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Volume :19 Issue : 74 1994      Add To Cart                                                                    Download

ECONOMIC NOTES ON THE CONSEQUENCES OF THE IRAQI AGGRESSION ON THE STATE OF KUWAIT

Auther : By: Dr. Ahmad Mounir Najjar

 

It is well known that the Iran-Iraq war had totally harassed Iraq: its economic power was ruined, burdened with debts, its infrastructure and superstructure were destroyed, in need of innumerable wealth to revamp the ruin caused by war and find jobs to the enormous army that came back from the battle field and to compensate the prisoners of war, the handicapped and the victims’ families.

Because of all these uncountable requirements, Iraq tried to make the most of its oil pumping, bit it faced the OPEC pressure to march with the production allotted to it so as to keep world prices.

But misfortunes seldom came one by one. World oil prices fluctuated and reduced which affected greatly Iraq and its economy. Iraq’s oil revenues were not enough to cover a small part of Iraq’s construction requirements.

Facing this dreadful economic reality, Iraq gumbled and invaded Kuwait despite all international, Arab and regional, ultimately some world and Arab forces united, defeated Iraq and Kuwait was liberated.

Kuwait was liberated, but direct and indirect catastrophic economic casualties, impossible to estimate, befell both the Arab world and many other countries, which had economic relations with Kuwait, Iraq and the other Arab countries.

There had been a temporary depression in monitary. The national Kuwaiti currency was devaluated as well as other Gulf ones. Gold and foreign transfer request increased which had their passive impact on economy.

Currency devaluation led to inflation, which caused the up-rising of productive and consumptive goods. Prices soared as a result of halting importations and transport during invasion. Despite the liberation of Kuwait, inflation continued for two reasons. Merchants raised the prices of some goods and refused to be resilient, producers also raised prices specially goods and equipments needed for reconstruction.

The Iraqi invasion caused disturbance in manpower, which affected directly and indirectly the economy of the region countries. There was undisciplined random immigration of Arab expertise which ensued deficiency and imbalance in the manpower structure. This had its impact on production and productivity in the Gulf Arab States and the other Arab countries.

Kuwait bears the major part of the second Gulf war fees either in the form of loans or grants. Iraqi military economy was affected as a result of devastating its military arsenal, which Iraq had bought and made through wealth it had got from the Arab Gulf States during the war with Iran. Casualties are not only confined to what the war had ruined, but the cost of construction should be enhanced too.

All Arab Gulf States economy has been harshly affected. Saudi Arabia suffered greatly through participating directly in the cost of war, liberation, establishments, buildings, covering world oil requirements despite the devalue of oil. The UAE was exposed to economic sufferings such as distability in currency and goods markets. Oman and Qatar faced great casualties such as inflation of bank activities, the reduction of oil revenues and environment pollution.

Oman was one of the countries, which had little casualties because of its geographical location and its unreliance at large on oil economy.

Egypt was also one of the countries that was affected by the Gulf war at large. The return of manpower from Iraq and Kuwait without being unable to transfer their savings, and the reduction of the Suez Canal revenues have burdened the Egyptian economy. In Syria the exports were minimized, tourism became at a halt, in addition to the cost of the troops sent to Gulf War.

Lebanon exports into Arab Gulf States were reduced. Jordan, Palestine, Yemen and Sudan were affected, too. Manpower in these countries returned and unemployment increased. The grants paid by Gulf States to these countries stopped which caused economic disorder. The environmental consequences with their social and economic reflections will be long life and will be hard to evaluate and estimate.

There are international reflections on the standard of oil prices putting in mind that oil is the vital production, which Arab Gulf States economy depends on. Before 1973, oil prices were fixed, yet world inflation has swallowed any rise in oil prices. Rise in oil prices was ostensible, especially if we add the rise of import prices compared with goods locally made and needed for reconstruction and armament.

Now let’s ask this question:

“What are the positive economic consequences which will be yielded to the Arab countries if the money spent in liberating Kuwait, spent in reconstruction, spent in compensating environment casualties – if this money was used instead in social and economic development projects for the Arab countries and Kuwait would be the pioneer that financed those projects?

The answer to this question will give true statistics to the negative economic dimensions that befell all Arab countries.

This question, also, will be demonstrated by contemporary and futuristic generations to those who planned and carried out the failure of Iraqi invasion of Kuwait.

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