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Until oil extraction began some decades ago, Iraq was predominantly an agriculture society. Now, agriculture only contributes to 16% of the economy. A reform of 1990, opened up state and collective farms, to be rented by private farmers at moderate rent. This was necessitated by food shortages.
Iraq is the world's largest producer of dates. Otherwise the agriculture of Iraq puts out wheat, barley, beans and rice.
The international embargo on Iraq is the single most decisive factor in the country's economy of today. Oil exports are limited, foreign assets frozen, later seized, and Iraq was stuck with a war debt of US$70 billion (equalling 7 years of oil revenues). Iraq's industry, putting out petrochemicals, textiles, steel, sugar and cement, has been dramatically effected by both the bombing, and the by the embargo.
Oil is found in the north, northeast, and in the south. The reserves are estimated to be the second largest in the world (second to Saudi Arabia). The oil industry of Iraq was nationalized in 1972. Iraq is member of OPEC.
Iraqis are all facing very difficult conditions, as prices have peaked while wages have lagged seriously behind, and people with state jobs often have to wait to receive their salaries. Smuggling exists, and a large black market, too.
Selling of valuables have been a solution for many people to make ends meet. Only very few profit from the situation. Information is sparse, but it seems as if the middle class are now living under conditions that were normal for the lower classes before the international embargo started.
Iraq's economy did not plumb directly after the start of the first UN sanctions on August 6, 1990, it's decline continued deep into the 1990's. The fall in gross domestic product (GDP) fell with 15% in 1996.
Before the Kuwait war, Iraq's export relied 98% on oil. The second most important export product was and is dates. Production levels were at 630,000 tons in 1997.
In the 1980's there had been a shift in the economic politics, leading to the reduction of state involvement in industries, and the selling of state organizations to private interests.
Unlike many other oil producing countries Iraq benefits from a population big enough to feed emerging industries with domestic labour forces, an agricultural sector producing enough for the domestic market and sufficient water resources.
Because of the Iraq-Iran War GDP did not rise for 8 years, whilst it grew with more than 30% from 1987 to 1989.
While much hardship on the economic development and general living standard has come as a direct result of the UN sanctions, there is already a year-long history of Iraq not using all funds available to help its population. Different programmes to allow increased imports of food and medical aid has not been used to their full by the Iraqi government.
During the 1980's the Iraqi authorities allowed for increased private participation in agricultural sector. The aim was self-sufficiency and surplus production that could be exported. But due to the hardship following the UN sanctions and the war in 1991, state control was resumed.
The UN sanctions of August 6, 1990 involved the following: