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As with the oil industry, other significant problems needlessly obstruct potential economic growth. As noted by Rashid Ashraf of Financial Times: “More than half of the families in Iraq still receive a monthly food parcel of basic supplies. This legacy of the oil-for-food programme in the long years of sanctions is expensive, and distorts the market.” Socialist prescriptions such as these were necessary under the sanctions regime to keep millions of Iraqis from starving, but are no longer appropriate. As the economy continues to advance, free market principles will rightfully continue to be encouraged by the United States as a means to facilitate those gains.
The New Iraqi Dinar, the official currency introduced in July 2003, has become a stable and unifying presence in the economy of Iraq. The banking sector is emerging as a powerful economic staple now that the Baathists no longer corrupt and distort the system. A similar development has occurred with the 2004 introduction of the Iraq Stock Exchange, as it too is free from the corruption that beleaguered the Hussein-era Baghdad Stock Exchange. About 90 stocks are listed and market capitalization grew from $1.15 billion at the end of 2004 to $2.14 billion at the same time last year. However, fear of foreign domination of the market has kept it closed to international investors. An Iraqi investor noted to Agence France Presse late last February that the best way to increase the capital flowing into the Iraq Stock Exchange is to “open the market to foreign investors and get money into the market.” This will happen over time.
Some foreigners, however, are already bullish on Iraq. In fact, United States and other coalition forces serving in Iraq are betting on an economically successful future for Baghdad. Many American troops are putting their money into purchasing the new national currency in hopes that a secure and prosperous Iraq will emerge. The fact that they are already not paid enough for the work that they do and that they are using their hard-earned paychecks and intimate knowledge of the Iraqi environment to purchase a share of Iraq’s future speaks volumes about the potential for a forthcoming significant economic expansion in Iraq. Perhaps the not-too-distant future will teach the impatient that, with time, large returns can come from a substantial investment.