The trade embargo in the 1990s, as western nations tried to punish Iraq for its invasion of Kuwait, high inflation and the collapse of the Iraqi currency, further combined to degrade Iraq’s middle class.
The eventual result was an Iraqi society comprised of a wealthy minority, linked to the dictatorship, and a majority who suffered in extreme poverty.
Emigration has also contributed to the decline in Iraq’s middle class because it was often those who were better off who were more willing and able to leave the country permanently. This led to a kind of “brain drain” and depletion of human resources that still plagues Iraq today.
Of course, since the overthrow of Saddam Hussein’s totalitarian regime in the spring of 2003, Iraqi society has undergone profound changes. A new political class has been created and there have also been profound changes to the structure of society. From the beginning, the first new government after Hussein, the Coalition Provisional Authority led by US diplomat Paul Bremer, seems to have wanted to encourage a new middle class in Iraq with its focus on raising wages, liberalizing the economy and free trade and encouraging small to medium sized business.
Despite the random and not necessarily always well advised nature of some of the Bremer administration’s decisions, they have contributed to an increase in incomes for large parts of Iraqi society. And the rise in oil prices has also allowed the current Iraqi prime minister, Nouri al-Maliki’s government to continue to create more government jobs and raise wages. This has certainly led to a bigger middle class in Iraq in a financial sense but it does not solve the problem of the middle class’ subordination to the state.
Partisanship, corruption, nepotism and a lot of bureaucracy also affects how the emerging Iraqi middle class can have an impact. It seems that a lot of the newly wealthy are busy seeking quick profits.
It will not be easy to promote the role of the middle class in Iraq. It will require radical economic changes that reduce the government’s rentier-style role and the middle class’s dependence upon the state. And none of this can be achieved without a comprehensive plan that strengthens civil society in Iraq and modernizes the culture; this plan must also be sustainable, based on economic, social and political progress.
Iraq needs to encourage small and medium sized business. Iraq also needs to give the unemployed middle class – the likes of university graduates and academics – alternatives to government employment. This can be done by encouraging better opportunities for domestic and foreign investors.
Iraq’s decision makers should be aware that these kinds of moves are not only an economic necessity, they are also critical in terms of combating the current splits in Iraqi society. These changes are critical when it comes to promoting peace and stability in a society that continues to suffer.