Iraq

K

Foreign Trade

Before the UN imposed a trade embargo on Iraq following Iraq’s invasion of Kuwait in 1990, average annual exports were estimated at $10.4 billion and imports at about $6.6 billion. Petroleum sales accounted for almost all the export earnings; other exports were dates, raw wool, and hides and skins. Leading imports were machinery, transportation equipment, foodstuffs, and pharmaceuticals.

With the trade embargo in place, Iraq virtually ceased earning income from exports. In 1996, under the oil-for-food agreement, the UN permitted Iraq to export oil worth $2 billion every six months to purchase food and medicine for its civilian population. However, Iraq could not pump that much oil for a variety of reasons, such as damage to equipment and loss of skilled workers. Therefore Iraq did not export as much oil as was allowed. Consequently, in 1996 Iraq exported oil worth only $400 million and imported food and medicine worth $492 million. The UN agreed in 1998 to increase the value of the oil-for-food arrangement to $5.2 billion every six months.

After Hussein’s overthrow in 2003, the UN ended the Iraqi trade embargo. The U.S.-led transitional authority established the Trade Bank of Iraq to oversee the return of unfettered foreign trade.

L

Currency and Banking

The monetary unit is the Iraqi dinar, consisting of 1,000 fil or 20 dirham (1,472 dinars equal U.S.$1; fixed rate). Currency is issued by the Central Bank of Iraq, which was entirely state-run and controlled the banking system and foreign exchange transactions until Hussein’s overthrow in 2003. The banking sector was subsequently privatized, and foreign banks were allowed to enter Iraq and own up to 50 percent of an Iraqi bank.

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Wajeeh Elali contributed the Economy section of this article.

VI

Government

From 1968 until 2003 the Iraqi government was a dictatorship dominated by a single political party, the Baath Party. From 1979 until 2003, the Baath Party and the government were controlled by Saddam Hussein. Under Hussein, the people had little if any influence on the government. There were occasional elections to the legislature, and Hussein was once confirmed as president in 1995 in a public referendum, but none of these seemingly democratic procedures was truly democratic. Until 2003 Iraq was governed by a 1969 constitution that defined Iraq as “a sovereign people’s democratic republic,” dedicated to the ultimate realization of a single Arab state and to the establishment of a socialist system.

A

Post-Hussein Government

A U.S.-led invasion toppled Hussein’s regime in 2003, and the United States began the process of establishing an interim Iraqi government. The U.S.-led coalition established the Coalition Provisional Authority (CPA), headed by U.S. administrator L. Paul Bremer III. The CPA selected a 25-member Iraqi governing council, with seats distributed among the country’s different religious and ethnic groups as well as existing political organizations.

A

1

Interim Constitution of 2004

The Iraqi governing council approved an interim Iraqi constitution, also known as the transitional administrative law, in March 2004. The constitution was hailed as one of the most democratic in the region, consisting of a bill of rights that guaranteed personal freedoms, including freedom of speech and freedom of religion.

The interim constitution was approved despite the opposition of 12 Shia members of the 25-member council, who objected to several provisions they considered undemocratic. These provisions were also opposed by the most powerful religious leader in Iraq, the Grand Ayatollah Ali al-Sistani, a Shia cleric. Sistani objected to the fact that the interim constitution was drafted by a handpicked council and said it would not be legitimate until it was approved by a democratically elected national assembly.

Shia dissenters argued particularly against a provision requiring a two-thirds vote by at least three of Iraq’s provinces in favor of the permanent constitution. The Kurds, who currently have autonomy (self-rule) in three provinces, sought this provision as a way of guaranteeing continued autonomy and other democratic rights for the Kurdish minority. The Shia dissenters objected that this provision gave too much veto power over the constitution to a minority of voters, including Arab Sunnis, many of whom were supporters of Saddam Hussein.

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