Iraq: Down and Out in Baghdad and Basra?

Abstract

Iraq has had one of the most severe and enduring sanctions imposed on it for more than a decade. A survival-conditions based 'two-gap model' provides an expedient explanation of the economic sclerosis arising out of the sanctions imposed on Iraq. This essay supplements Nordhaus' (2002) study, which estimates United States' long-term cost of war on Iraq but does not attempt to assess Iraq's economic conditions and the level of deprivation in Iraq. An estimate of the economic consequences of sanctions to Iraq is provided here. It is shown that the losses from sanctions amount to nearly US $168 billion (2002 US dollars). Using Sen's (1999) concepts, it is argued that the Iraqis are alienated from Iraq's rulers and 'the international community.'

Note: Previously titled "Down and Out in Baghdad and Basra"

Keywords: Iraq, Middle East, USA, Trade, Sanctions, Embargoes, Blockade, Foreign Financing

JEL Classification: F130, L510, P330, F020