An economist says Iraq has squandered $1.5 trillion and is turning into a “welfare fund” that threatens its future.
An economist says Iraq has squandered $1.5 trillion and is turning into a “welfare fund” that threatens its future.
2026-03-07 05:47
Shafaq News – Baghdad
On Saturday, economist Manar Al-Obaidi warned of an impending economic “catastrophe” in Iraq as a result of “structural waste” policies, revealing that the country had generated “historic” revenues of $1.5 trillion over the past two decades without becoming a productive economic force.
This came in a report published by Al-Obaidi on his Facebook page under the title “Twenty Years of Structural Waste: A Reading of Iraq’s Budgets (2006-2025)”.
Al-Obaidi said in his report that over the course of two full decades, specifically from 2006 to 2025, enormous financial wealth, unprecedented in the history of the modern state, flowed into the Iraqi treasury.
He explained that “total revenues during that period amounted to about 1900 trillion Iraqi dinars, which is equivalent to approximately 1.5 trillion US dollars,” considering that “this huge figure would have been sufficient to transform Iraq into one of the greatest economic powers in the region if it had been invested in building a modern infrastructure and developing productive strategic sectors.”
The spending gap between consumption and investment
Al-Ubaidi also said that “when dissecting the aspects of spending on this wealth, we find a severe imbalance in the financial equilibrium: operational (consumer) spending: the largest part was drained by an amount of 1490 trillion dinars (about 1 trillion dollars),” noting that “most of this spending went to salaries, allowances and daily consumer expenses, which turned the state into a huge ‘social welfare fund’ that distributes oil revenues without creating added value.”
He then addressed investment (development) spending, stating that it received only 400 trillion dinars (approximately $300 billion). This is a small percentage compared to the actual needs of a country that requires a complete reconstruction of its bridges, factories, and electricity and irrigation networks.
Spending has increased and consumption is on the rise
The data reveals that the pace of spending has not been constant, but has witnessed a dangerous escalation in recent years:
Peak and growth, with the highest spending rate occurring between 2022 and 2025, as these four years alone consumed 30% of the total spending over the twenty years. In contrast, the period from 2006-2009 saw the lowest spending at only 10%, says Al-Obaidi.
Regarding operational inflation, the economist revealed that “operational spending jumped by a terrifying 178% at the end of this period compared to its beginning, with a steady annual increase rate of 15%, which is an indicator of the unproductive inflation of the state’s administrative apparatus.”
Investment spending stations
Al-Obaidi said in this regard that “despite the modest level of investment spending, it witnessed varying periods of activity: the period from 2014-2017 recorded the highest investment rate at 28% of the total investment, followed by the period from 2010-2013 at 24%. However, these investments remained below the level of ambition and did not succeed in creating an alternative economic base to oil.”
He pointed out that “the security challenge is often used as a justification for the failure of development, but the facts on the ground refute this claim: the continuity of sovereign sectors: the vital economic sectors, foremost among them the ports and oil sector, have never stopped and have not been substantially affected by security disturbances, but have continued to supply the budget with funds.
fiscal policy in Iraq
Al-Obeidi also stressed that “the southern and central Euphrates provinces enjoyed good security stability throughout these years, and it was possible to transform them into industrial and agricultural strongholds and build solid infrastructure in them, but the lack of vision prevented that.”
The economist continued, saying that “the financial policy followed has relied on (burdening the state) with operational obligations to hinder any opportunity to build an economic system based on industry, agriculture and technological progress.”
Al-Obeidi also said, “The opportunity to utilize 1.7 trillion dinars, which would have made Iraq an invincible economic power, was wasted. What happened was clearly systematic so that the state would be a state of salaries and subsidies, not a state of construction and development.”
He concluded by saying that any attempt at reform must begin with curbing wasteful spending and directing surpluses towards productive investment. Those who formulate plans today should not look at the current population, but rather at the next twenty years, when Iraq’s population will reach 70 million. He stressed that “continuing with the same consumerist mentality in the face of this population explosion will lead to disaster.”
shafaq.com
