Progress in the Reconstruction of Iraq


The Republic of Iraq is a war-torn, Middle Eastern nation of roughly 38 million people. Operation Iraqi Freedom and the fight against the Islamic State decimated the country in the early 21st century. Years of conflict have scarred Iraq’s economy and hindered new business growth. Currently, Iraq ranks at a low 172 out of 190 nations on the World Bank’s Ease of Doing Business scale. The economy also suffers from a 14.8 percent unemployment rate. The situation seems dire, but there is hope for Iraq. American military personnel laid foundations for stability and economic success. Now, businesses are taking advantage of lucrative investments to repair the country. The reconstruction of Iraq is moving forward, even if mobility is gradual.

Iraq’s Lost Potential

In the late 1900s, Iraq’s economy grew steadily under the oppressive regime of Saddam Hussein. A CIA report on the Iraqi economy shows that the GDP in 1989 was $38 billion. Dr. George Gawrych, a professor of Middle East history at Baylor University, told The Borgen Project that this environment granted Iraqis social mobility. The government capitalized on the growing economy by building infrastructures, such as roads and schools. However, Iraqi success existed in a paradox.

“You see good things happening, but at the same time, you create a ruthless regime,” Gawrych stated in the interview. The war toppled the regime’s economic fortunes. According to the CIA, Gulf War repercussions caused the GDP to drop to $10.6 billion by 1996. By the time the country’s economy had recovered, Operation Iraqi Freedom occurred to stop the tyranny of Saddam Hussein. As a consequence, this toppled the economy again.

Trying to Rebuild

After combat in Iraq ended in 2010, the post-ISIS reconstruction of Iraq through U.S. military efforts began. American troops helped to build buildings, a deep water port and restore the southern oil hub of Umm Qasr. According to a 2011 report by The Brookings Institution, 59 percent of Iraqis felt security in the country had improved in 2010. Unfortunately, the reconstruction of Iraq following Operation Iraqi Freedom was hindered by ISIS.

One Foreign Policy Research Institute report found that ISIS-perpetrated grid damage caused at least a 40 percent loss of power from Iraq’s already ailing electrical infrastructure in 2016. ISIS increasingly stole revenue from Iraq’s government as well. In 2015, CNN reported that ISIS utilized exorbitant taxes to raise funds and damage the economy. One such tax seized 50 percent of the salaries of government employees living in ISIS-occupied territories, effectively meaning that the Iraqi government paid ISIS.

Investing in the Future

Businesses are stepping in to fill the economic void and build upon infrastructural foundations established by the military. The aforementioned FPRI report discovered that Iraq’s government could only meet 15,900 out of 23,000 required megawatts for summer 2018. Reuters reported that 157 projects required investments in the same year. Various organizations are meeting these needs.

  • The International Finance Corporation – The IFC manages the private sector matters for the World Bank and encourages foreign investment. According to Reuters, one Lebanese company utilizing these opportunities made a massive 24 percent return on a hotel investment. The IFC also directly funds many projects. It has already placed $1.2 billion at stake in Iraq and announced a $250 million telecommunications deal.

  • The Khudairi Group – This Iraqi firm was the first dealer of General Motors in the country. Due to its roots, the reconstruction of Iraq is very important to this company. It employs 250 individuals across its seven offices, four of which are in Iraq. It also uses part of its profits to replenish Iraq’s human capital. The Khudairi Group has assisted the Iraqi Children’s Foundation in opening two “Hope Buses” that feed, educate and comfort more than 100 kids.

  • General Electric – GE has been Iraq’s business partner for 50 years, and war has not deterred them. The American firm is currently in the third phase of the Besmaya Electricity Plant, which will increase power to 4.5 gigawatts. Beyond repairing Iraq’s grid, GE has helped form 6,200 Iraqi jobs since 2008. It also supports the proliferation of Iraqi business and has supplied $1 billion in loans to local firms.

Slow and Steady Progress

Both long-term military support and recent investment contribute to gradual progress. The World Bank’s most recent statistics on Iraq display steady GDP growth. The GDP is projected to increase to 5.8 percent in 2019 and to 5.1 percent by 2020. Economic diversification also bodes well for reconstruction, and foreign investment will sustain these advances. The reconstruction of Iraq requires much more work, but economic growth has placed it on the right track. With further investment, Iraq’s advancements will continue. War has besmirched Iraq’s recent past, but business promises a brighter future.

Sean Galli
Photo: Flickr


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