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    "label": "Report, Central Intelligence Agency, Arab States, Situation Report 13",
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    "title": "Report, Central Intelligence Agency, Arab States, Situation Report 13",
    "citationUrl": "https://catalog.archives.gov/id/486499626",
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    "productionDates": [
        {
            "day": 27,
            "logicalDate": "1949-09-27",
            "month": 9,
            "year": 1949
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    "seq": 32,
    "pageIndex": 0,
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    "ocrText": "27\nduction may increase these royalties to $24\nproduction difficulties abroad, which prevent\nmillion by 1950. Exploitation of the country's\nthe acquisition of needed machinery and equip-\nother great asset, the undeveloped water re-\nment.\nsources of the Tigris and Euphrates rivers, is\nd. Finance.1\nnow under study.\nPrior to World War II, Iraqi public finances,\nBritish economic influence in Iraq, which\nlike those of Egypt, were on a reasonably satis-\ndates from the activities of the British East\nfactory basis. The country enjoyed a balanced\nIndia Company around Basra in the seven-\nbudget, a negligible public debt, and a note\nteenth century, is well established. Under the\nissue fully backed by gold or foreign exchange\nMandate, it was inevitable that political con-\nassets (sterling).\ntrol should be accompanied by economic\nThe war years and those which followed,\ndominance. Today the most lucrative agencies\nhowever, have witnessed a progressive deterio-\nfor foreign goods are in the hands of British\nration in the country's financial stability.\nbusinessmen, and an outsider would encounter\nPrincipally because of large allied military\ndifficulty in cracking this commercial monop-\nexpenditures during the war, the index of\noly. In addition until very recently, British\nnotes in circulation rose from a January-July\nadvisers were attached to principal govern-\n1939 base of 100 to a fantastic 998 in June\nment departments, and the inclusion of Iraq\n1945. Since then there has been a slow but\nin the sterling area means that fiscal policies\nsteady decrease, but the problem is not yet\nare subject to a measure of British control.\nsolved. This increase of currency circulation\nb. Agriculture.\nwas accompanied by an upward spiral of prices\nwhich the government made little effort to\nDespite the unscientific use of its land, Iraq\ncheck. The cost of living index rose more\nhas always been a leading food producer in\nthan 600 percent in relation to the prewar\nthe Middle East. Aside from tea, coffee, and\nlevel. This inflation was not the result of\nsugar, which are imported, the country is a\nfiat money or uncovered fiduciary notes but\nsurplus producer of all essential foodstuffs.\nthe increased circulation of a currency fully\nPrincipal exports are cereals (particularly\nsupported by sterling.\nbarley and wheat), dates (the leading money\nAn acute shortage of dollars and other hard\ncrop), and livestock. Under the pressure of\ncurrencies has led Iraq, as a member of the\nthe world-wide shipping shortage during\nsterling area, to attempt to reach a settlement\nWorld War II, this trade increased with India,\nwith the UK regarding Iraq's sterling balances,\nIran, and the other Arab states.\namounting to an estimated £60 million. An\nC. Industrialization.\nagreement reached in August 1947 became in-\nAlways with the exception of the petroleum\noperative almost immediately when the UK\ninstallations, industry plays a relatively minor\nwas forced by its financial position to suspend\nrole in the Iraqi economy. Industrial de-\nconvertibility. An agreement concluded on\nvelopment has been hampered, among other\n17 November 1947 provided for the release of\nthings, by a lack of trained manpower and\na portion of Iraq's balances to cover current\ntechnical advisers. The government has at-\ntransactions.\ntempted to encourage manufacture by grants,\nThe greatest stabilizing factor in the Iraqi\nreductions in taxes, tariff concessions, and\neconomy is oil royalties, which in prewar years\ncredits made available through the Govern-\nhave provided as much as 30 percent of the\nment Bank for Agriculture and Industry.\ntotal revenue. Under the present inflated\nGovernment subsidies to the textile industry,\nbudget, about 10 percent of the revenues come\nfor example, are the principal factor that has\nfrom this source.2 It was formerly possible\nprevented its collapse. Other products locally\nto finance large-scale expenditures from this\nproduced, but not in sufficient quantity, are\ncigarettes, building materials, and matches.\nNote that one Iraqi dinar =$4.03.\nThese royalties have in addition been cut by\nAt present, new industrial projects are ham-\n50 percent since the shut-down of the Haifa refinery\npered by hard currency scarcities at home and\nin April 1948."
}