Crippled but growing Iraq economy

Civil war or not, Iraq has an economy, and—mother of all surprises—it’s doing remarkably well.

Real estate is booming. Construction, retail and wholesale trade sectors are healthy, too, according to a report by Global Insight in London. The U.S. Chamber of Commerce reports 34,000 registered companies in Iraq, up from 8,000 three years ago. Sales of secondhand cars, televisions and mobile phones have all risen sharply. Estimates vary, but one from Global Insight puts GDP growth at 17 percent last year and projects 13 percent for 2006. The World Bank has it lower: at 4 percent this year. But, given all the attention paid to deteriorating security, the startling fact is that Iraq is growing at all.

National oil revenues and foreign grants look set to total $41 billion this year, according to the IMF. Imported goods have grown increasingly affordable, thanks to the elimination of tariffs and trade barriers. Salaries have gone up more than 100 percent since the fall of Saddam, and income-tax cuts (from 45 percent to just 15 percent) have put more cash in Iraqi pockets. story at Newsweek

There are now as many as 48,000 mercenaries in Iraq, funneling income for the private military and security industry that reached $100 billion in 2004.

In the first Gulf war, the ratio of private contractors to military personnel was one to sixty. This time it’s approaching one to one.

A bit of info about private armies here. And a USA-centric assay of private armies in Mark Hemmingway’s “Warriors for Hire” cover story about private military contractors at The Weekly Standard, or follow his blog.