Failures (and successes?) of neoliberal economic policy in Iraq

Abstract

Arguments for the total overhaul of the Iraqi economy were grounded in neoliberal justifications and erroneous claims that the economy was moribund, inefficient and burdened by endemic corruption and thus, in need of rapid liberalization. The transition to a fully liberalized economy was implemented by Coalition Provisional Authority (CPA) officials with little regard for how decades of war and sanctions had shaped the Iraqi economy and the consequences this would have on post-invasion economic policy. The multiple failures of the CPA's neoliberal economic policies originate in this fundamental misreading of the economy and the disregard of specific economic patterns that had developed over the previous decades. Critical evaluation of these phases suggests that economic policy has largely failed to initiate sustained development, reconstruction or rehabilitation of the economy as a result of economic planners' fundamental misunderstanding of the Iraqi economy at the time of the invasion. These failures are the consequences of ideologically-driven policies that emasculated existing state structures, institutions and policy capacities. Furthermore, economic policy has perpetuated and, indeed, deepened the structural dependency of the Iraqi economy on oil revenues rather than generating economic diversification.