NCPA - National Center for Policy Analysis


December 12, 2006

Defense officials and military commanders say festering unemployment is leading Iraqi men to join insurgencies in exchange for cash because their quality of life has slipped dramatically, says the Washington Post. 

Overall, according to Pentagon officials:

  • The vast majority of former Iraqi factory workers are still unemployed and are bringing in no pay.
  • Unemployment can reach as high as 70 percent in some areas.
  • A small portion of the workforce receives government stipends, akin to welfare, but the pay system is badly flawed.
  • Overall, the stipends provide only about 20 percent of what the workers would make if fully employed.

As a result, the Pentagon is reevaluating how the Defense Department spends its nearly $4 billion each year on troop support, in hopes that it can divert some -- about $1 billion, according to officials -- to buy products from nearly 200 state-owned factories abandoned by the Coalition Provisional Authority after the U.S.-led invasion in, in an effort lower unemployment.

Additionally, the department has also been reaching out to U.S. companies that can place large orders for products from Iraq:

  • Caterpillar Inc., a $36 billion construction equipment firm, says they could possibly buy low-tech supplies, such as hinges, from Iraq, dovetailing with the company's interest in expanding opportunities in the Middle East.
  • Dow Chemical Co., a $46 billion firm that sells plastics and other products in more than 175 countries, is also considering what supplies it can purchase from Iraq.

Economic development is a departure from the military's usual missions.  But it may yet be the most promising plan to both reduce soaring unemployment and lessen the violence that has crippled progress, says the Post.

Source: Josh White and Griff Witte, "To Stem Iraqi Violence, U.S. Aims to Create Jobs," Washington Post, December 12, 2006.

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