Iraq’s Unknown Economy

While Iraq’s security situation improves dramatically, and its political scene muddles along with only very limited and mostly local steps toward gradual Sunni-Shia-Kurd rapprochement, what is happening on the economic side?

As students and practitioners of counterinsurgency and nation building well know, the economy is the third pillar of any successful mission, along with the security and political environments, and can never be neglected.

After meeting again recently with some of our top economic aid and reconstruction experts on Iraq, I have concluded they continue to do remarkable things at considerable personal risk and hardship in Iraq. Hospitals and electricity plants are being built, transportation infrastructure improved, water and waste treatment plants constructed. But the other striking, and lamentable, fact about our economic efforts in Iraq is that for the most part we don’t have the foggiest idea how well they are working. That has to change.

To be fair, some things are known. Inflation is within reasonable bounds. Oil revenues are up quite a bit due to the price of petroleum, even if production has increased only very gradually. Due largely to the improved security environment, electricity production and distribution finally took a substantial step forward in 2007, for the first time since the 2003 invasion. Without even counting the informal electricity sector, which has itself grown, official numbers have increased 10 percent to 20 percent. Cell phone ownership and usage have gone through the roof; national port capacity has increased substantially; the Internet is making real inroads.

Less happily, household fuel supplies are nudging upward slightly, but only after a couple years of stagnation or even decline relative to demand. Foreign investment remains very modest due to ongoing uncertainty about Iraq’s future — and concern about the violence of the present. Unemployment remains quite severe.

Beyond those conclusions, though, we don’t know much. While the U.S. government can point to many individual projects that are progressing or reaching the ribbon-cutting phase, we do not have a sense of overall national trends. How many Iraqis get water? How many have their trash picked up, or sewage removed dependably from their neighborhoods? How many get the water they need to irrigate their crops? How many get basic health care when they need it? How many of their kids are in school? And how do all these numbers compare to last year, or the latter year’s of Saddam’s rule — important benchmarks in shaping Iraqis’ perceptions of their government’s performance (not to mention that of the United States)?

The answers are blowing in the wind. American aid agencies either do not have viable strategies to collect meaningful data or believe they must defer to sovereign Iraqi authorities on such matters.

With American aid dollars drying up even as Iraqi government funds skyrocket due to the high price of crude oil, it is increasingly clear that while security remains in large part an American task, economic reconstruction and development must be led by Iraqis. So we bow out of the debate at times.

There is some logic to this thinking, but in the end it is flawed. We must know how well the economy in Iraq is doing. How else can we know whether to advise Iraqis to undertake a massive jobs creation program to alleviate the unemployment rate? Or to revamp strategies for national infrastructure, focusing on smaller and more local systems rather than larger ones vulnerable either to sabotage or to politicians’ bickering and interference?

How else can we pressure countries like Saudi Arabia to do more to help Iraq, if we cannot clearly explain how much help Iraq still needs? How can we convince war-weary American voters to stay with the Iraq effort (even as it is gradually downsized in coming years) if they have no comprehensive sense of how it is really going?

It is entirely possible to collect better data. Each year the World Bank produces admittedly imperfect but still useful basic developmental information on the overwhelming majority of the world’s countries, including some others experiencing conflict.

Few of these countries have the huge foreign presence found in Iraq, yet data are still collected and vetted. Information on child survival, primary education, literacy and life expectancy is readily available for most African states, for example. Why can’t we do as well in Iraq?

We need to do better. One place to start is to ask the United Nations, which produces most of the above-mentioned data for other countries, to expand its similar operations throughout Iraq. UNICEF has recently issued a report on the state of Iraq’s children, but its data on education is old. In fact, the report provides a nationwide estimate on the availability of basic utilities only for the single specific matter of sewers (UNICEF estimates that, outside Baghdad, 20 percent of Iraq’s children have use of proper sewerage facilities).

Another complementary approach would using polling and surveys to gauge Iraqi attitudes about quality-of-life indicators. To be sure, such surveys produce imprecise information at best, and only become truly meaningful over months or years as we can discern trends in perceptions. But better late than never.

Also, even if survey data are bound to be inexact, perceptions are hugely important in building a nation, healing sectarian wounds and restoring to the extent possible the image of America. We need to know if Iraqis believe their lives are getting better.

Last year was the year of security in Iraq, a remarkable period of unmistakable and hugely encouraging progress in reducing violence. Of course, 2008 needs to a year for Iraqi political progress to reinforce that security trajectory. But just as much, it needs to be the year of the economy. With the security environment so much better, that is now possible.

We will only know how well we are doing and what further changes may be necessary, if we recognize the importance of economic trends — and become curious enough to study them with the same care and attention we devote to understanding Iraq’s violence.