It's been six years since the U.S.-led invasion of Iraq. In recent months, stability has improved, but the gains will unravel unless progress is made toward strengthening the economy.
The financial crisis and lower-than-expected oil prices have changed things considerably for the Iraqi government. Last month, parliament made big cuts, revising the budget from $79 million to just $58.9 billion.
A major portion of this budget was supposed to be allocated toward rebuilding the infrastructure that has been devastated during the past six years. The New York Times reports that infrastructure projects are being put off, including the cancellation of a $600 million General Electric contract to lay electric cables and upgrade switches to allow the grid to increase electricity output.
Unemployment is also a big issue. A UN report released in February shows that unemployment is estimated to be around 18 percent. An additional 10 percent are underemployed, working part-time.
Adding to the frustration of locals, the government hasn't been able to meet basic needs like providing safe drinking water, electricity and education. The Iraqi Environment Ministry estimates that 36 percent of Baghdad's drinking water is unsafe as raw sewage, which still runs down Baghdad streets, mixes with drinking water. Furthermore, the demand for electricity still exceeds supply.
People expected things to go differently. Just last year, the Iraqi government was flush with cash. Record high oil prices prompted the government to offer big raises to employees. Now the shortfall has left the Iraqi government struggling to pay salaries for government employees and hundreds of thousands of new security troops.
But a shaky Iraq could force the Obama administration to adjust their plans. The Times points out that unless the economy strengthens and security gains continue, President Obama's timetable to withdraw troops could be delayed.
A stable Iraqi economy and an adequately prepared Iraqi military are crucial if American combat troops are to withdraw by August 2010, as aides to President Obama suggested this week. And illustrating just how closely the two countries are still intertwined, a faltering Iraq could also complicate Mr. Obama’s plan to lower the American deficit with billions in savings that would come from such a withdrawal.
Although the progress on the security front has given in a sense of normalcy, but the financial crisis has made it even more urgent for the government to develop a long-term strategy for stabilizing the economy, creating jobs, attracting foreign investment, which will ultimately mean prosperity for the Iraqi people.
According to Hazim al-Nuaimi, a political analyst in Baghdad, “The only thing that has changed is that now there's a light at the end of the tunnel. But it seems six years is not enough to be able to reach that light.”