Iraq: May 14, 2004


The terror campaign being waged by the Sunni Arab nationalists (the Baath Party crowd) and Islamic fundamentalists (al Qaeda and associates, as well as radical Shias led by Muqtada al Sadr) is having some success. In addition to driving a third of the foreign reconstruction workers out of the country, it has delayed foreign banks from setting up operations in the country. Two banks (HSBC Holdings PLC and Standard Chartered PLC.) that have announced they will set up operations in Iraq, have delayed entry until security improves. Thus the National Bank of Kuwait is the only foreign bank operating in Iraq. This is novel, for foreign banks were expelled in 1964. 

Meanwhile, the Central Bank of Iraq is up and running and the local currency, the dinar, is getting stronger every week (it currently trades at 1,460 dinars to the dollar.) The economy continues to improve, with Iraqis working around the transportation delays brought about by Sunni attacks on highway traffic. There is more economic opportunity for the average Iraqi than there has been for decades. Despite the high unemployment (over 20 percent), there are more new jobs being created each month by the new economic polices (which favor entrepreneurs and starting new businesses.) United States administrators swept away most of the ancient red tape and bureaucracy and, based on advice from Iraqi-Americans who had succeeded as entrepreneurs in the U.S., set up a system that Iraqis would recognize, and take advantage of. 

Most of this new economic activity is taking place out of sight of foreigners, because foreigners keep to a few secure locations to avoid the Baath Party gunmen who seem to be lurking everywhere. But the new economic activity is there, its huge and its growing. This is a major reason that most of Iraq is at peace. The fighting that gets so much attention in the media is restricted to a few neighborhoods in a few cities. 

Most of the violence in Iraq is more diffuse, with criminal and political gangs threatening and intimidating thousands of Iraqis each day. This is done to either facilitate theft of some sort, or discourage cooperation with the coalition or the new Iraqi government. The Iraqi police are actively involved in this battle, but are more successful against the criminal gangs than they are against the Baath Party thugs and foreign terrorists. The Baath Party crowd uses many veterans of Saddams secret police and intelligence forces, and has lots of money and guns. The foreign terrorists also appear to be well funded, which helps buy them protection from, or at least avoid  detection by, the police.

Radical Shia cleric Muqtada al Sadr is up against a wall. The Shia religious leadership has told him to disband his militia and surrender to police for trial on murder charges. To emphasize their demand, the clerical leadership has remained silent as coalition troops destroy or disarm his militia units in Karbala, Baghdad, Najaf  and other cities where the al Sadr forces were strongest. Al Sadr has already called for his gunmen to rise up and attack the coalition troops, and not much happened. Al Sadr is openly disparaged by Shia Iraqis, and public demonstrations have been held to protest the brutality and lawlessness of al Sadrs militiamen. 

Meanwhile, the Sunni Arab rebellion continues. Joint Sunni/marine patrols in Fallujah take place without much incident. But attacks on coalition targets by Sunni gunmen and al Qaeda terrorists continues throughout the Sunni areas. Once the al Sadr militias are completely gone, its quite likely that the battle with the Baath Party gangs will be renewed for a final campaign.


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