Plans to phase out rations to boost economy still debated

Tomato paste and cheese will be added as a special treat during the holy Muslim month of Ramadan to food rations, distributed to all Iraqi families. In general, the food ration, comprising items such as oil, flour, sugar and chickpeas, hasn't changed at all since the Ministry of Trade (MoT) took it over from the United Nations at the start of this year. And if the ministry's long-term plans go ahead the ration could be phased out altogether. However a large section of society are still dependant on food rations and some 25 percent of the estimated 27 million people in Iraq remain 'highly dependant' on it, a recent survey carried out by local authorities and supported by the World Food Programme (WFP) showed. According to the Baseline Food Security Assessment, the first of its kind in Iraq, of these 6.5 million people, some 2.6 million are so poor that they have to resell part of their food rations to buy basic necessities such as medicines and clothes. A further 3.6 million Iraqis, 14 percent of the population, would become food insecure if the rationing system was discontinued. But the actual number might be closer to 80 percent, because some families are embarrassed to say how much they need the food, Ahmad al-Mukhtar, director of the ministry's foreign economic relations department, told IRIN. A can of cold Coca Cola might cost just 30 cents at Brothers Market in the Karrada shopping district of Baghdad, one of the more than 14,000 corner stores around the country where families pick up the food ration. But since the average government salary is still less than US $200 per month, most Iraqis see buying one as a special treat, store owner Nahil Khudhair told IRIN. When they have extra money, families buy shampoo or face soap; they don't usually have much left over for any other treats, Khudhair said. The MoT now wants to change the system by joining the World Trade Organisation (WTO) to stimulate foreign investment and create more jobs so that people can work and pay for their own food, al-Mukhtar said. That way, the country can move to a more free-market economy, he added. Every family in Iraq has a ration card to pick up the "food basket" distributed to corner stores around the country by the MoT. Iraq's crude oil sales pay for the more than $200 million per month former Oil-for-Food programme, which was run by the United Nations from 1996 to 2003 to offset international sanctions against former President Saddam Hussein. "This will be a driving mechanism from a centrally planned economy to a market economy," al-Mukhtar said. "We cannot maintain a food subsidy for the entire population indefinitely." In an effort to remedy this, al-Mukhtar and other trade officials went to Geneva last week to get support from the world free trade body. They are asking for preferential treatment from WTO officials, believing that membership will jump-start Iraq's economy. "We believe the people of Iraq have suffered enough from Saddam Hussein's policies," al-Mukhtar said. "They should not be used as hostages to economic policy again." Al-Mukhtar wants to add jobs as he phases out the food ration system - something that he expects will take several years. In the future, only poor people who apply for it will receive it. At Brothers Market, however, customers are worried that if the food ration ends, citizens will be furious. "It's not good to liberalise prices, because there are classes who are very poor," Accram Mahmoud, who was buying water and cigarettes for the office of a South Korean company where he works, told IRIN. "I don't want to be pessimistic, but how can I get ahead if I can't afford even to buy groceries?" But Iraq is a rich country that just doesn't happen to have a lot of jobs at the moment, customer Ehab Namiq, told IRIN. If there are jobs, it's not necessary to give people food, Namiq said. "I have a salary, so I buy my own food and clothes and give the food subsidy away," Namiq said. "But poor people would be very angry if the subsidy ended, because they depend on this food." Trade officials know it will not be easy to wean people off the food subsidy. An idea put forward last autumn to pay families $20 per month rather than give them food was scrapped as too politically unpopular, given the current unstable situation. "In 2005, we will continue to provide the food basket as an important element of social stability," al-Mukhtar said. "But it's important that the WTO drives the process of our economic reform policy." Foreign investment that can bring more jobs is trickling into Iraq. Bakeries and soft drink factories were open, but a business exposition to show off Iraq to foreign companies had been postponed indefinitely, al-Mukhtar said. The latest November date for the show was considered too risky with continued kidnappings of foreigners and fighting in the Sunni Muslim stronghold of Fallujah and elsewhere. Making Iraq safe again for investors might take years, Amjad Hamid, a trade ministry aide, told IRIN. "Give us five to 10 years and this, too, will end," Hamid said. "We'll get the security situation under control."