ISIS and Its Impact on Iraq’s Economy

The Islamic State in Iraq and Syria

Terrorist organization born out of the womb of the Iraqi crisis and the political vacuum left behind, this organization became more powerful after the Syrian crisis. The international system inadvertently contributed to the emergence of an oppressor through the long-standing marginalization of the crisis in Syria.

ISIS received the armed support from the spoils that he had plundered from the armies of the state, and Mujahedeen of various parts of the world, thus being a strong basis contributed to the control of a large area, the most important province of Nineveh and a section of Anbar in western Iraq, and the province of Raqqa, which was considered the capital of the caliphate of the Islamic State, in addition to large areas of Syrian territory.

It does not rely on jihad in the traditional sense. It has strong plans, which explains its strong desire to build a state with economic resources by imposing its control over the oil and gas wells in Deir al-Zour and Mosul. As well as water resources in the provinces of Raqqa and Deir al-Zour.

Iraq's Economy

The oil sector dominates the country's economy, accounting for 95% of Iraq's national income. 

After the 1991 Gulf War, Iraq's gross domestic product fell by almost two-thirds as a result of an 85% drop in oil production than before the war, and the destruction of the industrial and service sectors. Iraq's external debt now stands at $ 100-150 billion.

Following US invasion, successive governments have ignored since the fall the question of managing the economy or, rather, a clear economic policy, unemployment in Iraq is more than 25 percent and the proportion of citizens below the poverty line is more than 30 percent, according to official data from the Central Bureau of Statistics and the United Nations Development Program.

The Entry of the Islamic State to Iraq

On Tuesday, June 10, 2014, newspapers and television stations around the world were seized with the sudden news of the fall of Iraq's second-largest city by dozens of militants from the "Islamic state". Dozens of ISIS militants managed to drop Mosul and then the rest of the northern cities to take up about 40 percent of Iraq's total territory within days.

1276 days The period of "Islamic State" in Iraq, which was open and uncompromising war, left its mark on everything in Iraq, from humans to stone.


The Effect of the War on ISIS Over the Economy

Billions of Dollars "Bill" War

The war in Iraq has not left the door of Iraq since 2014, but every second, when Iraq was losing millions of dollars, and with the end of the last battles against "ISIS" in Iraq, Iraqi former Prime Minister Haider Abadi estimated the economic losses at 100 billion dollars.


Military Spending

The military spending incurred by Iraq from the purchase of arms and ammunition, that the cost of the Iraq war on the organization «ISIS » amounted to 300 billion dollars, of which $ 100 billion went to armament and purchase of equipment and ammunition.


The Impact of the Islamic State on the Oil Sector

As mentioned above 95 percent of the national income depend on oil, Islamic State has taken control of large areas, including several oil wells and the most important refinery in Iraq, which was under the control of the Islamic state refinery of Baiji, and led to a fuel crisis.


Disruption of Domestic and Foreign Trade

The growth in the non-oil sector in Iraq has also deteriorated since the start of the conflict with the state organization due to the destruction of the infrastructure, the disruption of internal and external trade, and the closure of border crossings with neighboring countries.


The Withdrawal of Many International Companies

After the entry of the Islamic state, many international companies began to leave Iraq for fear of their lives and their personal interests, as many of the international companies are not ready to work in an insecure environment, which does not have the necessary security protections.


Stop Commercial Projects

Due to the preoccupation of the government and the people in the war on terrorism, many commercial projects have stopped, according to President of the Federation of Businessmen about nine thousand projects worth 270 billion dollars, most of them are idle, because of the lack of follow-up and monitoring by the regulators.

In addition to the emergence of fictitious companies quickly fled outside the country and many of them had received a cash payment from the government.


The Collapse of the Economic Infrastructure

the absence of an effective free-market linked to the global market. In fact, the weakness of Iraq's economic infrastructure is due to Iraq's long war and the international sanctions imposed on it. Despite the growth of the private sector market, it is still weak, as local markets have not been able to participate in the global market or even compete in it.


Some Recovery in the Iraqi Economy

The International Monetary Fund (IMF) said on Tuesday that the recovery of Iraq's growth in 2018 and 2019, indicating that the current temporary rise in oil prices provides an opportunity for producing countries to rebuild their reserves.

The IMF predicted "the recovery of growth in Iraq in 2018 and 2019, which is mainly due to the continuation of reconstruction efforts." And reconstruction will open the Iraqi market to foreign companies and investments to return.


Written by - Abduljalil Hage

Edited by – Adrija Saha

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