Iraqis Confront Mysteries of Capitalism

Just three years ago, Iraq had one of the most rigidly controlled economies in the world. Today Iraqis are struggling to understand an emerging capitalist system.

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Iraq's political parties are still negotiating the composition of a new government. But whoever ends up in power, the country will continue a rather remarkable economic transition.

Just three years ago, under Sadam Hussein, Iraq had a rigidly controlled socialist economy. Today it‘s in the process of becoming free market and capitalist, which means tens of thousands of government employees have to change how they do their jobs.

NPR's Adam Davidson has this story about one group of Iraqis struggling to understand capitalism.

ADAM DAVIDSON reporting:

Up until the war, Jameel al-Dhibar(ph) had a job that doesn't exist in Iraq anymore. He set the price of agricultural goods.

Mr. JAMEEL AL-DHIBAR (Iraqi government worker): For wheat, barley, fruits and vegetables, and so on.

DAVIDSON: He was the chief agricultural economist on a committee that set the price of wheat once or twice a year.

AL-DHIBAR: But for fruits and vegetables there were pricing ceiling -- weekly.

DAVIDSON: Farmers brought their produce to government centers and were paid the price that Dhibar and his team came up with.

AL-DHIBAR: Now, after we changed over the regime two and a half years ago, now we have a free market system. So everything has been broken.

DAVIDSON: Farmers sell to mills or to wholesalers at whatever the market bears. Prices have sprung up. Before Dhibar had set wheat prices at around $120.00 a ton. Today farmers are getting more than $200.00 a ton.

Dhibar said he always thought Iraq would be better off with capitalism.

DHIBAR: I know that very well. But I could not present it legally.

DAVIDSON: Promoting capitalism would have gotten him arrested, maybe tortured and killed. He couldn't teach capitalism in his classes at Baghdad University. He says he still remembers reading Adam Smith before Sadam's regime, and it's all coming back to him now. But he needs training, he says.

(Soundbite of classroom chatter)

DAVIDSON: And that's why he and eight other Ministry of Agriculture staffers came to Amman, Jordan, to learn how Iraq can apply to join the World Trade Organization, or WTO. Their teacher is a South African trade lawyer named Hilton Zuncle.

MR. HILTON ZUNCLE (Trade lawyer, South Africa): It's like uncle with a zed on the front -- Zuncle. And Hilton like the hotel.

DAVIDSON: The class is eight hours a day for five days, in a large conference room in a slightly faded hotel in central Amman. The week started with some economics 101. Zuncle explained comparative advantage. That's the economic theory central to capitalism that poor and inefficient countries can benefit from international trade just as much as advanced rich ones.

Zuncle says this is the central principle of WTO laws.

Mr. ZUNCLE: So from this point onwards, whether you agree with neo-classical economics, whether you are Communist, a Fascist or a Martian is irrelevant. The reality of our world in trade is that this is a principle that applies -- okay? -- and this is a principle we have to fit in with if we're going to be part of the trading system.

DAVIDSON: Other than oil, Iraq has had almost no exports for well over a decade. But the Agriculture Ministry employees here believe Iraq has one thing the rest of the world might want --dates, the desert fruit. Iraq is famous for having the very best dates.

By joining the WTO, Zuncle explained, Iraq has the best chance for selling dates and developing its economy. But Hilal Mohammad(ph), the head of Iraq's WTO Accession Committee, says however good capitalism sounds in books, he's not convinced it actually works.

Mr. HILAL MOHAMMAD: How far are these principles you are talking about far away from reality?

DAVIDSON: This question spurred a long discussion. Some of the Iraqis said they were certain the capitalist theory works, and joining the WTO would bring great things to Iraq. Others said the theory is bunk, it doesn't work in practice at all. Rich countries will get all the benefits.

This argument, of course, is not unique to Iraq. Many developing countries are debating whether or not the WTO benefits the world's poor. Zuncle asked the group to vote. Does world trade follow the theory? Does it benefit poor countries? He said he wanted a yes or no answer.

UNIDENTIFIED MAN: Yes and no.

(Soundbite of laughter)

DAVIDSON: Seven voted for yes, the world trade system can benefit countries like Iraq, as well as more developed ones like the United States. Three voted no. Surprisingly, Zuncle, the teacher, was one of the ‘no' votes. He said that as long as rich countries like the US and France keep subsidizing their farmers, the system will be skewed in favor of wealthy countries.

The agricultural economist, Dhibar, said it doesn't matter if the system is skewed. There's no choice.

DHIBAR: This is the way we have to go through it, whether we like it or not. It's something imposed all over the world.

DAVIDSON: Zuncle agreed, and said even if wealthy countries do protect their markets, Iraq is still better off joining in than sitting out.

Adam Davidson, NPR News.

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