Monday, August 10, 2009

The switch to a free market in Iraq a difficult one

The shift to a free market in Iraq has been a difficult one. Government jobs are plentiful and easy, it's factories have many more workers than needed. Workers in government run factories payed full time wages for only having to work 2 hours a day. Yet the fear is that removing the jobs will turn the workers into terrorists, as they will join the insurgency for food and money.

From this Reuters article that we found at the Qatar's Peninsula On-Line, we read more about the quandary.

Iraq has stuffed factories and other state bodies with legions of extra workers to lure the poverty stricken away from a well-funded insurgency, which has only waned in the last 18 months after more than six years since the US-led invasion.

At a state-owned electrical factory in Baghdad, a maximum of 2,500 workers are actually required, yet only a handful of the 4,370 employees on the payroll were visible in the forest of ancient looking machines in the cavernous factory halls.

Iraq hopes to entice foreign capital to such plants to rehabilitate them and turn them into profit-making ventures, but that could mean the sacking of thousands of extra staff.

“The security situation will go to pieces. The terrorists would employ them. They’d go to someone who would pay them to lay a roadside bomb,” said technical services chief Haady Ali.

The US military believes most Iraqis working with the insurgency do so only to earn a living, not through ideology.

Years of war and sanctions have worn down Iraqi industries, and before that decades of Soviet-style socialist economic policies under Saddam Hussein supported loss-making enterprises. Generations of Iraqis are accustomed to a government run economy in which the state provides for all, and a deep-rooted aversion to Western-style capitalism is part of the culture.

Yet a sharp fall in oil prices from last year forced Iraq to slash its 2009 budget three times, making it unlikely to be able to support a huge public sector indefinitely.

“Privatisation won’t work. There won’t be job safety - the country must protect its people,” said Faiq Marhoum, a worker at the factory for 37 years.

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