Iraq: Grocery prices jump as cost of gasoline soars threefold

[Kadie]

Ordinary Iraqis feel pinch of free-market reforms
Grocery prices jump as cost of gasoline soars threefold
Charles Levinson, Chronicle Foreign Service

Monday, January 23, 2006


Baghdad -- At his teetering vegetable stand in Baghdad's Amil district, Haidar Gassem bashfully reminded Iraqi housewives that a kilogram of tomatoes no longer costs 350 dinars (23 cents). They grumbled and reached for the extra 150 dinars, feeling one more ripple effect from the recent threefold spike in gas prices that followed the government's decision to slash fuel subsidies.

Since 2003, the United States has been pushing for rapid free-market reforms in Iraq. Such policies, U.S. officials say, are necessary to spur development and revive Iraq's moribund economy, which is still suffering from sanctions and decades of Baath Party mismanagement.

But rapid economic liberalization here is taking a toll on ordinary Iraqis. They've seen prices skyrocket for everything from shampoo to vegetables to heating oil. Food rations meant to help the estimated 8 million Iraqis who live on less than $1 a day have been cut by 25 percent.

Many changes implemented by the U.S. occupation in 2003, after Saddam Hussein's government fell, are still in effect as Iraqi politicians await election results that will lead to the formation of a permanent government. Tariffs on imports have been cut across the board, allowing cheap goods to pour in from China and driving Iraqi manufacturers out of business. A 2003 foreign investment law continues to anger Iraqi businessmen who say it is squeezing them out of the reconstruction boom.

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