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Gunter: Oil not the answer for Iraq

Col. Frank Gunter, associate professor of economics

According to Col. Frank Gunter, Iraq’s economic success can’t be inextricably tied to production of oil.

In fact, oil may be a curse for the Middle East’s newest democracy.

“Oil didn’t make Iraqis rich before the first Gulf War, and it won’t make them rich in the near future,” he says.

It’s an argument he’s in a unique position to make. Aside from being an associate professor of economics at Lehigh, Gunter is a colonel in the U.S. Marines Reserve and spent much of the past two years overseas.

“Iraq is currently making a painful transition from statism to a mixed-economy and from a dictatorship to democracy,” Gunter says.

To Iraq via Thailand

In January 2005, Gunter was mobilized as part of the tsunami relief effort. He served as the director of the Coalition Coordination Center in Thailand, and helped coordinate the efforts of dozens of civilian and military organizations that aided in the tsunami relief efforts.

From Thailand, Gunter headed to Baghdad—first as deputy of coalition operations, then as the chief of the economics division for the multi-national forces-Iraq. It’s a long title that roughly translates to “chief economist,” and it’s an experience he won’t soon forget.

“You get an interesting perspective from actually being there—from feeling the ground under you shake or seeing smoke on the horizon, or talking with Iraqis while walking the streets,” Gunter says. “It’s a little different than what you read in the headlines or see on the nightly news.”

But, perhaps, the biggest surprise to Gunter is the world’s limited interest in the economy of Iraq. The economy is critical to any conversation about Iraq, he explains, because the success of economic development initiatives has a direct impact on defeating the insurgency.

Life in the Green Zone

For seven out of his thirteen months in Iraq, Gunter called the Green Zone home.

The heavily-fortified neighborhood is in the heart of Baghdad, just a few miles east of the airport. It follows the contours of the Tigris River as it winds through the capital city, and its central location has long been home to Iraq’s political elite.

Now, it’s the temporary home to the U.S. embassy, international organizations, NGOs, representatives of the coalition nations, hospitals and major consulting companies critical to rebuilding Iraq. At one time, it also housed the Coalition Provisional Authority.

“What many people forget is that Baghdad was experiencing a resurgence before Saddam came to power in the late 1970’s,” explained Gunter. “That vitality, which disappeared over the last two decades, is slowly coming back to life, but it will be another few years before the city’s economic and cultural life gains any traction.”

The Green Zone remains among the safest areas in Baghdad, though it’s not immune to insurgent attacks. Twelve-foot concrete walls enclose the neighborhood, and security checkpoints dot the perimeter.

Despite the uncertainty, however, a growing number of shops and restaurants are serving a mixed population that includes a small contingent of Baghdad’s 5.7 million people. In the Green Zone, Iraqis have gotten accustomed to sharing their livelihood with military and civilian officials from two dozen foreign countries and a variety of international organizations.

“The Iraqi people are truly among the most courageous people in the world,” added Gunter. “Despite all the odds and the internal conflict, they know there’s a future to be had. And they know the world is watching.”

Challenges of rebuilding an economy

Gunter says that Iraq’s economic situation, if put in perspective, isn’t all that bad. Real national income per capita recovered to pre-invasion levels by the end of 2005.

Unemployment has dropped drastically, and is now between 18 and 22 percent; it was above 50 percent in 2003.

The challenge, according to Gunter, is that it’s time to re-evaluate several post-2003 economic policy decisions that were short-term in focus. Those choices may actually be undermining long-term attempts to establishing a true democracy.

It’s a topic he’ll explore next semester along with students in Lehigh’s College of Business and Economics in a new course titled “The Political Economy of Iraq.”

“It’s decision time for Iraq,” Gunter says. “It must now choose between democracy and oil-financed statism.”

--Tom Yencho

Posted on Friday, October 20, 2006

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