Mo id, Kam an
Book
The economic consequences o he Gul wa
P o ided in Coope a ion wi h:
Taylo & F ancis G oup
Sugges ed Ci a ion: Mo id, Kam an (1990) : The economic consequences o he Gul wa , ISBN
978-0-203-99210-4, Rou ledge, London,
h ps://doi.o g/10.4324/9780203992104
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The Economic Consequences
o
he
Gul
Wa
The
Gul Wa anks in e ms
o
scale
o
des uc ion and i s
consequen economic impac as one o he mos de es a ing
con lic s
o
mode n imes. Bo h I an and I aq a e now con on ed
wi h he need o econs uc sha e ed economies. Wha
is
clea ,
howe e ,
is
ha a e u n o he p e-wa economic si ua ion is no a
ealis ic op ion. The cos
o
he con lic o I aq means ha i can
ne e egain he lead i o me ly held in economic pe o mance
and
de elopmen le els. Simila ly, he Islamic Republic canno
e u n o economic p inciples o he Shah's egime. Wha , hen,
does econs uc ion mean?
In The Economic Consequences
o/ he
Gu/ Wa , Kam an Mo id
de ails he o me ly neglec ed cos s
o
he con lic o bo h I aq and
I an
and
o
he egion as a whole.
The
ca as ophic e ec
o
he
con lic
on
he economies
o
I an and I aq is examined, looking in
pa icula
a
i s impac on oil p oduc ion and expo s, o eign
exchange ea nings and o eign ade, and ag icul u al pe o m-
ance. Case s udies
o
he mili a iza ion
o
each coun y a e
p o ided, wi h p e-wa da a included o compa a i e pu poses.
In exposing he py hic na u e
o
he Gul Wa he au ho aises
some c ucial issues. Al hough he e minology
o
cease i e has
cen ed on he idea
o
econs uc ion he ques ions he immedia e
u u e
o
he egion, poin ing ou ha egional s abili y is an
essen ial p e-condi ion o he p ocess o ebuilding.
The Au ho
Kam an Mo id is Senio Lec u e in Economics a Co en y
Poly echnic,
and
is he au ho o De elopmen Planning
in
I an:
F om Mona chy o Islamic Republic.
This page in en ionally le blank
The
Economic Consequences
o
he
Gul
Wa
Kam an Mo id

Fi s published
1990
by
Rou ledge
Published 2017
by
Rou ledge
2
Pa k
Squa e,
Mil on
Pa k,
Abingdon,
Oxon
OX14
4RN
711
Thi d
A enue,
New
Yo k,
NY
10017,
USA
Rou ledge is an imp in
o
he Taylo & F ancis G oup, an in o ma business
Copy igh © 1990 K. Mo id
Typese by
J&L
Composi ion L d, Filey, No h Yo kshi e
The
Open
Access e sion o
his
book, a ailable a www. and ebooks.com,
has
been
made
a ailable unde a C ea i e
Commons
A ibu ion-Non Comme cial-
No
De i a i es 4.0 license.
B i ish Lib a y Ca aloguing in Publica ion Da a
Mo id, Kam an
The
Economic Consequences
o
he Gul Wa .
1.
I an. Economic Condi ions 2. I aq. Economic condi ions
I.
Ti le
330.955054
ISBN 978-0-415-05295-5 (hbk)
Lib a y
o
Cong ess Ca aloging in Publica ion Da a
Mo id, Kam an.
The
Economic Consequences
o
he Gul Wa . I Kam an Mo id.
p. em.
Includes bibliog aphical e e ences.
ISBN 0-415-05295-5
1.
I an-De enses-Economic
aspec s. 2. I aq--de enses-Economic
aspec s. 3.
I an-I aq
Wa ,
1980--1988-Economic aspec s.
I.
Ti le.
HC480.D4M64 1990
955.05'4--dc20
90--31657
CIP
Fo
my
Fa he
and Mo he
This page in en ionally le blank
Con en s
Lis
o
igu es IX
Lis
o
ables Xl
Fo ewo d by Anoushi a an Eh eshami
x
Acknowledgemen s XXlll
1 In oduc ion 1
2
I an
and
I aq
a
wa : he analysis o he economic
consequences
13
3
I aq
a
wa : he analysis
o
he economic consequences
35
4 Mili a iza ion
o
I an
1973-8: an economic analysis
53
5 The poli ical economy o mili a y expendi u e
in
I an
du ing he
wa
64
6 Mili a iza ion
o
I aq
1973-8:
an
economic analysis
76
7 The poli ical economy
o
mili a y expendi u e in
I aq
du ing he
wa
82
8 The
I an-I aq
wa
and he a ms ade
90
9 The impac
o
he wa on he mili a y expendi u e and
a ms impo s
o
Saudi A abia and Kuwai
102
Tables
9.11 Con i med a ms ag eemen s be ween Saudi A abia
and
he majo a ms supplie s (excluding USA,
UK
and
F ance), 1979-87
118
9.12 Con i med a ms supplie s o Kuwai , 1979-87
119
10.1 Re ining capaci y: he ac ual p oduc ion o e ine ies
and domes ic consump ion o oil p oduc s, I an,
1973-86
123
10.2 Weigh
o
commodi ies (excluding oil p oduc s)
unloaded
a
comme cial po s, 1978-84
124
10.3 Es ima ion
o
po en ial oil e enue, I an, 1980-6
126
10.4 Es ima ion
o
po en ial oil e enue, I aq, 1980-6
129
10.5 Es ima ion
o
I aq's po en ial GNP, 1980-6
130
10.6
The
oppo uni y cos
o
I an's mili a y expendi u e
(Milex) in e ms
o
o eign-exchange ese es o gone,
h ough inabili y o keep a 4.5-pe -cen de ence
bu den each yea ,
1981-{;
136
10.7
The
oppo uni y cos
o
I aq's mili a y expendi u es
(Mile x) in e ms
o
o eign-exchange ese es o gone,
h ough inabili y o keep Milex a 4.5 pe cen o
GDP
each yea ,
1981-{;
137
10.8
The
oppo uni y cos
o
I an's mili a y expendi u es
(Milex) in e ms o o eign-exchange ese es o gone,
h ough inabili y
o
keep Milex a 4.5 pe cen o
GDP
each yea , 1973-85
141
10.9
The
oppo uni y cos
o
I aq's mili a y expendi u es
(Milex) in e ms
o
o eign-exchange ese es o gone,
h ough inabili y o keep Milex a 4.5 pe cen
o
GDP
each yea , 1973-85
142
Appendix: Lis
o
abb e ia ions o weapons, weapon
sys ems and o he mili a y equipmen used in
ables
155
xi

Fo ewo d
The
I an-I aq
wa may indeed
be
eaching he end o i s u bulen
and des uc i e oad. The blood may ha e s opped lowing - o
he momen -bu he long ma ch owa ds eco e y -a a high
p ice o he ci ilian popula ion
o
bo h coun ies -has ha dly
begun.
I
is indica i e
o
he ex en and le el o des uc ion, and
he in ensi y
o
an 'old' con lic ough wi h he mos up- o-da e
weapons ha
ou
'modem'
(compe ing) ci iliza ions o Eas and
Wes ha e manu ac u ed, ha he e minology o he cease i e
pe iod has cen ed a ound such ill-de ined (bu hank ully un-
ideological) aga ies as econs uc ion, eju ena ion, ebuilding,
e c.
The
concep 'de elopmen ', de ined by he o hodox poli ical
economis s as he p ocess
o
mode nizing economic s uc u es and
p ocesses and ca ching-up wi h he ad anced capi alis coun ies,
has been shel ed in his no he n Gul egion, pe haps in esponse
o
he makeshi and unplanned s a egies a ou ed by he bel-
lige en s hemsel es o wo b oad easons. Fi s , as
D
Mo id
illus a es in his book, because, while hese p o agonis s ha e
been busy des oying each o he 's economies and he e y ab ic
o
hei na ional in as uc u es, he es o he de eloping wo ld has
been p eoccupied wi h he simul aneous s uggle
o
wea he and
capi alize on he an ums
o
he wo ld economy and o ge
on
wi h
he di icul ask o c ea ing and consolida ing modem indus ies
and economies. Second, and mo e o he poin , i appea s ha he
di ec and indi ec des uc ion in lic ed upon he wo economies
is
such ha i may ac ually be cogni i ely misleading
o
e e o he
pos -cease i e economic p ocesses in I an and I aq as any hing
bu ' econs uc ion'. Technically, 'de elopmen ', he cumula i e
p ocess
o
indus ializa ion and mode niza ion, may as ye no be
occu ing.
Bu
wha does econs uc ion mean? 'Going back' (Le. ebuild-
ing)
o
he 1980 economic si ua ion in he wo coun ies? Su ely
no ! Obse e s o he Pe sian Gul egion
will
be awa e ha ,
x
Fo ewo d
a ha ime, I an's socio-economic sys em had eached nea -
collapse, and ha (as all he majo economic indices show) he
economy was unc ioning a unde
40
pe cen o capaci y.
Mo eo e , i can ha dly be he case ha he ule s o he Islamic
Republic
o
I an, ha ing p esided o e he nea ly comple e
annihila ion
o
wha was Pahla i I an, would now be willing o
ec ea e he same (i.e. no e en simila ) s uc u es once again.
Al hough i can
be
a gued ha close examina ion does show ha
he
uling mullahs and hei echnoc a ic se an s ha e no eally
e en a emp ed o change he undamen als
o
he Pahla i econ-
omic sys em, i is clea ha hey, and he coun y as a whole,
will
be unable o lou ish i he e u n o he Pahla i sys em
is
he
agenda.
In
I aq's case also he 'going back'
is
an un ealizable ideal, o
h ee
main easons:
(i)
he coun y owes oo p ohibi i e an amoun o money o
o he
coun ies oday o he o ha e he comple e indepen-
dence
o
ac ion essen ial o ecap u ing he lead she has los
in
A ab
economic pe o mance and de elopmen le els,
(ii)
he
le el
o
mili a y expendi u es and he poli ical ins abili ies
associa ed wi h hem cu en ly inhibi na ional expendi u e
le els achie ed
in
he 'golden decade' o he 1970s,
(iii)
almos comple e dependence on he in e na ional p ice
o
oil
and pe oleum expo s makes nonsense
o
any ca e ul plan-
ning and a ge assignmen s in he cu en si ua ion, unlike
ha
which was se and achie ed in he las decade.
I
is pe inen o ask he e o e ha , i econs uc ion does no
deno e a e u n o he p ewa e a, hen wha does i amoun o? I
belie e ha , as his wa has p oduced nei he a ic o no
anquished, and consequen ly, as bo h egimes ha e emained
in ac , econs uc ion mus , in he las analysis, only mean
es eng hening. Mo e p ecisely, i
is
easible and p obable ha
a long pe iod
o
compe i i e es eng hening, s emming om
mu ual dis us , ea and egional ambi ions, may ha e al eady
been ins i u ionalized. Bu , o g asp ully he basis o compe i i e
es eng hening, we mus sys ema ically e alua e he lessons and
legacies
o
his wa in i s domes ic con ex , egional consequences,
in e na ional pe cep ions and his o ical p ecedences.
Domes ic
con ex
Domes ically, he p essu es o mili a ize, which we e
in
e idence
in he 1970s, ha e inc eased, expanding bo h he ole
o
he
XVI
Fo ewo d
mili a y in na ional poli ical li e, and hei consump ion a ion
in
he na ional budge . Fu he mo e, he ac ha he wo egimes
ha e emained in powe wi hou gaining any angible esul s om
he wa me ely enhances hei domes ic posi ions is-a- is he
disg un led ci ilian popula ions and hei espec i e na ional and
e hnic ad e sa ies. Wi hou checks and balances wi hin he poli i-
cal sys em, and in he absence o cons uc i e deba e on issues o
na ional impo ance in bo h coun ies, he egimes in powe a e
able no only o de ine he h ea s, bu also o mobilize hei
popula ions
in
he equi ed di ec ion and con inue o bypass he
legi ima e demands
o
he masses o a be e quali y o li e. Unde
hese condi ions, .wa will gi e he p o agonis s a chance
o
es
hei s eng hs and weaknesses, and peace an oppo uni y
o
e-
a m, consolida e and p epa e o u he clashes: in o he wo ds,
he ins i u ionaliza ion o unc ional ins abili y
pa
excellence.
Regional consequences
Regionally, he
I an-I aq
wa has p oduced e y in e es ing
by-p oduc s; i s commencemen led o he c ea ion
o
he Gul
Co-ope a ion Council in 1981, and i s (imminen ?) e mina ion has
gi en bi h
o
he A ab Co-ope a ion Council (ACC) in
1989.
The
o me was he eac ion
o
he Sou he n Gul s a es o he wa , and
he la e he esul
o
he I aqi wa e o and he mili a y suppo
i ecei ed om wi hin he egion. I aq's ACC pa ne s, Jo dan,
Egyp and No h Yemen, a e he same coun ies which con-
sis en ly suppo ed he I aqi wa e o ; Jo dan and Egyp o e ed
mili a y manpowe , Jo dan p o ided a sa e land ou e o he
beleague ed I aqis, and all h ee supplied a ms, ammuni ion and
suppo sys ems.
On
ano he scene, he I an-I aq wa o ced he egional hands
o he impo an A ab and non-A ab s a es in he complex game
o
powe poli ics in his sub-sys em's mic ocosms. Sy ia, Libya and
Sou h Yemen abandoned hei e s while adical ally -I aq -in
a ou o he Islamic I an. Is ael, Sy ia's mos immedia e egional
enemy, also suppo ed he I anian wa e o agains I aq, which,
as al eady men ioned, ecei ed unc i ical suppo om a numbe
o key mode a e A ab coun ies including Egyp - he only A ab
s a e wi h diploma ic ies o Is ael. So, in his ci cus o sho - e m
alliances, unde co e pa ne ships and biza e con ac ual ag ee-
men s, enemies om one egional hea e became objec i e
bed ellows in he Pe sian Gul poli ico-mili a y c isis, and poli ico-
ideological allies on key egional issues (on he A ab-Is aeli
con lic , Pales inian s a ehood and he Camp Da id Acco ds, o
XVll
Fo ewo d
ins ance) ended
up
objec i e enemies
in
he espec i e I aq-I an
wa 'suppo e s clubs'. Mo e dis u bing, wi hin he egional
con ex , is he pe se e ance
o
hese oppo unis ic musical-chai s
endencies since he cease i e in he I an-I aq wa . Sy ian, Is aeli,
I anian and now I aqi in ol emen
in
Lebanese poli ics and
ac ional igh ings illus a es well he dange s associa ed wi h such
loose loyal ies. The li ing agedies o he Lebanese si ua ion help
o
explain i s consequences.
In e na ional pe cep ions
In
i s in e na ional dimension he I an-I aq wa has been decla ed
one
o
he longes unin e up ed wa s be ween modem na ion-
s a es since 1945.
D
Mo id's e o s inciden ally help
o
explain
why i may also p o e o ha e been one o he cos lies since
eco ds began.
The inc eased dependence o he bellige en s on ou side ma e ial
and
mo al suppo p o ided un o eseen oppo uni ies (and as i
u ned
ou
pi alls as well) o ex a- egional coun ies and o ces
o
expand hei in luence in his oil- and na u al-gas- ich pa o
he wo ld.
In
many ways he decline
in
he in luence o he
Ame ican and So ie supe powe s in I an and I aq espec i ely,
pa icula ly a e 1980, was a unc ion o he expansion o o he
coun ies' in ol emen in Pe sian Gul a ai s. Bu he p o agon-
is s
had
se di e en c i e ia o he demons a ion o hei
commi men
o
he pa y
o
hei choice.
haq
expec ed diploma ic
and economic suppo and isola ion o I an in exchange o
' a ou s'. I an, on he o he hand, insis ed on ba e deals and
badly needed a ms, ammuni ion and communica ion equipmen .
Many coun ies chose o sa is y bo h pa ies' demands
by
openly
objec ing
o
he wa , on he one hand, and sec e ly supplying I an
wi h he ange o Ame ican- and Wes em-Eu opean-made a ms
deployed by he egula and e olu iona y a med o ces on he
o he . Some o he s p e e ed
o
push o a signi ican ma ke sha e
in ei he one coun y. Vie nam, Sweden, Sou h A ica and he wo
Ko eas all in o his ca ego y, as a as he I anian ma ke is
conce ned. F ance and he So ie Union,
o
cou se, had majo
mili a y in e es s
o
p o ec in I aq. Bu he mos s a ling aspec o
his wa 's 'in e na ional connec ion'
is
he ac ha a one ime
o
ano he nea ly one- hi d o he Uni ed Na ions membe ship was
in ol ed in p o iding ei he weapons, ammuni ion
o
suppo
sys ems
o
bo h bellige en s simul aneously, unde mining o ally
he in eg i y o he Uni ed Na ions (UN) sys em as an independen
a bi e and he collec i e conscience o he communi y o na ions.
x iii
Fo ewo d
I is i onic ha he p ime mo e s behind he UN Secu i y Council
Resolu ion 598 - he pe manen membe s
o
he council -which
led
o
he Gul Wa cease i e in July
1988
a e all also on ha lis
o
coun ies which ha e supplied weapons and suppo sys ems o
bo h pa ies o he con lic !
The
poli ical and ideological mix
o
he coun ies ha ha e been
capi alizing on he mis o unes
o
I an and I aq suppo s he
heo y
o
global powe -bloc decomposi ion as alluded o in he
p e ious pa ag aph. The close -and a imes in ima e -mili a y
suppo and assis ance ob ained
by
he bellige en s om he
bewilde ing ange
o
poli ical 'au ho i ies and sys ems' shows ha
he mili a y collabo a ions we e no based on ideological posi ion
and he pu sui
o
powe -bloc poli ics. Indeed, i any hing, he
pa e n
o
a ms supplie s o he wo wa ing coun ies indica es
ha ei he he supe powe s we e using hei p oxies o supply he
bellige en s;
o
he supe powe s had los con ol
o
hei allies and
p oxies in his case; and/o he Eas -Wes global di ide had
ac ually been b eaking down a he seams, hus enabling he wo
blocs' 'pa - ime' p oxies o pu sue an independen line based
pu ely on hei na ional in e es s and mo i es.
I
he la e is he
case, hen in e na ional suppo o he a ious pa ies o o he
egional wa s may ollow a simila pa e n o dange ous 'p ag-
ma ic' in e na ional ela ions which a he e y leas help o
p olong wa and inc ease he su e ings
o
he socie ies conce ned
and, a wo s , encou age in e na ionaliza ion
o
a local con lic in
he absence
o
powe -bloc p essu es and policy di ec i es. The ac
ha Ma xis Vie nam and Ma xis
China,'
llemies in he
Fa
Eas ,
bo h suppo ed he an i-Ma xis and o e ly eligious I anian
egime in i s ' eac iona y wa ' agains So ie -suppo ed Ba'a h
Socialis I aq p o ides li le com o o hose seeking poli ical
solu ions and unideological app oaches o in e na ional ela ions.
The
in e na ional lessons o he I an-I aq wa poin also
o
ano he ield
o
in es iga ion, namely ha , while he in e na ional
sys em has been looking o ways
o
unlocking he Eas -Wes
ideological doo o egional con lic esolu ion, i has managed o
o e look he di icul ies and ins abili ies a ising om di e ences
om wi hin each ideological di ide and global he e ogenei y. The
I anian e olu ion was he i s
in
he con empo a y wo ld o b eak
ou
o
he socialis e sus capi alis global mould and he wa wi h
I aq p o ided u he e idence
o
his end and i s o he ace s. A
sho e e ence o he a i udes o he sel -decla ed Ma xis -
Leninis s a es owa ds he wa shows ha he h ee 'poles'
o
he
In e na ional Communis Mo emen , he So ie Union, China
and Albania, adop ed posi ions no only con a y o hei own
XIX

Fo ewo d
doc ines
bu
squa ely in opposi ion o hei ideological
compe i~
o s'
in e es s, ega dless
o
he in e na ional epe cussions
o
hei
posi ions and ac ions. Albania concluded ha I an's posi ion
amoun ed
o
'an i~impe ialism'
and she should he e o e be
sup~
po ed
in he wa . China was seeking badly needed o eign
exchange, p o i able economic ela ions and ways
o
limi ing
So ie in luence -
and
indeed (i easible)
o
hu ing he So ie
posi ion -and so
ended
up
s ongly suppo ing I an.
And
he
So ie Union acilla ed be ween coun e ing he la en h ea om
an uns able
and
hos ile I an o he sou he n bo de and Muslim
epublics,
and
he need
o
suppo and p o ec
he
only long-
s anding Pe sian Gul ally, I aq, ega dless
o
he maxims
o
he
s a e's o icial ideology.
The
di isions wi hin
he
Wes e n camp a e mo e eadily classi i-
able; all
he
pa ies, wi h he excep ion
o
he Uni ed S a es,
F ance
and
he
Uni ed Kingdom we e in e es ed solely in expand-
ing
hei
comme cial and ade ies wi h he bellige en s, hei aim:
sell e e y hing
ha
he p o agonis s needed, including he means
o
ob aining an uncon en ional weapons capabili y. The h ee
named
coun ies, howe e , we e playing a mo e complex game
o
o eign policy, combining poli ics, comme cial and secu i y
in e es s
and
s a egic conce ns wi hin he same o mula.
His o ical p ecedences
Beyond
hese obse a ions wha his o ical p ecedences has his
wa
se ? Fi s , i was allowed
o
con inue
a
a ai ly in ensi e le el
by
he
bellige en s hemsel es in
he
i s ins ance,
and
ou side
o ces in
he
second.
Fo
yea s e e yone ound a ewa d in his wa
and,
so
long as his pe cep ion pe sis ed, conce ed e o s
o
end
he con lic we e dilu ed by ei he impossible demands, unaccep -
able p oposi ions
o
ou da ed p oposals. Second, weapon y
o
he
highes
o de
we e used by bo h p o agonis s. Al hough deployed
ine icien ly
a
imes, he weapons u ilized we e amongs he mos
sophis ica ed a ailable, ou inely deployed by he wo ld's g ea
and
majo
powe s alike.
The
ease wi h which bo h sides ob ained
and
deployed complex and sophis ica ed weapons sys ems in-
dica es
ha
o he
Thi d Wo ld a mies s ockpiling simila weapons
can easily annihila e hose pa ies wi hou hem, hus encou aging
egional a ms aces by he main ac o s in ol ed
' o
ca ch up and
keep
up'.
O
else,
i
all pa ies deploy such complex and ad anced
weapons sys ems, hen any ensuing wa
will
be
highly des uc i e
and,
i
he
supply ou es a e main ained and echnical assis ance
channels p esen , long in du a ion as well. Thi d, he calcula ed
xx
Fo ewo d
deploymen o chemical weapons and he indisc imina e i ing o
su ace- o-su ace missiles on ci ilian a ge s ha e quali a i ely
aised he mode and accep ed le els o wa a e in egional
hea es, hus inc easing he dange s o escala ion and he p ob-
lems associa ed wi h con lic managemen . And inally, on a mo e
posi i e no e, his wa has shown ha , when he cons uc i e will
o
he in e na ional communi y, as embodied in he inc eased
e o s o he UN, coincides wi h he exhaus ion o one o mo e o
he pa ies o a con lic , hen o mula ing peace can become a
ema kably s aigh o wa d a ai . The ending o he wa hough
and he condi ions ha ha e eme ged in he egion since Julyl
Augus
1988
poin owa ds an unse led u u e and one ha leans
mo e owa ds con on a ion in he long e m han comp omise.
The
I an-I aq
wa , i seems,
is
only he beginning o he long oad
owa ds long- e m peace, a peace ha
will
be based on mu ual
espec , ex ensi e in e dependence and subs an ial co-ope a ion.
I
we judge by he his o y o Eu ope, he e
will
be many many
o he wa s and an agonisms in he Pe sian Gul be o e any eal
peace be ween all he pa ies can eme ge. Mo eo e , i ook
Eu ope wo wo ld wa s in he wen ie h cen u y and he dis-
membe ing
o
a. powe ul con inen al powe (Ge many), and
many o he con inen al wa s besides, as well as he spec e o an
in asion by a powe ul and common enemy, be o e s a e iolence
was e en ually e ased om he agenda o in e -s a e ela ions o
he Wes e n Eu opean coun ies. The Wes e n Eu opeans ha e
paid a e y high p ice o hei cu en s a e o s able peace and
co-o dina ed and co-ope a i e ela ions, as exempli ied in he
Eu opean Communi y and Eu opean F ee T ade Associa ion.
I
is
emp ing
o
p esc ibe simila solu ions o e adica ing he cu en
s uc u al p oblems ha led o hos ili ies in he Pe sian Gul egion
wi hou aking accoun
o
he o uous oad owa ds he cu en
Eu opean en i onmen . Bu he geos a egic alues o he Gul o
he supe powe s and he dependence o de eloped and de eloping
coun ies
on
i s na u al esou ces may cause such a massi e
egional and in e na ional compe i ion o he ull con ol o his
egion ha he ques ion o locally based co-ope a ion ag eemen s
and he e en ual uni y o pu pose may ne e e en see he ligh
o
day - ha is, i he nuclea win e se s in.
Anoushi a an Eh eshami
Sep embe
1989
xxi
This page in en ionally le blank
Acknowledgemen s
I should like o exp ess
my
since e hanks o he help I ecei ed
while w i ing his book.
My
wi e, Annie, and
my
sons, Ke in and
Paul, a e
a
he op
o
he lis . This is simply o exp ess
my
deep
g a i ude o hei immeasu able suppo and lo e o e he yea s.
They so kindly ole a ed
my
wi hd awal om amily li e om ime
o
ime and pu up wi h
my
a els o close and a away places so
many imes. Thei o e all lo e and ca e o me p o ided he
en i onmen in which o w i e and s ill emain mysel .
I would also like o hank
my
a he and mo he -
o
whom I am
dedica ing his book - o hei cons an lo e and p aye s. They
encou aged me o con inue
my
educa ion and o ha I am
g a e ul.
I p esen ed ea lie d a s o some o he chap e s
o
his book a
di e en con e ences and semina s. I am mos g a e ul o hose
academic colleagues who commen ed on
my
wo k. As e e , hey
a e absol ed om all blame o he inal ou come
o
my
wo k,
bu
hey can be assu ed ha his s udy
is
ce ainly be e han i
would ha e been wi hou hei con ibLl ions. In pa icula , I
would like o hank M T. Hamauzu, Senio Resea ch O ice ,
In e na ional Exchange Depa men , Ins i u e o De eloping
Economies, Tokyo, o in i ing me o Japan o p esen pape s on
he poli ical economy o he Gul Wa a he Ins i u e in Tokyo
and o he es ablishmen s in Japan. I ound
my
expe ience in, and
o , Japan mos ewa ding. I would also like
o
hank
D
Ga i
Donn,
he o ganize , US-Eu opean Summe School on Global
Secu i y and A ms Con ol, Uni e si y o Sussex, o in i ing me
o he School o he
1987
and
1988
sessions, and enabling me o
sha e my esea ch in e es s o he poli ical economy o he Gul
wi h he o he pa icipan s.
I should like o hank
my
academic colleagues a he B i ish
Socie y o Middle Eas e n S udies and he De elopmen S udies
Associa ion, o hei commen s on, and c i icism o he opics
xxiii
The economic consequences
o
he
Gul
Wa
This obse a ion on he pa amoun global economic signi icance
o
he Gul makes he ela i e neglec o he co e age
o
he
economic consequences o he wa e en mo e s iking.
I
is he e o e expec ed ha
my
s udy
will
con ibu e
in
some
measu e o a be e unde s anding o he Gul Wa and
will
ill
he
gap which cu en ly exis s in he co e age o he economic
consequences
o
he con lic .
The
majo consequences
o
he wa in gene al a e:
des uc ion
o
weal h. The e has been a massi e loss
o
bo h
human and non-human capi al, leading o a la ge educ ion
in
p oduc i i y, and loss
o
o eign-exchange ea nings.
Sac i ice
o
po en ial ou pu , owing o he ans e
o
he labou
o ce om a peace- ime economy o a mili a y and wa - ela ed
economy. The e o e esou ces a e no alloca ed o hei mos
e icien uses
o
o hei mos e icien loca ions, hus esul ing in
inc eased cos s and educ ions in e iciency.
a b ain-d ain and ou going
o
human capi al leading o a smalle
skilled and semi-skilled labou o ce.
a educ ion in he quali y
o
human capi al esul ing om an
unp eceden ed call-up o mili a y se ice
o
s uden s in schools,
high schools and uni e si ies, and om he ligh o he
academics and p o essional classes o Wes e n coun ies.
a ise in domes ic in la ion, a ising om mo e expensi e
impo s, an inc ease in black-ma ke ading, and an inc ease in
comme cial ac i i ies (Le. impo ing and i s dis ibu ion) a he
expense
o
domes ic p oduc ion.
c ippling
o
he ag icul u al sec o , leading o massi e sho alls
in p oduc ion, hus esul ing in a se ious s a e
o
dependency on
he
ou side wo ld o ood supplies.
a huge ise in mili a y expendi u e (Milex), leading o an
inc eased de ence bu den.
a massi e inc ease in de ence- ela ed impo s, leading o an
inc eased a ms-impo s bu den, wi h much nega i e impac on
he
economy as a whole.
he
ailu e o di e si y expo s and hus he endency o become
inc easingly mo e dependen on he oil sec o o p o ide he
much needed o eign-exchange ea nings.
in he case
o
I aq, he loss o i s
$35
billion o eign-exchange
ese es (a he s a o he wa ) and he c ea ion o a huge
in e na ional indeb edness.
This book, desc ibing he economic consequences o he
I an-
I aq wa ,
is
an a emp o shed ligh on he abo e poin s, amongs
o he s.
6

In oduc ion
The
wa
This s udy is no
o
why na ions go o wa ,
4 bu none he less i
would be bene icial i
a
his s age
we
shed some ligh on he
backg ound o, and some o he appa en easons o , he
I an-
I aq wa .
By he mid-1970s I an had become he absolu e and undispu ed
powe in he Gul . This, o example, was acknowledged in 1975,
when I aq, o mally accep ed I an's mili a y supe io i y by signing
he Algie s Ag eemen , which p o ided o he ollowing:
1 Dema ca ion
o
he land on ie in acco dance wi h he
1913
P o ocol
o
Cons an inople and he e bal acco d o 1914.
2 Ag eemen o dema ca e he Sha ai-A ab wa e way on he
basis
o
he halweg (i.e. deep-wa e line).
3 Ag eemen o es o e secu i y and mu ual con idence along
hei common bounda ies, and
o
exe cise a 's ic and e ec i e
con ol' wi h he aim
o
inally pu ing an end o 'all ac s
o
in il a ion
o
a sub e si e cha ac e ' om ei he side.
4
The
pledge
o
bo h pa ies o ega d he p o isions nego ia ed
a
he
1975
OPEC
[O ganiza ion o Pe oleum Expo ing
Coun ies] mee ing as indi isible elemen s
o
a comp ehensi e
se lemen , such ha a b each
o
anyone
would be conside ed a
iola ion
o
he spi i o he Algie s Ag eemen .
5
Gi en he abo e, as Ka sh (1987) has no ed, he e
is
li le doub
as
o
which pa y o he ag eemen made he mos concessions.
Whe eas I aq wen a long way
o
acknowledge I an's so e eign y
o e hal
o
he Sha ai-A ab wa e way, I an in p ac ice made no
concession. The e
is
no doub ha
o
sign his ag eemen was a
humilia ing expe ience o Sadam Hussain.
Howe e , his ag eemen , leading o he Pax I ana o he 1975-9
pe iod, opened a new
e a
in I an-I aq ela ions. The o me s a us
quo a angemen s based on he
1937
Ag eemen ,6 we e eplaced
by a ela ionship ha assumed unques ioned I anian supe io i y
and dominance in he Gul . Gi en his, I an unde he Shah,
now mo e agg essi ely han e e be o e, ca ied on wi h i s 'big-
push' s a egy o de elopmen , bo h in he ci ilian and mili a y
sec o s.
On
he o he hand, I aq became much mo e 'inwa d' looking,
ocusing
on
he build-up o i s in as uc u e and imp o ing i s
de ences which had been conside ably des abilized as a esul
o
he Ku dish con lic which had been suppo ed by I an un il he
Algie s Ag eemen was signed. Mo eo e , i should be no ed ha ,
in con as o I an, I aq adop ed du ing his pe iod a 'less-hig'
7
The economic consequences
o
he
Gul
Wa
s a egy
o
de elopmen which
in
he end p o ed o be a much
be e
and wise policy.
The o igins
o
he wa
Many heo ies and poin s
o
iew ha e been pu o wa d o explain
he
I an-I aq
wa and i s causes, anging om cen u ies-old
eligious (Sunni s. Shia) and e hnic (A ab
s.
Pe sian) di e ences
and dispu es be ween he wo people o pe sonal animosi y be-
ween
I aq's
P esiden Hussain and I an's Aya ollah Khomeini.7
A u he model, based on he g and-design heo y, iden i ies
he
main cause
o
he wa as he I aqi leade 's pe sonal ambi ions.
These ange om he occupa ion
o
I anian e i o ies o he
o e h ow
o
he new e olu iona y egime, which would emo e
he
h ea
o
he sp ead
o
Islamic undamen alism and hus make
I aq
he p e-eminen
A ab
and Gul S a e, as well as he leading
o ce wi hin he Non-Aligned Mo emen (see, o example,
Co desman 1984 and S andenmaie 1983).
Ano he
s udy ejec s he abo e analysis and pu s o wa d he
poin
o
iew ha he I aqi in asion
o
I an did no emana e om a
p emedi a ed g and design bu was a p e-emp i e mo e, in ended
o
o es all
he
I anian h ea o he exis ence
o
he Ba'a h egime
(Ka sh 1988).
Howe e , as a as he p esen au ho
is
conce ned, I would like
o
say ha he e exis s some u h in all he abo e-men ioned
heo ies, and oge he hey p o ide a 'good' explana ion
o
he
main causes
o
he
I an-I aq
wa .
None
he
less i should be said ha , by he ime he Shah had
allen and was eplaced by a o ally and diame ically di e en
egime, he wa be ween he wo coun ies had become ine i able.
I an was now a heoc acy and adi ionalis , while I aq was secula
and mode nis .
The
wo s a es now had unques ionably di e en
iews and objec i es, domes ically, egionally and in e na ionally,
iews ha , unlike he si ua ion du ing he Shah's pe iod, could no
ha e been econciled. Indeed, he du a ion o he wa goes a long
way
o
es ablish his poin .
Gi en
he
abo e, as well as he acuum caused by he Shah's
aU,
a ' ime bomb' condi ion was c ea ed which had o explode,
and
i
did
on
22 Sep embe 1980.
In
o de
o
no e why he 'explosion' happened so soon a e he
e olu ion,
one
has o know wha I an and I aq we e like on he
e e
o
he
wa . The e o e,
a
his poin he p e-wa mili a y and
economic balances
o
he wo coun ies
will
be no ed.
8
In oduc ion
The mlli a y balance on he e e o wa
I
we look
a
he si ua ion om a pu ely mili a y poin
o
iew, i
can
be
said
ha
he
iming
o
he I aqi in asion could no ha e
been
be e
chosen.
A
he ime
o
he Shah's o e h ow, he
I anian a med o ces we e h own in o o al disa ay. They we e
ega ded as
he
Shah's ins umen
o
opp ession, and also as he
mos se ious po en ial sou ce
o
coun e - e olu ion, so he new
e olu iona y egime was quick
o
educe he a med o ces'
capabili ies e en u he by sys ema ic pu ges.
8
I
has
been
no ed ha , by he ou b eak
o
he wa , some
85
senio o ice s had been execu ed and hund eds mo e (including
all majo -gene als
and
mos
o
he b igadie gene als) we e
imp isoned
o
o ced
o
e i e.
In
all, by he ime
o
he wa , some
12,000 high- anking o ice s had been pu ged, 10,000
o
hem om
he
a my (Hickman 1982). Mo eo e , he a med o ces we e
a ec ed u he by hei inabili y
o
enlis new ec ui s, as well as
he mass dese ion in
he
ea ly s ages
o
he e olu ion.
Fu he mo e,
he
pu ges and hei consequences, as well as he
a emp s by he e olu iona y egime o es ablish he Re olu iona y
Gua d
Co ps, ne Pasda an, mean ha , by he ime
o
he
in asion,
I an
had
no Join S a
o
co-o dina e he wa s a egy
h ough a cen al command-and-con ol sys em (Ka sh 1987).
I
is
also
no ed
ha
he
US
ad ise s
on
hei depa u e om I an had
e ased
he
da a
on
he compu e -based in en o y-con ol sys em
o spa e pa s, hus making i almos impossible o I anian
mili a y pe sonnel
o
loca e and iden i y he mass
o
spa es in
depo s (Ka sh 1987).
I
I an's a med o ces we e in disa ay and in a s a e
o
humilia ion, I aq's o ces we e in a jubilan mood. The s eng h
o
he a my which had b ough disg ace upon hem by o cing hem
o
gi e in
o
he Shah's demands in Algie s had now diminished.
By Sep embe 1980 I aq, maybe o he i s ime, ound i sel
mili a ily in a posi ion whe e he balance
o
powe had ipped in i s
a ou (Ka sh 1987). So i seems ha , based
on
wha was
happening in I an, Saddam Hussain made a calcula ion
and
hen
o de ed
his o ces o in ade he old-enemy's e i o y.
The economic balance on he e e
o
wa (wi h special e e ence o
he oil sec o
and
on e enues)
Fo
abou
wo yea s
o
so p io o he wa , I an's economy had
been
in u moil. As
he
e olu ion was ga he ing momen um, so
we e
he
s ikes and io s which by he end
o
1978
had b ough he
9
The economic consequences
o
he
Gul
Wa
coun y o a s ands ill. By Decembe
1978
he e was a comple e
cessa ion
o
oil expo s. In Ma ch 1979, unde he new e olu ion-
a y egime, he oil expo s we e esumed, bu a a lowe le el han
be o e he e olu ion. Oil p oduc ion in Ap il-June
1979
was 3.9
million ba els
pe
day (mbd) as compa ed wi h 5.7 mbd in
1977
and
he i s nine mon hs
o
1978. The co esponding igu es o oil
expo s du ing he same pe iod we e 3.5 mbd and 5 mbd ( o
e idence
on
hese igu es see BP
1981
and Pe oleum Economis ,
a ious issues).
Fu he mo e, e en he lowe a e
o
p oduc ion was no being
main ained.
Fo
example, h ee mon hs p io o he wa , i.e.
June-Augus
1980, p oduc ion a e aged 1.4 mbd, while oil
expo s had d opped o abou 1 mbd, compa ed o 2.4 mbd in
1979. (BP
1981
and Pe oleum Economis , a ious issues.)
The
sha p ise in oil p ices p eceding he I anian e olu ion had
mos ly o se he educ ion in oil expo s and hus I an's oil
e enues did no decline so d as ically. Ne e heless he apid
decline in oil p oduc ion and expo s dep essed he e enues o
abou
$19.2 billion in 1979, om $23.6 billion in
1977
and $21.7
billion in 1978.
As
a as I aq is conce ned, i s si ua ion was in o al con as o
I an's. I aq's economy was booming du ing he la e 1970s. Oil
ou pu
had inc eased om 2 mbd in
1973
o 2.7 mbd in 1978, ising
by 30
pe
cen
o
3.5 mbd in 1979. Oil e enues had also isen
signi ican ly om $1.8 billion in
1973
o $10.8 billion in
1978.
By
1979 he oil e enues had isen by 97.2 pe cen o $21.3 billion
( o e idence
on
hese igu es see S a is iques 1978-81). In he i s
nine mon hs
o
1980, oil-expo e enues we e $22.4 billion,
o
abou
$29.8 billion
on
an annual basis (had he wa no s a ed
on
22 Sep embe 1980, and i
we
assume a cons an a e o
p oduc ion/expo o he emainde o he yea ).
In
all, as a as he economy is conce ned, I an was in u moil,
wi h educed oil p oduc ion/expo s and e enues, while I aq was
in a si ua ion
o
'ne e had i so good', wi h yea s o sus ained
economic g ow h, he build-up o i s in as uc u e, a apid and
unpa alleled ise in oil p oduc ion/expo s and e enues. The
di e ence be ween he wo coun ies' oil.!xpo s, be o e and since
he
in asion, can bes be obse ed in igu e 1.1.
In
sum,
on
he e e
o
he wa , I an and I aq, economically
speaking, could no ha e been mo e di e en and u he apa
han hey we e.
The
o egoing is a bi d's-eye iew o aspec s
o
he I an-I aq
wa in so a as i ela es
o
he o igin, causes, and he mili a yl
economic condi ions
o
bo h coun ies on he e e o he in asion.
10
300
250
200
150
100
50
In oduc ion
1'.''''·''''';'''..:1+1
I an
-I aq
O+-
__
~
____
~
__
~
____
~
__
~
____
p-
__
~
72
74
76 78
80
82
84
8.6
Figu e 1.1 Oil expo s by I an and I aq, 1973-86 (million onnes)
Sou ces: Mo id
1987:
15~1,
able 4.3; S a is iques 1974-86; UN
Depa men o In e na ional and Economic A ai s
(1979--83)
Yea book
o
Wo ld Ene gy S a is ics;
OECD
1974-86; 1986,
No.1;
BP (1986).
I
can
be
seen ha , om a pu ely mili a y and economic poin
o
iew, he iming
o
he I aqi in asion
o
I an appa en ly could no
ha e
been
chosen mo e wisely.
In
he mon hs p io o he
o ensi e, I aq o he i s ime ound i sel in a posi ion o deli e
he inal and a al blow agains I an.
Rega dless
o
why na ions go o wa , which could
be
a gued
unde
di e en heo ies and models, he e
is
a eal angible and
measu able consequence
o
he wa ; ha is, he impac
o
he wa
on
he economy, which
is
he main objec i e
o
his book.
An o e iew
o
he book
The
analysis
o
he economic consequen'
~s
o
he wa on I an's
and I aq's economies, as well as he economic consequences
o
he
apid mili a iza ion
o
he Gul coun ies a e he p incipal ocus
o
his book. Chap e s wo and h ee he e o e p o ide a s udy o he
impac
o
he con lic on some aspec s
o
he I anian and he I aqi
economies. These wo chap e s will emphasize oil p oduc ion!
expo s; o eign-exchange ea nings; non-de ence o eign ade and
he pe o mance
o
he ag icul u al sec o since he wa . Fo he
11

The economic consequences
o
he
Gul
Wa
pu pose
o
compa ison he co esponding da a on he p e-wa
pe iod o 1973--9/80
is
also p o ided.
One
o
he mos signi ican consequences o he oil-p ice
inc eases
o
1973-4 was a apid g ow h
in
mili a y expendi u e
o
I an and I aq. The e olu ion in I an, a e success ully deposing
he old egime, had a majo impac on I an's Milex and a ms-
impo s. They we e bo h educed signi ican ly. Howe e , he I aqi
in asion
o
I an in Sep embe
1980
has gi en ise o signi ican
changes, no only on I an's pa e n o Milex and a ms-impo s, bu
also
on
I aq's. Gi en he signi icance o hese changes, and hei
consequen economic impac s,
in
chap e s ou o se en
we
ha e
p o ided a somewha de ailed s udy o mili a iza ion o I an and
I aq du ing he
1973--8
and 1979-85 pe iods espec i ely.
In his book,
we
also a emp o demons a e he wo ld's
hypoc isy and double s anda ds in so a as he sales
o
a ms o
a eas o con lic , i.e. he I an-I aq wa a e conce ned. The e is, i
seems, ha dly a coun y in Eas o Wes , Sou h
o
No h, whe e
he ules
o
he 'game' ha e no been allowed o be b oken, so ha
a ms can be expo ed
o
e-expo ed o one
o
bo h coun ies.
Chap e
eigh he e o e will look a he Gul Wa and he
in e na ional a ms ade.
The
e olu ion in I an and he ise o Shi'i e undamen alism in
la gely Sunni-Muslim-domina ed coun ies in he Pe sian Gul
we e among he main easons o a apid inc ease
in
mili a y
expendi u e and a ms impo s in he Gul coun ies in he la e
19708.
I
is impo an o no e ha such apid inc eases in Milex
ha e aken place a a ime when oil e enues ha e been alling and
hus esou ces ha e become mo e sca ce. Now, mo e han e e
be o e, he oil-expo ing economies
o
he Gul ace a se ious
'bu e
s. guns' dilemma.
To
shed ligh on hese issues, in chap e
nine we shall look a he impac
o
he wa on Milex and he a ms
impo s
o
Saudi A abia and Kuwai .
In chap e en
we
shall a emp o b ing oge he he a ious
componen pa s o he economic cos o he wa o I an and I aq and
o assign a dolla alue o he wa 's cos s. Chap e ele en, he
conclusion o he book, summa izes he conclusions o he p e ious
chap e s and hen ies o pu o wa d some ecommenda ions
conce ning he e en ual pos -wa econs uc ion o I an and I aq.
Since majo pa s
o
his s udy co e opics such as o eign-
exchange ea nings, o eign ade, ag icul u al p oduc ion and
impo s, mili a y expendi u e and a ms impo s, e c., i was
deemed necessa y o p o ide he da a and analysis suppo ing he
a gumen s p esen ed. These include he ables, g aphs, cha s,
no es and appendices. Fo hose less inclined o go hough he
mass
o
de ail, b ie summa y chap e s a e included.
12
Chap e wo
I an and I aq a wa : he analysis
o
he economic consequences
In oduc ion
On
16 Janua y 1979 he Shah's 37-yea ule came o an end, when
he le I an ne e o e u n, a p ice ha i seems he had o pay o
his misguided and unaccep able policies, bo h in he ci ilian and
de ence sec o s in I an ( o u he eading on hese issues see
Mo id 1987).
On
1 Feb ua y
o
he same yea , Aya ollah Khomeini e u ned
o I an and was. g ee ed by millions. In Ap il I an became an
Islamic Republic. Acco ding o he e olu iona y leade s,
as
a
esul
o
he Shah's policies, I an had become oo dependen on oil
e enues and had ailed o di e si y i s expo s.
Mo eo e , i was a gued ha (demons a ed
in
Mo id 1987)
much
o
hese e enues was being spen on impo s
o
la ish
consume goods and mili a y- ela ed ha dwa e.
I
was also con-
ended ha I an unde he Shah had become oo dependen on he
Wes o i s impo s. Fu he mo e i was also a gued ha he
Shah's policies
had
esul ed in he des uc ion
o
he ag icul u al
sec o , pushing I an in o a se ious s a e
o
dependency on impo ed
ood.
The
e olu ion, i was claimed, would educe I an's mili a y
expendi u es and a ms impo s, would expand he ag icul u al
sec o , make
I an
sel -su icien
in
ood, di e si y and inc ease
I an's non-oil expo s, educe impo s, especially consume -goods
impo s, and inally educe I an's eliance on he Wes (Mo id
1987).
Howe e , li le did hey ( he e olu iona y leade s) know ha ,
while he e olu ion was s ill e y young, an was going o be
in aded and ha he e would be se ious consequences o he
p ojec ed goals and objec i es
o
he e olu ion.
Gi en his, we shall now a emp o p o ide a s udy
o
he
economic consequences
o
he wa on I an and I aq, wi h special
e e ence o oil p oduc ion/expo s, o eign-exchange ea nings,
13
The economic consequences
o
he
Gul
Wa
non-de ence o eign ade and ag icul u al pe o mance since he
wa .
Fo
he
pu pose
o
compa ison, h oughou his chap e , he
co esponding da a o he p e-Re olu ion/wa pe iod
o
1973-81
79 is also p o ided.
The
changes du ing hese wo pe iods
will
hen
be
no ed,
and
his in u n will p esen some o he economic
consequences
o
he
wa on bo h coun ies. This
will
be done by an
analysis
o
he e ec s
o
he wa on each coun y sepa a ely,
s a ing wi h
I an
in his chap e , o be ollowed by I aq
in
he
ollowing chap e .
The
economic consequences o he wa o I an
In
o de
o
assess he economic consequences
o
he wa o I an,
i
would
be
mos bene icial i , a his poin , some
o
he objec i es
o
he
Islamic Republic wi h ega d o hei goals
o
planning, as
illus a ed in he Fi s Fi e-Yea Economic, Social and Cul u al
De elopmen Plan, a e no ed. These obse a ions show, wha
I an
would ha e been like (a) i he e had been no wa and (b) i
he Islamic Republic had been success ul
in
achie ing i s objec i es.
Some
o
he main objec i es and p io i ies
o
he Plan a e as
ollows:
secu ing economic independence.
p o ision
o
ood and clo hing.
p o ision
o
housing.
elimina ion
o
unemploymen .
p e en ion
o
consume ism.
ag icul u e as
he
axis o de elopmen .
expansion
o
non-oil expo s.
p e en ing he expansion o la ge ci ies and implemen ing
se lemen policies (Mo id 1987: 206).
As
a as o eign- ade o ien a ions a e conce ned, he Plan had
p ojec ed 97
pe
cen and 3
pe
cen sha es
o
oil and non-oil
expo s in o al expo s o 1983, wi h he la e 's sha e ising o
7.1
pe
cen in 1987 (Mo id 1987: 26, able 7.2).
As
o
he
impo s, he Plan's majo objec i e was o dec ease
I an's
dependency
on
he ou side wo ld by educing he sha e
o
consume -goods impo s in o al impo s, om 22.3 pe cen in
1983
o
14.2
pe
cen in
1987
(Mo id 198',).
The e o e, when analysing he impac
o
he wa on I an's
economy,
no
only should we compa e and con as he p e- and
pos -wa changes, bu
also
no e he ou come
o
he Plan objec i es.
I
is
hen
ha
we can ha e a clea e pic u e
o
he consequences
o
he
wa .
14
300
250
200
150
100
50
I an and I aq a
wa :
economic consequences
mliDEIiJ
Oil
P oduc ion
-
Oil
Expo s
O+---- --~~--~--~--~----~--~
72
74
76
78 80
82
84 86
Figu e 2.1 Oil p oduc ion and expo s: I an, 1973-86 (million onnes)
Sou ces: Mo id
1987:
150-1, able 4.3; S a is iques 1979-85; UN
Depa men o In e na ional and Social A ai s (1979-81) Yea book
o
Wo ld Ene gy S a is ics;
OECD
1984;
1986,
No.1;
BP
1986.
The impac
o
he wa on oil p oduc ion and expo s
The olume
o
oil p oduc ion and expo s has been subjec ed o
much imbalance since he e olu ion and he s a o he wa . The
igu es o oil p oduc ion and expo s du ing he
1973--85
pe iod
a e p o ided in able 2.1, and hei g aphical p esen a ion
is
illus a ed in igu e 2.1. As can be seen, oil p oduc ion dec eased
by 54 and
11
pe
cen be ween 1979/80 and
198011,
whe e i
declined om 159,496 housand onnes in
1979
o only 66,252
housand onnes in 1981. By
1982
he si ua ion had imp o ed
conside ably, oil p oduc ion had inc eased by
82
pe
cen o
120,396 housand onnes. F om hen onwa ds oil p oduc ion
declined and, by 1985, i had allen o 110,100 housand onnes.
The co esponding igu e o
1986
is 94,100 housand onnes
(S a is iques 1986).
In all, on a e age each yea , oil p oduc ion has declined by 7.2
pe
cen du ing he 1979-86 pe iod. The
~o esponding
igu e o
he p e-Re olu ion/wa pe iod o
1973
o
1978
was a decline o 2.2
pe
cen
on
a e age each yea .
Gi en he imbalance in oil p oduc ion, he e has also been an
imbalance in oil expo s. The expo o oil ell by
67
pe
cen om
15
The economic consequences
o
he
Gul
Wa
s a egy o de elopmen (see u he Mo id
1987:
chap e s h ee
and ou ) wi h i s massi e impo equi emen s, mus ha e c ea ed
many p oblems and se backs in he economy.
I
should be
unde lined ha , since he e olu ion, he impo dependency
o
he economy has inc eased. Fo example, while in
1977
each
100
ials
o
non-oil g oss domes ic p oduc (GDP) p oduced equi ed
33
pe
cen
o
impo ed p ima y and in e media e inpu s, by
1983
he co esponding igu e had inc eased o
37
pe cen (all igu es
based in cons an ials,
1974
= 1(0) ( o e idence on hese igu es
see Behdad 1988: 10, able 4).
The
se ious s a e
o
impo dependency o he 'la ge' (wi h en
o
mo e wo ke s) manu ac u ing es ablishmen s can u he be
seen in he ac ha , acco ding o he S a is ical Cen e
o
I an,
impo ed p ima y p oduc s accoun ed o
54
pe cen o hese
es ablishmen s' o al impo s
in
1983. Fo chemicals and basic
me al indus ies, hese sha es we e 69.7 and 71.5 pe cen espec-
i ely in he same yea (S a is ical Cen e o I an 1985).
Gi en such a high dependency on impo s, i would no be oo
di icul
o
no e he e ec
o
such imbalance and luc ua ion in
o al impo s on he pe o mance o he indus ial sec o
in
I an
since he
~e olu ion
and he wa .
A
his poin , i he alues o he p e- and pos -wa non-de ence
impo s a e compa ed, i can be no ed ha o example, du ing he
1973-7 pe iod, hey had inc eased by
41
pe cen on a e age each
yea . while he co esponding igu es o he 1981-6 and 1983-6
pe iods show a decline
o
5.5 and 18.7 pe cen espec i ely.
Table
2.4 p o ides igu es o he sha e
o
non-mili a y impo s
in
GDP;
ha
is, he measu emen o impo pene a ion du ing he
1973-86 pe iod. As can be no ed, he sha e o o al non-mili a y
impo s in
GDP
(including oil) on a e age pe yea du ing
1979
o
1986 is 10.1
pe
cen .
The
co esponding igu e o he pe iod
1979-83,
o
ake accoun
o
he d as ic all in impo s du ing 1984-
6, is 11.9
pe
cen .
Howe e , i should be no ed ha , in he i s yea o he
e olu ion and he yea p eceding he I aqi in asion, namely in
1979, al hough oil e enues we e a he high le el o 1,408 billion
ials, he impo s we e kep a only
685
billion ials, ep esen ing
an
11.3
pe
cen impo s bu den o ha yea , a much lowe
bu den
han he p e ious yea s, i.e. 19.6 pe cen
in
1977.
The e o e i appea s ha he e olu iona y leade s we e indeed
genuine in hei app oach owa ds a
new
o eign- ade policy in I an,
and we e se ious in hei ini ial ac ions o educe I an's impo
dependency. Thus he ailu e o achie e he objec i e o he e olu-
ion in his a ea can be said o be a se ious consequence o he wa .
22

Table 2.4 I an's sha e o non-mili a y impo s
in
GOp·
(oil inclusi e and oil exclusi e) 1973-86 (billion cu en ials)
To al non-mili a y GDP (including oil) Impo a io-
GDP
GDP (excluding
oU)
Impo a io- GDP
1973
1974
1975
1976
1m
1978
1979
1980
1981
1982
1983
1984
1985
1986
No es:
• Au ho 's calcula ion.
C Au ho 's es ima ion.
impo s
248
442
782
875
1,022
721
685
863
985
1,185
1,528
1,328
1,061
m
1,784
3,072
3,479
4,480
5,207
4,917
6,053
6,759
8,218
10,621
13,471
15,030
15,306
15,509
14.0
14.4
22.5
19.5
19.6
14.7
11.3
12.8
12.0
11.6
11.7
8.8
6.9
5.0
1,196
1,630
2,103
2,802
3,545
3,692
4,317
5,178
7,288
8,852
11,662
12,926c
13,I63c
13.183c
Sou ces:
Cen al Bank o I an,
AnnUill
Repo
and
Balonce
Shee ,
1351,
1356,
1357~;
lMFa (1980,
1987)
lllk uJdon JI
FIIUUId JJ
S IIds ics
21.0
27.0
37.0
31.0
29.0
20.0
15.7
14.9
13.5
13.4
13.6
10.3
8.1
6.0
Table 2.5 Commodi y composi ion o I an's impo s (non-mili a y) classi ied by hei use, 1973-86 (%)*
1973 1974 1975 1976 1977 1978
1979
1980
1981
1982 1983
In e media e goods (a) 60.3 65.2 53.2 52.5 53.9 51.5 54.6 57.2 60.0 57.9 59.5
Capi al goods (b) 24.8 20.3 29.8 9.8 26.5 28.0 18.9 16.0 15.8 19.5 23.9
Consume goods (c) 14.9 15.5 17.0 17.7 19.6 20.5 26.2 26.3 23.8 22.6 16.6
To al 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
A e age sha elYea (a)
1979--86-
A e age sha elYea (b)
1979--86'"
A e age sha elYea (e) 1979--86·
No es:
..
Au ho 's calcula ion.
+ Au ho 'S es ima ion.
56.9
19.1
24.0
All igu es ounded up, o als may no add up o
100.
A e age sha e Yea
(a)·
1973-8
A e age sha e Yea (b)" 1973-8
A e age sha e Yea
(e)'"
1973-8
Sou ces: Cen al Bank
o
I an,
Annual
Repo and Balance Shee , 1356, 1358, 1361,
1362
Mo id
1987:
164, able 4.10
56.1
26.5
17.6
1984+
55.5
20.1
24.4
100.0
1985+ 1986+
54.0 52.0
19.5 20.0
26.5 28.0
100.0 100.0
I an and I aq a
wa :
economic consequences
The
composi ion
o
I an's non-de ence impo s (pe cen age
sha e in o al) du ing he 1973-86 pe iod
is
gi en
in
able 2.5. The
impo subs i u ion (I-S) s a egy o de elopmen and he goal
o
sel -su iciency since he e olu ion ha e mean ha a la ge
p opo ion
o
impo s has been in e media e and capi al-goods
impo s. Indeed, du ing he 1979-86 pe iod, on a e age each yea
56.9 and 19.1 pe cen
o
o al impo s we e in e media e and
capi al-goods impo s.
A
his poin , i he igu es
o
he p e- and pos - e olu ion/wa
pe iods a e compa ed, i can
be
obse ed ha he sha e o
in e media e goods impo s has emained mo e
o
less unchanged;
while he impo s
o
capi al goods on he o he hand ha e declined
signi ican ly (see able 2.5).
The
mos signi ican change, gi en he e olu ion's goals and
objec i es, in pa icula o 'p e en consume ism', has been a
subs an ial ise in impo s
o
consume goods. As shown in able
2.5,
he
impo sha e
o
consume goods, which du ing 1973-8 was
17.5
pe
cen
o
he o al on a e age each yea , has apidly
inc eased o
24
pe
cen on a e age pe annum in he 1979-86
pe iod.
In
ou
analysis so a ,
we
ha e used he cu en alues
o
impo s. We now analyse cons an -p ice igu es. The da a on he
alue o o al impo s a 1974 cons an p ices has been calcula ed
by using he index
o
indus ial coun ies' expo alues, whose
igu es a e gi en in able 2.6. As can be seen, he o al non-mili a y
impo s a 1974 cons an p ices was
434
billion ials in 1979, ising
con inuously and signi ican ly o 983 billion ials in 1983.
Since 1983, howe e , gi en he apid decline in oil e enues and
consequen ly he all in impo s a cu en p ices, he e has also
been a decline in impo s a cons an p ices. They ell signi ican ly
o only 462 billion ials in 1986.
In
all, du ing 1979 o 1986, he impo s a
1974
cons an p ices
ha e inc eased by 0.9 pe cen on a e age each yea . The
co esponding igu e o he 1979-83 pe iod, o ake accoun o he
d as ic all in impo s du ing he 1984-6 pe iod,
is
he ise
o
22.7
pe
cen on a e age each yea , while he igu e o he 1983-6
pe iod
is
he decline
o
22.2
pe
cen on a e age each yea . To al
impo s
a
1974 cons an p ices du ing he p e-wa pe iod
o
1973-
8 had inc eased by 5.6 pe cen on a e age each yea .
Wha all hese igu es ell us
is
he exis ence o e y chao ic and
diso ganized economic condi ions in I an, which in u n, ha e
c ea ed a nigh ma e o planne s and planning in gene al.
One
canno plan he economy on a long- e m basis when he e a e
yea ly luc ua ions
o
hese magni udes in impo s, gi en he
25
Table 2.6 Es ima ion o I an's non-mili a y impo s a
1974
cons an p ices·, 1973-86 (billion cons an ials)
~~~lmlmlmlml~~
1982 1983 1984
1985
1986
To al non-mili a y impo s
(cu en p ices)
248
442
782
87S
1,022
721
686
863
985
1,185
1,583 1,328
1,061
772
Index
o
indus ial coun ies' expo
alues
1974
= 1
0.62
1.0
1.1
1.3
1.4
1.3
1.6 1.8 1.7
1.7 1.6
I.S I.S
1.7
To al non-mili a y impo s a
1974
cons an p ices
400
442
711
673
730
555
434
482
573
714
983
862
689
462
A e age annual g ow h
o
impo s
a
1974
cons an p ices (%)*
1973-8
5.6
1979-86
0.9
1983-6
-22.2
No e: •
Au ho 's
calcula ions.
Sou ces: Cen al Bank
o
I an
Annual
Repon
and
Balance Shee , 1356. 1359; IMFa (1980.1985. 1987) In en ll ionol Finuncial S a is ics
I an and I aq a wa : economic consequences
'dependen ' capi alis na u e o he economy. The wa and he
ins abili y ha i has caused ha e made a bad si ua ion wo se.
A
his poin he o igins o I an's impo s since he e olu ion!
wa , whose da a was p o ided in able 2.3, is he subjec
o
analysis.
A
he ou se , i should be unde lined ha , since he
e olu ion, he mo i a ion
o
o eign- ade policy has been pa ly
poli ical, as, o example, he ban on ade wi h he US, and he e
has been a decla ed p e e ence o ading wi h he Thi d Wo ld,
as well as a emp s o educe he olume o ade wi h he Wes
(see u he Mo id 1987: chap e 7).
Howe e , as i will be demons a ed sho ly, he wa and he
desi e o sa is y he immedia e needs
o
he popula ion, ha e made
he achie emen o he objec i es o he e olu ion much mo e
di icul , i no impossible.
By looking
a
able 2.3, i can be no ed ha he majo p e-wa
supplie s, namely, Wes Ge many and Japan, a e s ill he main
expo e s o I an. In
1979
hey had accoun ed o 14.5 and 10.4 pe
cen
o
I an's o al impo s. The co esponding igu es o
1985
a e
15.5 and 12.8
pe
cen .
In all, while in 1980 indus ial coun ies had p o ided 66 pe
cen
o
o al impo s, by 1986 no much had been changed, as
in
ha yea hei sha e was
65
pe
cen
o
he o al. Howe e , he
Eu opean coun ies' sha e
o
he o al, du ing he same pe iod,
has inc eased om 7 o
14
pe
cen . The sha e
o
A ican coun ies
has emained unchanged, accoun ing o abou 0.4
pe
cen
o
he
o al du ing he same pe iod (IMF 1986b).
I
we now compa e he abo e igu es wi h hose
o
he p e-wa
pe iod (i.e. 1979), i can be seen ha he sha e
o he
indus ialized
coun ies in ha yea was
71
pe cen o he o al. The e o e, in
compa ison o 1986, since he wa , he e has been a modes
decline (6
pe
cen ) in I an's o al impo s om hese g oups o
coun ies. Howe e ,
on
he o he hand, he e has been a massi e
inc ease in he sha e
o
Eu opean coun ies, as hei sha e in
1979
was only 3.4
pe
cen
o
he o al;
a
he same ime he A ican
coun ies' sha e has also declined om 3.4
pe
cen o he o al
o
only 0.4
pe
cen (IMF 1986b).
In conclusion, i can be said ha , because o he all in o al
I anian oil expo s, i is also ue ha Wes e n Eu opean coun ies
as well as Japan ha e subs an ially educed hei oil impo s om
I an since he e olu ion. Bu , as was no ed, I an has no de-
c eased i s impo s om hese coun ies. O e all, al hough he e
has been some di e si ica ion o ading pa ne s in pos - e olu ion
I an, he changes ha e no been signi ican enough
o
educe I an's
dependency on coun ies like Wes Ge many and Japan, al hough,
27

Table
2.7
I an's p oduc ion o p incipal c op p oduc s,
197H5
( housand me ic onnes)*
I em 1973 1974 1975 1976 1977 1978 1979
1980
1981 1982 1983 1984 1985
Whea 4,600 4,700 5,570 6,044 5,517 5,526 5,800 5,700 6,518 6,500 5,956 5,500 6,000
Rice 1,334 1,313 1,430 1,566 1,400 1,280 1,420 1,212 1,500 1,400 1,216 1,600 1,100
Ba ley 923 863 1,438 1,487 1,230 1,276 1,000 1,100 1,351 1,400 1,413 1,550 1,650
Com
25
25
65 80 55 60 57
60
50 53 55 50 50
Suga bee 4,940 4,200 4,670 5,250 4,150 3,653 3,900 1,500 2,318 2,100 3,650 3,290 3,385
Suga cane 1,050 1,200 940 600 1,000 898 1,399 1,400 1,400 1,300 1,600 2,200 2,150
Co on ( aw) 615 715 470 510 535 472 278 180
211
294 202 226 200
Bo ine mea 99 102 104 108 160 160 161
171 181
190 165 165 168
Mu on and lamb 158 152 167
171
176 224 230 232 225 225 230
234
234
Poul y 100 103 106 130 189
208
211
211
213 215 230 235 240
Cows' milk ( esh) 1,050 1,150 1,230 1,250 1,300 1,580 1,580 1,550 1,627 1,705 1,650 1,650 1,700
Sheep milk ( esh) 555 570 593 617
640
664
687 690 710
731
705 705 715
Cheese 77
81
85 86 89 98 98 99 102 105 104 104 106
Bu e 48 51
54
56 58 66
66
67 69 72 70 70
71
No e:
• Figu es a e ounded o he nea es 1,000 onnes.
Sou ces:
FAOa
1975, 1977, 1979, 1980, 1984,
1985
I an and I aq a
wa :
economic consequences
a he same ime, hese coun ies ha e educed hei dependency
on I anian oil.
The impac
o
he wa on he ag icul u al sec o
One
o
he mos agic consequences
o
he wa , as we
will
demons a e sho ly, has been he ailu e
o
he ag icul u al sec o
o
mee
he basic equi emen s o he people. This has been he
case, e en hough, as was men ioned ea lie , he e olu ion had
decla ed ag icul u e as he 'axis
o
de elopmen ', had p omised
sel -su iciency in ood and, in all, a o al e e sal
o
he policies
disc edi ed in he pas . The e o e he ollowing
is
an a emp o
demons a e wha has been happening in he ag icul u al sec o
since he e olu ion and he wa .
The
igu es o he es ima ed p oduc ion
o
p incipal c op
p oduc s and main li es ock i ems du ing 1973-85 a e gi en in
able 2.7.
I
can be obse ed ha he a e age annual g ow h a es
o many i ems du ing he 1979-85 pe iod ha e been ei he
nega i e
o
inc easing a a e y insigni ican a e. Fo example, he
p oduc ion
o
whea du ing he pe iod
unde
s udy g ew by 0.6
pe
cen on a e age each yea ; ice
(-4
pe
cen ); bo ine mea (0.7
pe
cen ); mu on and lamb (0.3
pe
cen ); sheep milk (0.7 pe
cen ) and cheese
(1
pe
cen ).
The
abo e igu es
will
p o e mo e meaning ul i hey a e
compa ed wi h he a e a which he popula ion has been g owing
du ing he same pe iod.
The
popula ion has inc eased om 37.2
million in 1979 o 44.2 million in
1985
(IMF 1986a), ep esen ing
an a e age annual g ow h a e
o
2.9
pe
cen . This obse a ion
e y clea ly demons a es he ailu e
o
he ag icul u al sec o o
mee he ood equi emen s
o
a g owing popula ion.
The
easons
o such an ou come a e a ied and complex. To elabo a e
on
hem
is
indeed beyond he scope
o
his s udy. Howe e , he e can
be
no doub
ha
he moun ing cos s
o
he wa and he inc eased
u aUu ban mig a ion caused by i a e amongs he main easons.
The
ollowing is an a emp o cla i y his obse a ion.
Since he e olu ion he e ha e been many a emp s o inc ease
he p oduc i i y
o
he ag icul u al sec o by
sh~ ing
he emphasis
om indus ial
o
ag icul u al de elopmen . Thus, o example,
land
unde
cul i a ion has inc eased signi ican ly. Table 2.8 p o-
ides in o ma ion on land use since he e olu ion. As can be
no ed, be ween 1979 and 1985, land unde use o whea p oduc-
ion inc eased by 32.3
pe
cen ; ba ley (47.4
pe
cen ); suga bee
(10.3
pe
cen ); co on
(31
pe
cen ) and ice (58
pe
cen ).
Howe e , gi en he signi ican inc ease in land unde cul i a ion,
29
The economic consequences
o
he
Gul
Wa
hen why, as was no ed ea lie , has ag icul u al p oduc ion ei he
declined
o
been
s a ic du ing he same pe iod?
Table 2.8 Land unde cul i a ion ( housand ac es)
1979
1980
1981
1982 1983 1984 1985 1979-85
%
change
Whea 11,705 12,940 15,202.5 15,480 15,105 14,897.5 15,485 32.3
Ba ley 3,535 4,152.5 3,597.5 4,602.5 5,015 5,407.5 5,210 47.4
Suga
Bee
328.5 353 422.5 457.5 420 335 362.5 10.3
Co on
359.75 437.25
340
495
460
522.5
465
31.0
Rice 750.41 796.75 1,147.5 1,207.5 1,072.5 1,102.5 1,187.5
Sou ce: Minis y
o
Ag icul u e (1983, 1986) Ag icul u al Economic Repo
Table 2.9 Sale and deli e y o ac o s, e ilize s (uni s and housand
ons)
1982 1983 1984 1985 % change
T ac o s 28,940 32,918 23,860 15,840 45.0 (1982-5)
Fe ilize s 1,312 1,931 1,679 1,626 15.8 (1983-5)
Sou ce: Minis y
o
Ag icul u e (1986) Ag icul u al Economic Repo
The
answe
o
his ques ion
is
di ec ly ela ed
o
he con-
sequences
o
he wa . Why? Because, as a esul
o
he wa and i s
moun ing cos s, he e has been less money a ailable o necessa y
expendi u es in
he
ag icul u al sec o .
Fo
example, as shown in
able 2.9, he numbe
o
ac o s sold and deli e ed o he a me s
declined by
45
pe
cen du ing he 1982-5 pe iod, and he olume
o
e ilize s also declined by 15.8
pe
cen du ing he 1983-5
pe iod, e en hough, as was no ed al eady, he e has been a
signi ican ise in land use.
Howe e , he go e nmen in Teh an had hoped ha , by employ·
ing
mo e
people
on
he la ge a ea
o
cul i a ed land, p oduc ion
could be inc eased, wi h g ea e eliance on adi ional me hods
o
p oduc ion, a he han employing mo e capi al-in ensi e ech-
niques. The e o e, gi en his s a egy, he e was a need o a
la ge labou o ce o wo k
on
he land han e e be o e. How-
e e .
he
wa
e y soon pu an end o he ealiza ion
o
he said
objec i e, as an inc easing p opo ion
o
a young and able
wo k o ce om he u al a eas was called up
o
go o he wa
on , while he emaining people ei he we e oo old
o
wo k on
he
land
o
chose
o
go
o
he
la ge ci ies hemsel es.
Since he wa , many illages ha e been dese ed al oge he .
Fo
30
I an and I aq a
wa :
economic consequences
example, in Malaye ,
by
1983,
65
ou o nea ly 254 illages had
been dese ed (Keyhan:
20
July 1983). As a
as
in e nal mig a-
ion
is
conce ned, na ion-wide da a on u al-u ban mig a ion
is
sca ce. Es ima es, howe e , indica e ha 40 pe cen
o
he u ban
popula ion g ow h be ween 1977 and
1983
has been due o peasan
mig a ion (Kaze ooni 1985). Acco ding o o icial es ima es, du -
ing 1979-83, 2.2 million people ha e mo ed om u al o u ban
a eas, al hough independen s udies es ima e his igu e o be a
leas h ee imes highe (Kaze ooni 1985).
I
is
in e es ing o no e
ha , acco ding
o
ano he independen obse e (Simpson 1988),
he popula ion o Teh an, o example, has inc eased om 6
million in 1978 o mo e han
10
million in 1986, ep esen ing an
a e age annual inc ease
o
o e
19
pe cen du ing he same
pe iod.
The
o icial in o ma ion on he (pe cen age) sha e
o
he econ-
omically ac i e popula ion
in
ag icul u e in I an o selec ed yea s
be ween
1965
o
1985
is gi en in able 2.10. As a ma e o in e es ,
he co esponding igu es o India, Pakis an and Tu key a e also
gI en.
By looking a able 2.10 and compa ing he di e en se s
o
da a, he scale o I an's u al-u ban mig a ion, in absolu e, as well
as ela i e e ms, becomes e y clea . As can be seen,
in
1965,49
pe
cen
o
I an's economically ac i e popula ion we e in u al
a eas. By 1980 hese igu es had d opped o
36
pe
cen and he
co esponding igu e o
1985
is
33
pe
cen .
Table 2.10 Pe cen age sha e o economically ac i e popula ion
in
ag icul u e - a measu emen o u baniza ion -I an, India, Pakis an and
Tu key (selec ed yea s)
I an India Pakis an Tu key
1965
49
73
60
75
1970
44 72
59
71
1975
40
71
57
65
1980
36
70
55
58
1985
33
69
52 52
Sou ce:
FAOa
1985
One
o he many easons o he apid u baniza ion
in
I an, a
leas up o he e olu ion, was he misguided and inapp op ia e
ag icul u al and indus ial policies unde he Shah, which ha e
been add essed by he p esen au ho elsewhe e al eady (Mo id
1987).
The
e olu ion, howe e , had made he u al-u ban mig a ion a
31
The economic consequences
o
he
Gul
Wa
The impac
o
he
wa
on oil p oduc ion and expo s
By a he mos se e e blow o he economy o I aq as a esul
o
he wa has been o he oil sec o . Wi hin he i s ew days
o
he
wa he I aqi e ine y
a
Bas a, o -loading acili ies a Fao, Kho
ai-Amaya and Mina al-BakT, as well as he key
K-l
pumping
s a ions in
he
Ki kuk ield in he no h, we e pu ou
o
ac ion.
Thus,
wi hin a week
o
he ou b eak
o
he hos ili ies, I aq was
o ced o suspend i ually all i s oil expo s.
The
signi ican decline in oil p oduc ion/expo s can bes be seen
in able 3.1 and igu e 3.1, whe e he olume
o
oil p oduc ion and
i s expo s du ing he 1973-85 pe iod a e no ed. As can be seen,
oil p oduc ion dec eased by
24
and 66
pe
cen be ween 1979/80
and
1980/1, whe e i ell om 170,300 housand onnes in
1979
o
130,000 housand onnes in 1980 and hen ell d as ically
o
only
43,900 housand onnes in 1981. Since 1982 he si ua ion has
imp o ed somewha , al hough no ising o any hing nea ing he
p e-wa le els. By 1985 and 1986 oil p oduc ion had inc eased o
68,778 and 82,665 housand onnes (S a is iques 1986).
In
all,
on
a e age each yea , oil p oduc ion has declined
by
9.7
pe
cen be ween 1979 and 1986. The co esponding igu e o he
p e-wa pe iod o 1973-9 was an inc ease
o
9.4
pe
cen .
180
160
140
120
100
80
60
40
::::::::::::J
Oil
P oduc ion
_
Oil
Expo s
20+-
__
~
__
~
__
~~
__
~
__
~
__
~
__
~
72
74 76 78
80 82
84 86
Figu e 3.1 Oil p oduc ion and expo s: I aq, 1973-86 (million onnes)
Sou ces: S a is iques 1974-86; Uni ed Na ions In e na ional Economic
and
Social A ai s (1979--83) Yea book
o/Wo ld
Ene gy S a is ics;
OECD
1974-86
38

I aq a wa : economic consequences
The
decline in oil p oduc ion has esul ed in a massi e educ ion
in oil expo s. The expo
o
oil
ell
by
25
pe
cen be ween
1979
and 1980. The co esponding igu e o he
198011
pe iod was
72
pe
cen , whe e oil expo s ell om 120,400 housand in
1980
o
only 34,100 housand onnes in 1981. Then, as a esul o imp o e-
men s in oil p oduc ion, oil expo s we e also inc eased, and by
1985
48,549 housand onnes o oil we e expo ed. The co espond-
ing igu e o 1986
is
62,100 housand onnes (S a is iques 1986).
In all, du ing
1979
o 1986, oil expo s ha e declined by 12.7 pe
cen
on
a e age each yea , while, du ing 1973-9, he co espond-
ing igu e was an inc ease o 10.3 pe cen .
The e o e, i can be seen ha one o he mos se ious con-
sequences
o
he wa has been in he oil sec o , whe e oil
p oduc ion/expo s ha e declined signi ican ly, while e e y e o
has been made o inc ease hem.
Wi h ega d
o
he main ecipien s o oil expo s, i can be said
ha all he coun ies men ioned
in
able 3.1 ha e educed hei
o e all impo s o I aqi oil (i.e. hey ha e educed hei depen-
dency on I aq).
The impo ance o oil in p o iding o eign exchange du ing he
pe iod unde s udy and he ailu e
o
he I aqi go e nmen o
achie e one
o
he main objec i es o i s planning policies, namely,
educing he coun y's dependency on oil e enues as he main
supplie
o
o eign exchange, and also o inc ease non-ene gy
expo s, as ou lined o example in he Fi e-Yea Na ional
De elopmen Plan,
1981/85
(Plan and Budge O ganiza ion 1982),
can bes be seen in able 3.2, whe e he alue o o al expo s and
i s composi ion du ing he 1973-86 pe iod a e gi en.
As
can be no ed, gi en he se ious damages o oil-expo
acili ies, he e enue gene a ed by pe oleum expo s has allen
d as ically.
I
ell om 7,718 million dina s in 1980 o only 2,752
million dina s in 1986, ep esen ing an a e age annual decline
o
16
pe
cen du ing he same pe iod. The alue o non-ene gy
expo s has emained mo e
o
less s a ic a a ound 40-42 million
dina s a yea . I should, howe e , be no ed ha in bo h cases he
igu es quo ed a e in cu en p ices. The e o e, i in la ion
is
aken
in o conside a ion, he ac ual decline in cons an p ices du ing he
pe iod unde s udy can be e y subs an ial indeed.
A
his poin , i he p e- and pos -wa o eign-exchange ea nings
a e compa ed, i can be seen ha , du ing he 1973-9 pe iod, I aqi
oil e enues as well as i s o al expo ea nings con inuously
inc eased each yea . The a e age annual a es o inc ease we e
50
and
48
pe cen espec i ely.
39
Table 3.2 Value
o
I aq's o al expo s,
1973--86
(million cu en dina s)
1973 1974 1975 1976 1977 1978 1979
1980
1981 1982 1983 1984 1985 1986
TX
588 1,949 2,450 2,738 2,850 3,266 6,329 7,760 3,110 3,056 3,042 3,545 3,903 2,792
CPX
555 1,921 2,415 2,692
2,807
3,204 6,287 7,718 3,068 3,014 3,000 3,495 3,862 2,752
N-EX* 33 28 35
46
43 62 42 42 42
42
42 50 44 40
Sha e
o
CPX
% % % % % % % % % % % % % %
in TX* 94.4 98.6 98.6 98.3 98.5 98.1 99.3 99.4 98.6 98.6 98.6 98.6 99.0 99.0
Sha e
o
N-EX
in TX* 5.6 1.4 1.4 1.7 1.5 1.9 0.7
0.6
1.4 1.4 1.4 1.4 1.0 1.0
No es:
• Au ho 's calcula ion.
TX To al expo s.
CPX C ude pe oleum expo s.
N-EX Non-ene gy expo s.
The
exchange a e o he pe iod unde s udy:
$1
= 0.30 dina s (1973), 0.29 (1974-82) and 0.31
(1983--6).
Sou ces: IMFa
1987
S a is iques
1986
I aq a wa : economic consequences
The impac o he
wa
on he alue, composi ion and he o igins o
non-de ence impo s
The
money alue o I aq's o al impo s du ing he 1973-85
pe iod, like hose o I an, has been he subjec
o
much luc ua-
ion. Howe e ,
a
he ou se i should be no ed ha , a leas o he
i s wo yea s o he wa , Saddam Hussain, wi h he help
o
his
iends in he egion, was a man de e mined o ha e bo h guns and
bu e . As i will be shown in a la e chap e , no only has he alue
o
mili a y expendi u es (Milex) inc eased signi ican ly since he
wa ,
bu
he e was also a apid inc ease in non-mili a y impo s in
he ea ly yea s
o
he in asion.
Gi en he d as ic all in I aq's o eign exchange ea nings, he
simul aneous inc eases
in
Milex, a ms impo s and non-de ence
impo s would no ha e been possible wi hou ou side help. Two
A ab
coun ies, amongs o he s, ha e become indispensable o
I aq's wa e o s. They a e Saudi A abia and Kuwai . Bo h ha e
played a p ima y ole in sus aining I aq's economy.
I
has been es ima ed ha A ab-sou ce inancial suppo o
I aq, mainly om Saudi A abia and Kuwai , du ing he i s wo
yea s
o
he wa amoun ed o $1.0 billion a mon h ( o e idence on
his s a emen see, o example, Ka sh 1987, Goose 1987, S au e
1985). This undoub edly enabled I aq o ollow a policy
o
no only
'guns and
bu e ',
bu
also wi h added honey and jam.
Indeed he go e nmen in Baghdad delibe a ely se
ou
o
accele a e he pace
o
economic de elopmen and wen o con-
side able e o in he i s wo yea s o he in asion o cushion he
popula ion and o ensu e ha he a e age I aqi ci izen would no
su e economically because
o
he wa .
Fu he mo e, he scale
o
go e nmen expendi u es and impo s
du ing his pe iod becomes e en mo e clea when
we
no e ha ,
in
spi e
o
all he ou side inancial help, by he end
o
198213
I aq had
s ill exhaus ed i s $35.0 billion o eign-exchange ese es and had
become a majo deb o na ion, a poin o which we shall e u n
in
a u u e chap e .
Table 3.3 p o ides da a on he money alue o o al non-mili a y
impo s be ween 1973 and 1985. As can
be
seen, he alue
o
impo s was $8,984 million in 1979, inc easing o $14,067 million in
1980, $20,922 million in
1981
and s ill inc easing o an all- ime high
o
$21,728 million in 1982, ep esen ing an a e age annual g ow h
a e
o
32.2
pe
cen du ing he same pe iod.
Howe e , wo yea s in o he wa , Saddam Hussain had no
deli e ed he goods, as Khomeini was s ill
in
cha ge in I an, while
he bu den
o
suppo ing he I aqis was e e inc easing. Thus' he
41
Table 3.3 Value and dis ibu ion o I aq's impo s8 by main coun ies, 1973-85 (million cu en dolla s)
1973 1974 1975 1976 1977 1978 1979 1980
USA
50
188
370
218 218
426 486
797
Canada
2
22
79
72
71
10
99
137
Wes
Ge many
36
191
754
848
802
476
1,258 1,980
UK
78
126
238
273
307
261
470
823
I aly 30
79
164
192
228
217
741
1,037
F ance
76
175
263
309
252
296
877
1,179
Ne he lands
14
38
61
75
184
80
260
275
Belgium
39
53
99
70
106
110
315
374
Swi ze land
12
29
48
40 85
141
152
233
Sweden
17
54
92
82
62
119
353
397
Spain
20
22
45
33
45
56
159
213
Japan
61
270
765
518
789
881
1,759
2,413
Aus alia
4
89
45
98
88
51
204
221
Tu key
19
32
24
31
58
52
116 148
India
18
56
71
57
61
38
75 75
B azil
53
131
200
n
70
48
264
318
O he s
(including So ie
Union
and
Eas e n
Eu ope)b
365
816
897
904
1,055
951
1,316
3,447
To al
non-mili a y
impo s
894
2,371
4,215
3,897
4,481
4,213
8,984
14,067
Table 3.3 (con inued)
1981 1982 1983 1984 1985 % sha e
o
o al impo l'
1973 1978 1979 1985
USA
1,005
931
563
731
470
6 10 5 4
Canada
198
173 105
140
57
0 0 1
0.5
Wes
Ge many
3,179
3,452
1,618
947 926
4
11
14
9
UK
1,382
1,698
669
500
630
9 6 5 6
I aly
1,475
1,827
878
691
760
3 5 8 7
F ance
1,601
1,588
894
752 757
9 7
10
7
Ne he lands
314
322
175
187
181
2 2 3 2
Belgium
351 371
175
146
132
4 3 4 1
Swi ze land
298
369
220
112 118
1 3 2 1
Sweden
626
519
144
116
137
2 3 4 1
Spain 306
299
102 133 107
2 1 2 1
Japan
3,324
3,019
695
884
1,450
7
21
20
14
Aus alia
106
221
99
216
177
0 1 2 2
Tu key
615 672
352
1,028
822
2 1 1 8
India
86
95
85
77
61
2 1
0.8
0.6
B azil
328 350
453
385
699
6 1 3 7
O he s
(including So ie
Union
and
Eas e n
Eu ope)b
5,728 5,882 5,048
4,133
3,050
41
23
15
29
To al
non-mili a y impo s
20,922 21,728
12,275
11,178
10,534
100 100 100 100
No es:
a Excluding mili a y- ela ed impo s.
b Au ho 's calcula ion,
all
he pe cen ages ha e been ounded up, hus o als may no add up o
100.
Sou ces:
IMFb 1980, 1983,
1986
IMFa
1986

The economic consequences
o
he
Gul
Wa
A ab
inancie s
o
I aq's
wa e o s changed hei ac ics by
educing hei di ec 'loan'
o
cash
o
I aq (excep o he paymen s
o
a ms
deli e ies by
he
So ie Union which is di ec ly paid o by
he
Saudis) in a ou
o
expo ing 300,000 ba els
o
oil a day om
he
Neu al
Zone
on
behal
o
I aq (S au e 1985). (This issue is
no ed
u he
in chap e
en.)
The
educ ion in o al cash suppo , as well as he exhaus ion
o
he
o eign-exchange ese es, educed I aq's abili y
o
sus ain
high le els
o
impo s. Indeed, be ween 1982-3, 1983-4 and 1984-
5 he alue
o
impo s ell by 44, 9 and 6
pe
cen espec i ely. By
1986, o al impo s
had
allen u he o only $8,847 million (IMF
1987b).
Such a decline in impo s and he ac
ha
I aq's indus ializa-
ion, like
ha
o
I an,
has
been
based on 'dependen capi alism'
and
he
impo -subs i u ion s a egy
o
de elopmen , wi h i s
massi e
impo
equi emen s, mus ha e c ea ed many p oblems
and
se -backs in
he
economy.
A
his poin , i should be no ed
ha
he go e nmen
o
I aq has
no
published much
da a
and
in o ma ion on di e en aspec s
o
he
economy
since he wa . Howe e , i can be a gued ha he
consequences
o
he
wa i sel , i.e. disloca ion
o
he labou o ce,
ligh
o
he
educa ed people, educ ion in o eign wo ke s, e c., as
well as
he
signi ican educ ion in impo s, ha e mean ha he
indus y is ope a ing a below i s ac ual po en ial. Also now, mo e
han
e e
be o e, consume -goods impo s o m a e y la ge sha e
o
he
o al impo s wi h no appa en con ibu ion
o
he de elop-
men
o
he domes ic economy.
Table
3.4 p o ides igu es o he sha e
o
non-mili a y impo s
in
GDP.
As
can
be
seen, in 1979, he sha e
o
impo s in
GDP
(including oil) was 22.8
pe
cen . Howe e , gi en he educ ion in
GDP
since he wa , as well as he massi e inc ease in impo s, by
1982
he
co esponding sha e had inc eased
o
50
pe
cen .
In
all,
du ing 1979
o
1985
on
a e age each yea he bu den o impo s
has
amoun ed
o
32.5
pe
cen
o
he
GDP
(including oil).
I
he
abo e igu es
a e
compa ed wi h he p e-wa ones, i can
clea ly
be
no ed
ha
indeed, since he wa , he e has been an
unp eceden ed inc ease in I aq's impo dependency. Fo example,
du ing he 1973-8 pe iod, on a e age each yea , I aq had spen 2.9
pe
cen
o
i s
GDP
(including oil)
on
i s non-de ence impo s.
The e o e i can be a gued ha one o he majo consequences o he
wa o I aq has been he apid and signi ican inc ease in i s impo
dependency.
As
no ed in chap e one, he I aqi s a egy
o
de elop-
men
and
mode niza ion du ing he pos -oil-p ice-inc ease pe iod
o
1973--4
was mainly based
on
a 'less big' app oach o de elopmen .
44
Table 3.4 I aq's sha e
o
non-mili a y impo s in
GOP*
(oil inclusi e and oil exclusi e) 1973-85
1973 1974 1975 1976 1977 1978 1979
1980
1981 1982 1983 1984 1985
To al non-mili a y
impo s 0.058 0.083 0.123 0.138 0.172 0.205 2.6
4.1
6.1 6.3 3.8 3.5 3.3
GOP
(including oil) (a) 1.6 3.4 4.0 5.2 5.9 7.0 11.4 15.8 11.1 12.6 13.1 13.9 16.8
Impo /GOP
a io % • 3.6 2.4 3.1 2.6 2.9 2.9 22.8 25.9 54.9 50.0 29.0 25.2 20.0
GOP
(excluding oil) (b) 0.65 1.3 1.6 2.1 2.3 2.8 5.0 6.0
7.9
5.1 6.6 7.6 10.8
Impo /GOP
a io % •
8.9
6.4 7.7 6.6 7.5 7.3 52.1 68.3 77.2 123.5 57.6 46.0 30.6
%
A e age sha e/yea (a) 1973-8· 2.9
A e age sha e/yea (b) 1973-8· 7.4
A e age sha e/yea (a) 1979-85* 32.5
A e age sha e/yea (b) 1979-85* 65.0
No es: • Au ho 's calcula ion. The igu es o o al non-mili a y impo s and GDP a e
in
cu en billion dina s.
Sou ces: IMFb 1980, 1986; IMFa 1980, 1986; Uni ed Na ions Economic and Social Commission o Wes e n Asia
1981
and Republic o I aq 1983; Uni ed
Na ions Economic and Social Commission o Wes e n Asia
1986
The economic consequences
o
he
Gul
Wa
Thus i can be said ha , gi en he pas policies, i
is
mos likely
ha , du ing
he
pos -1979-oil-p ice-inc ease pe iod, i he wa had
no
aken
place, I aq would no ha e inc eased i s non-de ence
impo s so signi ican ly. The e o e, no only would she no ha e
exhaus ed
he
o eign-exchange ese es, bu , also by now, he
ac ual $35.0 billion
o
ese es would ha e inc eased a
ew
imes
o e .
In
ou
analysis so a we ha e used he cu en alues o impo s.
We now analyse cons an -p ice igu es. The da a on he alue
o
o al impo s
a
1974 cons an p ices has been calcula ed by using
he
index
o
indus ial coun ies' expo alues, whose igu es a e
gi en in able 3.5. As can be seen, he alue
o
non-mili a y
impo s a 1974 cons an p ices was 1.6 billion dina s in 1979, ising
signi ican ly o 3.8 billion dina s in 1982.
Since 1982, howe e , gi en he decline in impo s a cu en
p ices, he e has also been a decline in cons an -p ice igu es. They
ell
o
2.4 billion dina s in
1983
and s ill u he o only 1.6 billion
dina s in 1986.
In all, be ween 1979 and 1986, he e has been a ze o g ow h in
impo s a 1974 cons an p ices. The co esponding igu e o he
1979-82 pe iod, o ake accoun
o
he d as ic all in impo s
be ween 1982 and 1986, is he ise
o
33.4 pe cen on a e age each
yea , while he igu e o he 1982-6 pe iod is a decline
o
19.5 pe
cen
on
a e age each yea . To al impo s a 1974 cons an p ices
du ing he p e-wa pe iod
o
1973-8 had inc eased by 15.5 pe cen
on
a e age each yea .
A
his poin , he o igins
o
I aq's impo s (non-mili a y) since
he
wa , whose da a was p o ided in able 3.3, is he subjec
o
analysis. As can be seen, i seems ha be ween
1979
and 1982, all
he coun ies men ioned in he able had decided o ewa d I aq
o in ading I an by expo ing as much as hey could o ha
coun y.
Fo
example, I aq's impo s om he USA, Wes
Ge many, he
UK,
I aly, F ance and Japan inc eased by 24, 40,
53,35,22
and 20
pe
cen espec i ely on a e age each yea du ing
he same pe iod.
Fu he mo e, by looking a he igu es gi en in able 3.3, i can
be no ed ha , du ing he pos -wa pe iod o
198~5,
Japan has
emained he majo supplie o I aq's non-mili a y impo s,
supplying
14
pe cen
o
he o al in 1985, ollowed by Ge many
(9
pe
cen ), Tu key (8
pe
cen ), I aly and F ance
(7
pe cen ) each
and
he
UK
(6
pe
cen ).
I
he abo e igu es a e compa ed wi h hose
o
1979
(i.e.
be o e he in asion), he bigges majo change ha can be
no ed
is
in he alue
o
impo s om Tu key, as in ha yea
46
Table 3.5 Es ima ion
o
I aq's non-mili a y impo s a
1974
cons an p ices, * 1973-86 (billion cons an dina s)
1973 1974 1975 1976 1977 1978 1979
1980
1981
1982 1983 1984 1985 1986
To al non-mili a y impo s
(cu en p ices)
0.058
0.083
0.123
0.138
0.172
0.205
2.6
4.1
6.1
6.2
3.8 3.5 3.3
2.7
Index
o
indus ial coun ies'
expo alues
1974
= 1
0.8
1.0
1.1
1.1
1.2
1.4 1.6
1.8 1.7 1.7
1.6
1.5
1.5
1.7
To al non-mili a y impo s
a
1974
cons an p ices
0.073 0.083
0.111
0.123 0.142
0.150
1.6
2.3
3.5 3.8
2.4
2.3
2.2
1.6
A e age annual g ow h
o
non-mili a y
impo s a cons an
1974
p ices
(0/0)*
1973-8
1979-86
1979--82
1982-6
15.5
0
33.4
-19.5
No e: •
Au ho 's
calcula ion.
Sou ces: IMFb Di ec ion
o
T ade S a is ics, 1980, 1987; IMFa In e na ional Financial S a is ics, 1980, 1986
The economic consequences
o
he
Gul
Wa
in e na ional a ai s. A ms sales a e a mo e han
an
economic
occu ence, a mili a y ela ionship
o
an a ms con ol
challenge-
a ms sales a e o eign policy w i la ge' (emphasis in o iginal).
The
abo e is a b ie p esen a ion
o
some
o
he impo an
easons conce ning 'pull' and 'push' ac o s causing high Milex and
a ms impo s. Gi en
he
scope
o
his chap e and he limi s
o
ou
co e age, we shall
no
a emp o p o ide a de ailed and Cdmp e-
hensi e s udy
o
opics such
as
poli ico-s a egic, mili a y 'domes ic'
o
' o eign' objec i es
o
a apid inc ease in mili a iza ion.1 Wha
we in end
o
do
is
o
p o ide a b ie s udy
o
he economic
consequences
o
such expendi u es on I an and I aq.
The e o e,
in his
and
in he ollowing chap e s, we will no e he
de ence
bu den,
es ima e he alue o a ms impo s and p o ide
da a
on
he
measu emen
o
a ms-impo s bu dens.
The
majo
a ms ag eemen s
and
he main a ms supplie s will be iden i ied.
The
a e
a
which di e en coun ies in he Gul ha e been
mili a ized, measu ed by he changes in he numbe s
o
mili a y
pe sonnel, as well as he a ailabili y
o
main mili a y ha dwa e,
will
be
no ed. Analysis
o
hese opics will s a in his chap e ,
whe e
I an's
expe ience wi h apid mili a iza ion du ing he 1973-
8
pe iod
is gi en.
The es ima ion o de ence and a ms-impo s bu dens
The
igu es o Milex and de ence bu den -
ha
is, he sha e
o
mili a y expendi u e (Milex) in
GDP
du ing 1973-8 a e gi en in
able 4.1.
As
can
be
no ed, du ing he pe iod unde s udy, Milex
Table 4.1 Ra io
o
mili a y expendi u es (Milex) in
GDp·
(oil including
and excluding) -de ence bu den, I an,
1973--8
1973
1974
1975
1976
1977
1978
Milex
GDP
Sha e
o
de ence
GDP
Sha e
o
de ence
145
218
707
665
561
693
(including oil) in
GDP
(%)
(excluding oil) in
GDP
(%)
1,784
3,072
3,479
4,480
5,207
4,917
8.1
7.1
20.3
14.8
o.7
14.1
1,196
1,630
2,130
2,820
3,545
3,692
12.1
13.3
33.6
23.7
15.8
18.7
A e age annual g ow h
o
Milex A e age de ence bu den
(%)
1973-8
(%)
(1973-8)
37.0
in
GDP
(including oil)
in
GDP
(excluding oil)
13.0 19.9
No es: • Au ho 's calcula ion. The igu es o Milex and
GDP
a e
in
cu en billion ials.
Sou ce: Based on Mo id 1987: 181, able 5.2
54

Mili a iza ion
o
I an 1973-8
inc eased om
145
billion ials
in
1973
o
693
billion ials in
1978
which ep esen s a
37
pe cen a e age annual inc ease o he
pe iod.
The
highes a e o inc ease in Milex was be ween
1974
and
1975, whe e i inc eased by mo e han
224
pe cen . This, in
ou
iew, clea ly demons a es he ela ionship be ween he mili a -
iza ion
o
I an, and he pe o-dolla - ecycling objec i e
o
he
a ms sale. Fu he mo e, he sha e de ence
in
GOP
(including oil)
inc eased om 8.1
pe
cen
in
1973
o 14.1
pe
cen in 1978.
A
his poin , i we compa e he abo e se s
o
igu es wi h hose
o
selec ed coun ies whose igu es a e gi en in able 4.2,
we
can
indeed no e he scale
a
which I an had become mili a ized du ing
he pe iod unde obse a ion.
Table 4.2 Wo ld mili a y expendi u es (Milex)
as
pe cen age o
Gnp·.
selec ed coun ies,
1973--8
1973 1974 1975 1976 1977 1978
Canada
1.9
1.9 1.9 1.8
1.9
2.0
USA
6.0
6.1
6.0 5.4 5.4
5.2
Belgium 2.8
2.8
3.1 3.1
3.2
3.3
Denma k
2.1
2.3
2.5 2.3
2.3
2.4
F ance 3.8 3.7 3.8 3.8 3.9 3.9
FR
Ge many
3.5
3.6 3.6
3.5
3.4 3.4
G eece
4.1
4.3
6.5
5.9
6.8 6.6
I aly
2.9
2.8
2.5
2.3
2.4 2.4
Tu key
4.3
4.1
6.0
6.4
6.0
5.5
UK
4.8 5.0
4.9
5.0
4.8
4.7
India 3.0 3.0
3.3
3.4 3.2
3.1
Pakis an
6.1
6.0
6.1
5.6 5.4
5.3
Indonesia 3.7
3.1
4.1
3.9
4.1
4.3
Japan
0.8
0.9 0.9 0.9 0.9
0.9
Aus alia 2.4
2.5 2.5 2.5 2.5
2.5
No e: •
GOP
a cu en ma ke p ices.
Sou ce: SIPRI 1981: 166-7 Table 6A.4
As can be seen, coun ies such as Canada, USA, UK, Indonesia
(i.e. oil-expo ing economies ou side he Middle Eas ), G eece
and Tu key, India and Pakis an (bo h se s
o
coun ies wi h a long
his o y
o
con lic ) we e spending be ween 3 and 7 pe cen
o
hei
GOP
on Milex. (Fo u he de ails see able 4.2.)
As was men ioned ea lie , one
o
he peculia i ies
o
Milex in
he oil- ich economies o he Middle Eas has been i s e y high
impo con en . Du ing he pe iod unde s udy I an became he
main impo e o majo weapons in he egion. This can clea ly be
seen in able 4.3, whe e ank o de o majo Middle Eas a ms
impo e s du ing 1970-4 and 1975-9
is
gi en.
55
Table 4.3 Rank o de
o
majo Middle Eas a ms impo e s, 1970-4 and 1975-9
Middle Eas La ges ecipien %
o
egion's La ges supplie %
o
coun y's The ou la ges %
o
he egion's
%
o
Thi d coun ies o al o each o al supplie s
o
he o al
Wo ld o al coun y egion
1970-4
50
Sy ia
25
So ie Union
95
So ie Union
51
Egyp 23 So ie Union
98
USA 34
I an
22
USA 60
UK
10
Is ael
18
USA
97
F ance 2
I aq 4 So ie Union
85
Saudi A abia 3 USA
51
1975-9
48
I an
31
USA
81
USA
61
Saudi A abia
14
USA
79
So ie Union 15
Jo dan 13 USA
98
F ance 7
I aq
12
So ie Union
85
UK
5
Is ael 10 USA
95
Sy ia 6 So ie Union
84
Sou ces:
Based on SIPRI
1980:
96-7, ables 3.6 and 3.7
Mili a iza ion
o
I an 1973-8
While in 1970-4 I an was he hi d la ges impo e
o
weapons
in he Middle Eas (a e Sy ia and Egyp ), by he 1975-9 pe iod i
had become he la ges , impo ing
31
pe cen
o
he egion's o al
weapon impo s, only a ew pe cen age poin s less han he
combined impo s
o
Saudi A abia, I aq and Sy ia.
I
is
also
impo an o no e ha , du ing he 1973-4 and 1975-8 pe iods, he
USA
had supplied 60 and
81
pe
cen o I an's o al a ms impo s.
We shall e u n o his poin once mo e, when he alue
o
I an's
a ms impo s
is
he subjec
o
s udy.
Table 4.4 p o ides da a on he es ima ed alues
o
I an's a ms
impo s, as well as he a io
o
a ms impo s o o al impo s; ha
is,
he
ade bu den
o
a ms impo s du ing 1973-8. As can be
no ed, he alue
o
a ms impo s inc eased om
87
billion ials in
1973
o
416 billion ials in 1978, ep esen ing a
37
pe cen a e age
annual inc ease du ing he same pe iod.
An impo an poin o no e
is
he ac ha a ms impo s had
inc eased om
87
billion ials in
1973
o
424
billion ials in 1975,
ep esen ing a
121
pe
cen a e age annual inc ease. This obse -
a ion
is
ano he example
o
he di ec ela ionship be ween he
oil-p ice inc eases
o
1973-4 and a ms sales as a
way
o ecycling
pe o-dolla s back in o he ad anced economies.
As o he a ms-impo bu dens, as can be seen, he a io had
inc eased om
26
pe
cen
in
1973
o
37
pe cen in 1978. In all, he
ade bu den
o
a ms impo s was 29.5 pe cen on a e age each
Table 4.4 Ra io
o
a ms impo s
in
o al impo s (bu den o a ms
impoc s)a, I an, 1973-8
A ms
Impo s" Non-De ence To a/lmpo s Ra io
o
a ms impo s!
Impo o al impo s
(%)
A 8 (A) +
(8)
A
(A) +
(8)
x 100
1973
87
248
335
26.0
1974
131
442
573
22.9
1975
424
782
1,206 35.2
1976 399 875 1,274 31.3
1977 337 1,022 1,359 24.8
1978 416
721
1,137 37.0
A e age annual g ow h
o
a ms impo s 1973-8: 37.0
pe
cen
A e age annual g ow h
o
a ms impo s bu den 1973-8: 29.5
pe
cen
No es: • Au ho 's calcula ion.
b Fo he way
in
which a ms impo s ha e been es ima ed see Mo id
1987.
The
igu es quo ed o de ence and non-de ence impo s a e
in
cu en billion ials.
Sou ces; Based on Mo id
1987:
able 3.1;
183:
able 5.3
57
The economic consequences
o
he
Gul
Wa
yea du ing he same pe iod; a subs an ial inc ease by his o ical
s anda ds.
Fo
example, be ween 1968 and 1972 he a ms-impo
bu den
a io had inc eased by 12.2 pe cen on a e age each yea
( o e idence see Mo id 1987: 183, able 5.3).
Gi en he sums in ol ed, i would be e y in e es ing
o
no e
wha I an
had
ecei ed in exchange o such an imp essi e
paymen .
The
shopping lis (Le. he a ms ag eemen s) nego ia ed
be ween I an and he US, he UK, F ance, he So ie Union, I aly
and
he
Ne he lands a e shown in ables 4.7-9
a
he end
o
he
chap e . Because
o
he e olu ion, he hos age c isis, and he wa
wi h
I aq,
no
all he i ems no ed
in
hese ables ha e been
deli e ed. None he less, hey es ablish beyond any doub he
ex en
o
which I an's mili a iza ion p ocess was in p og ess. La e
on,
we shall p o ide he lis
o
majo weapon i ems ha had been
supplied by he ime
o
he Shah's down all.
These ables p esen some in e es ing obse a ions. The US was
he
only supplie
o
igh e planes. They also supplied he majo i y
o
helicop e s and ai anspo anke s. Des oye s and sub-
ma ines we e also US supplied, as we e some
o
he anks. The
UK
p o ided Chie ain and Sco pion anks and many a mou ed
ca ie s
and
ships.
F ance and he Ne he lands p o ided anspo ai c a and
iga es. Missiles
o
all so s we e mos ly supplied by he US,
ollowed by he
UK
and F ance. S angely enough, e en he
So ie Union ( he main supplie o I aq) had joined he Wes e n
na ions in selling a ms o he Shah). They p o ided su ace- o-ai
missiles (SAM), guns and a mou ed ca ie s.
As
was men ioned ea lie , no all he i ems o de ed by he Shah
had
been
deli e ed by he ime
o
he e olu ion. Howe e , he
ollowing is an a emp
o
iden i y he weapons ha we e in se ice
in
I an
by 1979.
Table 4.5 illus a es majo weapon sys ems held by he I anian
a med o ces in
197213
and
1979/80.
As can be seen, he numbe s
o
anks, comba ai c a and helicop e s had inc eased om 960,
160 and 140 o 1985,
445
and 684 espec i ely du ing he same
pe iod.
In all, by
1979/80,
he a my, in addi ion o he p e iously held
Ame ican-supplied anks, had ecei ed
875
Chie ain and 250
Sco pion anks om B i ain, a med wi h many di e en ypes
o
missiles.
The
a mou was s eng hened by he addi ion o
100
ada -con olled an i-ai c a guns, Hawk su ace- o-ai missiles,
as well as 570 helicop e s
o
a ious ypes.
The
na y
had
ecei ed 1 'Tang' subma ine, 3 des oye s, 4
'Saam'
iga es, 4
PF
103 Co e es, 7 la ge pa ol ships, 2 insho e
58
Mili a iza ion
o
I an 1973-8
Table 4.5 Majo weapons sys ems held by he a med o ces, I an,
1972/3-1979/80
Tanks
Comba ai c a
Helicop e s
A mou ed igh ing ehicle
197213
960
160
140
1,100
1979180
1,985-
445
b
684"
825
No es: • Among hem 875 we e Chie ain, 250 Sco pion (bo h B i ish supplied); he es
included 400 M-47/-48, and 460 M-60AI (Ame ican supplied).
b All Ame ican supplied; among hem 190 F-4DIE, and 166 F-5E1F.
C Mos ly Ame ican supplied.
Sou ces: IISS
197213
and 1979/80
minesweepe s, 2 landing ships, 1 eplenishmen and 2 supply
ships. The na al ai o ce had 6 econnaissance planes, 6 Siko sky
hea y helicop e s,
20
SH-30 an i-subma ine helicop e s, and 24
helicop e s
o
a ious ypes.
The
ai o ce had ob ained
445
comba ai c a , among hem
190
Phan oms, 166 Tige 11,
77
Tomca and
14
Phan om econnaissance.
I also had
13
Boeing 707 and 9 Boeing
747
anke s, as well as 84
helicop e s
o
a ious ypes. The anspo squad on included
18
E27s, 3
Ae o
Commande 690 and 4 Falcon 20. The igh e s we e
a med wi h se e al di e en ypes
o
missiles, among hem
Phoenix, Sidewinde , Spa ow ai - o-ai missiles (AAM), Ma e ick
and
Condo
ai - o-ship missiles (ASM) (IISS 1978/9 and 1979/80).
In able 4.4, he es ima ed alue
o
I an's de ence impo s in
billions
o
cu en ials was gi en. Gi en he yea ly exchange
a es,2 he es ima ed alues
o
a ms impo s in SUS (cu en
p ices) we e: $1.3 billion in 1973, $1.9 billion (1974), $6.2 billion
(1975), $5.7 billion (1976), $4.7 billion (1977) and $5.9 billion
(1978). The e o e he o al es ima ed alue
o
a ms impo s
is
$25.7 billion du ing he same pe iod.
Mo eo e , as was no ed ea lie , in he 1973/4 and 1975/8
pe iods, he
USA
had supplied 60 and
81
pe
cen o I an's o al
a ms impo s. The e o e, du ing he pe iod unde obse a ion, he
US had supplied $20 billion wo h
o
a ms
o
I an. This
is
e y
impo an , as i shows he signi icance
o
he e olu iona y leade s'
ac ion, when hey cancelled mos
o
he a ms ag eemen s wi h he
US soon a e he e olu ion, a poin which we shall e u n o in
chap e i e.
A
his poin he scale o I an's mili a iza ion, in e ms
o
inc eases in mili a y manpowe du ing he
197213
o 1979/80 pe iod
(be o e he s a o he Re olu ion)
will
be no ed. As can be seen
in able 4.6, he o al mili a y manpowe inc eased om
191
59

The economic consequences
o
he
Gul
Wa
housand in 197213
o
415
housand in 1979/80, ep esen ing an
inc ease o 117
pe
cen du ing he same pe iod.
Table 4.6 Mili a y manpowe and i s composi ion, I an,
197213-1979/80
( housands)
197213
Change
II
197918 J"
%
To al mili a y manpowe
191
117
415
o
which:
A my
160
78
285
Ai
Fo ce
22
354
100
Na y 9
233
30
Pa amili a y o ces:
genda me ie 40
85
74
No es: •
Au ho 's
calcula ion.
b Rela es
o
he pe iod be o e he s a
o
he e olu ion.
Sou ces: IISS
197213
and
1979180
The
highes pe cen age inc ease was in he ai o ce whe e i s
manpowe inc eased om 22,000 o 100,000 du ing he pe iod
unde
s udy. The ai o ce was ollowed by he a my and he na y
espec i ely.
The e
was also a majo inc ease in he numbe
o
genda me ie (pa amili a y) o ces.
Conclusion
In
his chap e a b ie s udy
o
he mili a iza ion o I an du ing he
pe iod 1973-8 has been p esen ed.
I
was no ed ha du ing he
pe iod
unde
s udy 2,989 billion ials was spen on Milex. This sum
ep esen s a
13
pe
cen a e age annual sha e
o
GDP
(including
oil) du ing he pe iod unde obse a ion. A la ge pa
o
his
expendi u e was
on
' eady-made' a ms impo s om ab oad.
Indeed, du ing his pe iod, 1,794 billion ials was spen on
impo ing, in o he shel ashion, a ms in o I an.
The
chap e also clea ly demons a ed he ela ionship be ween
he
massi e inc ease in I an's Milexla ms impo s and he objec-
i e
o
he
ecycling
o
pe o-dolla s a e he oil-p ice inc eases
o
1973/4.
The
mili a iza ion
o
I an a b eak-neck speed
was
once desc ibed
by Sena o F ank Chu ch as ' he mos apid build-up
o
mili a y
powe
unde
peace- ime condi ions o any na ion in he his o y
o
he wo ld' (Kla e 1980: 12).
Such a build-up, especialy when i had linked he Shah so closely
wi h US policies in he Gul , had gone a long way o comp omise
60
Mili a iza ion
o
I an
1973~
he Shah's image wi h he I anians. As Bani-Sad no ed
a
he ime
o
he e olu ion:
The
economic heal h, social wel a e and cul u al in eg i y
o
he
na ion a e all being sac i iced so ha he Shah can con inue o
ule wi hin he ame-wo k
o
Ame ican s a egic objec i es
(Bani-Sad 1978).
Gi en such an obse a ion and eelings owa ds he Shah's
mili a iza ion
o
I an, i
is
no wonde ha one
o
he i s o eign-
policy changes by he e olu iona y leade s, was o b ing an
end
o
his policy and also o
end
he 'special' US-I anian ela ions.
Table 4.7 US-I anian a ms ag eemen s, 1973-9, by quan i y, ype and
da e
o
o de~
Quan i yb Weapon designa ion Weapon desc ip ion Yea
o
o de
80
G uman
F-14
Tomca
Figh e /in e cep o 1974
176
MCD-D
F-4E
Phan om
Figh e 1973, 1974
169
No h op
F-5E Tige
II
Figh e 1973, 1975
49 Beechc a F33C Bonaza Ai c a 1973, 1974
28
MCD-DRF-4E
Phan om
Figh e / ecce ai c a 1974, 1977, 1978
28
No h op
F-5F Figh e / aine 1975
160
Gene al
Dynamics F-16 Figh e 1976
5-10
G uman
E-2C
Hawkeye
Ea ly
wa ning
and
1976
con ol ai c a
10 Lockheed C-5A Galaxy Long- ange anspo 1975
7 Boeing 707-32OC Tanke / anspo 1977
7 Boeing 707-39JC Tanke / anspo 1975
12 Boeing 747-131 F eigh e / anspo 1975
10 Boeing
E-3A
AWACS
Ai bo ne wa ning
and
-
con ol sys em plane
4 Boeing 747-200F F eigh e 1977
3
Lockheed
P-3C
O ion
An i-sub 1976
202 Bell
AH-lJ
Sea
Cob a
Gunship, helicop e Dec. 1972
287 Bell 214A-l (Is ahan) U ili y helicop e Dec. 1972
39 Bell 214C Ad anced u ili y 1976
helicop e
2 Bell 214B Big Li e Ca go helicop e 1975
6 Bell 214A U ili y helicop e 1977
6 Siko sky S-G5A Hea y-li helicop e 1975
6 Siko sky
RH-53D
Helicop e 1975
91
Bell-Agus a 206
Je
Range Helicop e 1973
6 Bell-Agus a 21P Helicop e 1974
22 Boeing-Me idionali Helicop e 1974
CH47C
2 Siko sky-Agus a
S-GIA-4
Helicop e 1976
7
'Sp uance'
class 7600 Des oye 1974
6
'Sp uance'
class 7800 Des oye 1974
3
'Tang'
class Subma ine 1975
2,500+
Hughes AGM-G54
TV
guide
A-S
missile 1973
Ma e ick
61
The economic consequences
o
he
Gul
Wa
Table
4.7
(con inued)
QUIln i y'>
Weapon designa ion Weapon desc ip ion Yea
o
o de
704 Hughes A TM-54A A-A missile
1973,
1976
Phoenix
6,200 Hughes BGM-71A ow ATM 1972-6
222 MCD-D AGM-84A A-SIS missile
1974
Ha poon
634
MCD-D FGM-71A ATM
1975
D agon
754+
Ray heon AIM-9J AAM 1974-6
Sidewinde
516+
Ray heon AIM-1E AAM 1973, 1974,
1976,
Spa ow
1977
432 Ray heon AIM-1F AAM
1974
Spa ow
3,168 Ray heon AIM-9L AAM 1974, 1975,
1976
Sidewinde
186 Ray heon AIM-9H AAM
1978
Gene al Dynamics ShShMlSh AM
1974
RIM-67A
Rockwell In e na ional ASM
1974
AGM-53A
414 To pedo MK 46
1975
Fo d M-I13
Al
APC
1976
Ray heon MIM-23B HawkSAM
1971
10.000 KolllMDDlRay heon Landmob/po
1977
FGM-77A
No es: • Compiled by he au ho om he sou ces below.
b No all he i ems we e deli e ed, as he e olu ion, he hos age c isis and he wa wi h
I aq ha e a ec ed he deli e ies.
Fo
meaning
o
abb e ia ions see pp. 155-7.
Sou ce: SIPRI
1974--80
Table 4.8 UK-I anian a ms ag eemen s, 1973-9
Weapon designa ion
Chie ain MK3 and MK5
Chie ain MKS (Shi I an)
Chie ain A
RV
Al is Sco pion
Al is Sco pion
Fox
Fox
FV-4204
FV-420S
Vicke s
Wes land
and
Sea King
Vospe Tho neyc o
62
Weapon desc ip ion
Tank
Tank
Tank
Ligh ank
A med econ. ehicle
Scou ca
A mou ed ca
A mou ed eco e y ehicle
AVLB
A mou ed eco e y ehicle
ASW helicop e
Ai c a ca ie
Flee eplenishmen
Suppo ship
Yea
o
o de
1974
1977
1975,
1976
1973
1976
1975
1975, 1977
1977
1976
1974
1977
1974
1974,
1977
Mili a iza ion
o
I an 1973-8
Table 4.8 (con inued)
Weapon designa ion Weapon desc ip ion Yea
o
o de
Rapie M-548
BAC
Rapie
BAC
Rapie
BAC
Rapie Blind i e and
Sho Tige ca
Sis el SeakiJIe I & II
BAC
Swing i e
SAM- acked
SAM- acked
SAM- owed
S-A Missile
S-S
missile
A-T missile
No e:
Fo
meaning
o
abb e ia ions see pp. 155-7.
Sou ce: SIPRI 974-S0
1976
1974
1974
1974
1973
1973
Table 4.9 I anian a ms ag eemen s wi h F ance, So ie Union, I aly and
Ne he lands,
1973-9
Supplie Weapon designa ion Weapon desc ip ion Yea
o
o de
F ance Dassaul Falcon 20 T anspo ai c a
1975
'Kaman' class Missile boa 1974
AS
11112
ASM 1973-4
AS
12
ASM 1974
MM.38 Exoce ShShM
1974
Ho
ATM 1979
So ie Uniona SAM-7 and SAM-9
6000
SAM
o
each
VCI BMP-l
APC
No .
1979
ASU-85 and ZSU-23-4 SP
AI
and AlAgan
BMP-76 A mou ed ca 1976
I aly SH-30 Sea King Helicop e
1977
Seakille lMa e
AShM
1978
CH-47C Chinook Helicop e
1977
Ne he lands Fokke -VFWF.27 T anspo Feb.
1973
F iendship Sep .
1973
F-27MK400 M and T anspo 1976
F27MK600
Ko enae class F iga e 1978
No es: • Unde $414 mil ion.
b Ag eemen signed du ing Wa Minis e Tou anian's isi o Moscow
in
No embe
1976.
Sou ce:
SIPRll974-S0
63
The economic consequences
o
he
Gul
Wa
1979
and
1980 was 14.4
pe
cen , whe e i inc eased o
159
billion
ials, ep esen ing an a ms-impo s bu den o 16.8 and 15.6
pe
cen espec i ely du ing he same wo yea s.
Table 5.3 Ra io
o
a ms impo s
in
o al impo s (bu den
o
a ms
impo s),
a I an, 1979-85
1979
1980
1981
1982
1983
1984
1985
A ms
impo />
A
139
159
504
650
750
927
648
Non-mili a y
impo s
B
686
863
985
1,185
1,583
1,328
1,061
To al impo s
A+B
825
1,022
1,489
1,835
2,333
2,255
1,709
Ra io
o
a ms
impo s o o al
impo s"
(%)
A
A+B
16.8
15.6
33.8
35.4
32.1
41.1
37.9
A e age
annual
g ow h
o
mili a y-impo s· 1979-85: 29.2%
1979-80
Bu den
o
a ms
impo s, a e age
pe
yea 16.2
1979-85
30.4
1981-5
36.1
No es: • Au ho 's calcula ion. The igu es quo ed o de ence and non-de ence impo s a e in
cu en billion ials.
b Mili a y- ela ed impo s ha e been es ima ed a
50
pe cen
o
o al mili a y
expendi u e o each yea . These ha e been calcula ed unde he assump ion ha ,
unlike he Shah's pe iod, no majo ad anced mili a y i ems ha e been ecei ed. Mos
o
he impo s a e spa e pa s, small a ms and ammuni ion. The impo s o 'majo
weapons' ha e been hose
o
he 'second bes ' and no hose
o
he mos expensi e
ypes. Howe e , mos
o
he impo s ha e come ia black ma ke and hi d pa ies,
and his should ha e inc eased hei cos s signi ican ly. In conside a ion
o
all
hese
ac o s,
ou
es ima ion
o
mili a y- ela ed impo s has been based on 50 pe cen
o
he o al mili a y expendi u es o each yea , as opposed o
60
pe cen o
1973--8.
We,
howe e , admi ha his
is
only an educa ed guess.
SouTces:
IMFa 1985; and IISS
1980/1
o
198617
Howe e , as a esul o he in asion and he subsequen inc ease
in Milex, a ms impo s we e also inc eased signi ican ly. They
inc eased
o
217 billion ials in 1980 and
504
billion ials in 1981,
ep esen ing an inc ease
o
217
and
132
pe
cen espec i ely_
In all, du ing 1979-85, a ms impo s inc eased
by
29.2
pe
cen
on
a e age each yea , a subs an ial a e o inc ease by any
s anda d. Howe e , he ac ha , since he e olu ion, no majo
ad anced mili a y i ems ha e been ecei ed and ha mos
o
he
supplies a e
o
he 'cheape ' and 'second-bes ' a ie ies, has mean
ha
he e
has been a educ ion in he annual a e age g ow h a e
o
mili a y impo s. Fo example, du ing he 1973-8 pe iod (a
70

Mili a y expendi u e in I an du ing he wa
-
Ra io
o
a ms
impons
)
..
74
76
78
80 82 84 86
Figu e
5.4 A ms-impo bu den: I an, 1973-85
(%)
Sou ces: Based on SIPRI 1980: 96-7, ables 3.6 and 3.7; IMFa
1985:
IISS 1980/1-1986 7
pe iod
o
massi e mili a iza ion), a ms impo s had inc eased by
37
pe
cen
on
a e age each yea .
None
he less i should be unde lined ha , since he in asion,
he e has been a massi e inc ease in he a ms-impo s bu den.
This bu den du ing 1979 and 1980
on
a e age each yea was 16.2
pe
cen , ising
o
36.1
pe
cen be ween 1981 and 1985. The e o e,
i
he
p e-wa (Le. 1973--80) and pos -wa (1981-5) de ence
bu dens a e compa ed, i can
be
seen ha he e has been a
signi ican inc ease in such a bu den.
The
co esponding igu es o
he
a ms-impo s bu den du ing he same pe iod a e 26.1 and 36.1
pe
cen espec i ely (see u he igu e 5.4).
In
conclusion, i can
be
said ha one
o
he majo consequences
o
he
wa
on
I an has been he inabili y
o
he e olu iona y
egime
o
keep
he Milex and a ms impo s low, as hey had jus
done in he i s wo yea s
o
he e olu ion be o e I an was
in aded.
The impac
o
he e olu ion and he
wa
on miU a y manpowe
and
i s composi ion, as well as on he quali y
and
quan i y
o
majo
weapon sys ems held
in
I an
The
e olu ion, as no ed in chap e wo, had a majo impac
on
he a med o ces. Many high- anking o ice s we e ei he pu ged
71
The economic consequences
o
he
Gul
Wa
o
execu ed.
The
o al numbe o men in he h ee o ces (a my,
ai o ce and he na y) ell om he high
o
415,000 in
1979/80
(p e- e olu ion)
o
only 240,000 in
198011,
ep esen ing a decline
o
o e
42
pe
cen . Table 5.4 p o ides in o ma ion on he mili a y
manpowe
o
he egula a my since he e olu ion.
Table 5.4 Mili a y manpowe o he egula a med o ces and i s
composi ion, I an, 1979/80,
198011,
1984/5,
1986n
and 1987/8 ( housands)
1979/80
198011
1984/5 1986/7 1987/8
(p e- (pos -
Re olu ion) Re olu ion)
To al
415
240
305
355 355
o
which:
A my
285
150
250
305 305
Ai
Fo ce 100
70
35
35 35
Na y
30
20
15
15
15
Sou ces: IISS 1979/80 o
1987/88
I
can
be
seen ha , gi en he ini ial nea disin eg a ion
o
he
o ces soon a e he e olu ion, e en by
1987/8,
hey had no
egained hei
p e~ e olu ion
s eng h. The o al manpowe
o
he
egula a med o ces has inc eased o 355,000, which
is
s ill 14.5
pe
cen
less han wha i was in
1979/80.
A
majo
impac
on
he a med o ces since he e olu ion,
howe e , has been a pa allel ise and a apid de elopmen
o
he
Re olu iona y
Gua d
Co ps (ROC)
o
Pasda an-e Enqelab. F om
a modes beginning in
1979/80
o p o ec he e olu ion, hey now
ha e become a majo o ce no only in p o ec ing he e olu ion,
bu
also since he I aqi in asion in de ending he coun y.
By 1986n
he
RGCs had o med hemsel es in o di e en
b anches, consis ing
o
g ound o ces, na al o ces, ma ines and
ai o ces.
I
is
es ima ed ha by
1986
he e we e some 300,000
olun ee s in g ound o ces, wi h
11
egional commands. Thei
a ille y included
su ace- ~su ace
missiles (SSM) and ai de ences.
They se e independen ly
o
wi h he egula a my. They also
con ol Basij (see below).
The
s eng h (Le. he numbe
o
men unde a ms)
o
he
Re olu iona y Gua ds' Na al Fo ces
is
no clea ly known. They
ha e, howe e ,
i e
island bases, namely Al Fa siyah, Halul (oil
pla om), Si i,
Abu
Musa and La k. These o ces ha e some
40 Swedish Boghamma as boa s a med wi h an i- ank guided
weapons (ATGW); ecoilless launche s (RCL) and machine guns.
The
coas -de ence elemen s' a ille y includes some Ch HY-2
72
Mili a y expendi u e in I an du ing he wa
missiles,
be e
known as silkwo m SSM, in a leas h ee
o
hei
si es. I
is
also belie ed ha hey migh ha e I alian SSM in hei
possession.
The
ma ine co ps
is
epo ed o include some h ee
b igades. No much has been epo ed on hei ac i i ies
a
his
s age.
The
Re olu iona y Gua ds' ai o ces ha e gone h ough much
imp o emen in he las couple
o
yea s. They now ha e an
impo an ole in he ai de ence
o
majo ins alla ions.
I
is
es ima ed ha in 1986, hey had a leas
22
F-6 igh e planes.
As
well as he es ablishmen
o
he RGCs, in
1981
he You h
B igades (Basij) was also o med.
I
is
belie ed ha by 1986n, as
many as 1 million we e in Basij Fo ces.
1
The e o e, in all, since he e olu ion, he e has been an
inc ease
o
a leas 310
pe
cen (excluding women unde a ms) in
he numbe
o
people unde a ms, as by 1987 hei numbe had
inc eased o 1,700,000.
Table 5.5 illus a es he lis
o
majo weapon sys ems held by he
egula a med o ces o selec ed yea s since he e olu ion.
I
he
quali y and quan i y
o
hese weapons a e compa ed wi h hose
o
he p e- e olu ion pe iod, some majo changes can be obse ed.
Table 5.5 Majo weapon sys ems held by he egula a med o ces, I an,
1979/80,
198011,
198415
and
1987/8.
1979180
1980/1
198415
Q
198718"
(las yea
o
he ( i s yea
o
he
Shah) Re olu ion)
Tanks
1,985
1,985 1,050(?) 1,310(?)b
Comba Ai c a
445 445
95(?)
6O(?)C
Helicop e s
684
684 320(?)
3OO(?)d
A mou ed igh ing
ehicles
825
825
1,190 1,060
No es:
• Losses and incomple e epo ing
o
esupply make i impossible o es ima e ue
numbe s.
b Among hem: pe haps
1,OOOT-541-55;
250T-59, T-62, T-72 (all Russian and Eas
Eu opean-supplied, many cap u ed om he I aqis), and a e y small numbe
o
Chie ain, M-47/-48, and M-60AI. The e o e, since he wa , nea o al losses in p e-
wa ank holdings and majo changes
in
ypes and supplies o anks.
C S ill p e- e olu ion/-wa holdings. No new supplies
o
any signi icance.
d Same as
c.
(7) Ques ionable i all ope a ional.
Sou ces:
USS
1979/80
o
1987188
As no ed in chap e ou , du ing he
1973--8
pe iod, he US was
by a he bigges supplie
o
he mos ad anced weapons o I an.
I
was also no ed ha , by 1979/80, I an had ecei ed
445
comba
ai c a , among hem
190
F-4s and
166
F-5s. The e we e also 1,985
73
The economic consequences
o
he
Gul
Wa
anks deli e ed
o
I an; among hem we e
875
Chie ains and
250
Sco pions.
Howe e , gi en he e olu ion and he subsequen emba goes
agains di ec a ms sales o I an, as well as losses due o he wa ,
by
1987/8
he e we e only some 1,310 anks,
60
comba ai c a
and
300
helicop e s held by he a med o ces.
Since he e olu ion and he wa he mos impo an change in
I an's a mou y has been in he ank di ision. Mos o he ad anced
B i ish-made Chie ain and Sco pion anks ha e been des oyed.
The
new anks a e mainly all RussianlEas e n Eu opean made,
amongs hem a e
,OOO
T-54155s
and
250
T-59s. The e o e, as
shown in able 5.5, since he wa , no only has he quali y
o
he
anks held been o ally changed, bu also, as a as quan i y is
conce ned, in 1987 I an had
675
anks less han wha i had in
1980.
As
o he comba ai c a and helicop e s, no new majo
sys ems ha e been supplied since he e olu ion. Howe e , due o
losses incu ed since he wa , hei ac ual numbe s ha e been
educed signi ican ly, om
445
and
684
in
1980
o 60 and 300 in
1987 espec i ely. Fu he mo e, i
is
belie ed ha , due
o
pa s
sho ages
and
o he echnical p oblems, no all
o
he abo e a e
ope a ional anyway.
As
i appea s, i can he e o e be said ha , since he wa , he e
has
been
a nea collapse in he a ailabili y o ad anced majo
weapon y sys ems held by he a med o ces in I an. The e o e i
seems sa e
o
conclude ha he e y la ge sums ha I an has been
spending on a ms impo s has been mainly on spa e pa s, 'second-
a ed' weapons, as well as shells, mines and missiles, amongs
o he s.
None he less high expendi u es ha e been necessa y since a ms
p ices ha e been much in la ed, gi en ha mos ha e been
acqui ed h ough hi d pa ies and black ma ke s, a poin
o
which
we will e u n in chap e eigh .
Conclusion
In his chap e i was demons a ed ha he e olu iona y leade s,
in he i s wo yea s
o
hei exis ence and p io o he I aqi
in asion, apidly and signi ican ly educed I an's Milex and a ms
impo s. Howe e , his majo pos - e olu iona y achie emen was
ab up ly ended when he coun y was a acked.
Since ha ime Milex and a ms impo s, as well as co espond-
ing de ence and a ms-impo s bu dens, ha e all been inc eased
signi ican ly.
74
Mili a y expendi u e in I an du ing he wa
I
was also no ed ha , since he wa , he e has been a massi e
ise in he numbe
o
people unde a ms
in
I an. We obse ed
ha , while he e has been a majo educ ion in he impo ance
o
he egula a med o ces, he e has been a pa allel ise in
impo ance and unc ions o he Re olu iona y Gua ds.
I
was also demons a ed ha he e has been a majo change
in
quali y and quan i y
o
majo weapon y sys ems held in I an. We
no ed ha he e has been no new deli e y
o
ad anced igh e
planes and helicop e s. We es ablished he ac ha hei numbe s
ha e been educed signi ican ly and, due o echnical p oblems,
no all he a ailable s ock
is
ully ope a ional.
We no ed ha , since he e olu ion/wa , he mos impo an
change in I an's a mou y has been in he ank di ision. The e has
been a o al change
in
hei quali y and quan i y du ing he pe iod
unde
s udy.
In all, i can be said ha
one
o he mos damaging consequences
o
he wa has been he inabili y
o
he e olu iona y leade ship o
keep he Milex, he a ms impo s and hei co esponding bu dens
low, as hey had managed o do immedia ely a e he e olu ion
and p io o he in asion.
75

Chap e
six
Mili a iza ion
o
I aq
1973-8: an
economic analysis
In oduc ion
In chap e ou some aspec s
o
he mili a iza ion o I an unde he
la e Shah, du ing he
1973--8
pe iod, we e no ed. The Shah's d i e
o egional hegemony h ough inc eases in Milex and a massi e
a ms impo s p og amme did no ail o ha e an impac on I aq,
which had i s own aspi a ions owa ds i s own egional ole.
The
easons o and he s yle in which bo h coun ies pu sued
hei mili a iza ion policies a e a ied and complex. Gi en he
scope
o
his chap e , no a emp
is
made he e o discuss and
analyse he di e ences. Howe e , he eade in e es ed in hese
issues is encou aged o e e o Ka sh 1987, Helms 1984, B own
and Snyde 1985, Abdulghani 1984, King
1987
and Li wak 1981,
amongs o he s.
The e o e, wha we in end o do, in his chap e
is
o p o ide an
economic balance shee
o
I aq's mili a iza ion, simila in s yle and
scope o ha which was p o ided o I an in chap e ou .
The es ima ion o de ence and a ms-impo s bu dens
The
igu es o Milex and de ence bu dens du ing he
1973--8
pe iod a e gi en in able 6.1. As can be seen, Milex inc eased om
0.165 billion dina s in
1973
o 0.586 billion dina s
in
1978,
ep esen ing an a e age annual inc ease
o
29
pe cen .
An
in e s ing obse a ion o be seen in his able
is
ha , while
he
mili a y expendi u e du ing he pe iod unde s udy had
inc eased signi ican ly, i had no inc eased a he a e a which
GDP
had g own. This
is
so, as he sha e o de ence in
GDP
(including oil) had allen om 10.3 o 8.4 pe cen be ween
1973
and 1978. This is in con as o I an's expe ience du ing he same
pe iod. As was no ed in chap e ou , I an's de ence bu den had
inc eased om 8.1 pe cen in
1973
o 14.1 pe cen in
1978.
76
Mili a iza ion
o
I aq 1973-8
Table 6.1 Ra io
o
mili a y expendi u e (Milex) in
GDP
(oil including
and excluding) -de ence bu dena, I aq,
1973---8
1973
1974
1975
1976
1977
1978
Milex
0.165
0.236
0.356
0.394
0.492
0.586
G D P Sha e
o
de ence
(includin{ in GDP"
oil)
1.6
3.4
4.0
5.2
5.9
7.0
10.3
6.9
8.9
7.6
8.3
8.4
A e age annual g ow h o Milex 1973-8:829.0%
GDP
Sha e
o
de ence
(excludin~
in GDP"
oil)
0.65
1.3
1.6
2.1
2.3
2.8
25.4
18.1
22.2
18.8
21.4
21.0
No es: • Au ho 's calcula ion. The igu es quo ed o Milex and
GOP
a e
in
cu en billion
I aqi dina s.
b Calcula ed by he au ho , based on he in o ma ion
in
EIU
1980.
Sou ces: Uni ed Na ions Economic and Social Commission o Wes e n Asia
1981;
IMFa
1986;
I1SS
1973/4; and EJU
1980
Fu he mo e, I an's Milex had inc eased by 37
pe
cen on a e age
each yea , while, as was no ed, he co esponding igu e o I aq
is
29
pe
cen .
A
his poin , i we compa e
I aq's
de ence bu den igu es wi h
hose
o
o he
selec ed coun ies whose igu es we e gi en in
chap e ou , able 4.2, we can no e ha , I aq, like I an, du ing
he pe iod unde obse a ion, had alloca ed a much la ge sha e
o
i s
GDP
o de ence han any o he coun y men ioned in ha able.
This obse a ion once mo e ein o ces he ela ionship ha
exis s be ween oil e enues on he one hand and high le els
o
Milex
on
he o he .
Table 6.2 p o ides da a on he es ima ed alue
o
I aq's a ms
impo s, as well as he a io o a ms impo s o o al impo s du ing
he 1973-8 pe iod. As can be no ed, he alue o a ms impo s
inc eased om 0.058 billion dina s in
1973
o 0.205 billion dina s in
1978, ep esen ing an a e age annual g ow h
o
29
pe
cen .
As o he a ms-impo bu den, i can be seen ha , like he
de ence-bu den igu es, he a io had declined om 17.8 pe cen
in 1973 o 14.4
pe
cen
in
1978. Once again, his
is
in con as o
I an's expe ience, whe e, as no ed
in
chap e ou , hese a ios had
inc eased signi ican ly.
Howe e , al hough he sums spen on a ms impo s we e much
less han wha I an had spen , none he less, in absolu e e ms,
hey ep esen a signi ican expendi u e. The e o e, as in he s udy
which was p o ided
in
chap e ou o I an, i is e y in e es ing
o
no e wha I aq had ecei ed
in
exchange o such imp essi e
77
The economic consequences
o
he
Gul
Wa
Table 6.2 Ra io o a ms impo s in o al impo s -bu den o a ms
impo s8, I aq,
197H
A ms
impo s"
A
1973 0.058
1974 0.083
1975 0.123
1976 0.138
1977 0.172
1978 0.205
Non-mili a y To al impo s
impo s
B
(A)
+ (B)
0.268 0.326
0.688 0.771
1.22 1.343
1.13 1.268
1.3 1.472
1.22 1.425
Ra io
o
a ms
impo s o o al
impo s
('Yo)"
A
(A)
+
(B)
17.8
10.8
9.1
10.9
11.7
14.4
A e age annual g ow h
o
mili a y impo s- 1973-8: 29.0%
Bu den
o
a ms -impo s a e age pe /yea 1973-8- 12.4%
No es: •
Au ho 's
calcula ion.
1be
igu es quo ed o de ence and non-de ence impo s a e in
cu en billion I aqi dina s.
b Mili a y ela ed impo s ha e been es ima ed a
35
pe
cen
o
he
o al mili a y
expendi u es o each yea unde obse a ion in his able, based on he in o ma ion
gi en in he US
Im-82.
Sou ces: IMFa 1985; SIPRI, 1974 o 1979; IISS, 1973-4 o
198011;
and USACDA 1984
paymen s. Fi s , he con i med a ms supplie s o I aq du ing he
pe iod unde s udy will be no ed.
As
can be seen in able
6_5
a he end o his chap e , he So ie
Union was he majo a ms supplie . Indeed, i
we
e e o able
4.3, i can be seen ha he So ie Union had supplied
85
pe
cen
o
I aq's o al a ms impo s du ing he pe iod unde s udy.
Di e en ypes
o
MiG igh e planes, helicop e s, ai anspo
anke s, hea y and ligh anks, a mou ed ca ie s, and many
di e en ypes
o
missiles we e supplied by he So ie Union.
F ance was he nex majo supplie o modem weapons o I aq.
The
numbe s and ypes o majo weapon sys ems held by he
I aqi a med o ces be ween
197213
and
1979/80
a e illus a ed in
able 6.3.
As
can be seen he numbe
o
anks, comba ai c a ,
helicop e s and a mou ed igh ing ehicles inc eased om 925,
189, 46
and
360 o 1,900, 339,
231
and 1,500 du ing he same
pe iod. This able shows ha he g ea majo i y o he weapons
supplied
o
I aq we e Russian made.
This, as well as
ou
obse a ions in chap e ou , clea ly
demons a es he ac ha he main bene icia ies o he a ms build-
up in he Pe sian Gul a e he supe powe s as well as he 'mini' and
'second- a ed' powe s in Eu ope.
Table 6.2 ga e igu es
o
he es ima ed alue
o
a ms impo s in
cu en billions
o
I aqi dina s. Gi en he exchange a es,
1 he
o al es ima ed alue
o
a ms impo s in
SUS
(cu en p ices)
78
Mili a iza ion
o
I aq 1973-8
Table
6.
3 Majo weapon sys ems held by he a med o ces, I aq,
197213-
1979/80
Tanks
Comba
ai c a
Helicop e s
A mou ed
igh ing ehicles
197213
925
189
46
360
1979180
1,900'
339
b
231
c
1,500
NOles:
• Among hem: 1700 T-54/-551-62 and 100 T-34 medium anks (Russian supplied).
b Among hem: 12TU-22; 80 MIG-23B; and
115
MIG-21 (Russian supplied).
C Among hem:
35
Mi-4,
14
Mi-6, and
80
Mi-8 (Russian supplied).
Sou ces: nss
197213
and
1979/80
du ing he 1973-8 pe iod
is
he sum o $2.7 billion.
I
we e e o
chap e ou , i can
be
no ed ha his sum was indeed much less
han I an's o al mili a y impo s, which we e $25.7 billion du ing
he same pe iod.
As
men ioned be o e, he So ie Union had supplied
85
pe
cen
o
I aq's
o al a ms impo s. The e o e, he o al So ie a ms sales
o
I aq
du ing he pe iod unde s udy was he sum
o
$2.2 billion.
A
his poin he mili a y manpowe and i s composi ion du ing
1972/3
o
1979/80
will
be
no ed. As can be seen in able 6.4, he
o al mili a y manpowe inc eased by
137
pe
cen om 102,000 o
222,000 du ing he same pe iod. The a my inc eased i s numbe s
om 90,000 o 190,000, while he co esponding igu es o he ai
o ce we e 10,000 inc easing o 28,000 du ing he same pe iod.
Table 6.4 Mili a y manpowe and i s composi ion, I aq, 197213-1979/80
( housands)
197213
Change·
1979/80
%
To al mili a y manpowe
102 137
222
o
which:
A my
90
122
190
Ai o ce
10
280
28
Na y 2 100 4
No e: • Au ho 's calcula ion.
Sou ces: I1SS,
197213
and 1979/80
The g ow h o he I aqi a med o ces
was
no
as
balanced
as
ha o
I an's. The I aqi na y did no de elop o he same deg ee
as
he
o he b anches o he a med o ces. This was mainly due o I aq's
geog aphical limi a ions, as he coun y
is
i ually land-locked wi h a
Gul coas line o only
10
miles compa ed wi h 1,243 miles o I an.
79
The economic consequences
o
he
Gul
Wa
sum
o
0.484 billion dina s, ising by 11.4
pe
cen o 0.539 in 1980.
Then,
as a esul
o
he
in asion, i inc eased by 59.2
pe
cen o
0.858 billion dina s in 1981. Howe e , as no ed in chap e h ee,
du ing his pe iod
he e
was a massi e inc ease in non-mili a y
impo s.
Gi en
his, he a io
o
a ms-impo s bu den ell om
15.7
pe
cen
in 1979
o
11.6
pe
cen in 1980 and 12.3
pe
cen in
1981, while ising
o
18.9
pe
cen in 1982.
Howe e ,
since 1983, as can be seen, he e has been a massi e
inc ease in a ms impo s (mos ly due o inc eased a ms deli e ies
om
he
So ie
Union),
accompanied by a apid decline in ci ilian
impo s.
Thus
he
a ms-impo s-bu den a io inc eased o 34
pe
cen
(1983), 46.1
pe
cen
(1984) and 45.9
pe
cen (1985). These
can
bes
be
seen in igu e 7.3, whe e I aq's a ms-impo bu den
du ing
he
1973-85 pe iod
is
illus a ed. Fo he pu pose
o
compa ison,
I an's
a ms-impo s bu den
is
also shown.
50
45
40
35
30
25
20
15
10
....
===I
l=..::J
5~--~--~---- ---~---T--~~~
72
74
76
78
80
82
84
86
Figu e 7.3 A ms-impo bu den: I an and I aq, 1973-85
(%)
Sou ces: Based on Mo id
1987:
181, able 5.2; IISS 1979/80 o
198617;
Cen al Bank
o
I an: 1358, 1362; IMFa 1985, No embe 1986; SIPRI
1984-6;
USACDA
1985
The impac
o
he wa on mili a y manpowe , i s composi ion, as
well
as
on he quali y and quan i y o majo weapon sys ems held by
I aq
Table
7.3 p o ides in o ma ion
on
he I aqi a med o ces du ing
he
1979/80
o
1987/8 pe iod.
As
can be seen, he e has been a
huge inc ease in he
numbe
o
people in ol ed, one way
o
86

Mili a y expendi u e in I aq du ing he wa
ano he , wi h he a med o ces since he wa . As shown in he
able, he o al mili a y manpowe in 1979/80 was 222,000, ising
by 9
pe
cen
o
242,000 in 1980/1. Then, as a esul
o
he in asion
and he con inuing wa , by
198415
he igu e had inc eased by
166
pe
cen
(198011
= base) o 643,000, ising
by
31.4 pe cen o
845,000 in 1986/7. By 1987/8 i had isen
o
he g and o al o
1,000,000.
Table 7.3 Mili a y manpowe and i s composi ion: I aq,
1979/80,
198011,
198415,
198617
and
1987/8
( housands)
1979180
198011
198415
198617
198718
To al
222 242
643
845 1,000
o
which:
A my
190"
200
600
800
955b
Ai
o ce
28
38
38
40 40
Na y 4 4 5 5 5
No es: • Excluding a ound 250,000 ese es.
b Including a ound 480,000 ac i e ese es. Fu he mo e, while
in
1979180
he e we e
750,000 in he People's A my ( a pa amili a y o ce), his numbe has inc eased o
650,000 in
1987/8.
Sou ces:
nss,
1979180
o
198718
In all, he o al mili a y manpowe has inc eased by
350
pe cen
du ing he same pe iod, a massi e a e
o
inc ease, e en compa ed
wi h I aq's own a e o mili a iza ion be o e he wa . In
197213
o
1979/80, he o al mili a y manpowe igu e had inc eased by
137
pe
cen (see able 6.4).
This, indeed, is a massi e a e
o
mili a iza ion o a coun y in
e ms
o
he pe cen age o he popula ion unde a ms. In 1979/80,
only 1.7
pe
cen o he o al popula ion was in he o ces, while
he co esponding igu e o 1987/8 has massi ely inc eased o
17
pe
cen o he o al.
I
he abo e igu e
is
compa ed wi h I an's i
can
be
no ed ha , gi en I an's much la ge popula ion, only 3.6
pe
cen
o
he o al popula ion we e, one way o ano he , in he
o ces in he same yea . Thus i can be seen ha he wa has had a
much bigge impac on he I aqi popula ion, when i comes o
ac i e se ice, han
on
I an's.
As o he composi ion
o
he I aqi a med o ces, i can be said
ha he bigges a e
o
inc ease has been in he a my whe e
numbe s ha e inc eased om 190,000 in 1979/80 o 955,000 in
1987/8, ollowed by he ai o ce which has inc eased i s numbe s
om 28,000 o 40,000 in he same pe iod.
Table 7.4 illus a es he lis
o
majo weapon sys ems held by he
I aqi o ces o selec ed yea s since he wa .
A
his poin , i should
87
Table 7.4 Majo weapon sys ems held
by
he a med o ces: I aq,
1979/80,
198011,
1984/5
and
1987/8
1979180
Chang '
1980/1
Chang '
198415"
Chang '
1987/8"
% % %
Tanks 1,900
50
2,850
73
4,920
28
6,310"
Comba ai c a
339
0
339
71
580
? 500+d
Helicop e s
231
19
276
38
381
11
422
A mou ed igh ing ehicle
1,500
67
2,500
28
3,200
25
4,000
No es:
a Au ho 's calcula ion.
b Due
o
losses and incomple e epo ing o esupply, all igu es en a i e.
~
Among hem: some 4,500
T-54I-SS/-621-72;
1,500 T-S9/-69,
ISO
Chie ain, M-60, and M-47 (mos ly cap u ed om I an).
" Among hem: 1 squad on
o
TU-22, 1 squad on
o
TU-16, 4 squad ons
o
MIG-238M, and 4 squad ons
o
Mi age F-IEOS (Exoce -equipped).
As well as some
2S
MIG-2S;
40
MIG-19;
200
MIG-21 and
30
Mi age F-IEO.
Sou ces: IISS
1979180
o 1987/8
Mili a y expendi u e in I aq du ing he wa
be emphasized ha nowhe e be e can he di e ence
in
a ailabili y
o
mili a y ha dwa e o I aq and I an be obse ed han
in
ables
7.4 and 5.5. While, as no ed be o e, I an has been s a ed
o
any
kind
o
weapons, able 7.4 shows ha I aq, on he o he hand, has
been su e ing om a e y se ious case o obesi y! In a nu shell, i
mus be said ha he igu es in able 7.4 a e indeed 'unbelie able'.
As can be seen, he se en-yea con lic , wi h all he des uc ion
ha i has caused in e ms o weapons los , none he less has
esul ed in he numbe s
o
anks, comba ai c a , helicop e s and
AFVs being inc eased by 232, 47,
83
and
167
pe cen espec i ely,
be ween 1979/80 and 1987/8.
In all, we mus admi ha he in o ma ion p o ided in able 7.4
is mind-boggling o say he leas . How can a coun y which has los
much
o
i s oil e enues and all
o
i s o eign ese es and has gone
h ough a se en-yea wa end up wi h so much mo e mili a y
ha dwa e han a he beginning
o
he wa ? In he ollowing
chap e an a emp
is
made o shed ligh on his issue.
Conclusion
In
his chap e we ha e a emp ed
o
shed ligh on he mili a iza-
ion
o
I aq
since i s in asion
o
I an in 1980.
I
has been shown
ha , al hough since he wa he e has been a signi ican decline in
I aq's
GDP
(bo h including and excluding oil), he e has also been
a apid inc ease in Milex, esul ing in an unpa alleled ise in he
de ence bu den.
I
was also no ed ha he alue
o
a ms impo s has inc eased by
34
pe
cen on a e age each yea du ing he 1980-5 pe iod,
ep esen ing an a e age de ence bu den o
27
pe
cen each yea .
By compa ing he abo e igu es wi h he p e-wa pe iod
o
1973-9,
we we e able o demons a e ha indeed, since he wa , he e has
been a massi e inc ease.
I was also obse ed ha , since he wa , he e has been a huge in-
c ease
in
he numbe o people unde
a ms
in
I aq.
In
ac , hei numbe
has inc eased by
350
pe cen be ween
1979/80
and
1987/8.
Thus he
pe cen age sha e o he o al popula ion in ol ed wi h he a med
o ces has inc eased om 1.7 o
17
pe cen du ing he same pe iod.
As o he quali y and quan i y
o
majo weapon sys ems held by
he I aqi o ces, we demons a ed ha he numbe s
o
anks,
comba ai c a , helicop e s and AFVs oo ha e inc eased by 232,
47, 83 and
167
pe
cen espec i ely since he wa . In all, gi en he
size
o
he I aqi popula ion, i can be a gued ha , since he wa ,
I aq has been u ned in o a 'mili a y machine', wi h majo
consequences o he pos -wa pe iod, as he eadjus men o a
mo e 'no mal' li e may p o e oo di icul .
89
Chap e
eigh
The I an-I aq wa and he a ms
ade
In oduc ion
This is a
chap e
in which we hope
o
demons a e
he
wo ld's
hypoc isy.
We
hope
o
es ablish beyond any easonable doub how
immo al
and
indi e en
he
wo ld has been in so a as he sales
o
a ms
o
he
a eas
o
con lic , i.e. he
I an-I aq
wa , a e conce ned.
Nowhe e be e in he wo ld can one obse e hese low s anda ds
han
in a s udy
o
a ms sales
o
he wa ing coun ies in
he
Gul .
The e
is,
i
seems, ha dly a coun y, in Eas
o
Wes , Sou h
o
No h,
whe e he ules
o
he 'game' ha e no been allowed
o
be
b oken,
so
ha
weapons can
be
expo ed
o
e-expo ed
o
one
o
bo h
coun ies.
Because
o
he ex ensi e in ol emen
o
many coun ies, wi h
nume ous
scandals
and
o ging
o
documen s, i is impossible
o
co e
he
en i e subjec in his chap e . The e o e, he e, we will
iden i y hose coun ies ha ha e supplied he necessa y ' uel' o
he
'engine'
o
wa and des uc ion in he Gul . We will also
demons a e
he connec ion be ween he du a ion
o
he
wa and
he
e e
inc easing numbe
o
supplie s
o
weapons
o
bo h
coun ies.
Thus,
a
his s age, no a emp will
be
made
o
discuss he
composi ion
o
he
weapons deli e ed,
o
how he a ms ha e been
supplied, e c., al hough con i med a ms deli e ies
will
be iden i ied.
Howe e , he
eade
in e es ed in ollowing his subjec u he , is
s ongly encou aged
o
consul he wo ks
o
Wal e
De
Bock and
Jean-Cha les
Deniau
(1988), An hony
H.
Co desman (1987a),
Michael B zoska (1987), Thomas Ohlson and Elisabe h Skons
(1987), Michael B zoska and Thomas Ohlson (1986) and he
Towe
Commission
Repo
(1987), amongs o he s.
90
The wa and he a ms ade
A ms supplie s o
I an
and
I aq
since he
wa
P io o
he
I aqi in asion
o
I an, he e was al eady an emba go
on
a ms sales o I an, imposed by P esiden Ca e in eac ion o
he aking
o
Ame ican 'hos ages' in Teh an.
Mo eo e , as no ed in chap e wo, he nea disin eg a ion
o
he egula a med o ces in I an soon a e he e olu ion, as well
as
he
depa u e
o
Ame ican mili a y ad ise s, mean ha I an
had
majo
p oblems in ope a ing i s highly ad anced weapon y
sys ems
a
he ime
o
he con lic .
The e o e, immedia ely a e he in asion, he low le el
o
ope a ional abili y
o
he a med o ces and he newly c ea ed
Psada ans had mean ha I an was in despe a e need
o
un-
sophis ica ed
and
simply ope a ed a ms, including shells, bombs,
dynami e, explosi es, missiles, e c.
Mo eo e ,
I an's
need o such weapons coincided wi h he
equally despe a e need
o
many o he coun ies o inc ease hei
con en ional, unsophis ica ed a ms sales. These sales had d opped
signi ican ly because
o
huge ises in he expo
o
ad anced
weapons
and
mili a y ha dwa e ollowing he oil-p ice inc eases
o
1973-4.
Fu he mo e, as no ed in p e ious chap e s, he So ie Union
had
educed i s a ms expo s o
I aq
soon a e i s in asion
o
I an.
This had also c ea ed an oppo uni y o o he coun ies o supply
I aq
wi h much needed weapons.
The
abo e ac o s, amongs o he s, had c ea ed a si ua ion
which may ne e ha e exis ed be o e. Namely, wo e y ich
coun ies
a
wa , bo h despe a e o a ms (I an in pa icula ), and
bo h willing and able
o
pay huge sums o hei supplies. The e-
o e
he
sky was he limi , so o speak, o he es
o
he wo ld o
'sa is y' hem.
Tables 8.1a
o
8.1c illus a e he ex en
o
he wo ld's in ol e-
men
in supplying weapons o I an and I aq. Table 8.1a iden i ies
he
coun ies supplying a ms and o he suppo o I an du ing he
198~3
pe iod.
The
co esponding in o ma ion on I aq is p o ided
in able 8.1b. Table 8.1c lis s he 'cle e ' coun ies, namely hose
who ha e been a ming
he
wo coun ies
a
he same ime. These
ables, in
ou
iew, can be aken as a s a ing poin o show he
hypoc i ical na u e
o
he
supplying na ions.
By looking
a
hese ables, i can be seen ha by he end
o
1983
he e
we e 8 coun ies supplying a ms
o
I an only, while 9
coun ies we e supplying I aq. In he 'cle e ' ca ego y, he e we e
9 mo e coun ies supplying bo h I an and I aq. In all, du ing he
same pe iod, he e we e
26
supplie s
o
weapons o I an and I aq;
91

The economic consequences
o
he
Gul
Wa
Table 8.1a A ms supply and o he suppo o I an,
198G-3
Coun ies supplying Weapons" O he suppo ' Majo weapon supplie
I an
only
be o e he wa
G eece
...
...
USA and B i ain
Is ael
...
•
Sy ia • *
Yemen, Sou h •
Ko ea, Sou h
...
*
Taiwan
...
Vie nam
...
Alge ia
... ...
Libya
...
...
Sou h A ica
...
A gen ina
... ...
No es: a The
enn
'weapons' includes majo weapons, small a ms, ammuni ions
o
explosi es.
b
'O he
suppo ' includes mili a y anspo ehicles, spa e pa s. aining. mili a y
ad ise s, logis ic suppo
o
inancial suppo .
SOUTce:
Based on SIPRI
1984:
198, able 7.5
Table 8.1b A ms supply and o he suppo o I aq,
198G-3
Coun ies supplying
I aq
only
Belgium
FR
Ge many
Po ugal
Spain
Czechoslo akia
Hunga y
Poland
Yugosla ia
Aus ia
Egyp
Jo dan
Kuwai
Saudi A abia
Uni ed
A ab
Emi a es
Pakis an
Phillipines
Mo occo
E hiopia
Sudan
Weapons" O he suppo ' Majo weapon supplie
be o e he wa
...
...
...
...
*
...
...
...
...
...
So ie Union and F ance
...
...
...
...
...
...
...
...
...
...
...
...
...
...
...
No es: •
The
enn
'weapons' includes majo weapons, small a ms, ammuni ions
o
explOl., es.
b
'O he
suppo ' includes mili a y anspo ehicles, spa e pa s, aining, mili a y
ad ise s, logis ic suppo
o
inancial suppo .
Sou ce: Based on SIPRI
1984:
198, able 7.5
92
The wa and he a ms ade
Table
8.le
Coun ies
supplying a ms
o
bo h
I an
and
I aq,
1980-3
I an I aq
weapo~
O he suppo >
weapo~
O he suppo >
USA • • •
So ie Union • • • •
China • •
F ance • • • •
I aly • • • •
Ge man
DR
• • •
Swi ze land • •
Ko ea, No h • • • •
B azil • • • •
No es: a The e m 'weapons' includes majo weapons, small a ms, ammuni ions
o
explosi es.
b 'O he suppo ' includes mili a y anspo ehicles, spa e pa s, aining, mili a y
ad ise s, logis ic suppo
o
inancial suppo .
Sou ce: Based on SIPRI
1984:
198, able 7.5
'o he '
mili a y- ela ed suppo was also p o ided by some
o
he
same coun ies as well as many mo e. (Fo mo e de ails see ables
8.1a o 8.1c)
Tables 8.2a
o
8.2c illus a e he numbe
o
coun ies supplying
a ms
o
'o he '
mili a y- ela ed suppo o I an, I aq
o
bo h,
du ing he 1980-6 pe iod. As shown in able 8.2a, by he end
o
1986 he e we e
12
coun ies supplying weapons o I an only. This
Table
8.2a
A ms
supply
and
o he
suppo s
o
I an,
1980--6
Supplying I an only
Weapo~
O he suppo >
Alge ia • •
A gen ina • •
Canada • •
Denma k •
Finland • •
Is ael • •
Kenya •
Ko ea, Sou h • •
Libya • •
Mexico • •
Singapo e •
Sy ia • •
Taiwan • •
Tu key • *
Vie nam •
Yemen, Sou h *
No es: • The e m 'weapons' includes majo weapons, small a ms, ammuni ions
o
explosi es.
b
'O he
suppo ' includes mili a y anspo ehicles, spa e pa s, aining, mili a y
ad ise s, logis ic suppo
o
inancial suppo .
Sou ce: Based on SIPRI
1987:
204-5, able 7.8
93
The economic consequences
o
he
Gul
Wa
Table 8.2b A ms supply and o he suppo s o I aq, 1980-6
Supplying I aq only
Weapons'"
O he suppo '
Egyp • •
Jo dan • •
Kuwai •
Mo occo •
PhiJIipines • •
Sudan •
Tunisia •
Uni ed A ab Emi a es •
Yemen,No h
•
No es: • The e m 'weapons' includes majo weapons, small a ms, ammuni ions
o
explosi es.
b
'O he
suppo ' includes mili a y anspo ehicles, spa e pa s, aining, mili a y
ad ise s, logis ic suppo
o
inancial suppo .
Sou ce: Based
on
SIPRI
1987:
204-5, able 7.8
Table B.2e Coun ies supplying a ms o bo h I an and I aq, 1980-6
Coun y
suppo ing bo h
pa ies
Aus ia
Belgium
B azil
Bulga ia
Chile
China
Czechoslo akia
E hiopia
FR
Ge many
F ance
Ge man
DR
G eece
Hunga y
I aly
Ko ea, No h
Ne he lands
Pakis an
Poland
Po ugal
Saudi A abia
Sou h A ica
So ie Union
Spain
Sweden
Swi ze land
UK
USA
Yugosla ia
I an
weapons'" O he suppo '
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
...
...
...
...
•
I aq
weapons'"
O he suppo '
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
...
•
•
...
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
No es: •
The
e m 'weapons' includes majo weapons, small a ms, ammuni ions
o
explosi es.
b
'O he
suppo ' includes mili a y anspo ehicles, spa e pa s, aining, mili a y
ad ise s, logis ic suppo o inancial suppo .
Sou ce: Based on SIPRI
1987:
204-5, able 7.8
94
The wa
and
he a ms ade
ep esen s an inc ease
o
4 coun ies since he 198a-3 pe iod. The
newcome s include Canada, Denma k, Finland and Singapo e.
I
we look a able 8.2b, i can be seen ha he e we e only 3
coun ies, namely Egyp , Jo dan and he Philippines, ha we e
supplying I aq only. This ep esen s a decline o 6 coun ies since
he 198a-3 pe iod. A eason o his can be ela ed o he huge
inc ease in a ms expo s
by
he So ie Union o I aq since
198213
and hus o a lesse need o a ms impo s om o he sou ces,
supplying So ie -made weapons. This can clea ly be obse ed by
no ing ha he coun ies ha we e
no
supplying I aq only in he
1983-6 pe iod, bu we e in 198a-3, included Czechoslo akia,
Hunga y, Poland and Yugosla ia.
The
scale
o
he wo ld's in ol emen
in
supplying a ms o bo h
I an and I aq can bes be no ed
in
able 8.2c. I can be seen ha by
1986 he e we e
26
coun ies supplying weapons o bo h coun ies.
This means ha by he second pe iod o he wa (i.e.
1983
o
1986),
17
new coun ies had joined in a ming bo h I an and I aq a
he same ime.
We no ed ha ables 8.1a o 8.1c we e he s a o he jou ney
in o hypoc isy. We ha e now eached
ou
des ina ion. Table:; 8.2a
o
8.2c a e he inal poin s
o
ou jou ney. These ables eplesen
he sel ishness and lack
o
mo al s anda ds
o
41
coun ies which
ha e pu hei p o i s and sel in e es be o e hei loyal y o ellow
human beings elsewhe e in he wo ld.
One
inal hing ha we would like o do is o d aw he eade 's
a en ion
o
he ac ha he I an-I aq wa and he supply o a ms
o
bo h coun ies a e no he only examples o a ms being
deli e ed
o
an a ea
o
con lic .
In ac , he whole issue
o
a ms sales o he Thi d Wo ld, whe e
esou ces a e sca ce and he majo i y
o
go e nmen s a e unable
o p o ide o he basic needs
o
he popula ion, mus be b ough
o he o e on o wo ld a en ion (i.e. he people
o
he majo
ad anced economies). This is a i al issue, gi en he sums spen
and, hus, he huge scale
o
oppo uni y cos incu ed.1
Fo
example, i has been es ima ed ha du ing he
1982~
pe iod, he o al alue
o
a ms expo s om he leading majo
weapon expo ing coun ies, namely he USA, he So ie Union,
F ance, he
UK,
FR
Ge many and I aly, has been he sum
o
$142,591 million a
198~
cons an p ices (SIPRI
1987:
183, able
7.1). A poin o be no ed is he ac ha he g ea es sha e
o
he
global a ms ade
is
no be ween he ad ance economies hem-
sel es, bu wi h he Thi d Wo ld.
Indeed, du ing he same pe iod, 51.6
pe
cen
o
o al
US
a ms
expo s we e des ined o he Thi d Wo ld. The co esponding
95
Chap e
nine
The impac
o
he wa on he mili a y
expendi u e and a ms impo s
o
Saudi A abia and Kuwai
In oduc ion
The
e olu ion in I an, he ise
o
Shi'i e undamen alism in
la gely Sunni-Muslim-domina ed coun ies
in
he Pe sian Gul and
he
So ie in asion
o
A ghanis an we e among he main easons
o a apid inc ease in mili a y expendi u e and a ms impo s in he
Gul
coun ies in he la e 1970s.
Howe e ,
he
p esen secu i y h ea s, a ising om he Gul
Wa ,
ha e esul ed in a mo e apid mili a iza ion and u he
acquisi ion
o
weapons in he neighbou ing coun ies. Since 1979/
80 all he six Gul Co-ope a ion Council (GCC) membe s ha e
spen billions
o
dolla s on impo ing majo sophis ica ed weapon
sys ems.
I
is
impo an o no e ha such apid inc eases in mili a y
expendi u e (Milex) and a ms impo s ha e aken place
a
a ime
when oil e enues ha e been alling, and he e o e esou ces ha e
become mo e sca ce. This ob iously has a p o ound economic
e ec on
he
economies
o
hese coun ies. Fu he mo e, gi en he
small size
o
he popula ion in hese coun ies, he wisdom
o
ecei ing such ad anced weapons in such quan i ies can se iously
be
ques ioned.
This chap e is di ided in o wo pa s.
The
i s p o ides a b ie
s udy
o
Milex in and a ms impo s by Saudi A abia and Kuwai .
I
is expec ed
ha
his p esen a ion will mo e clea ly es ablish he
case
ha
he Gul has been u he mili a ized since he wa .
The
second a emp s o assess he cos
o
high mili a y bu dens a ising
om mili a iza ion in he cases o Saudi A abia and Kuwai ,
especially in e ms
o
o going po en ial o eign exchange.
Milex
and
a ms
impo s, Saudi A abia and Kuwai : 1973-85
Table 9.1 p o ides in o ma ion on he alue
o
Milex and he a io
o
de ence bu den
o
Saudi A abia and Kuwai du ing he
1973--85
102

Table
9.1
Ra io o mili a y expendi u es (Milex)
in
GOP -de ence bu den·, Kuwai and Saudi A abia,
1973-85
GDP
Kuwai Kuwai s
Mila
Kuwai 's
BN.(K)
dina s
BN.(K)
dina s
de ence
bu den·
1973
2.2
1974 3.5
1975
3.2
1976 3.8
1977
3.9
1978 4.2
1979
6.7
1980 7.8
1981
6.9
1982 6.1
1983 6.3
1984 6.6
1985
5.9
A e age annual g ow h
o
GDp·
1973-8
A e age annual g ow h
o
GDP
1979-85
A e age annual g ow h
o
Milex· 1973-8
A e age annual g ow h
o
Milex· 1979-85
A e age annual de ence
bu den·
1973-8
Kuwai
Saudi
6.4% 14.8%
A e age annual de ence
bu den·
1979-85
Kuwai Saudi
6.9% 18.6%
0.074 3.4
0.179 5.1
0.210 6.6
0.312 8.2
0.300 7.7
0.309 7.4
0.339
5.1
0.400 5.1
0.478 6.9
0.476 7.8
0.429 6.8
0.491 7.4
0.548 9.3
Kuwai 13.8% Saudi 40.7%
Kuwai
-2.1%
Saudi 5.3%
Kuwai
33.
1 % Saudi 52.9%
Kuwai 8.3% Saudi 5.4%
GDP
(Saudi
BN.
(S)
iJzIs
40.6
99.3
139.6
164.5
205.1
223.8
248.4
385.8
520.6
524.7
415.2
371.3
339.2
No e: • Au ho 's calcula ion. All he igu es quo ed a e in local cunency and a cu en p ices.
Sou ces: IMFa
198012
and 1986;
OPEC
1985; and
1ISS
197314
o
198617
Saudi's
Milex
Saudi's
de ence
BN.
(S)
ials)
bu den
4.3 10.6
9.2 9.3
23.7 17.0
32.4 19.7
32.7 15.9
35.9
16.1
46.7 18.8
57.2 14.8
83.0 15.9
92.1 17.6
95.2 22.9
79.4 21.4
64.0 18.9
The economic consequences
o
he
Gul
Wa
pe iod. As can be seen,
in
1973 and 1974 (be o e OPEC I), Saudi
A abia had spen 4.3 billion iyals and 9.2 billion iyals on Milex.
Then,
as a esul
o
he oil-p ice inc eases, Milex had inc eased o
23.7 billion iyals in 1975, ep esen ing an inc ease
o
167 pe cen .
Since 1976
and
up
o
1978 (i.e. he s a o he I anian e olu ion),
he Saudis' Milex had emained a be ween 32-36 billion iyals.
Howe e , since he e olu ion and he I aqi in asion o I an, he
Saudis' Milex has been inc eased a an amazingly high a e. By
1980, Milex had inc eased o 57.2 billion iyals, ep esen ing an
inc ease
o
58
pe
cen since 1978. The co esponding igu es o
1983 we e 95.2 billion iyals and 164
pe
cen .
As
a esul
o
he apid dec ease in oil p ices in ecen yea s,
Milex has co espondingly allen o 64 billion iyals in 1985. In all,
du ing he 1978--83 pe iod, Milex had inc eased by
21
pe cen on
a e age each yea , while
GDP
had g own by
13
pe cen . The
co esponding igu es o he
1978--85
pe iod, o ake accoun o
he decline in oil p ices, we e 9 and 6 pe cen on a e age each
yea .
As a as Milex in Kuwai is conce ned, i can be seen ha again
as a esul
o
oil-p ice inc eases in 1973/4, Milex had inc eased, by
1975, o 0.210 billion dina s, ep esen ing an inc ease
o
184 pe
cen since 1973. Howe e , since he ini ial inc ease in Milex, he
expendi u e had emained a abou 0.300 billion dina s up o 1978.
Since 1978 Milex and de ence bu dens ha e apidly inc eased.
Milex has g own by an a e age annual a e o 8.5 pe cen du ing
he 1978--85 pe iod, while he co esponding igu e o
GOP
g ow h
is
only 4.9
pe
cen (see u he able 9.1). Mo eo e , by
1985 he de ence bu den had inc eased signi ican ly o 9.3 pe cen
om 5.1
pe
cen in 1981.
Table 9.2 p o ides in o ma ion on he es ima ed alue
o
a ms
impo s as well as he bu den o a ms impo s in Saudi A abia and
Kuwai du ing he 1973-85 pe iod.
I
can be seen ha , in Saudi
A abia, he alue
o
es ima ed a ms impo s inc eased om 2.2
billion iyals in 1973
o
16.4 billion iyals in 1977, ep esen ing an
inc ease
o
o e 65 pe cen on a e age each yea du ing his
pe iod. Howe e , as a esul o secu i y h ea s ( eal
o
imagined)
since he la e 1970s, he e has been a massi e ise in he es ima ed
alue
o
a ms impo s.
In
ac , by 1983, he es ima ed alue o a ms impo s had
inc eased
o
57.1 billion iyals, ep esen ing an inc ease o
23
pe
cen
on
a e age each yea since 1977. As o he a ms-impo s
bu den,
i can
be
no ed ha , while in 1978 he e was a
21
pe
cen
bu den, by 1985 i had inc eased o 29.5 pe cen . (Fo mo e
de ails see able 9.2.)
104
Table 9.2 The a io o a ms impo s
in
o al impo s -bu den o a ms impo sa, Saudi A abia and Kuwai . 1973-85
Saudi A abia Kuwai
Es ima ed a ms Non-mililo y A Es ima ed a ms Non-mililll y A
impo s" impo s
A+B
impo s impo s"
A+B
A B % A B %
1973 2.2 7.3 23.2 0.04 0.271 12.9
1974 4.6 10.2 30.1 0.09 0.456 16.5
1975 11.9 14.8 44.6 0.11 0.632 17.4
1976 16.2 30.7 34.5 0.16
l.0
13.8
1977 16.4
5l.7
24.1 0.15
l.2
11.1
1978 17.9 69.2 21.0 0.16 1.3 10.9
1979 28.0 82.2 25.5 0.20 1.5 11.8
1980 34.3 96.2 26.0 0.24 1.7 12.4
1981
49.8 120.0 29.0 0.29
2.1
12.
1982 55.3 138.2 28.4 0.29 2.3 11.2
1983 57.1 137.1 29.4 0.26 2.2 10.6
1984 47.6 118.0 29.0 0.29 2.2 12.7
1985 38.4 90.2 29.5 0.33 1.7 16.3
To al in
bn. USS 110.3
272
8.7 61.2
No es:
• Au ho s' calcula ion. All he igu es, excep hose in he las TOW, a e in cu en local cu ency, billion iyals o Saudi A abia and billion dina s o
Kuwai .
b Mili a y- ela ed impo s ha e been es ima ed a 50 and 60 pe cen o he o al mili a y expendi u e o each yea du ing he 1973-8 and 1979-85
pe iods espec i ely. These assump ions a e based on he ac ual alue and olume
o
a ms ans e s
o
hese coun ies. We, howe e , admi ha hese
a e a bes only educa ed guesses.
Sou ces:
IMFa 1980 and 1986; IMFb 1980 and 1987; IISS
197314
o
198617;
SIPRI
1974
o 1987;
and
USACDA
1969--78
and
1985
The economic consequences
o
he
Gul
Wa
In Kuwai also he e has been a apid ise in he es ima ed alue
o
a ms impo s. Indeed hey ha e inc eased om 0.16 billion
dina s in 1978 o 0.33 billion dina s
in
1985, ep esen ing an
a e age annual inc ease o
11
pe cen du ing he same pe iod.
The
a ms-impo s-bu den a io has co espondingly inc eased
om 10.9
o
16.3
pe
cen du ing he same pe iod.
In
all, able 9.2 demons a es e y clea ly and beyond an.; doub
how hese wo coun ies, in pa icula Saudi A abia, wild small
popula ions, in absolu e, as well as ela i e e ms, ha e become a
s o age place o he weapon make s o he indus ialized coun ies.
I
can
be
seen om he lis
o
con i med a ms supplie s o Saudi
A abia
and
Kuwai du ing he 1973-8 pe iod, which
is
illus a ed
in ables 9.7
and
9.8 a he end o his chap e , ha , du ing his
pe iod, he
USA
was he majo supplie o weapons o Saudi
A abia, ollowed by F ance and he UK. Many di e en ypes
o
weapons, including igh e s, anks, helicop e s, a mou ed pe -
sonLel ca ie s and many di e en so s o missiles, ha e been
supplied by hese coun ies.
A ms acquisi ions by he Kuwai is a e much smalle in alue and
quan i y. Majo supplie s include he USA, F ance and he UK.
The
So ie s had also joined in p o iding weapons o Kuwai ,
among hem SAM missiles.
Tables 9.9-11 illus a e he lis o a ms supplie s o Saudi A abia
du ing he 1979-87 pe iod. F om hese ables i becomes clea ha
he
USA
is by a he majo supplie o a ms o Saudi A abia,
ollowed by F ance and he UK.
To
a i e a an accu a e sha e
o
each supplie , in he Saudis' o al a ms impo s, gi en he a ail-
abili y
o
in o ma ion a p esen , is appa en ly an impossible ask.
Howe e , ha ing analysed he ables, and no ed he quan i y and
quali y
o
a ms supplied,
we
es ima e ha he USA has had a
55
pe
cen sha e o he Saudis' a ms impo s, ollowed by F ance and
he
UK
(join ly) 40
pe
cen , and he 'o he s' 5 pe cen . We,
howe e , admi ha hese a e 'educa ed' guesses only.
The e o e, gi en ou es ima es, he alue o a ms expo s by he
USA
o
Saudi A abia du ing he 1973-85 pe iod is he o al o
$60.6 billion. The co esponding igu e o F ance and he UK
(join ly) is $44.1 billion.
These h ee coun ies, be ween hem ha e supplied such an
a senal
o
weapons
o
Saudi A abia ha , one wonde s, gi en he
small size
o
he popula ion, by whom o how hese weapons a e
going o
be
used i ,
o
when, he e
is
a mili a y need o hei
use. The se iousness
o
his p oblem
will
be seen a a la e da e
when he
I an-I aq
wa has ended. The secu i y h ea would
he e o e be emo ed, and he Saudis could ind i oo di icul o
106
The impac
o
he
wa :
Saudi A abia and Kuwai
p oduce any jus i ica ion o main aining such a high mili a y
po olio.
In all, as shown in ables 9.9 and 9.10, e e y kind
o
weapon
possible, especially
o
he mos ad anced ypes, has been deli e ed
o Saudi A abia. The mili a iza ion
o
Saudi A abia a such a
b eak-neck speed will ha e a majo impac on he pos -wa
de elopmen
o
coun ies like I an. Is I an,
in
he pos -wa pe iod,
going o accep a lesse mili a ized pos u e han a coun y like
Saudi A abia,
o
is
i going o a apid build-up o i s a med o ces,
accompanied by a massi e inc ease in a ms impo s?
I
he second
op ion
is
adop ed, hen he e
will
be se ious compe i ion, gi en
sca ce esou ces, o he de elopmen
o
he ci ilian economy.
Table 9.12 illus a es he lis o coun ies supplying a ms
o
Kuwai .
I
can be seen ha , in his case also, he USA, F ance and
he
UK
a e
he
main bene icia ies o inc eased a ms impo s by he
Kuwai is. They ha e, among hemsel es, p o ided he mos
ad anced weapon sys em o a coun y
o
only 1.8 million people.
How and unde wha condi ions hese weapons can be used by he
Kuwai i ci izens emains o be seen.
Table 9.3 p o ides in o ma ion on he quan i y and composi ion
o
majo weapon sys ems held by he Saudi and Kuwai i a med
o ces du ing he
197213
o
1987/8
pe iod.
I
can be seen ha he
numbe
o
anks in Saudi A abia has inc eased om
85
o 550
du ing he same pe iod. The co esponding igu es o comba
ai c a , helicop e s and AFVs we e 71,
30
and 200, ising o 226,
91
and 550 du ing he same pe iod.
Table 9.3
Majo
weapon sys ems held by he a med o ces, Saudi A abia
and
Kuwai ,
197213,
1979/80,
198415,
198617
and
1987/8
Tanks (S)
(K)
Comba
ai c a (S)
(K)
Helicop e s (S)
(K)
A mou ed
igh ing ehicle (S)
No es: (S) Saudi A abia.
(K) Kuwai .
? No known exac ly.
• Fo Kuwai (197415).
(K)
1972/]"
85
100
71
28
30
7
200
?
1979/80
1984/5
350
450
2SO
b
240
b
178
203
50
49
52
60
44
35
200
200
120
160
1986/7 1987/8
450
550
230b 160b
216
226
80
80
80
91
40
40
550
550
160 160
b The numbe s o anks in Kuwai alling since 1979/80 may be because mos o hem
ha e been gi en
o
he I aq a my.
Sou ces: IISS 1972/3 o 1987/8
107

The economic consequences
o
he
Gul
Wa
As
o Kuwai , i can be no ed ha he numbe o anks had
inc eased om 100 in
197213
o
280
in 1979/80. Howe e , his
igu e has declined o 160 in 1987/8. The e o e i
is
mos likely ha
Kuwai , besides any o he assis ance i has p o ided o I aq, has
also supplied ha coun y wi h many anks. The numbe o
comba ai c a s and helicop e s on he o he hand has inc eased
om 28 and 7 o 80 and
40
du ing he same pe iod.
Table 9.4 p o ides in o ma ion on mili a y manpowe and i s
composi ion in Saudi A abia and Kuwai du ing he pe iod unde
s udy.
As
can
be
no ed, in Saudi A abia, be ween
197213
and
19791
80,
he
o al mili a y manpowe had inc eased om 41,000 o
45,000, ep esen ing an a e age annual g ow h a e o 1.3 pe
cen .
Table 9.4 Mili a y manpowe and i s composi ion, Saudi A abia and
Kuwai , 197213, 1979/80,
198011,
1984/5,
1986n
and 1987/8 ( housands)
To al
(S)
(K)
o
which:
A my
(S)
(K)
Ai
o ce
(S)
(K)
Na y
(S)
(K)
No es: (S) Saudi A abia.
(K) Kuwai .
197213"
41.0
10.2
36.0
8.0
4.0
2.0
1.0
0.2
•
Fo
Kuwai
(197415).
1979180
45.0
11.2
35.0
9.0
8.0
2.0
2.0
0.2
1980/1
198415
198617
198718
48.0b 52.0" 48.0" 67.0"
12.5d 12.5d 13.1d
16.1d
31.0 35.0 40.0 45.0
10.0 10.0 10.0 13.0
15.0 14.0 14.0 15.0
2.0 2.0 2.0 2.0
2.0 3.0 4.0 4.0
0.5 0.5
1.1
1.1
b
Up
o he end
o
1979, mili a y
se ice
in Saudi A abia
was
olun a y;
in
1980
consc ip ion was in oduced.
• Does no include o eign con ac mili a y penonnel. es ima ed a
10,000
in
1987/8.
d Excluding expa ia e penonnel.
The igu es abo e
do
no include pa amili a y o ces.
Sou ces: IISS
197213
o 1987/8
Howe e , in 1980, consc ip ion was in oduced. The e o e, he
igu es o mili a y manpowe ha e inc eased o 67,000 in 1987/8,
ep esen ing an a e age annual g ow h a e
o
5.1 pe cen since
1979.
I
is also impo an o no e ha his igu e does no include
o eign con ac mili a y pe sonnel, es ima ed a abou 10,000 in
1987/8.
The
numbe
o
mili a y pe sonnel in Kuwai has also inc eased
signi ican ly. Thei numbe s inc eased om 10,200 in
1974/5
o
11,200 in 1979/80, ep esen ing an a e age annual g ow h a e o
1.9
pe
cen .
108
The impac
o
he
wa :
Saudi A abia and Kuwai
Since 1980, howe e , he o al mili a y manpowe has inc eased
o 16,100, which ep esen s an a e age g ow h a e
o
5
pe
cen
pe
yea since 1979.
Once again, hese wo ables go a long way o demons a e he
a e
a
which Saudi A abia and Kuwai ha e so apidly been
mili a ized since he
I an-I aq
wa .
The oppo uni y cos o he mili a iza ion
o
Saudi A abia and
Kuwai : 1973-85
A
his poin an a emp
is
made o assess he cos
o
high mili a y
bu dens a ising om mili a iza ion, in e ms
o
po en ial o eign-
exchange ese es o gone o Saudi A abia and Kuwai .
In a choice si ua ion he concep
o
oppo uni y cos s e e s o
he bene i s o gone by selec ing one op ion
a
he expense
o
se e al o he s. When esou ces a e sca ce, i a socie y (i.e. he
go e nmen ) selec s policy
A,
i o goes he bene i s de i ed om
policies
Band
C.
The
classic illus a ion o oppo uni y cos s o
go e nmen al decision-making is he 'guns
s.
bu e ' dilemma.
This dilemma depic s spending on he mili a y and social wel a e
as in e sely ela ed
o
one ano he . As Milex ises, he bene i s
o
al e na i e p e e ences in he a eas
o
social wel a e mus su e . 1
Howe e , i seems, gi en he massi e oil e enues, especially
since
he
ea ly 1970s, he oil-expo ing coun ies in he Gul ha e
no , in a eal sense, aced a 'guns
s.
bu e ' dilemma, in so a as
social wel a e expendi u e
is
conce ned. The e o e i can be
a gued ha , gi en he se ious p oblem o abso p i e-capaci y
cons ain s ha has been pe sis en in hese coun ies, he mos
se ious oppo uni y cos
o
he apid inc eases in Milex in he
Pe sian Gul coun ies is he po en ial losses in hei o eign-
exchange ese es.
The e o e he e he ocus
is
o y
o
es ima e he dolla alue
o
he po en ial o eign-exchange ese es ha could ha e been
possible, i a lesse sha e
o
he
GDP
had been alloca ed o Milex.
The
pu pose
o
his endea ou
is
no o shed ligh on pas losses,
bu
o
iden i y
he
a eas in which u u e gains can be made.
In 1979, a e he e olu ion, as no ed in p eceding chap e s, he
e olu iona y go e nmen in I an educed he coun y's de ence
bu den
o
a 4.5
pe
cen sha e
o he
GDP. This 'ac ion' could ha e
been
ollowed by a ' eac ion' om
o he
coun ies in he egion.2
I
i had, hen less would ha e been spen on Milex. The e o e
wha we in end
o
do is
o
es ima e wha Saudi A abia and Kuwai
could ha e accumula ed in o eign-exchange ese es, i hey had
ollowed I an's example and had educed hei Milex o a le el
o
a
109
Table 9.5 The oppo uni y cos o Saudi A abia's mili a y expendi u es (Milex) in e ms o o eign-exchange ese es
o gone, * h ough inabili y o keep Milex a 4.5 pe cen o
GDP
each yea , 1973-85
Ac ualGDP
Ac wzl Ac ual sha e
o
Mila
should Sums could ha e US ce i ica e- Fo eign- Equi alen in
Milex Milex in
GDP
ha e been, gi en been a ailable o -deposi a e exchange bn. US $
ou assump ions o in es men ese es,
(4.5%
o
GDPI ab oad, gi en including
yea ) ou assump ions in e es s
eamed
(compounded)
A % B IA-BJ %
1973 40.6 4.3 10.6 1.8 2.5 6.95
1974 99.3 9.2 9.3 4.5 4.7 7.82 2.67 0.76
1975 139.6 23.7 17.0 6.3 17.4 7.49 7.98 2.28
1976 164.5 32.4 19.7 7.4 25.0 6.77 27.3 7.81
1977 205.1 32.7 15.9 9.2 23.5 6.69 55.84 15.95
1978 223.8 35.9 16.1 10.1 25.8 8.29 84.61
24.88
1979 248.4 46.7 18.8 11.2 35.5 11.22 119.55 35.16
1980 385.8 57.2 14.8 17.4 39.8 13.07 172.5 53.91
1981
520.5 83.0 15.9 23.4 59.6 15.91 240.04 70.60
1982 524.7 92.1 17.6 23.7 68.4 12.35 347.27 102.14
1983 415.2 95.2 22.9 18.7 76.5 9.09 467.03 133.44
1984 371.3 79.4 21.4 16.7 62.7 10.37 592.91 169.40
1985
339.2 64.0 18.9 15.3 48.7 8.05 723.59 206.77
1986 834.47 231.79
No es:
• Au ho 's calcula ion. The igu es quo ed a e all in bn. Saudi A abian iyals, excep whe e o he wise indica ed.
Sou ces:
IMFa 1980;
1982
and 1986;
OPEC
1985
and IISS
1973/4-198617
Table 9.6
The
oppo uni y cos
o
Kuwai 's mili a y expendi u es (Milex)
in
e ms
o
o eign-exchange ese es o gone, *
h ough inabili y o keep Milex a 4.5
pe
cen
o
GDP
each yea , 1973-85
Ac ualGDP
Ac ual Ac UilI sho e
o
Milex should Sums could ho e US ce i ica e- Fo eign- Equi alen in
Milex
Mila
in
GDP
ho e been, gi en been a ailable o -deposi
a e
exchange bn.
US
$
ou
assump ions o in es men ese es,
(4.5%
o
GDP/ ab oad, gi en including
yea ) ou assump ions in e es s ea ned
(compounded)
A % B
A-B!
%
1973 2.2 0.074 3.4
1974 3.5 0.179 5.1 0.157 0.022 7.82
1975 3.2 0.210
6.6
0.144 0.066 7.49 0.024 0.08
1976 3.8 0.312 8.2 0.171 0.141 6.77 0.096 0.32
1977
3.9 0.300 7.7 0.176 0.124 6.69 0.253 0.84
1978 4.2 0.309 7.4 0.189 0.120 8.29 0.402 1.34
1979 6.7 0.339 5.1 0.302 0.037 11.22 0.562 1.87
1980 7.8 0.400 5.1 0.351 0.049 13.07 0.669 2.23
1981
6.9 0.478 6.9 0.311 0.167 15.91 0.813 2.71
1982 6.1 0.476 7.8 0.275 0.201 12.35 1.135 3.78
1983
6.3 0.429 6.8 0.284 0.145 9.09 1.501 5.00
1984 6.6 0.491 7.4 0.297 0.194 10.37 1.796 5.99
1985
5.9 0.548 9.3 0.266 0.282 8.05 2.195 7.32
1986 2.676 8.92
No es: • Au ho 's calcula ion.
All
igu es quo ed a e
in
billion cu en Kuwai i dina s, excep hose whe e o he wise indica ed.
Sou ces: IMFa 1980,
1982
and
1986;
OPEC
1985; and IISS
1973/4
o
198617
The economic consequences
o
he
Gul
Wa
Table 9.10 (con inued)
Supplie Weapon designa ion
Je s eam
31
To nado
ADV
ALARM
Sky Flash
Hawk
To nado
ADV
To nado
IDS
SSR
ALARM
Sea
Eagle
Sky Flash
Sou ce:
SIPRI
1979
o
1987
Weapon desc ip ion Yea
o
o de
T anspo
Figh e
ARM
AAM
T aine /s ike
Figh e
Figh e
Rada
ARM
AShM
AAM
1986
1985
1985
1985
1986
1986
1986
1984
1986
1986
1986
Table 9.11 Con i med a ms ag eemen s be ween Saudi A abia and he
majo a ms supplie s (excluding USA, UK and F ance), 1979-87
Supplie Weapon designa ion Weapon desc ip ion Yea
o
o de
Aus ia
Panze jage K
TD
1986
Spain C-212-A T anspo 1984
Aus ia
Cui assie
LT,TD
1986
Ge many
FR
Gepa d
AAV
1986
Leopa d-2 MBT 1985
TP2-1
APC
1982
I aly
VCC-l
Ape
1982
B azil
EE-ll
U u u
APC
1982
Spain CN-235 T anspo 1984
Aus ia
Cui assie
LT,TD
1985
B azil
EE-9
AC
1986
Ge many
FR
Gepa d
AAV
1979
Indonesia
CN-212 T anspo 1979
Spain CN-235 T anspo
1985
Aus ia
Cui assie
LT,TD
1985
B azil
EE-T2
MBT
1985
I aly SH-3D Hel
1985
Japan
KV-I07,2A
Hel 1982
Swi ze land 1 C-9 T aine 1984
Spain BMR-600 ICY 1986
B azil As os-ll-SS-40
MRS
1985
Ge many
FR
Wildca
AAV
1984
Spain CN-235 T anspo
1985
Swi ze land PC-9 T aine
1985
No e:
Fo
meaning
o
abb e ia ions, see pp. 155-7.
Sou ce: SIPRI 1979
o
1987
118

The impac
o
he
wa :
Saudi A abia and Kuwai
Table 9.12
Con i med
a ms
supplie s
o
Kuwai ,
1979-87
Supplie Weapon designa ion Weapon desc ip ion Yea
o
o de
F ance MM-38 Exoce ShShM
1978
MM-40 Exoce ShShM 1980
Comba an e-2
FAC
1982
Mi age
F-IC
Figh e
1982
MM-40 Exoce ShShMlSShM 1982
AM-39 Exoce AshM
1983
AMX-13-90
LT
1983
AMX-155 MK-F3 SPH
1982
AS·332 Hel
1983
Supe -530
AAM
1982
Mi age
F-IB
T aine 1984
Mi age
F-IC
Figh e
1983
ARMAT
ARM
1983
UK
16M FPB
1979
20M FPB
1979
Chie ain-5 MBT
1981
Chie ain-5 MBT
1984
Hawk T aine
1983
LC
1983
FV-I01 Sco pion
LT
1983
SRM-6 Ho e c a 1980
LC 1984
Ge many
FR
TNC-45 FPB 1980
PC-57 PC,
FAC
1980
USA
TOW
ATM
1979
Dhahe
PB
1979
M-l13-Al
ICV 1979
MIM·23B Hawk SAM
1979
M-l13-A2
APC
1980
M-I25-A2
APC
1980
M-577-A2 CPC 1980
M-901-Tow ICV 1980
L-lOO-30
T anspo
1981
TOW
ATM
1982
M-113-A2
APC
1982
TOW
APC
1982
V-ISO
APC
1984
V-300
APC
1984
So ie Union SA-7 SAM 1979
SA-7 SAM 1984
SA-8 SAM 1984
F og-7 SSM 1984
No e:
Fo
meanings o abb e ia ions, see pp. 155-7.
Sou ce: SIPRI 1979
o
1987
119
Chap e
en
The
economic cos
o
he wa : he
assignmen
o
a dolla alue,
Sep embe 1980-Augus 1988
In oduc ion
In
his chap e we will a emp o b ing oge he he a ious
componen pa s
o
he economic cos
o
he wa
o
I an and I aq.
We will also a emp o assign a dolla alue o he wa 's cos .
He e
ou
ask
is
no simply o add up
o
compa e o he
es ima es
ha
ha e been made by di e en economis s
o
esea ch
agencies. Indeed,
on
he con a y, gi en ha his opic has
ecei ed li le a en ion, we should y o e alua e and use a
numbe
o
di e en assump ions and es ima ing p ocedu es in
o de
o
a i e
a
a igu e o he economic cos o he Gul Wa .
1
In
all, i should be said ha he una ailabili y
o
necessa y
in o ma ion and
da a,
esul ing om eigh yea s o wa , has made
he
ask
o
desc ibing, o ecas ing
o
es ima ing he economic cos
o
he
I an-I aq
wa a daun ing assignmen indeed.
Howe e , gi en he a ailable in o ma ion, we ha e in his
chap e
a emp ed o p o ide a somewha de ailed es ima ion
o
he
economic cos
o
he wa .
The
p esen s udy is di ided in o
h ee
pa s.
The
i s examines he es ima ion o he economic cos
o
he
wa o I an, he second es ima es I aq's cos s, and he hi d
is
an
a emp
o assess he cos
o
highe mili a y bu dens a ising
om mili a iza ion, in e ms
o
po en ial o eign-exchange o gone
o
I an
and I aq.
The economic cos
o
he wa o
I an
A
he
ou se i should be no ed ha he I anian au ho i ies, in
con as
o
I aq's, ha e, om ime o ime, published hei
es ima es
o
he
economic cos
o
he wa o I an. Howe e , he
es ima ed cos
o
he wa p o ided by he I anian go e nmen is
mos incomple e. Many componen s
o
he cos s ha e ei he
wi ingly
o
unwi ingly been le ou .
120
The economic cos
o
he wa
The e o e,
a
his poin , an a emp
is
made o p o ide he
eade wi h a mo e comp ehensi e me hod o es ima ing he
economic cos o he wa .
Acco ding o he I anian au ho i ies, he o al economic cos o
he wa om Sep embe
1980
o June
1982
was a o al
o
$150
billion
(EIU
1984). The e o e, du ing he pe iod o 21 mon hs, he
mon hly cos o he wa , on a e age had amoun ed o $7.14
billion. This es ima ed cos does no include oil- e enue losses,
al hough i includes losses incu ed in he oil sec o .
I
also
includes losses in indus y, ag icul u e, ene gy, elecommunica-
ions, housing and heal h.
In a second es ima e I an main ained ha , by he end o 1984,
he o al economic cos had inc eased o
$200
billion (based on he
same me hod
o
es ima ion)
(EIU
1984). This means ha , du ing
he 30-mon h pe iod, June
1982
o Decembe 1984, a u he
$50
billion
o
economic losses had been sus ained. The e o e, du ing
he second pe iod o he wa he losses had declined o $1.7 billion
on
a e age each mon h. Howe e , i he losses a e aken as a
whole, om Sep embe
1980
o Decembe 1984, hey amoun ed o
$4.00 billion on a e age each mon h.
Finally, in a mo e ecen es ima e, acco ding o a Plan and
Budge Minis y publica ion, he economic losses incu ed du ing
he i s
i e
yea s
o
he wa had inc eased o
$309
billion (MEED
27
Sep embe 1986). This es ima e co e s a 6O-mon h pe iod,
ep esen ing a $5.2 billion loss on a e age
pe
mon h.
I ,
a his poin ,
we
assume ha he economic losses o he wa
since Sep embe
1985
ha e amoun ed o an a e age
o
$4
billion a
mon h ($4 billion = he a e age o he h ee p e ious es ima es),
we
can no e ha he es ima ed economic losses, gi en I an's
me hod o es ima ion, could ha e inc eased
o
$369
billion by he
end
o
1986.
Howe e , as no ed be o e, he es ima es p o ided by I an a e
mos incomple e. We now, he e o e, a emp o p o ide a mo e
de ailed es ima e o he economic cos
o
he wa
o
I an om
Sep embe
1980
o
Decembe 1986.
To
a i e a such an es ima e,
he ollowing cos elemen s should be added o he abo e igu e
o
$369 billion. They a e:
1
The
cos
o
1 million onnes o oil gi en o Sy ia, as a gi , o
closing he I aqi oil pipeline in Ap il
1982
(S au e 1985). This
means ha he pe iod unde conside a ion o ou es ima ion is
a o al
o
57 mon hs.
One
million onnes o c ude oil a yea
is
equal
o
20
housand ba els a day, and he p ice o oil pe ba el
du ing he pe iod unde s udy being
$34
(1982),
$29
(1983),
$28
121
The economic consequences
o
he
Gul
Wa
(1984),
$28
(1985),
$26
(1986),
$18
(1987) and $14.6 (1988)
means ha he o al cos
o
I an o gi ing such a gi o Sy ia,
o i s suppo in he wa agains I aq, has amoun ed o
$11
billion.
2 As well as he gi
o
1 million onnes o oil, I an also ag eed
o
supply Sy ia wi h 2.5 million onnes o c ude a a discoun
o
se e al dolla s pe ba el. A mos quo ed discoun igu e
is
$2.0Iba el (S au e 1985). Gi en he olume o oil expo s (50
housand ba els/day) and he a e o discoun p o ided, he
o al cos o I an amoun s o
$183
million.
3 In he sp ing o 1984, I aq s a ed an ea nes a ack on anke
a ic in he uppe egion o he Gul . Be ween Ma ch
1984
and
Janua y 1987,
106
anke s ca ying I anian oil we e a acked
(MEES
6 July 1987). As a esul , many ship owne s ha e been
eluc an o send hei essels o Kha g Island. Insu ance a es
o hull and ca go ha e inc eased be ween
i e
and en old, so
ha
o al shipping a es om Kha g Island ha e isen om
abou wo ld scale
20
(be o e he a acks) o as high as wo ld
scale
60--80
(since he a acks). The inc ease in insu ance a es,
as well as he inc eased wage demands
by
he c ew, ha e
esul ed in an inc ease o abou
$2
o
$3
pe ba el on li ing oil
om Kha g Island (S au e 1985).
I an,
on
he o he hand, in o de o pe suade he ship owne s
o make he jou ney h ough wha has become known as
'Exoce Alley' has o e ed discoun s on he p ice ha i cha ges
o i s oil, hus educing i s po en ial o eign-exchange ea nings.
The e o e, du ing he pe iod unde obse a ion (Ap il
1984
o
Augus 1988), gi en he olume and p ice
o
oil expo s, he cos
o
such a discoun has amoun ed
o
an es ima ed o al o
$3
billion.
4
Due
o
sus ained I aqi a acks on oil e ine ies and oil-
p oduc ion acili ies, as well as a educed le el
o
oil deli e ies
o he e ine ies hemsel es, a gene al sho age o oil p oduc s
has been pe sis en in I an since he wa . Table 10.1 illus a es
in o ma ion on e ining capaci y, he ac ual p oduc ion and
domes ic consump ion
o
oil p oduc s in I an, du ing he 1973-
86 pe iod.
I
can
be
seen ha he e ining capaci y which had inc eased
om 33,000 housand onnes in
1973
o
65,700 housand onnes
in 1980, has been d as ically educed o only 30,500 housand
onnes in
1986.
Howe e , domes ic consump ion has inc eased
om 25,254 housand onnes
in
1980
o
35,950
housand onnes
in
1986. Because o he inabili y o e ine ies o p oduce enough
oil
p oduc s o domes ic consump ion, he e
has
been
a se ious sho age.
122
Table 10.1 Re ining capaci y: he ac ual p oduc ion
o
e ine ies and domes ic consump ion
o
oil p oduc s, I an,
1973--86
( housand onnes)
1973 1974 1975 1976 1977 1978 1979
1980
1981 1982 1983 1984 1985 1986
Re ining capaci y
n~~~~~~~~~g~g~~~n~n~
33,000 30,500 30,500 30,500
Ac ual p oduc ion
om e ine ies 27,735 29,615 32,210 39,965 36,196 33,455 33,005 29,450 31,560 32,781 31,023 31,008 30,357 31,730
Domes ic consump ion
o al 12,932 14,760
17,581
21,506 25,311 25,819 26,563 25,254 30,850 35,272
42,621
35,~7
35,948 35,950
o
which:·
Pe ol 1,426 1,727 2,320 2,737 3,480 3,738 4,210 3,547 3,152 3,358 4,410 4,303 + +
Ke osene 3,145 3,653 3,690 5,026
5,811
4,795 5,924
4,700·
4,470 5,382 6,933 5,918 + +
Diesel oil 3,932 4,407 5,346 6,259 7,552
5,351
8,178 8,048 12,798 10,062
12,041
11,218 + +
Fuel oils 3,808 4,205 4,883 5,467 5,919 8,984 6,173 6,908 8,426 8,335 9,604 12,492 + +
P oduc ion less
consump ion 14,803 14,855 14,629 18,459
10,885
7,636 6,442 4,198
710
-2,491 -11,598
-4,339
-5,591
-4,220
(298) (299) (295)
No es: • Due
o
ounding, i may no add up o o al.
+ No known.
(372) (219) (154) (130) (85) (14)
(-50)
(-234)
(-87)
(-113)
(-85)
( ) The igu es
in
b acke s ep esen one housand ba els pe day. They ha e been compu ed by he au ho using he ollowing: 1 onne = 7.33 ba els.
Sou ces: S a is iques 1981, 1982, 1983, 1986

The economic consequences
o
he
Gul
Wa
I
can be seen
ha
by 1982 I an had u ned in o a ne impo e
o
oil p oduc s, impo ing 50 housand ba els/day ha yea , and
mo e
in subsequen yea s. In o de o es ima e he cos
o
oil
p oduc impo s o
I an,
we ob iously ha e o know he p ice
pe
ba el
o
di e en oil p oduc s, expo ed o I an. Howe e ,
i
seems
ha
a wall
o
sec ecy su ounds his issue, as no oil
company
ha
we app oached was p epa ed o supply us wi h he
equi ed in o ma ion.
Howe e , in 1987, a con ac wi h he So ie Union o impo s
o
2 million onnes
o
e ined oil p oduc s by I an in exchange o 5
million onnes
o
c ude expo o ha coun y
was
signed (MEED
31
Oc obe
1987).
Does
his mean ha he p ice o oil p oduc s
is gene ally 2.5 imes
he
p ice
o
c ude?
I
his was
o
be
he
case, hen
he
cos
o
oil-p oduc impo s
o
I an du ing he
pe iod
unde
s udy
is
an es ima ed o al
o
$14 billion.
Ano he
economic cos
o
he wa is he po en ial loss in
expo
o
oil p oduc s by I an. Howe e , he lack
o
in o ma ion
and
da a
p ecludes
he
possibili y
o
e en ying
o
es ima e his
po en ial loss. None he less, as mos
o
Abadan's ou pu was o
he
expo
ma ke , he loss in o eign-exchange ea nings could
be
subs an ial.
5
A
he
ou se
o
he
wa , he
po
acili ies
a
Kho amshah and
Abadan
we e des oyed. This o ced I an o shi i s impo s
o
o he
smalle , less e icien po s,
and
also
o
di ec mo e
o
i s
impo s by ail
and
oad links h ough he So ie Union
and
Tu key.
Table
10.2 p o ides in o ma ion
on
he weigh
o
commodi ies (excluding oil p oduc s) unloaded
a
comme cial
po s
du ing
he
1978-84 pe iod.
Table 10.2 Weigh
o
commodi ies (excluding oil p oduc s) unloaded a
comme cial po s, 1978-84 ( housand onnes)
Po
1978 1979 1980 1981 1982 1983 1984
Kho amshah 3,641 1,278 856 0 0 0 0
Imam Khomeini 5,833 4,019 4,106 3,466 2,137 3,803 2,284
Anzali 385 395
561
519 803 839 508
Busheh 696 354 524 748 1,250 2,024 1,095
Banda -e-Abbas and
Banda -e-Shahid
Raja i 2,983 2,335 3,734 6,248 5,684 7,575 6,735
Nowshah 117
91
166 207 177 303 170
Abadan
881
301
75
0 0 0 0
Chahbaha X X X X X 428 502
To al 14,536
8,n3
10,022 11,183 10,051 14,972 11,294
No e: X Negligible.
Sou ces: S a is ical Cen e
o
I an 1986,
1987
124
The economic cos
o
he wa
I
can be seen ha
in
1980
(9
mon hs), Kho amshah and
Abadan had handled 856 housand onnes and
75
housand
onnes
o
impo s espec i ely. Since he wa no ca go has
a i ed
a
hese po s which o iginally had be e links wi h
ma ke s. Mo eo e , since 1980, he e has been a signi ican a e
o
inc ease in impo s a Busheh and Banda -e-Abbas and
Banda -e-Shahid Raja i. Mo e ecen ly, he e has also been
some de elopmen
a
Chahbaha o enable i o handle mo e
o
I an's impo s (see u he able 10.2).
The changes in po s handling impo s
as
well
as he highe a e
o
insu ance p emiums o shipping in he Gul
in
gene al ha e
esul ed in an ex a eigh cos o $30-50 pe on o impo s
(S au e 1985). As no ed in able 10.2, he o al impo s we e
10,022 housand onnes
in
1980
(12
mon hs). The e o e, he o al
impo s o he las qua e o he yea (i.e. since he wa )
amoun ed o
2,506
housand onnes. The co esponding igu es o
he whole
o
1981
we e (11,183 housand onnes),
1982
(10,051
housand onnes),
1983
(14,972 housand onnes) and
1984
(11,294
housand onnes). Gi en he o e all educ ion in impo s since
1983, i
is
mos likely ha he olume o impo s has declined o
abou
10
million onnes pe yea du ing he 1985-6 pe iod.
I , a his poin , he abo e igu es a e mul iplied by $40/ onne
(which
is
he middle poin be ween he lowe and uppe bounds
o
ex a eigh cha ges),
we
will
a i e a he igu e o $3.5
billion, which ep esen s he es ima ed ex a cos o impo ing
since he wa .
6 As will be demons a ed in mo e de ail la e in his chap e ,
whe e he oppo uni y cos o he mili a iza ion o I an and I aq
is he subjec
o
s udy, he o al ac ual mili a y expendi u e
(Milex) in I an du ing he 1981-6 pe iod (i.e. since he wa ) has
amoun ed
o
$86.5 billion. We ha e also shown ha , gi en he
e olu iona y go e nmen 's desi e o main aining a 4.5 pe cen
de ence bu den, he· po en ial Milex du ing he same pe iod
could ha e been
$37
billion.
The
di e ence be ween he ac ual and po en ial Milex
is
$49.5
billion. This sum could, o example, ha e been in es ed
ab oad.
I
i had, gi en he ac ual in e es a es du ing he same
pe iod, hen by he end o
1986
i s compounded alue could
ha e inc eased
o
he o al
o
$76.1 billion. The e o e, ano he
economic cos o he wa
is
he loss o his po en ial ea ning.
Gi en he ac ual Milex du ing he
1986--8
pe iod, as well as ou
me hod
o
es ima ion o he po en ial Milex, as no ed abo e,
his means ha he po en ial o eign exchange losses had
inc eased
o
$84 billion by Augus
1988.
125
The economic consequences
o
he
Gul
Wa
A
his poin , i all he abo e igu es a e combined
we
will
a i e
a
he
semi-g and o al economic cos
o
he wa o $560.7 billion.
Howe e , in o de
o
a i e a he g and o al cos , he oil e enue
losses should also be included.
The
es ima ion
o
oil e enue losses in I an since he wa , i
seems, is an impossible ask, as he coun y's oil p oduc ion/
expo s we e much dis up ed well be o e he wa . Howe e , a his
poin , an a emp is made o p o ide an educa ed guess conce ning
he es ima ion
o
he po en ial oil- e enue losses esul ing om
he wa .
Table 10.3 p o ides in o ma ion on such es ima ion. The able
i s no es he ac ual o al oil expo s and e enues du ing he
1980--6 pe iod. They we e 446,815 housand onnes and $91.5
billion.
Table 10.3 Es ima ion
o
po en ial oil e enue, I an, 1980-6
Ac ual oil Ac ual oil Ac ual oil Po en ial oil Po en ial oil
p ices pe expo s e enues expo s- e enue·
ba el US $ ( housand bn.
ials
and, ( housand bn.
ials
and,
onnes) in b acke s, onnes) in b acke s, in
in bn. US $ bn. US $
1980 32 40,112 684 (9.7) 53,482 886 (12.5)
1981
37 41,079 732 (9.3) 54,771 1,163 (14.8)
1982 34 81,724 1,508 (18.1) 108,963 2,270 (27.1)
1983 29 81,100 1,621 (18.8) 124,980 2,295 (26.6)
1984 28 72,600 1,066 (11.8) 129,229 2,387 (26.5)
1985 28 72,100 1,157 (12.7) 129,229 2,387 (26.5)
1986 26 58,100 873 (11.1) 138,404 2,079 (26.4)
To al 446,815 7,641 (91.5) 739,058 13,467 (160.5)
No e:
• Au ho 's es ima ion.
Sou ces:
Fo
ac ual igu es: IMFa
1987
and Sm is iques
1980
o
1986
In
o de
o
a i e a he po en ial oil expo s, we assumed ha
o 1980, he ac ual and po en ial oil expo s we e he same, excep
ha du ing he las qua e
o
he yea oil expo s we e se e ely
dis up ed. The e o e, 13,370 housand onnes o oil was added o
he olume
o
ac ual oil expo s in 1980 o a i e a he igu e o
53,482 housand onnes, ep esen ing he po en ial oil expo s o
he
same yea .
To
es ima e he po en ial oil expo s o
1981
and 1982,
we
assumed
ha
hey would ha e g own a he same a e a which he
ac ual oil expo s had g own, i.e. a 2.4 and 98.0 pe cen du ing
he
1980--1
and 1981-2 pe iods.
F om 1982 onwa ds, he oil p ices s a ed o all. This coincided
126
The economic cos
o
he wa
wi h a se ious oil glu ha had de eloped ea lie . A his poin , we
assumed ha p agma ism would ha e p e ailed in I an, and ha
he au ho i ies would ha e inc eased he olume
o
oil expo s
only by he a e a which oil p ices we e alling.
I
his scena io was o ha e been adop ed, hen, as oil p ices ell
by 14.7
pe
cen du ing he 1982-3 pe iod, oil expo s would ha e
inc eased a he same a e, o 124,980 housand onnes in 1983.
The
same line
o
easoning was applied o
OU
es ima ion o oil
e enue losses o he es
o
he pe iod unde s udy. Ha ing
es ima ed hese igu es and mul iplied hem by he oil p ices, we
we e able
o
es ima e he po en ial oil- e enue losses. In
ou
es ima ion, we ha e used he ac ual oil p ices; o do o he wise
would ha e mean es ima ing he po en ial oil p ices. This would
ha e made
ou
ask e en mo e daun ing han i al eady is. In o de
o a oid he usage
o
so many unknown igu es
we
decided o use
he ac ual oil p ices.
In
all, du ing he 1980-6 pe iod, he po en ial oil e enues could
ha e been a o al
o
$160.4 billion. The e o e, he o al po en ial
loss in oil e enues since he wa is he es ima ed sum
o
$69.0
billion. The ac ual oil e enues du ing he las
17
mon hs
o
he
wa we e $14.2 billion. Thus, he o al ac ual oil e enue du ing
he wa pe iod
is
$105.7 billion. The e o e, he o al po en ial oil
e enue losses since he wa (gi en
ou
assump ions)
is
$83.6
billion.
I
he
abo e igu e
is
added
o
he semi-g and sum
o
$560.7
billion, we will a i e a he g and o al economic cos
o
$644.3
billion. This sum, ep esen s only he mone a y cos
o
he wa o
I an.
I
does no include in la iona y cos s, he loss
o
se ices and
ea nings by he many hund eds
o
housands
o
people killed, he
deple ion
o
na ional esou ces, he pos ponemen
o
c ucial
de elopmen p ojec s, he cos o he delayed aining and educa-
ion
o
he young people, and inally he igu e also excludes he
cos
o
wel a e paymen s o he hund eds
o
housands inju ed in
he wa who a e no able o con ibu e ully in he c ea ion
o
weal h o he na ional economy.
The economic cos
o
he wa o
I aq
The I aqi go e nmen , in con as o I an's, has no published any
es ima es
o
he economic cos
o
he wa . This makes he ask
o
es ima ing such a cos o I aq's economy a e y complica ed
assignmen indeed.
In o de o a i e a he alue
o
he economic cos o I aq, he
ollowing componen s should be iden i ied: he es ima ed cos
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