Courtesy of www.icg.org
Most of the products Munkith and Munthir Abbas sell were either illegal for ordinary Iraqis to own or too expensive for them to buy. Now, the twin brothers manage just one of many import shops that offer a range of electronic goods, from hand irons to satellite television receivers.
“Whenever the people can buy, they will buy,” said Munkith, 31. The most popular items in his store are refrigerators, a necessity in a city where the summer heat can top fifty degrees Celsius. New televisions and satellite dishes are popular as well. In the past, it was a crime to possess a dish. Now it’s necessary in a country with few television channels, no cable, and limited nightlife. Most people prefer to stay at home and watch movies rather than travel around a city that is dark and often interrupted by gunfire.
Cellular phones, banned under the regime of Saddam Hussein, are now available in southern Iraq. The system operates from Kuwait and is often overloaded during business hours, when it can take twenty or thirty attempts to place a call–if a connection is made at all. Most prized are the phones with the 911 prefix. These are used by the most of the offices of the Coalition Provisional Authority in Basra and apparently have priority on the network. Businessmen who want a reliable method of communication turn to satellite telephones, like the Thuraya, with charges of up to USD $1.50 per minute.
The bulk of Basra’s consumer products are imported from the United Arab Emirates and Kuwait and pass through the Umm Qasr port in southern Iraq. Shopkeepers reported few problems with travel from the port, but some still remain. “Ten days ago, thieves tried to climb aboard the ship,” said Munthir. “The crew beat them off.”
A massive reduction in taxes has allowed the consumer market to blossom. Import duties were 100% in Ba’athist Iraq, and that’s not counting the payoffs (or rashwa) that are no longer necessary. The Abbas brothers operated a second-hand goods store for most of their four years in business. Import duties for these recycled products were a mere 70%. Under the CPA there are no import duties until January, when they will reach 5%. “If we imitate the Emirates in taxes and procedures it will be good for business,” said Munkith. “Of course, I’d like to see a free trade zone in Basra.”
Iraqi businessmen still face significant challenges. Banking facilities are scarce and unreliable throughout Iraq. Most Iraqi businessmen also lack valid passports, a consequence of the previous regime charging 2.5 million Iraqi dinars (over USD $700 at the time) for one. Travel documents are available from the CPA, but many ordinary Iraqis find them difficult to obtain. Also, the documents are not always accepted by neighboring countries, such as Dubai. Forged Iraqi passports are available on the black market for USD $150 but often fail border inspections. The CPA and the Iraqi Governing Council hope to issue new passports sometime in 2004.
Fluctuations in the dinar also cause headaches for shop owners. “People stop buying and selling when the exchange rate goes up and down,” said Asad Ismail, 41, owner of the local Daewoo import store. The rate had been about 2000 Iraqi dinars to the American dollar, but it peaked at 1600 dinars to the dollar immediately after the capture of Saddam Hussein. Mr. Ismail keeps everything priced in dollars, or their dinar equivalents – changed daily. “We protect ourselves by dealing in dollars,” he said.
Basra and its surrounding governorate are exceptions in Iraq. Gasoline is available, there has been an improvement in electrical power since the war, and security is better here than in most places. The majority Shi’a population has welcomed the primarily British multinational occupation. Fruit stands, supermarkets, and restaurants are open on Basra’s main shopping street of Al-Jaza’ir, which is full of cars and customers even at night.
This prosperity is not widespread. A satellite dish, which costs between USD $80 and $130, is an expensive luxury in a country where the average professional earns USD $150 a month. The situation in Baghdad is much more acute in terms of prices and transportation. Gasoline has spiked to over 250 Iraqi dinars per litre there, over ten times the government-mandated price of ID 20.
Still, cars flood into the country. There is a car market in Basra that jams one of the major roads several times a week. Double-decker trailers that carry twelve automobiles line up at Iraq’s borders. Some people work as couriers and drive cars for private citizens or foreign companies, from the town of Safwan, on the Kuwaiti border. This is a dangerous profession. Carjacking is a major problem in the area, since thieves can easily sell cars in Basra or across the Iranian border.
Robert Wilson, a political analyst at the CPA, hopes for Basra’s continued development. “Basra may go from a backwater of Iraq, second to Baghdad, as it has been for the last forty years, to its natural position as the largest city in the Gulf,” he said.
Basra has a long way to go. Large parts of the city are scarred by battles from several wars and insurrections. The Shatt Al-Arab waterway is littered with capsized freighters and sunken fishing ships. Electricity has improved but many homes and businesses still rely on generators. It remains to be seen whether the sudden expansion of imported consumer goods will improve the lives of the ordinary citizens of Basra.