The economic consequences of the Gulf war

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 This Ve sion is a ailable a : h ps://hdl.handle.ne /10419/240582 S anda d-Nu zungsbedingungen: Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen Zwecken und zum P i a geb auch gespeiche und kopie we den. Sie dü en die Dokumen e nich ü ö en liche ode komme zielle Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich machen, e eiben ode ande wei ig nu zen. So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen (insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en, gel en abweichend on diesen Nu zungsbedingungen die in de do genann en Lizenz gewäh en Nu zungs ech e. Te ms o use: Documen s in EconS o may be sa ed and copied o you pe sonal and schola ly pu poses. You a e no o copy documen s o public o comme cial pu poses, o exhibi he documen s publicly, o make hem publicly a ailable on he in e ne , o o dis ibu e o o he wise use he documen s in public. I he documen s ha e been made a ailable unde an Open Con en Licence (especially C ea i e Commons Licences), you may exe cise u he usage igh s as speci ied in he indica ed licence. h ps://c ea i ecommons.o g/licenses/by-nc-nd/4.0/ 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 127