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Last Updated: Tuesday, 6 January, 2004, 18:14 GMT
Iraq unemployment
Iraqi men complaining about their wages
One of the casualties of the war in Iraq which needs to be put right somehow in 2004, is the Iraqi economy.

In fact after Saddam Hussein's wars against Iran and twice against the United States and its allies, plus a decade or so of sanctions, the supposedly oil-rich economy of Iraq has become a basket case.

High unemployment is not just a waste of Iraq's enormous human resources, it also leads to trouble, with hundreds of thousands of young discontented Iraqi men finding they have not much to do - except perhaps confront coalition forces.

Paul Wood reported.

PAUL WOOD:
A typical day in Baghdad. An equally typical suicide bomb. This is what economists call "risk premium." Who'd invest here when your profits could literally be blown to smithereens? Normality, prosperity all depend on the security which has so far proved elusive in Iraq. Not good news if you're looking for work. They wait here from 5.00am every morning. Some of the two out of every three Iraqis without a job. They're hoping for a day's labour. It would bring them the equivalent of 2, about 20p an hour.

WOOD:
Do you think things are worse or better for you now than before the war?

MUHLAS HALAD:
We used to buy cooking gas for 250 dinars. Now it's 4,000.

WOOD:
He's struggling to support eight children. A worker can't pay 4,000 dinars for cooking gas, he complains. How many days have people been without work? Do you get work most times, or most times you do not get work? Everyone says they work just one day in ten. Raled Hussein (Unchecked) moved here from Nasiriyah to find a job. "Prices are rising" he says. "Please, all we're asking for are jobs".

Dr AlI ALLAWI:
(Iraqi Trade Minister)

We have a dire unemployment situation now. Unemployment, underemployment is up to 50 or 60% of the total labour force, and there are no serious investment programmes currently being undertaken apart from those that are related to emergency reconstruction.

WOOD:
What do you say to the men we met yesterday morning at Teran Square (Unchecked)? They're desperate for work now, desperate for help now. What do you say to them?

ALLAWI:
I say you have to understand that the public finances of this country were left in very, very dire straits by Saddam. The flow of funds will not be forthcoming until the early part of next year, and when that happens, there should be a dramatic improvement in terms of quality, jobs available and employment available. I would ask them to be patient.

WOOD:
If you have to weigh your currency rather than count it, the economy is in pretty bad shape. But more money is flowing down through Iraq, much of it coming from the Americans. The money changes in Baghdad's Paradise Square have never been so busy. The mosque in Paradise Square was one of the most famous in the world for the few weeks of the war because it formed the backdrop for everybody's life shots. We're also used to the sound of this mosque, because every time the bombing started, so did a thunderous call to prayer. It was a kind of act of defiance. Today, this mosque coexists perfectly peacefully with the Americans, and one reason for that is that in the old days under Saddam, the Imam, who was making that call to pray, would get just $2 a month. Today, under the Americans, he gets $60 a month. Those $60 wouldn't go far in this store. Luxury goods piled high on the pavements are one of the emblems of the new Iraq. Microwave ovens and televisions would cost several months' salary for the average Iraqi. Imported goods also threaten to crush Iraq's fragile domestic industry. The Al-Najah water heater factory looks busy enough. But there are only 25 workers here. Before the war, it was 160. The factory's manager gave me a dismally frank assessment of what had gone wrong since the coalition's arrival.

ABED AL-SALAM:
(Manager, Al-Najah Factory)

The electricity is always off. The raw materials don't get through from the border, and our markets were protected under the old regime. Now heaters are imported from outside the country from Syria and Iran. Theirs are better and cheaper.

WOOD:
So these machines work at only a fraction of their capacity. The factory tried to diversify. They thought, water heater covers can't be that different from, say, satellite dishes. It wasn't a success. "Too small". The manager shows me all the rejected dishes. The problem: they didn't know the mathematical formula for the focal point of a dish. Theirs were too shallow. They didn't work, and they didn't sell. The factory was plunged into the free market overnight. It's gone through post-Soviet style economic shock therapy. Shock therapy is the doctrine favoured by the coalition for the state sector as well. Some think that would be a terrible mistake.

Dr FAREED YASEEN:
(Advisor to Governing Council)

If you were in an environment that had social networks, that had social blankets that would protect people who are laid off. You don't have that in Iraq. I mean, it was pretty disruptive in Eastern Europe. These measures were made by governments that were popularly elected and, therefore, the legitimacy of these decisions was unimpeachable. But in Iraq that's not the case. The CPA is still an occupying authority. It doesn't have a popular mandate. Ideology should at the very least be contextualised. These people are specialists who have no idea of the specific conditions of the patient they are in. so they don't know what his allergies would be, and in fact what would kill him and what would save him.

WOOD:
Short (Unchecked) is a tough neighbourhood where people make tough decisions to survive. It is conservative, traditional. So women like Azhjan dress modestly, covering themselves in the black attire. Azhjan is 22 now and has been a prostitute since she was 14. She earns about $20 from each Iraqi man she sees. That's almost a week's wages for a labourer. At first she is embarrassed to talk about this. She is encouraged by her aunt and mother, also both prostitutes. Her mother was shot in the hand by a neighbour, angry about the family profession. But they all say that, in these hard times, many more women are turning to prostitution. "She knows what she is doing but she said she doesn't want..." First a little adjustment for the camera Azhjan wants to look her best.

AZHJAN:
(Prostitute)

A lot of women are selling themselves now. Families take their daughters to the hotels to be enjoyed by the Americans. This is the only way, and the easy way, to get money.

WOOD:
Another emblem of today's Baghdad, the petrol queue. This leads to another way to make money:
the black market. Hiding away in a quiet side street, Suhal (Unchecked) makes $15 a day illegally reselling petrol he buys at the pumps. Getting this fuel can take him a day or even two days of waiting. The black market exists because most people can't afford this investment of time.

Dr AHMED OHMERI:
(Dentist)

I am intending to put a day off in my clinic because I don't have petrol to go. My clinic is in Mansour, which is on the other side of the city. I spend too much petrol to reach there. And I have money, but I can't buy petrol. I don't have four or five hours from my time to stay in the queue for the petrol, so I have to shut the clinic off for at least two days.

WOOD:
After all that waiting, it's pretty bad-tempered. No more jerry cans, the security guard has said, trying to limit people to 30 litres each. Then a furious row breaks out over queue-jumping. There is, though, a deeper reason for this anger:
Iraq sits on a lake of oil. People can't understand how nine months into the occupation things are still so bad. Iraq's economy was broken down before the coalition got here. Operation Iraqi Prosperity calls for rebuilding it on free market principles. That means things are going to get worse before they get better. The Iraqi economy will have to spend a little while longer spluttering, struggling and crawling up the slow lane.

This transcript was produced from the teletext subtitles that are generated live for Newsnight. It has been checked against the programme as broadcast, however Newsnight can accept no responsibility for any factual inaccuracies. We will be happy to correct serious errors.



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