US embassy cable - 05BAGHDAD4798

UNCLAS SECTION 01 OF 03 BAGHDAD 004798 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAGR, ECON, ELAB, ENRG, EPET, SMIG, SOCI, PGOV, IZ 
SUBJECT: COPING WITH LIFE AND SHORTAGES IN IRAQ 
 
REF: A. BAGHDAD 4041 
     B. BAGHDAD 4484 
     C. BAGHDAD 4553 
     D. BAGHDAD 3989 
     E. BAGHDAD 3450 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION. 
 
1. (SBU) SUMMARY: Iraq's current economic conditions are 
adverse for many.  While emigration, whether permanent or 
temporary, is available to a relatively small number, 
ANECDOTAL EVIDENCE INDICATES those who leave are often among 
Iraq's best and brightest.  Average families have developed a 
complex dance encompassing barter, the sale of personal 
assets, black market activity, emigration, and reliance on 
the intertwined tribal/religious/family connections to cope. 
END SUMMARY 
 
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FOOD 
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2. (SBU) Each Iraqi family is entitled to receive food 
staples from the Ministry of Trade through the Public 
Distribution System (PDS) to meet their basic needs based on 
family size (ref A).  These food rations, however, do not 
reach every family and, in most cases, do not provide 
sufficient supplies for the most needy citizens.  Of 3,500 
households questioned by the World Food Program in a survey 
released in 2004, roughly 52% of households responded that in 
the course of a month, they sometimes did not have food to 
eat and did not have money to buy food.  Roughly 50% 
explained that their income had declined, while others blamed 
rising prices and shortcomings in the PDS for the food 
difficulties. 
 
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JOBS 
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3. (SBU) Lack of economic opportunity, especially productive 
employment, rather than a lack of available food, is the 
primary reason for food insecurity.  A reasonable estimate 
for unemployment pegs it at approximately 30%. 
Underemployment is assumed to be much higher, but no data is 
available (ref E).  Coping strategies range from the easy to 
the extreme.  Borrowing money to pay for food is a relatively 
common expedient.  Some 35% of families seek help through 
Islamic charity.  More serious is shifting money from health 
care and education to purchase food.  Greater still is the 
selling off of assets.  Criminal activity to feed one's 
family is the absolute final resort, according to respondents 
in the WFP survey. 
 
4. (SBU) Most extreme is the liquidation of valuable assets, 
such as draft cattle, dowries, and land rights.  According to 
representatives of the Food for Peace/USAID office, a village 
on the Basrah-ThiQar border had very little food during the 
first nine months of 2005, as village wheat stocks had 
spoiled because of poor storage techniques.  As a 
consequence, there were few animals in the village -- they 
had been sold to buy food.  Pressed to the breaking point, 
the villagers are reportedly selling off their water buffalo 
-- the family tractor in the marsh areas -- to pay for food. 
 
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FUELS 
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5. (SBU) Supplies of fuel for cars, generators, cooking, and 
heating are increasingly irregular and currently scarce in 
much of Iraq (refs B and C).  This has led to a large black 
market in fuel.  People obtain gasoline by either sitting in 
long fuel lines and paying at the pump, or buying it from 
someone who sits in fuel lines for a living.  For example, 
there are reports of old cars that have been turned into 
mobile gas tanks: people add extra tanks to their cars, then 
purchase fuel at low, controlled prices (between $.05 and 
$.13 per gallon), then resell the fuel for a profit to their 
neighbors who have a job and cannot wait a day or two in the 
gas line. 
 
6. (SBU) Coupons to distribute critical cooking and heating 
fuel across the country (ref D) during the winter months are 
freely transferable for the first time in 2005.  This 
innovation has evolved into a thriving free market, where 
both the coupons and filled fuel canisters are sold to the 
highest bidders.  The richest families have plenty of fuel, 
and the poorest sell their fuel for a profit to purchase 
other items -- a thriving bit of economic trade and barter. 
 
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ELECTRICITY 
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7. (SBU) Despite improvements in generation, electricity 
remains an on-again, off-again essential service in Iraq.  In 
most cities, electricity is on about half the time, on a 
rotational cycle of several hours on, and several off. 
Iraqis have developed multiple ways of coping with the 
constant power interruptions.  For example, local 
entrepreneurs have purchased large neighborhood generators; 
households can then purchase a certain amount of amps of 
power from the operator when grid power goes off.  A normal 
bill for this service is $30-75 per month for about 7-10 amps 
of alternative power, sufficient to run a household when the 
national grid if off. 
8. (SBU) Families that can afford a generator themselves have 
small generators of about 1500 KW -- sufficient to keep the 
lights on and the TV/DVD player working when the neighborhood 
generators and the grid are off.  Minister of Electricity 
Shalash has estimated that there are 10,000 of the large 
neighborhood generators in Baghdad, and Minister of Oil 
al-'Ulum, whose ministry tracks gasoline and diesel 
consumption, has estimated there are between 750,000 and 1 
million small household generators.  Acquiring fuel for the 
generators, as well as for cooking and heating, has become an 
art.  Because of the uncertainty in supply, hoarding is 
widespread.  We note, for example, that a recent delivery of 
kerosene to Baghdad did not appreciably raise available 
stocks.  We presume that increased household purchases for 
the purpose of hoarding have hindered the ability of fuel 
authorities to get ahead of spotty deliveries.  If/when the 
GOI reduces its subsidy for these fuels to something close to 
regional prices running generators will be increasingly 
expensive and the number of people without electricity will 
increase. 
 
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HOUSING 
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9. (SBU) Due to the low individual economic viability, 
particularly among young, male adults, the nuclear family 
stays together in Iraq for an extended period of time. 
Unemployment among younger males is very high so many young, 
adult males remain in their parents' homes, unable to earn a 
living or support a family.  Young women remain at home, as 
is usual in the Muslim world, until they are married.  This 
phenomenon, coupled with a high birth rate, means that there 
are a greater number than normal of quite large households. 
(NOTE: The size of the average Iraqi household is 6.  Among 
the poor, it rise to 7.  END NOTE.) 
 
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TRIBAL AND ISLAMIC NETWORKS 
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10. (SBU) Tribal support networks and Islamic custom, both 
quite prevalent in Iraq, require each person to share either 
at least 2.5% of any wealth they have held for one Islamic 
year or 3.5 oz. of gold with the needy.  This tithe is given 
to the tribal leadership or, in urban settings, to the imam 
at the local mosque.  The donation may be in cash, staples or 
clothing.  This local charity system, known as "Zakat", helps 
to support those at the lowest end of the economic spectrum. 
 
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EMIGRATION 
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11. (SBU) Some find moving abroad until opportunities in Iraq 
improve the most attractive option to adverse economic 
conditions.  Neighboring countries, including Jordan, Egypt 
and Saudi Arabia, are hosting large numbers of Iraqi 
citizens.  We believe that there are thousands of Iraqis 
"parked" in neighboring countries waiting for better 
conditions before they return.  Furthermore, many 
multinational companies who maintain regional headquarters in 
Dubai, Cairo or Amman have recruited a large number of young 
Iraqi technocrats -- at international salaries -- and are 
training abroad to be ready for future, stable conditions in 
Iraq.  The remittances these young Iraqis send home help to 
keep their unemployed and needy family members afloat. 
 
12. (SBU) COMMENT: The drawdown of family capital and 
emigration, in particular, will make Iraq's economic recovery 
more difficult.  They point to the urgency of establishing 
conditions to reverse emigration and capital flight as well 
as secure economic growth.  One can and should admire the 
resilience of many Iraqi families but, for most, coping 
mechanisms come with a price -- often impacting on future 
economic prospects.  END COMMENT. 
KHALILZAD