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Iraq Remains Ultimate Welfare State
Published on Tuesday, September 14, 2004 by the International Herald Tribune
Iraq Remains Ultimate Welfare State
Virtually Everyone is Still Dependent on Handouts of Free Food
by Erik Eckholm

BAGHDAD - Iraq may be tormented by ethnic and religious divisions, but one thing still unites all its people, from holy warriors of the Sunni Triangle to middle-class supporters of the government to disaffected Shiites of the south. What nearly every Iraqi family gets, regardless of income and no matter whose guns rule the local streets, is the central government's monthly gift of free food.

Nearly 18 months after U.S. forces demolished Saddam Hussein's government, pledging to create a prosperous, free-market democracy, Iraq remains in some ways the world's ultimate welfare state.

Saddam's government started handing out survival rations through neighborhood shops in 1991, when the country faced international trade sanctions. The program continues unchanged, even in cities like Falluja, where Islamic militants are in control and all other government services have been cut off. Across the country, no one doubts that the families of insurgents survive partly on government rations, just like everyone else.

The monthly supply of flour, rice, beans and other goods is worth about $15 per person, but for the poor majority, battered by years of sanctions, war and economic collapse, it is a safety net. Even among those who are well-off, food rations have come to be regarded as an entitlement and - to the chagrin of senior economic officials and their U.S. advisers - people want the list of free items expanded.

"We can't live without the ration," said Hassina Hasoon, a bent, 80-year-old woman, her face beatific in a swaddling of black and white cloths, as she picked up bags of wheat flour in the impoverished Washash neighborhood of central Baghdad.

In her three-generation household of eight, only one son can find occasional work, she said. "We totally depend on the ration for our food. We want them to add meat and chicken to the list."

Maher Ali Oraibi, 45, who was visiting the same depot, said: "If they stop the food ration, then food prices will go sky-high and there will be war in the streets. Don't let them stop this program, for I assure you, people will die."

The system has enormous costs, direct and indirect. Importing and distributing the goods eats up $3.8 billion a year, or close to one-fifth of the national budget. It has fostered bureaucratic corruption, creates a culture of dependency and, by relying almost entirely on imported goods, suppresses domestic farming and industry.

In another example of costly subsidies, gasoline sells for less than 10 cents a gallon. Other fuels are similarly cheap. Altogether, the cost to the government amounts to $5 billion in lost revenues, or about $200 per person.

Western advisers, the International Monetary Fund and Iraq's top economists all agree that these huge subsidies will cripple plans to diversify and free up the economy. But they also know the likely consequences in the streets if the subsidies are cut anytime soon. For now, basic economic reforms are hostage to the Iraq's political fragility and its mass unemployment.

By United Nations estimates, 60 percent of Iraqis depend for an important part of their diets on their rations of flour, rice, beans, cooking oil, milk powder, sugar and tea. Most other families collect the rations, too, with many selling off undesired goods for cash.

"The food distribution system is our most important social safety net," said Fakhri Aldin Rashan, a senior economist and under secretary in the Trade Ministry, which administers the rations.

Fearful of any backlash in a country where large segments of the population are in open revolt, the interim government has pledged to leave the program in place at least through 2005. Slowly and carefully, Rashan said, the government hopes to start cutting back rations to the rich, eventually providing free food just to the most vulnerable segment of the population as it fosters private commerce.

Western advisers have promoted switching to a cash payment, perhaps $15 to $20 a month per person, that would allow people to buy what they want, thus stimulating private farming, commerce and development.

But suspicion and fear run deep, and the government decided against that approach, Rashan said.

Jassim Salah, 74, distributes ration items at his food and cigarette shop in Khadra, a middle-class district in west Baghdad. He had heard discussion on television of the proposed switch to cash payments, he said. His response was typical: "They are talking about giving us money instead of food. It's all lies. Don't believe them; they'll let us starve."

A more practical argument against switching to cash, Rashan said, is that the funds will tend to be collected by the males who head households and who may spend the money on themselves or even take second wives.

But even as people cling to the security of free food, many complain about poor quality and erratic delivery. People say the flour is often half-spoiled and the cooking oil stinks, and corruption in the procurement process is legendary.

"The officials who run this are thieves," Salah, the shopkeeper, said. "They import good quality food, sell it and then give bad quality food to the people."

He said his fee for distributing rations was so low it was hardly worth the trouble. But the rations do bring in neighbors who may buy soft drinks or cigarettes as they trade their coupons for ration items.

© International Herald Tribune



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