This book addresses the impact on the Iraqi economy of the two Gulf wars, the Iran-Iraq War and the recent Gulf War which followed Iraq's invasion and subsequent occupation of Kuwait. The book consists of two sections, with six chapters in the first and eight chapters in the second. The first section covers the Iraqi economy from 1950 until 1980, shortly after Saddam Hussein assumed absolute power, while the second section covers the Iraqi economy from 1980 until 1992.
The major thesis of the book is that political policy is a means and economic development is a goal, and this goal is the well-being of a country's citizens. Hence, the main purpose of government in a developing country is achieving economic development through sound political policies. Zainy analyzes and compares the theories of development, growth and modernization, within the context of this major thesis. He then manages to make his analysis of these theories relevant to Iraq. He chooses to discuss six indicators of economic development and their application to Iraq, such as per capita income and the extent of dependency on primary products export. He compares such indicators with those of the rest of the OPEC countries and three developed countries, then concludes that Iraq is characterized by a backward economy. He thus identifies the necessity of directing the country's resources toward achieving economic development through investment in human and physical capital.
The book explores various policy options a developing, yet oil-rich, country has and condenses these options into three non-mutually exclusive alternatives. He then proceeds to devote generous attention to his favorite of the three: oil production and complete investment of oil revenues. This option calls for the allocation of significant parts of Iraq's oil revenue to finance the economic development plans that started in 1950.
The analysis of the Iraqi effort in planned economic development during the period spanning 1950-80 shows that the level of execution of every plan always fell far short of the target. According to Zainy, only 58 percent of the total financial allocations were spent. He attributes this dismal performance in the execution of the plans to the limited "absorptive capacity" of Iraq. And he puts forward six reasons for Iraq's limited capacity to absorb developmental capital, with the most significant being shortage of skilled labor and management along with an inadequate infrastructure.
Poor countries, Zainy states, are characterized by paucity of investment capital and are plagued by a vicious cycle of poverty. Hence, oil revenues, in oil-rich countries such as Iraq, play a significant role in breaking this cycle of poverty and enabling the country to take the path of economic development. However, in Iraq's case, this development began to take the form of military development, while ignoring the need to create a diversified, self-sufficient and productive economy, less dependent on primary products export.
To conclude the first section, Zainy examines the structure of the Iraqi economy and Iraq's effort in implementing its plans of economic development. He shows that the economy achieved a robust annual growth rate of 8.3 percent between 1960 and 1980. However, despite this growth, the Iraqi economy continued to be heavily skewed toward the extractive sector, dominated by crude oil extraction. This sector contributed 66 percent of GDP in 1960 and declined to only 62 percent in 1980. This, once again, indicates a continuing dependency on primary production and little diversification of the other sectors of the economy.
The second section of the book addresses the endemic economic, political and social crises of Iraq and their impact on economic performance. During the 1970s, when the price of oil exploded, Iraq had one of the highest rates of economic growth in the world. This led contemporary observers to expect Iraq to follow on the rapid path of development other countries of recent European settlement took. Instead, starting in the 1980s, Iraq gradually lost ground in the world economy and became a heavily indebted economy.
The main reason for this decline, the book shows, is that as the Iraq-Iran War continued to rage, it quickly developed into an economic war of attrition. According to Zainy, military expenditures increased from $343 million in 1970 to $11,900 million in 1980 (about 34 times) and then to a peak of $21,720 million in 1984. Its armed forces increased from 95,000 troops in 1970 to 430,000 in 1980 and reached 1 million in 1988. Needless to say, this was a rather enormous drain on the country's human, financial and physical resources.
The book then shows quite clearly that the steady deterioration of Iraq becomes apparent in any current comparison to the 1970s. As such, the main question this book attempts to answer is: What accounted for this dramatic deterioration in the economic, social and political institutions of Iraq?
The book answers this question by concluding that the disastrous performance of the Iraqi economy is attributable to the actions of Saddam and the complete absence of accountability. Saddam concentrated absolute power in his hands and, therefore, could never be held accountable by the people or the state. The underlying problem is thus identified as the inherently flawed political system of Iraq, i.e., the vehicle which was to deliver the country to economic prosperity and development was an intrinsically unreliable machine. It was, to put it another way, "unsafe at any speed."
It is worth noting that unlike many previous books, this book not only addresses Iraq's two recent wars and their economic impact, it also attributes these wars to the political, economic and social policies of the government of Iraq. As such, this book is among the best studies on Iraq published in the 1990s and is quickly becoming required reading for students of the Middle East in general and Iraq in particular. This book provides a good theoretical, historical and comparative framework to its analysis. It is also well suited for advanced undergraduate and graduate courses on Middle Eastern topics.