In Search of Legitimacy: The Post-Rentier Iraqi State
Published on: Mar 26, 2004

Isam al Khafaji is a professor of nation formation and development at the University of Amsterdam.

Iraq's turbulent history is a symptom of a structural crisis in which modes of governance are only a product. The policies of the republican ruling elites have accentuated, rather than solved, this crisis. This crisis, as I will try to show, has nothing to do with the so much invoked heterogeneity or artificiality of Iraq as an entity and society. It is a crisis that only surfaced after the emergence of new trends that have left their long-term repercussions on Iraq's society, economy and state structures.

The Monarchy or Disguised Pre-modernity:

In order to show how the turbulent political situation surrounding Iraq is leading many analysts to derive hasty--and often unfounded--conclusions regarding its prospects, one has only to remember that between 1921 and 1958 Iraq was a constitutional monarchy which kept the formalities of a parliamentary democracy that was more stable than the political regimes of many of its neighbors.

Many analysts emphasize the role of the British in designing Iraq's political system and keeping it in place. Yet a more careful reading of history would show that the latter had to take into account the dynamics of Iraqi society--its anti-British revolt in 1920 and the forceful demands of a rising urban intelligentsia to establish a European-style political system for example--as they tried to secure their long term interests in that country (Nadhmi 1984). The two main social pillars that provided support for the monarchy and who were favored by its policies were the big landed aristocracy in the countryside and the large mercantile strata in the cities. The relationship between the state and these two social classes was quite transparent in the sense that individuals from both classes or their descendents and kinsmen invariably occupied leading posts in the cabinets and the parliament (Batatu 1978: 358-9). However, it was not only the tiny group of wealthy individuals who had a stake in preserving the system, or at least who did not challenge the legitimacy of that system.

For despite the modern institutions upon which the monarchy was based, the system was basically geared towards channeling pre-modern local loyalties into national politics. Hence, its legitimacy was derived to a large extent from the legitimacy that the urban notables and the big landed aristocracy in the countryside had acquired among their respective 'constituencies'. Landlords were for the most part tribal sheikhs, religious 'ulama, or simply ex-warlords who subjugated the peasants in exchange for 'protection' from other invaders of their land. Urban notables owed their positions to regional/confessional loyalties within segregated cities. Hence, in modern terms Iraq's parliamentary democracy was anything but representative of the majority of the population.

The parliamentary system that existed in Iraq was based on a set of rules whereby representation and political solidarities and alliances reflected not the voluntary and free individual choices, which form the essence of civil society, but rather the various 'primordial' associations that characterize a pre-bourgeois community.

The survival and viability of this political system for almost four decades should seriously question the currently widespread statements on the 'ungovernability' of Iraq, either because of its supposed 'artificiality' or because of its 'heterogeneity'.

The Roots of Crisis:

But then, how did a political system that for almost four decades enshrined the principles of separation of the legislative, executive and judicial powers, free elections, and freedom of the press, assembly and organization devolve into an absolutist autocracy in the name of the people?

Iraq in 1950 was in a position similar to other third world countries characterized by widespread urban misery and unemployment, destitute peasants, newly emerging middle sections of the population, and lacking the necessary capital to embark on a modernization program that could alleviate poverty and raise productivity. The dramatic change occurred when the oil consortium agreed on a profit-sharing arrangement with the host countries in the Middle East in the early 1950s.

Within a period of two years Iraq's oil revenues leaped from 5.3 million Dinars in 1950 to 79.9 millions in the year of the 1958 revolution (al Nasrawi 1968: 23). By 1953, oil production was already accounting for 45.7 percent of Iraq's GDP (Owen & Pamuk 2000: 168). The dramatic increase in the state's resources, which witnessed another leap during the 1970s, had far-reaching consequences for state-society relations, norms of governance and, obviously, economic performance.

When the windfall gains from oil began to flow in the early 1950s, the government was bound by a certain degree of accountability towards the parliament and the royal court. New institutional arrangements were thus made to efficiently dispense with the new resources (Jalal 1973: 42-60). Yet, despite the commitment to allocate the bulk of oil revenues to investment purposes, the temptation to relax constraints on public spending proved to be too strong (Mahdi 1977: 16).

With the overthrow of the monarchy, the legal constraints on the government's allocative freedom were gradually released as job creation and raising the standard of living of civil servants and particularly the armed forces proved to be very attractive for both the government agencies and the population in general (CB 1966: 279). Soon this whole procedure of keeping a façade of strictness gave way to the practice of allocating the residual of oil revenues--if there was any left--to the investment plan after carving out the allocations of an ever expanding ordinary budget. Hence, with annual per capita income growth rates of 4.7 percent and 3.4 percent during the periods 1961-1964 and 1964-1969 respectively, the corresponding growth rates for government consumption were 10.9 and 7.9 percent, and for total investment only 0.15 and 3.3 percent (Mahdi 1977: 16). Ironically, these dramatic changes came when a major declared objective of the consecutive republican regimes was accelerated economic development.

Disruptive Migration, Shifting Balances:

Two sets of factors intertwined to produce the authoritarian structures of today's Iraq. One set of factors--the enhanced autonomy of the state and its agents thanks to the rise of oil revenues--made the change feasible, while the second, the crisis of pre-modern social structures, made it desirable. The last set of factors explains why the dominant classes under the monarchy lost their legitimacy in the eyes of the majority of the population and why the public looked at the monarchy's use of the newly acquired wealth with deep mistrust. But what is our evidence of the regime's loss of legitimacy?

The sharecropping system in agriculture was one of the cruelest in the Middle East. Most available land was concentrated in the hands of a tiny number of landowners: 1.7 percent of holders owned 62.83 percent of the agricultural land, while 72.93 per cent of the holders owned only 6.28 percent of land (Gabbay 1978: 42). A comparison between an Iraqi tenant in the 1950s and a medieval European serf ran in favor of the latter, according to Doreen Warriner (1962: 119).

With the consolidation and expansion of opulent mercantile and landowning classes, the economic conditions until the 1950s were all but stagnant. Agriculture was increasingly commercialized, old loyalties in the countryside were disintegrating and landowners were no longer in need of a large workforce of their tribesmen or kinsmen. In the meantime, urban dominant classes were mostly engaged in trade, banking and real estate activities, which have a low absorptive capacity for labor. The expansion of industrial activity was too slow to absorb even a fraction of the migrants or urban unemployed. Hence cities were swelling with the unemployed.

Millions of landless peasants found themselves marginalized and many ended up as migrants in miserable squatters in Baghdad and the other major cities. Baghdad's population grew from 300 thousand in 1930 to 3.8 millions in the mid 1970s. The comparable figures for Basra were 60 thousand, 232 thousand and 680 thousand.1

The vast majority of immigrants were landless peasants, mostly illiterate and unqualified. Unemployment played a crucial role in depressing the rate of pay and cheapening the workforce for employers. Despite the spectacular rise in Iraq's oil revenues since 1952, unemployment rates increased from 19.5 percent in 1947 to 23.8 percent in 1957 (Hassan 1965: 78-9).

Migration waves were inevitably leading to a radical change in the composition of Iraqi cities. The original city, the nucleus in which prosperous merchants, absentee landowners and bureaucrats thrived, was cracking down with time. But for the new migrants, the pluralism of urban life whereby members of 'other' ethnicities and/or confessions enjoyed enviable positions, were only explicable in terms of the latter's playing the role of agents of a foreign enemy, or as the latter being foreigners themselves. The source of these evils was seen as a result of the dominance of foreign and alien elements over urban life. The big city to which they had only recently migrated was seen as a locus of all the maladies. It was but natural that such complaints would be articulated within an ultra nationalist and statist discourse.

Roots of Statism:

Although the vast majority of immigrants were landless and destitute peasants, the most articulate immigrants, who would shape Iraq's future, came from different origins. These were the sons of small landowners, craftsmen from provincial towns, or well-to-do peasants, who were sent to Baghdad in order to pursue higher education, or find better jobs there. The fact that these immigrants have radically shaped Iraq's socio-political landscape mainly (but not exclusively) due to their enrolment in state jobs-especially the armed forces-provides a way of analyzing their impact.

The scanty data relating to the expansion of state employees before the 1950s indicate that the number of people depending on the government salaries and pensions for their living in the mid-1930s was 37,158; i.e. 1.2 percent of Iraq's three-million population then, and approximately 5 percent of the urban inhabitants (Daleel 1936: 251). This number leaped to 319 thousand by 1967 (Mahdi 1977: 50). As for the armed forces, they grew from 3,500 men in 1921 to 12,000 in 1932 (Sluglett 1976: 260), around 50,000 in 1947 and 110,000 in 1957 (Hassan 1965: 78-9).

The officer corps was not only composed of those sons of lower classes who could afford to finish a few years of high schools and enroll in military academies, but was also stratified along sectarian/regional lines. Discrimination was systematically practiced against enrolling Kurds and Shi'is in the officer corps. Shi'is from the southern poverty-stricken governorates had a heavy presence in the noncommissioned officer corps and the police. For the poor sections, especially during the period of stagnation during the 1930s and 1940s, these outlets provided excellent means for advancement for those who saw all other avenues blocked.

Al Khattab provided ample evidence on how the British selected members of three Sunni Arab tribes residing north of Baghdad to form the nucleus of the officer corps of the newly formed Iraqi armed forces in 1921. Members of al Jubour, al Bayyat, and al 'Azza tribes formed some 25 percent of the officer corps of the Iraqi army in the 1920s (al Khattab 1979: 123). Colonel al Zaidi published a comprehensive list of the Iraqi and Turkish officers who joined the Iraqi armed forces after the defeat of the Ottoman empire in WWI. None of the senior officers (colonel and above) belonged to the majority Shi'ite confession of Iraq (Al Zaidi 1990: 433-43). This formula of excluding members of the majority confession, as well as non-Arab ethnicities including those adhering to the privileged confession (such as the Kurds who are Sunni Muslims but non-Arabs), has been pursued decades after the formation of nationalist rule.

The would-be ruling elites' discrimination against particular confessions or ethnicities, however, should not be viewed as primarily motivated by a sectarian or chauvinist attitude as such. It was rather about people originating from a common background, experiencing the same hardships, sharing the same dreams regarding the prospects of migrating to the 'cosmopolitan' Baghdad, and facing the same shunning, dehumanization, and exclusion by the elite of the 'cosmopolitan' city.

Thus, while it is true that the migrants who came to play prominent roles in Iraq's political and economic life shared much with other migrants, their difference from the majority of the latter should also be stressed. Hence their political acts and choices, though in many ways responding indirectly to the expectations of the majority, were by no means representative of the choices and beliefs of the majority. On the 'destructive' side, i.e., on defining the political target for attack, there was quasi-unanimity. One can safely assume that the monarchy and the dominant landed aristocracy were despised by the majority of the populace during their closing years.

Migrants and non-migrants alike were not keen on preserving the status quo. But while many aspired to overthrow (or radically transform) the ancien regime, not all had the ability to do so. Political change required much more than discontent, which manifested itself in several street outbursts in the major cities. It required the existence of a core that had the capability to effect that change. And while those who succeeded in doing so did express the bitterness of migrants and the alienated urbans towards the upper ruling classes, they had their distinctive worldviews that distanced them from wide sections of other migrants.

The rifts and violent clashes that characterized the early revolutionary period were clear indicators that while all parties agreed on overthrowing the existing regime, there was little agreement on the social, economic, and cultural programs that should be implemented and, most important, on the type of political regime that should replace it.

Manufacturing Revolutions:

Radical change took place within a social context characterized by: 1) the domination of big landed aristocracy and the mercantile class; 2) an increasingly autonomous role of the state, and 3) the rise of social strata whose further advancement was blocked by the dominant landed and mercantile classes, and who could present their revolutionary cause in a way that appealed to wide masses of the oppressed.

Understanding the backgrounds of the immigrants who came to play leading roles in Iraqi society is essential to understanding the ideological framework, the political practices and the socio-economic programs that they introduced and to explain how they imposed acquiescence on the majority of the population. It may be ironical that these changes, which were the direct product of the crises of a system dominated by the big landed aristocracy, were not carried by its direct victims.

Two traits of the Ba'thist revolutionary leaders could be discerned: the first is that none of them came from the major urban centers of Iraq. And the second is that virtually none of the new leaders, or their parents, had experienced direct subjugation to the oppressive machinery of big landed aristocracy. They either hailed from regions whose topography did not allow the rise of big estates, or were small landowners who did not suffer directly from semi-feudal exploitation and degradation (Batatu 1978: 1090-91).

This background has been instrumental in shaping the outlooks and social programs of the Ba'thist leadership. But portraying the new leadership in this way may give the impression that this analysis is additional evidence for the widely held notion that political leadership has a free hand in molding passive societies. An analysis of the course of the revolution will show that the final shape taken by the revolutionary regime was due, to a large degree, to the forceful pressures that it had faced from social actors, who despite being unorganized and lacking the means of transmitting their demands, could make their aspirations and disappointment felt by the rulers.

Saddam Hussein's Ba'th Party came to power one decade after the revolution that established the republic in 1958. During that decade, a reformist and nationalist leadership was overthrown in a bloody coup in 1963 led by the Ba'th Party. Nine months of a terror regime under that party came to an end when a pan-Arabist regime overthrew the Ba'th and ruled Iraq until 1968.The first (reformist) leadership of the revolutionary regime was predominantly urban and had symbolic urban figures heading them. Some of the positions were occupied by figures who had played prominent roles in society and in 'establishment' politics, or had occupied relatively prominent positions under the defunct regime. In the period 1958-1963, 64 percent of the ministers were born in Baghdad, Basra, or Mosul. The comparable figures for the period 1963-1968 were 37 percent, and 25 percent for the first decade of the Ba'thist regime (1968-1977) (Tikriti 1976: 276, al Khafaji 2000: 262-5).

During the first republican era (1958-1963), legal-bureaucratic formalities were respected in some areas, including regulations governing military promotions. Yet the overall erosion of democratic and meritocratic practices was too pervasive to be papered over through modest and highly circumscribed observance of the rule of law. And even these feeble attempts at legalism soon gave way under the weight of increasingly authoritarian practices. And by 1968, with the multiplication of coups d'état, each claiming to rectify the errors of its predecessors, the proclaimed goal of returning to constitutional rule was abandoned. Yet, abandoning constitutional norms and the commitment--verbal at least--to reinstall pluralism in public life could not have been possible with the urban revolutionaries at the helm of the state. Hence urban politics (and culture) was made redundant as the cities themselves had been overwhelmed by non-urban migrants.

It should not be surprising that promulgating and implementing the law on land reform, a major step with which the revolution has been associated, took place during this 'first stage' of the revolution. Ironically, this reform unleashed pressures that were to undermine the political base of those who enacted them. The first-stage leaders did not intend to go much beyond curtailing the power of big landowners and punishing the old politicians. Radicalized masses of unemployed immigrants who had never been to the ballots or understood party politics, and peasants for whom the liberty of the press meant very little, if anything, could not understand the hesitation of their leaders to abolish all these practices.

The revolutionary developments since 1958 swept the old ruling classes away from the political scene. The 'transitional' revolutionaries followed suit after a few years as the huge pressures for radicalizing the course of revolutionary changes made it possible for rural and provincial town immigrants to take full control of the state apparatuses. Theoretically, this should lead one to expect the establishment of more representative and therefore more democratic political systems since these immigrants formed the majority of the new urban spaces and had so much to share with the aspirations of the peasants. So, how can we understand the paradox of the rise of a tyrannical leviathan under the rule of a tiny clique as an outcome of this change?

The interaction of two sets of conditions may account for this. One is the social configuration at the time of the revolution and the other is the changing relationship between state and society since the early 1950s. The mass migrations coupled with the virtual absence of expansion in the formal, organized urban sectors--the same phenomena that instigated change--had their necessary corollary; namely that the new regimes stood above atomized societies. The vast majority of the population was neither organized economically, nor politically. Their aspirations, pressures and disenchantment could be felt and transmitted in indirect ways, but they had no way of putting collective demands systematically. Repression and hostility towards collective acts by the pre-revolutionary, as well as revolutionary, regimes were able to isolate what little organized action could be carried out via radical parties and trade unions.

On a societal level, state authorities, deprived of their independent means of ideological legitimation, were facing atomized populations even before the revolution took place. In fact, this atomization was a symptom of the crisis that the revolution was supposed to address. This situation provided the preconditions for asserting the supremacy of the state as a regulator of social activity without the mediation of local leaders. The backgrounds of the new revolutionary leaders, almost all owing their rise to occupying jobs in the state apparatus and particularly the armed forces, was an additional reason for fetishizing the state and its capabilities to 'produce' progress. But this fetishism only evolved gradually as the state leaders discovered the lack of organized and effective resistance by the atomized population to their acts.

With the exception of land reforms, the transitional revolutionaries had no plans to enact serious changes in the socio-economic spheres. Land reforms had an objective of putting a ceiling on the size of land owned by a single individual or family and distributing the confiscated land to landless peasants. The new leaders' enthusiastic calls for industrialization and the encouragement of national industry were translated into enacting legislation that gave more exemptions and bonuses to local private industrialists and taxing imported goods. Hence, no étatism was preconceived by the urban and transitional revolutionaries.

The social consequences of these developments were obviously favorable to the rise of new juntas who were not constrained in their actions by organized lower classes, or powerful dominant classes. But these consequences would not have been sufficient to ensure stability if the state had not acquired the potential for relative financial autonomy from the dominant classes.

A more autonomous state could now do away with the whole concept of representation to the advantage of direct rule. The armed forces, despite their distorted ethnic and sectarian composition, could present or imagine themselves as the only national institution that could act on behalf of the 'nation'.

While urban revolutionaries saw their 'destructive' mission accomplished by cutting the roots of big landed aristocracies, with whom they shared no common interests or sympathies, the more articulate and active sections of the population were looking for bettering off their conditions in the cities. The scenes of inequality, lavishness and affluence lay side by side with those of misery.

The revolutionary leaders' background, hailing from oppressed sects or regions, was instrumental in shaping their ways of perceiving class divisions in Iraq as a whole, and their 'solutions' to harmonize society and bring social justice. Those rulers may not have, and in many cases did not, harbor a priori religious prejudices, but were driven to view the dominant and wealthy merchants, bankers and affluent strata--who were mostly Shi'ites--as hostile people belonging to privileged sects or regions. Attempts at 'redressing' inequality inevitably turned into suspicion against established urbans, especially those with whom they shared a confessional solidarity.

As the 1958 revolution achieved the goals that were welcomed by the majority of the population, fissures within the revolutionary camp surfaced as the eternal question of the outcome of the revolutions would reveal the narrowing of the common denominator between people hailing from different social structures and having different concerns. Yet, rather than a 'smooth' process of switching from one type of revolutionary regime to another, the way the present system, in place since 1968, unfolded and its specific structure are of utmost importance to understanding present day Iraq.

Ba'thism in Action:

The Ba'th party came to power in a bloodless coup in 1968 after a decade that witnessed three republican military regimes each ousting the other in a bloody coup, each claiming to be the final revolution that would put an end to corruption and exploitation, and to fulfill the goal of Arab unity. At the time of the Ba'thist coup, the predominant mood among politically articulate sections of the population was quite contradictory. On the one hand, people were weary of military rule and the bloodshed associated with it. On the other hand, the second half of the 1960s witnessed a resurgence of radicalism, in both the developed and the developing worlds. Iraqis contrasted the 1967 Arab defeat in the face of Israel with the Vietnamese resistance to the US forces.

The Ba'th party played skillfully on these sentiments by projecting the image of a militant party, not a military junta, coming to rid the nation from defeat and stagnation. The revolutionary mood, a decade of non-constitutional rule, as well as a deep mistrust in the monarchy, the only constitutional regime in the history of Iraq, made the perpetuation of unconstitutional rule look like an ordinary procedure to the population in general. The main opponents of the regime on the left and right did not question its legitimacy on these grounds, given that even if they did, the general mood would not have been very receptive to such a challenge. Rather, the challenge was whether the Ba'th party was sufficiently patriotic, radical and committed to development and social justice or not.

The RCC (Revolution's Command Council), transformed into an entirely Ba'thist body after ousting the officers who helped the party come to power, became the highest legislative body in the country. With this, all subsequent decisions aimed at making shows of power-sharing such as the creation of a National Assembly in 1980, were doomed to turn into additional rubber stamps for the RCC.

However, it was clear from the outset that, despite the formal show of collective leadership, not all members of the RCC were equally empowered. Power resided with those who were in charge of the major coercive apparatuses: the military and intelligence. The sense of vulnerability and threat that the new leaders created, their subsequent determination to attack counter-revolution whether from within or from without, and the increasingly politicized atmosphere served as justification for the vast expansion of the internal security apparatus. What began in 1958 as a popular revolution against 'a handful of traitors' turned into a nightmare for thousands and thousands who could be accused at any moment of conducting activities against the revolution. To the General Directorate of Security and the Directorate of Military Intelligence, no less than three other formidable coercive institutions were added: the General Intelligence, the Special Security Forces and the Military Security, in addition to a vast network of informants who report to the party or to its front organizations (al Khafaji 1994, Bengio 2000).

The hierarchy within Iraq's Ba'thist power structure was not evident from the beginning because of the leadership's skillful attempt to cast an image of comradeship among seemingly equal colleagues. With the abortion of an internal coup attempt in 1973 led by the powerful head of security in collaboration with other leading members within the regime, concentration of power within a few hands took another sharp turn that formalized family and regional solidarities. By the end of the 1970s the president, his vice chairman, the minister of defense as well as many other powerful figures belonged to one extended family.

The heavy reliance on family and kinship as the cementing element in consolidating power blocs, however, represented a radical shift in Iraqi politics in the 1970s. The Ba'th Party came to power with an agenda of modernization in a society that was already urbanized and had cast away the rule of dynasties since the overthrow of the monarchy in 1958. Hence, the leadership of Saddam Hussein had to legitimate this shift in ideological terms as a group of militants who happened to belong to the same kin.

Yet this shift was predicated on a series of measures that emboldened the Iraqi leadership's claims to rule on behalf of the people. Until the nationalization of the oil industry in 1972, the Ba'th regime had to prove its patriotism in a defensive manner. Once that hugely popular act was achieved the state assumed the full role of an unaccountable patron and patriarch of the population, creating jobs, dispersing largesse, and marginalizing the discontents. From the 1980s on, a new pattern in appointing senior figures to the cabinet and other sensitive jobs could be discerned. Whereas these figures had been invariably drawn from bureaus and offices annexed to the RCC in the 1970s, the ever-expanding Office of the Presidency assumed that role now (al Khafaji 1990). This individualization was to culminate in the way the chairman of the RCC was gradually dissociated from the rest of its members and put above them.

What made this outcome possible was not the power struggle at the top, but the atomization of society, the increasing capacity of the state to play a dominant role in the economy, and a host of other factors that made nationalism, statism and development look like identical/ non-competitive objectives.

Trajectories of Rentierism:

The single most important factor that allowed the state to play the role of a patron and furthered the atomization of society lies in the rentier structure that was associated with the peculiar way of extracting and disposing of oil revenues. Rentierism, defined in its broadest sense as the regular dependence of a country on substantial amounts of external economic rents whose variations are not related to changes in productivity or changes in inputs to the production process, reached its zenith in Iraq during the1970s and 1980s.2

Iraq's relatively huge oil revenues since 1952 spared it the typical problems that other 'third world' countries had faced; namely the search for hard currency and means for financing its investment expenditure. Policy makers and planners were therefore not pressed by the need to raise the competitiveness of Iraq's industry and agriculture or to find export outlets for Iraqi products, but by the need to find jobs for the unemployed and to raising the standards of living in the short run. This was facilitated by the fact that, unlike manufacturing or agriculture, creating jobs in the civil service required no additional inputs (Penrose 1971: 285).

Through these policies the ruling Ba'th ensured the acquiescence of wide sections of the population. From 1958 to 1977, the number of personnel employed by the state jumped from 20,000 to more than 580,000, not including the estimated 230,000 in the armed services at that time or some 200,000 pensioners directly dependent on the state for their livelihood. The most recent figures, from the period just after the Gulf War are: 822,000 on the state civilian payroll, including some 200,000 working for the various state and party security services, approximately 400,000 in the active duty armed forces and some 350,000 pensioners. In proportional terms, this means that the civilian state apparatuses employ around 21 percent of the active work force, and that around 40 percent of Iraqi households are directly dependent on government payments (Batatu 1978: 1126, UN 1991).

These policies resulted in the state becoming a Leviathan and not a vehicle for development and/or modernization. As oil revenues jumped from an average of US $ 600 millions between 1970 and 1972 to US$ 26 billions in 1980 the state not only became the biggest single employer of the workforce in the economy, but also the main generator of hard currency, and through both, the main purchaser of products and services of a flourishing private sector.

The more resources were becoming available to the state, the more the country diverged from the path of late industrializers. Given the fact that private contractors continued to dominate the construction sector of the economy, it was but natural that the most affluent sections of the Iraqi capitalists would be composed of those 'fat cats' vying to show their allegiance to the regime, and thus to gain more contracts from the state, brokers who provided imported goods, and industrialists who were eager to satisfy the needs of state agencies that were becoming their main market.

As the atomized population was linked individually to the state apparatus, forms of collective identities replacing the old pre-capitalist ones could not emerge in place. To further the atomization of the population, individual petitions requesting (but not demanding) wage increases or special favors were sympathetically looked upon, while unions and autonomous associations were harshly suppressed.

By the second half of the 1980s, Iraq was beginning to look like the Egypt of the early 1970s. The extent of privatization can be seen from the 1988 household budget survey. Almost three quarters of the total income in the urban areas, and well over four fifths in the rural areas were in fact profits and rents, as well as a substantial percentage of the population earning their incomes from unorganized (informal) activities (Alkazaz 1993: 236).

'Fat cats' closely connected to those in the upper hierarchy of the political system were beginning to encroach upon state property; the state whose resources had already been stretched beyond its means was looking for those who would shoulder off the burdens of running its property; and depression was looming over the economy for the first time in decades. But how could such inefficient systems prevail for relatively long periods of time?

The key feature of a rentier state is that external rent liberates the state from the need to extract income from the domestic economy. Iraqis were indoctrinated to believe that they only received benefits from the state without contributing to its wealth and that they were not entitled to have a say in the running of the state.

Under statism significant short-term achievements were made in the standards of living. Between 1960 and 1992 life expectancy rose from 48.5 years to 65.7 years and infant mortality dropped from 139 per thousand in 1960 to 73.8 per thousand in 1985. Other indicators such as the daily intake of calories, access to safe water, number of population per doctor, access to health services and to the sewage system, literacy among adults and enrollment in primary schools showed considerable improvement (al Khafaji 2000b).3

Kinship, Confession and Class:

Until the rise of rentierism, members of the dominant elite came from across the national/confessional spectrum of Iraqi society (Batatu 1978: 57-60). The composition of the dominant classes, representative of the diversified composition of the population itself, was not the product of a deliberate policy. Rather it reflected the nature of pre-modern polities and social formations. Hence alongside the senior officers and the upper bureaucracy, the bulk of the dominant classes had their roots as local chieftains: tribal sheikhs, urban notables, chief of urban quarters, religious notables, etc., which explains their more or less representative character in the regional, confessional and ethnic sense.

There was, however, a major and palpable schism within these classes that helped to bring a degree of stability to the monarchic system and whose dissolution under the impact of rentierism explains much of the structural crisis of today's Iraq. Whereas poor and rich cut across all sects, ethnicities and regions, the urban Shi'a rich were concentrated in trade and banking activities while the Sunnis dominated the state apparatus and by consequence those economic activities, such as manufacturing industry, that relied on the state as a purchaser or subsidizer.

As wealth was mostly generated in the private sphere, this 'division of labor' within the dominant classes ensued with a degree of stability within the social system. For despite the perceived discrimination against non-Sunni Muslims in filling the higher state positions, the private sector provided opportunities for those non-Sunnis who had the required means for social and economic ascendance.

With the advent of the rentier state the boundaries between and within each community were violently redrawn. As the state became the single largest employer and purchaser as well as the dispenser of foreign exchange in the economy, private capital itself became increasingly dependent on a state that discouraged transparency under the pretext of national security. Contracts and largesse were handed out to those closest to the 'Revolution'; a term that was reified and given metaphysical connotation. Kinship and common regional descent with the major leaders or those occupying sensitive jobs in the intelligence and security apparatuses steadily and firmly asserted themselves as major criteria. By the mid-1970s Iraqi private capital was beginning to make positive, but slow advances in the economy. The existence of a large stratum of nouveaux-riches was quite evident for most Iraqis then. The number of registered contractors rose from 828 in 1970/1971 to 2788 in 1975. Complementing these relatively large-scale activities and responding to the rising demand for a variety of products and services, a wide network of smaller businesses, industries and workshops flourished. The rise in large private industrial enterprises was much more modest; from 1069 to 1282 respectively (AAS 1969: 91, AAS 1978: 132).

By the mid-1980s, the land reform acts were reversed to allow the long-term lease of agricultural lands that had been sequestered under the land reform acts to private companies, a new law providing exemptions and grants to companies with higher capital was passed, a contractors' union was established, and finally a privatization plan under the rubric 'the administrative revolution' was adopted. State owned agricultural projects and farms, hotels, cinemas and restaurants, gas and oil distribution stations, and hundreds of industrial establishments were put to sale.

At a Crossroads?

Iraq will undoubtedly remain dependent on the production of oil as a main source of its foreign exchange earnings in the short and even medium-term. While a post-Saddam state will, in all probability, withdraw from engaging in directly productive or distributive economic activity, oil production will still be in the hands of state-owned companies. Oil revenue will no longer, however, be sufficient to perpetuate the rentier system. Iraq can resume its pre-1980 level of oil production of 3.5 million barrels per day within a short period of time. Given its huge reserves and low costs of production, it can easily attract foreign investors to upgrade and expand it export capacity. Such a relatively huge surge in exports, however, could be counterproductive, even harmful. All major oil exporters face severe economic problems and are therefore highly unlikely to cede part of their market shares to Iraq. This means that an increase in Iraq's pumping of oil would only contribute to a collapse of the market prices and the shrinking of revenues for all of the exporters including Iraq.

An even bleaker consequence of increasing oil exports by Iraq is directly associated with its vulnerable geo-strategic position. Iraq is the only major oil exporter with no independent outlet to the sea. The Gulf countries could squeeze Iraq's oil production if its competition with them seriously threatened their own export earnings. In addition, outstanding debts to Saudi Arabia and the Gulf emirates dating to the Iran-Iraq war era, and demands for war reparations by Iran and Kuwait may well prove to be formidable weapons to force concessions on a weak and devastated Iraq. Even if the U.S. applied a strategy of radically shifting its regional alliances and priorities to embrace a modernizing and 'moderate' Iraq in the face of the Saudis and Iranians, the prospects for big surges in Iraq's oil prospects may not prove to be very promising because political alliances can do nothing to offset the effects of oversupply. Moreover, a U.S. embrace of Iraq would require that non-oil exporting neighbors of Iraq-Syria and Turkey in particular-to be fully cooperative in order to provide secure alternative outlets for Iraq's oil. Either way, Iraq will have to make compromises with its neighbors in order to secure the flow of its oil through their territories.

In the meantime, the temptation to radically upgrade Iraq's export capacity to the point of challenging Saudi Arabia as the major oil exporter could threaten the yearning of Iraqis for a peaceful future. In order to thwart attempts to block its drive to be the major oil exporter, Iraq would have to rebuild a military machine that would reproduce the cycle of violence and wars and swallow whatever gains accrued from an increase in oil revenues.

The upshot is that Iraq can no longer count on the resumption of oil exports to go back to its pre-Gulf War levels. Even if it could, pumping 3.5 million barrels per day once again would not secure revenues comparable to the old levels. All this would probably force any Iraqi regime to rely more on private initiatives and to open up its financial markets for foreign capital. How the private sector and foreign capital respond would likely shape the future of Iraqi politics and society.

If sanctions have brought misery to the vast majority of the population, wiped out the middle class, and caused the more affluent to leave the country, they have also created or enriched a stratum of 'super nouveaux riches' (Graham-Brown 1999: 179-213). However, because much of their wealth came through mafia-like family or political ties to the Ba'thist regime, it is highly unlikely that they would invest in a post-Saddam economy. A more likely source of local investment if Iraq could achieve a degree of stability would be the present Iraqi expatriate community estimated at about 3.5 to four million people. The obvious source of foreign capital would be from oil companies racing to stake their claims to lucrative new opportunities.

Categorical predictions are impossible, but the resulting proliferation of socioeconomic actors able to challenge the state monopoly over investment and employment decisions may produce a degree of civil and political pluralism sufficient for a transition to a democratic polity and society. Of course, the risk that it will not do so can hardly be exaggerated. Economic pluralism is almost certain to follow the fall of Saddam's regime. A federal status for Kurdistan would be an additional source for competition.

Experience shows, however, that in the absence of a framework that binds together the various actors privatization may further atomize the population. The Ba'thist regime contributed, through patronage and clientelism, to a flourishing private sector, for which the state was the major customer. This relationship diminished the stake of the capitalists in democracy and even in the rule of law. Thus an Iraq that perpetuates its dependence on oil exports and state purchases, even if its private sector supplies the state's requirements, would produce only the semblance of openness already seen in certain Middle Eastern and Central Asian republics. Its society would be no more than a clustering of communities, sectarian, tribal, and regional, each vying to enhance its positions at the expense of others-a recipe for civil conflict.

A desperate post-Saddam Iraq might open up and liberalize swiftly, with an eye to attracting foreign and domestic resources, but the main beneficiaries would be private banks that have no stake in industrialization or productivity. On a societal level, the consequences would be the further enrichment of a tiny minority; the outflow of resources and capital; and the rise of unemployment. A heedless privatization would eventually push wider sectors of the population to the economic margin, the so-called informal sector and nostalgia for the old patron-state. Only a strategy of modernization and industrialization that gradually releases the grip of the state while laying the foundations of a diversified but interlinked economy can usher in a new era for Iraq, and thereby the entire region. It is in this task, more than the pumping of oil, that a post-Saddam Iraq would most need the commitment of the international community.

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Endnotes

1 Figures for 1930 & 1975, Issawi (1988, Table 6-2), 1950’s, Barakat (1984: 93), figure for Basra in the 1950s, Calculated from Najm il Din (1970: 132).

2 On the concept of rentierism applied to the Middle East, see Mahdavy 1970 and Beblawi & Luciani 1987.

3 These indicators should not be read as evidence on efficient performance by the incumbent Iraqi regime. The source cited above shows that in a regional perspective Iraq had the worst or second worst record in most of the human development indicators.