The First Iraqi Economic Forum, held by the Iraqi Economists Network (IEN) in Beirut, discussed a number of studies focusing on the role of Iraqi oil revenues in the resurgence of dictatorship and poor governance. One of the important papers presented at the forum was that of economists Adel Abdul-Mahdi, former Iraqi vice president and finance minister, and Adnan al-Janabi, head of the oil committee in the Iraqi parliament. In a paper titled The Rentier State: A Major Barrier to Sustainable Development, Abdul-Mahdi divided the Iraqi rentier economy into two phases, pointing to the radical change that took place in the philosophy of government after 2003. The former vice president dubbed the earlier phase (prior to 2003) the “unipolar rentier economy," in light of political monopoly and authoritarian rule. During that phase, the armed forces had more than one million conscripts, and included the regular army, the popular army, and a myriad other secret and special forces. Military expenditure during the same period reached $1 billion monthly, which was more than the total value of oil revenues at the time, while debt soared to $200 billion. In addition, hundreds of thousands of Iraqis were killed or mutilated, and an equal number emigrated, draining the country from experts, specialists, and skilled workers. As a result of the embargo and the sanctions imposed by the UN Security Council on Iraq in 1990 following the invasion of Kuwait, the country lost around $14 billion annually, and about $70 billion in potential oil exports that the country was banned from selling in the 1990s. Losses in assets and infrastructure during the first and second Gulf wars amounted to about $684 billion or the equivalent of Iraq's GDP for 29 years. Power plants suffered severe damage, adversely impacting the country's electric output for a long period of time. Official statements in 2012 spoke about producing 7,000 megawatts, including 1,000 from Turkey and Iran, against a minimum demand of no less than 15,000 megawatts. This is while bearing in mind that up to $30 billion was spent on the ministry of electricity between 2003 and 2011 according to the budget, an amount that would soar to about $70 billion if other civil expenditures and the cost of private generators were added. Despite these huge allocations, Iraqis outside of Iraqi Kurdistan, which has used private companies to generate round the clock power, do not enjoy a 24-hour power supply, and only receive a few hours of electricity each day, even during the summer when temperatures can rise to above 50° C. Adnan al-Janabi, in a booklet he handed out during the conference that summarized his ideas on the Iraqi economy, and in his many discussions on the subject, pointed out that Iraq would continue to suffer from resurgent dictatorship as long as oil revenues are controlled by a “strong man" in Baghdad. Instead, Janabi proposed diversifying the way revenues are redistributed, to flow increasingly towards the provinces, in addition to Baghdad. This, he said, can be achieved by implementing in earnest the federal system Iraq adopted after 2003. Otherwise, a new dictatorship is inevitable, as is evident today, with Prime Minister Nuri al-Maliki controlling the political, military, and security pillars of power, in addition to the oil revenues. Janabi then said that “the state's ownership of mineral wealth has allowed rulers to be in a position where they can be authoritarian, rather than a position where they would need the people to bring in revenues for the state and for their own personal income." He pointed out that Iraq, “After the influx of oil revenues in the early 1950s, resorted to a development model that protected the state from the disadvantages of these revenues." Janabi went on to say, “The development council was a pioneering experience in the region, as an independent body with a high degree of professionalism. 70 percent of oil revenues were diverted to this council, and 30 percent to the government's budget. However, Abdul-Karim Kassem's military coup eliminated this model, and oil revenues started gradually crawling back into the government's coffers, damaging the state's institutions. The revenues led Iraq into devastating disputes over wealth and power, until absolute control of the country finally fell into the hands of one man." Jannabi then added, “When the ruler attains this degree of authoritarianism, he slides, besides a failed development model, to dictatorship. This concomitance between the two cannot be easily broken: Oil revenues tempt rulers and make them believe they own the ruled, and prevents the emergence of a successful development model. Meanwhile, the lack of economic and human development leads to the expansion of repressive agencies, and turns armies from a defense role to an instrument of internal repression, and sometimes to fighting fatal foreign adventures. This is what the Shah of Iran did, and was repeated at the hands of the Islamic Republic of Iran. This is what Gaddafi did, and this was the approach of Saddam Hussein." The chairman of the oil commission then concluded by saying, “How much today resembles yesterday. But the present situation is more terrifying. We say more terrifying because oil revenues are bigger, because we are without a state, because the occupation left us divided into sects and components, and because the region is beleaguered with dire consequences in the offing. The Iraqi scene is witnessing the worst manifestations of the rentier state." * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
