Business growth sustains fragile calm

Iraqi leaders and US officials warn that, unless the economy improves and jobs are created, the violence may return.

An Iraqi worker installs new equipment in a renovated poultry slaughterhouse near Mahmudiyah on Oct 14 2008.

MAHMUDIYAH, IRAQ // The rural lands surrounding Baghdad once had a reputation as the bread basket of Iraq, with lush farms producing the vegetables and meat eaten in the capital city a few miles to the north. That was back before the US invasion, the insurgency and a sectarian civil war made the area notorious worldwide as the triangle of death. Things are changing again, and the daily, deadly violence of 18 months ago has been replaced by a peace, one that is incomplete, fragile and expensive to maintain but a peace nevertheless.

Local leaders and US officials warn, however, that unless the economy improves and unless people are given jobs and regular incomes, the violence may return. According to Shaakar Karradi, who runs a poultry incubator and hatchery in Mahmudiyah, 26km south of Baghdad, the economy is starting to pick up. "In 2006, we had many problems with the insurgents and the fighting. Al Qa'eda put pressure on people not to work and many businesses shut down.

"Now the agricultural association is very successful, the industry is up on its feet again and I think it will continue to grow. "Farmers have a chance to make a profit and we are employing more people. I feel optimistic." Poultry has traditionally been a big business in the area and under Saddam Hussein received heavy state support. When the government was overthrown in 2003, it all but collapsed. Some factories shut their doors for two years.

Although some resumed work, they operated on a small and barely profitable scale, struggling to compete against cheap frozen imports in the newly open market. And, farmers said, they had little assistance from the Iraqi authorities. Hamstrung by violence and widespread incompetence and corruption, subsequent governments failed to revive the sector. "I'm sorry to say it but the ministry of agriculture isn't achieving much," said Mr Karradi, 66. "We've not seen any help from them. In fact we have a major problem because we cannot get fuel from official sources. We have to buy it on the black market, and end up paying more than twice as much for it."

Speaking on condition of anonymity because he was not authorised to talk to the media, a reconstruction expert working for the US government said the Iraqi government had done little to help farmers get their businesses off the ground. "All they offer is small loans with absurd conditions attached to them," he said. "No ordinary farmer can really qualify for a loan and they end up having to pay a cut to government officials if they want one.

"If you're an Iraqi farmer, the government is useless." Effectively bypassing the central authorities, the US military paid US$1.6 million (Dh5.9m) to support the local poultry association. Money was given to farmers but on condition that a proportion of the money be repaid by reinvesting in the sector. Within months, poultry farmers started to turn a profit. Mahmudiyah's successful poultry association, however, is the exception rather than the rule. Joblessness in the region remains high and the economy - and the tenuous peace - is propped up by the Sahwa Council scheme. These councils were set up as part of a deal between the US military and local tribes, many of which used to support the insurgents. The tribes are given cash in exchange for not attacking US forces and keeping security in their areas.

The region is dotted with checkpoints manned by these tribal militia - known variously as awakening councils, the sons of Iraq or concerned local citizens. Each tribal fighter gets a salary of about $250 per month, handed over by US troops in big stacks of hard currency. It is effectively a huge welfare scheme. Mizher al Hamadani has a doctorate degree in agriculture from a US university and spent eight years studying in Utah. He is also from one of the most powerful families in Iraq and his family runs a local Sahwa Council. He said the payouts were vital, but would not solve the underlying economic problems.

"Between 40 and 50 per cent of people here are jobless," he said. "Jobs would push people away from the insurgency - many fight or plant bombs because they're paid to. So if we can give people jobs, they'll move away from the market of insurgents and into the normal economy. "Unfortunately, that hasn't happened." Close to the Hamadani tribal home is a small village where residents live in small mudbrick homes with dirt floors. Children work alongside their parents chopping wood and making charcoal in nearby burn pits.

Mr Hamadani said the government was largely to blame for such poverty and economic stagnation. "They have billions of dollars in surpluses that are not spent, yet we see no strategic thinking on employment projects. "Most of the people who direct Iraq's economy don't do it well. They are living behind the concrete walls and don't see what happened. If the economy doesn't get better, the insurgency will always exist."

There had, he said, been positive talks in Baghdad about revitalising the economy, but little action. "We see no implementation on the ground. You have to see people working, some buildings. You need to see results. We have small-scale projects. We got some help from the Americans for four tractors. There are 350,000 people here and 60 per cent of those depend on agriculture. Four tractors just isn't enough."