Oil is Iraq’s greatest economic resource. Iraq possesses one of the world’s largest known oil reserves, and has been one of the world’s leading exporters. Most of the oil is obtained from the Kurd areas. Prior to the Gulf War of 1990, oil accounted for nearly 98 percent of the country’s total exports, a third of which was shipped to the United States.
Following the discovery of an oilfield near Kirkuk in 1927, and other fields near Basra and Mosul in the 1940s and 1950s, production went up rapidly during the 1960s and 1970s. The northern fields in the Kurdistan area have been producing more, although reserves are larger in the southern fields near the Kuwait border.
New fields in central Iraq have also been found recently near Baghdad, which started production in 1989. Most of the oil is exported directly from tanker terminals in the Gulf, although pipelines carry oil to the Mediterranean terminals as well. Iraq also possesses large reserves of natural gas. Although Iraq has a range of other minerals, including coal, iron ore, lead, copper and sulfur, exploitation has lagged behind. Emphasis on oil production has meant that development of the nation’s waterpower resources has been neglected; although several dams were built on the rivers, the potential remains largely unutilized.
Traditionally, Mesopotamia (the land between the rivers) has been best known for its agricultural productivity, which was recorded by Herodotus as early as the 5th century B.C. The total area given to cultivation at one time or another may have been much greater than today. Agriculture, based largely on irrigation, has been practiced in Iraq for a long time, perhaps dating back to 5000 B.C.
Centralized governments built and carefully devised irrigation systems capable of tapping the seasonal flow of the rivers. By the time of the invasion of the Mongols, most of the hydraulic works had fallen into disrepair, and during the Ottoman rule progressive siltation of the irrigation system meant that it remained neglected.
The area devoted to cropland drastically declined until the mid-20th century, when efforts were made to arrest the trend. New water diversion and flood control measures have been adopted, but the centuries of silt build-up and salinity problems have greatly reduced agricultural efficiency.
Wheat, barley, rice, dates, vegetables, millets, sugarcane, tobacco, cotton, and fruits are the chief crops grown. Wheat is the major crop overall, grown primarily in northern Mesopotamia; rice, fruits, and dates are grown in the southern parts of the Tigris-Euphrates basin. Barley is widespread as it better tolerates aridity and soil salinity.
Grain production is inadequate for domestic requirements, and food items account for a quarter of the country’s total imports. Dates are the chief commercial crop, grown west of Shatt-al-Arab. Next to oil, dates are the country’s most important export. Cotton is an important commercial crop, grown primarily for export.
Nearly one-eighth of the labor force is engaged in agriculture, accounting for one-fifth of the nation’s gross domestic product. Despite the government’s promotion of agriculture, the cultivated area declined by about one-half during the 1970s, but increased during the 1980s as a number of reclamation projects were completed. Iraqi agriculture faces several problems, including soil salinity, floods, droughts, and siltation that impedes the efficient working of irrigation.
The manufacturing sector developed rapidly since the mid-1970s, when the government policy moved toward heavy industrialization and import substitution. Petrochemical and iron and steel plants have been built at Basra and near Baghdad.
Tractors, electrical goods, telephone cables, tires, trucks, aluminum goods, and fertilizers are the main products. Production of advanced military hardware (and chemical weapons) got a boost during the Iran-Iraq War. After 1973, increased oil revenues helped finance new social programs, large construction projects, and creation of state-controlled new businesses, new high-rise buildings, and busy expressways that are largely concentrated in the metropolitan Baghdad area and in the urban axis between Baghdad and Basra.
However, punitive military strikes, primarily by the U.S. in retaliation to Iraq’s occupation of Kuwait in 1990 caused large scale destruction of Iraq’s economy and infrastructure. Economic recovery since then has been stalled by the UN sanctions against Iraq, dimming changes for future development.