Iraq: The Marshall Plan, Vietnam, Eastern Europe & Welfare Reform All At Once
I'm a member of a great not-for-profit organization called Business Executives for Naional Security (BENS) (www.bens.org) The CEO of BENS, General Chuck Boyd (USAF, ret) asked me to write a letter to give the membership an update on the Iraqi economy. I did so and the following letter was sent out to the BENS members:
Dear General Boyd,
Things are going well here in Iraq. We continue to push the football down the field. Time flies by for me, and we are very busy. I've traveled all over Iraq (Baghdad many times, Fallujah, Mosul, Kirkuk, Tuz, Bayji and I live in Tikrit) plus to several countries throughout the Middle East (Jordan three times, Kuwait twice and Dubai).
Believe me, I had low expectations prior to coming here, and the economy is worse than I anticipated. Without tremendous international support, the future of Iraq would certainly look bleak. With international support, there is hope. There are many positive signs but most people do not have an accurate picture how bad the situation was when we entered Iraq. Iraq is experiencing a combination of economic and military phenomena that have occurred before. Unfortunately, they are all happening here at once, making our task very difficult. The historical parallels are:
1. The Marshall Plan and the re-building of war torn European nations
2. The insurgency of Vietnam
3. The privatization of previously state owned enterprises in Eastern Europe
4. The development of third world countries in Africa through USAID
5. The elimination of an entitlement mentality
Unlike the Marshall Plan following WWII, we are not re-building a country that was previously organized along capitalist lines. We are rebuilding a state run by centralized planning that created an entitlement mentality among its citizens. Iraqi literacy rates fell from one of the highest to one of the lowest in the Middle East under Saddam Hussein. Employment prior to the liberation of Iraq was dominated by the government, the military and agriculture. Virtually no industry existed otherwise.
For this reason, our operation is more about "development" from an economic standpoint than "reconstruction." We are doing this while combating an insurgency campaign that intimidates average Iraqi citizens.
On the positive side we are building the Iraqis a first rate infrastructure with water, power, schools, sewage, all several decades more advanced than they ever had in the past. This will provide them with a much higher basic quality of life and the opportunity to build Iraq into a productive society. When added to the newfound freedoms they are enjoying as a society and as individuals, the result is truly inspiring.
I know media gives the impression that there are many cities here and the country is relatively advanced and urban. Not so. Around 75 percent of the population is rural. Agriculture is the largest employer with around 40 percent of the population employed in some type of farming. The average income for those who work in Iraq is less than $500 a year.
Despite its oil wealth the country has an incredibly high burn rate ($13 billion per year) because of high subsidies (electricity is free, everyone receives a food basket as a result of oil for food, gas is a nickel a liter, state owned companies are very unprofitable and are in essence a subsidy). Unemployment is between 30 to 50 percent in most areas. The only significant industry is agriculture and that only brings in $1.5 billion annually ($60 per capita).
The country also has a very high debt load estimated at over $100 billion. The international community is helping with that but realistically, even with oil reserves, Iraq is a very poor country with little economic output. The total GDP of Iraq is estimated at only $8 billion outside of oil ($300/per capita) and even that figure is questionable. Unless the Iraqis can create other industries beyond oil, Iraq will face an uncertain and unstable future. Because of its large population (26 million), even if it reaches maximum projected oil production, it will still have less than $2,000 per capita GDP. This will keep it among the poorest countries per capita - even with oil production at a maximum.
Most of my work is relatively tactical. The Iraqi government is a sovereign government now and makes up its own policies - I am not involved in anything at that
level. My job is to understand what's happening at the national and local level- and decide how we can make the most difference with limited resources.
In our area (North-Central Iraq), we're working to build Iraqi chambers of commerce in each major city, business centers and agricultural cooperatives. This will help provide the local infrastructure to coordinate with the national growth plans and eventual investment from foreign investors. Iraq is a beautiful country. Right now, the area is lush with vegetation and the weather is ideal - around 75 degrees. If it could stay this way, the tour wouldn't be so bad. Unfortunately, it's going to get hotter faster. Our area gets at least 15 days each summer where the temperature exceeds 120 degrees.
Militarily we're really taking it to the enemy. There is a noticeable difference in the environment here in the past few months both militarily and politically and both for the positive. The locals are turning in more and more insurgents and the new Iraqi police and army are getting larger in numbers and improving in quality.
I am very encouraged by this. The Kurds and the Shi'ites are both very pleased as a whole with the outcome of the liberation and the elections. The Sunni's have started to realize that the train has left the station and they better get on board. Many Sunni Imams recently issued a fatwa telling Sunnis to go ahead and join the Iraqi police and army. That is a tremendous boost to our efforts.
I couldn't be more proud of the way our soldiers are performing. Morale is high and most people seem to enjoy their jobs. It is usually the exception that is quoted on television. I find most soldiers enjoy what they are doing. Our quality of life is very high. We get hot food three times a day. We work often in air conditioned buildings and vehicles. Most soldiers have regular phone and internet access and occasional television access.
We continue to get hit pretty regularly with mortars, but for the most part the insurgents are very inaccurate. The mortar attacks are most often ineffective from a destructive standpoint. Every once in a while they get lucky though. We took ten casualties on our base last week from mortars. All lived and all but one returned to duty shortly after receiving medical care.
For the most part we are very safe when we are on our bases. However, when our soldiers leave the bases, they face significant dangers. We see dozens of attacks in our area every day from booby traps (called Improvised Explosive Devices - IED) and suicide bomb cars (called Vehicle Born Improvised Explosive Device - VBIED).
We are aggressively pursuing the enemy and are seeing many successes killing or capturing insurgents, but we have a long way to go. It feels like momentum is moving in favor of coalition forces and the Iraqi people. The insurgency is still a dangerous threat and we expect to take casualties as we move forward.
Dear General Boyd,
Things are going well here in Iraq. We continue to push the football down the field. Time flies by for me, and we are very busy. I've traveled all over Iraq (Baghdad many times, Fallujah, Mosul, Kirkuk, Tuz, Bayji and I live in Tikrit) plus to several countries throughout the Middle East (Jordan three times, Kuwait twice and Dubai).
Believe me, I had low expectations prior to coming here, and the economy is worse than I anticipated. Without tremendous international support, the future of Iraq would certainly look bleak. With international support, there is hope. There are many positive signs but most people do not have an accurate picture how bad the situation was when we entered Iraq. Iraq is experiencing a combination of economic and military phenomena that have occurred before. Unfortunately, they are all happening here at once, making our task very difficult. The historical parallels are:
1. The Marshall Plan and the re-building of war torn European nations
2. The insurgency of Vietnam
3. The privatization of previously state owned enterprises in Eastern Europe
4. The development of third world countries in Africa through USAID
5. The elimination of an entitlement mentality
Unlike the Marshall Plan following WWII, we are not re-building a country that was previously organized along capitalist lines. We are rebuilding a state run by centralized planning that created an entitlement mentality among its citizens. Iraqi literacy rates fell from one of the highest to one of the lowest in the Middle East under Saddam Hussein. Employment prior to the liberation of Iraq was dominated by the government, the military and agriculture. Virtually no industry existed otherwise.
For this reason, our operation is more about "development" from an economic standpoint than "reconstruction." We are doing this while combating an insurgency campaign that intimidates average Iraqi citizens.
On the positive side we are building the Iraqis a first rate infrastructure with water, power, schools, sewage, all several decades more advanced than they ever had in the past. This will provide them with a much higher basic quality of life and the opportunity to build Iraq into a productive society. When added to the newfound freedoms they are enjoying as a society and as individuals, the result is truly inspiring.
I know media gives the impression that there are many cities here and the country is relatively advanced and urban. Not so. Around 75 percent of the population is rural. Agriculture is the largest employer with around 40 percent of the population employed in some type of farming. The average income for those who work in Iraq is less than $500 a year.
Despite its oil wealth the country has an incredibly high burn rate ($13 billion per year) because of high subsidies (electricity is free, everyone receives a food basket as a result of oil for food, gas is a nickel a liter, state owned companies are very unprofitable and are in essence a subsidy). Unemployment is between 30 to 50 percent in most areas. The only significant industry is agriculture and that only brings in $1.5 billion annually ($60 per capita).
The country also has a very high debt load estimated at over $100 billion. The international community is helping with that but realistically, even with oil reserves, Iraq is a very poor country with little economic output. The total GDP of Iraq is estimated at only $8 billion outside of oil ($300/per capita) and even that figure is questionable. Unless the Iraqis can create other industries beyond oil, Iraq will face an uncertain and unstable future. Because of its large population (26 million), even if it reaches maximum projected oil production, it will still have less than $2,000 per capita GDP. This will keep it among the poorest countries per capita - even with oil production at a maximum.
Most of my work is relatively tactical. The Iraqi government is a sovereign government now and makes up its own policies - I am not involved in anything at that
level. My job is to understand what's happening at the national and local level- and decide how we can make the most difference with limited resources.
In our area (North-Central Iraq), we're working to build Iraqi chambers of commerce in each major city, business centers and agricultural cooperatives. This will help provide the local infrastructure to coordinate with the national growth plans and eventual investment from foreign investors. Iraq is a beautiful country. Right now, the area is lush with vegetation and the weather is ideal - around 75 degrees. If it could stay this way, the tour wouldn't be so bad. Unfortunately, it's going to get hotter faster. Our area gets at least 15 days each summer where the temperature exceeds 120 degrees.
Militarily we're really taking it to the enemy. There is a noticeable difference in the environment here in the past few months both militarily and politically and both for the positive. The locals are turning in more and more insurgents and the new Iraqi police and army are getting larger in numbers and improving in quality.
I am very encouraged by this. The Kurds and the Shi'ites are both very pleased as a whole with the outcome of the liberation and the elections. The Sunni's have started to realize that the train has left the station and they better get on board. Many Sunni Imams recently issued a fatwa telling Sunnis to go ahead and join the Iraqi police and army. That is a tremendous boost to our efforts.
I couldn't be more proud of the way our soldiers are performing. Morale is high and most people seem to enjoy their jobs. It is usually the exception that is quoted on television. I find most soldiers enjoy what they are doing. Our quality of life is very high. We get hot food three times a day. We work often in air conditioned buildings and vehicles. Most soldiers have regular phone and internet access and occasional television access.
We continue to get hit pretty regularly with mortars, but for the most part the insurgents are very inaccurate. The mortar attacks are most often ineffective from a destructive standpoint. Every once in a while they get lucky though. We took ten casualties on our base last week from mortars. All lived and all but one returned to duty shortly after receiving medical care.
For the most part we are very safe when we are on our bases. However, when our soldiers leave the bases, they face significant dangers. We see dozens of attacks in our area every day from booby traps (called Improvised Explosive Devices - IED) and suicide bomb cars (called Vehicle Born Improvised Explosive Device - VBIED).
We are aggressively pursuing the enemy and are seeing many successes killing or capturing insurgents, but we have a long way to go. It feels like momentum is moving in favor of coalition forces and the Iraqi people. The insurgency is still a dangerous threat and we expect to take casualties as we move forward.
posted by Dan at 5:08 AM
