Inflation in Iraq

Thanks to the blog Opit (whom I believe has new digs over at Opera) for this one – he posted it in response to the post about malnutrition in Africa.

From Yahoo, originally from the Inter-Press news service (who also have article running at the moment that details 2007 being the worst year yet for Iraq):

The Iraqi government announcement that monthly food rations will be cut by half has left many Iraqis asking how they can survive.

The government also wants to reduce the number of people depending on the rationing system by five million by June 2008.

the U.S.-backed Iraqi government has announced it will halve the essential items in the ration because of “insufficient funds and spiralling inflation.”

The cuts, which are to be introduced in the beginning of 2008, have drawn widespread criticism. The Iraqi government is unable to supply the rations with several billion dollars at its disposal, whereas Saddam Hussein was able to maintain the programme with less than a billion dollars.

“In 2007, we asked for 3.2 billion dollars for rationing basic foodstuffs,” Mohammed Hanoun, Iraq’s chief of staff for the ministry of trade told al-Jazeera. “But since the prices of imported foodstuff doubled in the past year, we requested 7.2 billion dollars for this year. That request was denied.”

The trade ministry is now preparing to slash the list of subsidised items by half to five basic food items, “namely flour, sugar, rice, oil, and infant milk,” Hanoun said.

The imminent move will affect nearly 10 million people who depend on the rationing system. But it has already caused outrage in Baquba, 40 km northeast of Baghdad.

“The monthly food ration was the only help from the government,” local grocer Ibrahim al-Ageely told IPS. “It was of great benefit for the families. The food ration consisted of two kilos of rice, sugar, soap, tea, detergent, wheat flour, lentils, chick-peas, and other items for every individual.”

Another grocer said the food ration was the “life of all Iraqis; every month, Iraqis wait in queues to receive their food rations.”

According to an Oxfam International report released in July this year, “60 percent (of Iraqis) currently have access to rations through the government-run Public Distribution System (PDS), down from 96 percent in 2004.”

Bugger. I think I’ve made this point with regard to the Chinese government, previously: people will accept non/un/anti-democratic (or otherwise dysfunctional) government, provided that they can at least eat, live in a house, pursue their own happiness as best they can. Take that away, and people start wondering, openly, why you’re the government. In the backs of our minds, we never properly forget that we invented government.

Which would make it suck for the Iraq government. Like any other government, they’re dealing with inflation that is predominantly exogenous – they can only buy what they can afford with the money they had. The fact that Hussein managed to feed people (under wildly different circumstances) will also not help (no, all the shit Hussein also did to them does no matter, because what you and I think is irrelevant to a man who can’t feed his family. That’s just the way it is, and you’re welcome to call a jobless man with hungry children stupid and irrational and ungrateful. In fact, I dare you).

I’d also be interested to see how the US responds to this, both from their administration responsibility perspective (increase aid? Ask for more foreign support? We already saw Africa’s experience with inflation, yesterday), and from the perspective of military occupation (since this problem will also, to some extent (a) affect the costs of the US mission in Iraq, and (b) affect the angriness of the people faced by the US mission in Iraq. Especially if Iraqis decide to blame that mission for the inflation).


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