No More Charity: Making Iraq's Economy Work

Ration cards cover a number of staples but in recent years, items in the national food assistance programme have often been delayed or not delivered at all: this has caused popular protests in Iraq. And the system still exists today even though the original reasons for it no longer do.

Today, eight years after the US-led invasion that toppled Hussein’s regime, the Iraqi government still allocates around US$7 billion out of a federal budget of just over US$80 billion for ration cards. And the country remains one of the only nations in the world to make ration cards available to all of its people, regardless of income. In fact, the ration card is often used as a form of identity – many Iraqi families no longer have a passport or an identity card but most have the ration card – and has become one of the most important documents in any official transaction.

According to almost all economic analysis this practice creates a state of dependency among the Iraqi people; ration cards have been acknowledged as a significant obstacle to economic growth in Iraq. It is a particularly unjust way of redistributing wealth because it does not distinguish between those who really need state assistance and those who do not.

Certainly, there are better alternatives for spending the billions allocated to fund the ration card system and the distribution of ration card supplies. For example, increasing the salaries of those Iraqis of limited means and those on superannuation as well as improving other kinds of social welfare. This might also circumvent the amounts that are secretly channelled into the pockets of the corrupt.

Some observers argue that those in power don’t even believe in the social welfare aspect of the ration card system. Instead they say it’s about the potential political consequences of dismantling the system.

Rentier Symptom #3: An Over-Inflated Public Sector

Another indicator that a nation is a rentier economy is an over inflated public sector as well as an increase in the number of state-owned institutions that is not commensurate with need for them.