And aren't we just so damned proud that we improved the quality of life for them by installing democracy?
Weary Iraqis Face New Foe: Rising Prices

Published: August 26, 2006

BAGHDAD, Iraq, Aug. 25 — For Mehdi Dawood, Iraq’s failures have leached into the cucumbers, a staple of every meal that now devours a fifth of his monthly pension.

And it is not just the vegetables. Fuel and electricity prices are up more than 270 percent from last year’s, according to Iraqi government figures. Tea in some markets has quadrupled, egg prices have doubled, and all over the country the daily routine now includes a new question: What can be done without?

“Meat, I just don’t buy it anymore,” said Mr. Dawood, 66, holding half-filled bags at a market in Baghdad. “It’s too expensive.”

“We are all suffering,” he said. “It’s the government’s fault. There is no security. There is no stability.”

As if Iraqis did not have enough to worry about. Going to the market already requires courage — after repeated bombings there — and now life’s most basic needs are becoming drastically more expensive.

Three months into the administration of Prime Minister Nuri Kamal al-Maliki, the inflation rate has reached 70 percent a year, up from 32 percent last year. Wages are flat, banks are barely functioning and the consensus among many American and Iraqi officials is that inflation is most likely to accelerate.

Violence, corruption and the fallout from decades of government control are kicking up the price of nearly everything, especially fuel, which in turn multiplies the production cost for goods.

“It’s a very serious problem,” said Anthony H. Cordesman, a Middle East analyst at the Center for Strategic and International Studies in Washington. “You don’t have stable trucking; you don’t have stable distribution. You have a constant protection racket, with security forces who are involved in sectarian fighting often taking bribes to have things operate. All of that builds up pressure on prices.”

Mr. Maliki’s office has responded with proposals to spur foreign investment and calls for public patience, even forgiveness. But billions in American aid has already been spent on Iraq with limited impact.

Compared with security problems, which can be addressed to some extent by deploying more troops to the streets, the economy is harder to control, especially since most Iraqi commerce occurs beyond the reach of government policy.

Fuel remains the country’s most visible example of economic dysfunction. A gallon of gasoline cost as little as 4 cents in November. Now, after the International Monetary Fund pushed the Oil Ministry to cut its subsidies, the official price is about 67 cents.

The spike has come as a shock to Iraqis, who make only about $150 a month on average — if they have jobs. Estimates of unemployment range from 40 to 60 percent. And with black-market sellers commanding $3.19 a gallon because of shortages, up from about $1.25 a few months ago, the actual price most Iraqis pay is far higher than what is officially sanctioned.

Filling up now requires several days’ pay, monastic patience or both.

Three years after fuel shortages led to riots in Basra, tension is often palpable at the pumps. Lines stretch as far as the eye can see, and at least two shootings have been reported in Baghdad this month alone. Near a station downtown this week, bribes and line cutting appeared to be the norm. At one point a Mercedes and several police vehicles cut ahead of at least 50 cars while a policeman watched.

“Why are you letting people come from outside?” shouted a man who was just a few cars from the station after seven hours of waiting.

The station’s manager said the drivers given special treatment must have had a note showing that they were doctors, or attending a funeral. A few hundred yards back, by a beat-up station wagon, Abdul Rehman Qasim had a different theory: the drivers avoiding the wait possessed either money or power. He had neither.

“I’m a poor guy,” he said. “So I leave some of my children here. They spend the night in the car.”

“Under the government of Maliki, things are getting worse and worse,” he added. “Only God can save us.”

In Iraq’s once-bustling markets, frustration is equally acute. Car bombers have regularly attacked commercial districts, and prices seem to be up at every stall. At markets in a middle-class Shiite area near downtown, chickpeas have doubled in price. Lamb now runs as high as $2.75 a pound, up from $1.50.

Cucumbers, tomatoes and eggplant have all jumped too, while the price of the propane gas cylinders most families use for cooking has quintupled to more than $15.

“We live hand to mouth,” said Mr. Dawood, a retired clerk for Pepsi.

Veiled women shopping nearby agreed. “We’re tired, and the situation is horrible,” said Zakiya Abid Salman, 55, a widow carrying eggplants. “There are no jobs, and the prices are always rising.”

Merchants said they had no choice but to increase prices because of the increased costs of doing business. And still, they said, their incomes have declined.

Ali Fouad, 27, pushing live fish around a shallow tub of water, said the price of transporting his product from farms south of Baghdad has nearly tripled since last year. A few months ago he sold about 110 pounds of fish a day, earning roughly $50 after expenses. Since he had to raise prices about 60 percent, he said, he sells less and earns only $20 a day.

“What’s our life today?” he asked. “We are working only for gas, ice and electricity. There is no savings.”

Stanching inflation will not be easy. Experts here say they struggle just to collect the data necessary to diagnose the problem, while Iraq largely lacks the usual mechanisms for controlling prices.

The Central Bank of Iraq is only three years old. Though the International Monetary Fund reports that officials have raised interest rates — and accelerated efforts to create a functioning market economy — its most recent study in July also concluded that “the banking system is largely inert.” As a result, the report said, the effectiveness of such measures would be “very limited.”

“Increasing the interest rate for business loans and mortgages — if people aren’t taking out those loans, how much of an effect can you have?” said Edward W. Kloth, an economic adviser at the American Embassy here. “The tools that are available are very limited in this kind of a situation.”

Ali al-Dabagh, a spokesman for Prime Minister Maliki, said in an interview that “the government is working hard to find solutions.” He blamed terrorists for undermining Iraq’s elected leaders, but he acknowledged that the country “needs an administrative revolution.”

For the families trying to survive, time sometimes seems to be running out. Fathi Khalid, 43, a vegetable seller with a mostly empty stall, said obstacles seemed to multiply by the day. Sometimes roads are blocked so harvests never arrive. Sometimes he cannot afford to pay the right bribes. And week after week, his customers purchase less and less.

“Most people buy half what they used to,” he said. “The vegetables sit here and rot.”