and the Shiites in the south of the country.

With the Iraqi economy practically strangled due to the UN sanctions the pictures of dying Iraqi children with no medicine or food convinced the US to accept the UN oil for food programme. This programme which lasted until 2001 was to have been used as a tool to convince Saddam to reveal and destroy his weapons of mass destruction (WMD)infrastructure. However the measures failed as Iraq did not reveal any of its WMD sources as it completely denied having any. Furthermore the sanctions did not bring the Saddam regime to its knees as expected. Recognising the fact that the sanctions were only punishing the Iraqi people and not Saddam's regime and the long term futility of the sanctions due to Saddam's extensive smuggling network, the US decided that other ways had to be found. Viewing the UN inspections of WMD sites as futile the US, plus Britain, Poland and a number of other countries massed forces in Kuwait in expectation of an attack. As Iraq repeatedly failed to reveal its WMD weapons despite warnings from the US and its allies a military attack was launched against it. After a campaign which lasted a number of weeks Saddam Hussein's regime was toppled.

The US strategy post the Saddam regime focused on rebuilding Iraq and to install a democratic regime. However the rebuilding efforts have been fraught by insurgent attacks against US forces plus internal strife between different Iraqi factions. Nevertheless the US and its coalition have continued to focus on the reconstruction efforts and on building a democratic political institution in Iraq. This is based on the logic that a democratic Iraq will side with US economic and strategic policies in the region in return for US militarty and economic assisstance. This is highly probable.

Iraqi exports to the US , under official numbers, stand at about 50% of all exports. The main Iraqi export is oil. Oil and related products account for around 90-95% of the Iraqi exports.

Oil has been a major driving force in the aspirations to rebuild Iraq . Some have even argued beyond this. The IAMB, the monitoring body for Iraqi oil funds, has recently put forward a number of concerns which highlight American relations with the Iraqi oil. Recent reports express concern with regards to an absence of controls over the oil. As a result, Iraqi oil contracts have been awarded to Halliburton, for example, at non-competitive contracting.

While oil is the major engine for change, another growth tool is that if private spending. If Iraqis working under government roles and projects spend their money in the Iraqi economy, growth may be enhanced. Yet this depends heavily on the quality of life in Iraq and on the security situation, which continues to be bleak.