The consequences of war - Iran

The war was a defeat for the Islamic revolution.

Iran had failed to overthrow the competing Ba’ath revolution and the Middle East’s Sunni fundamentalists had spurned its vision of an Islamic order. Iran’s regional worldview had been defeated. The Middle East state system had withstood an existential challenge and succeeded in confining war within the boundaries of the two belligerents. The vision of ‘permanent revolution’, of subverting the regional order, had been forced to accept the conventional rules of the game.

Most critical, though, was the sheer cost of the war. Measured at around $1,100 billion in 1988 dollars, when the currency was worth twice what it was in 2015 it was enormous. Baghdad authored 40% of those cheques, and for Iran, responsible for the remainder and still trying to demobilise, the previous policy of international isolation was inimical to successful reconstruction on this scale. Efforts were quickly made to mend relations with the USSR which had deteriorated after the wholescale destruction of the Tudeh party and with the west and, as the threat of Islamic fundamentalism receded, relations also improved with Arab nations.

But for President Rafsanjani the key difficulty was urgency. The mercantile elites and their focus on the immediacy of trade provided a kind of solution. One Rafsanjani, as a former businessman, understood. He therefore enrolled them, using the clergy to authorise their activities in return for financial support. This extended the corruption of traditional clerical patronage and encouraged state sanctioned instability, allowing the merchants and those with power to benefit from artificially induced scarcity.  This increased the dominance of the elites and ensured the continuation of what amounted to a kind of managed instability. At the same time the absence of any real private sector placed pressure on the state to take control, reinforcing autocracy whilst the wealthy invested their riches abroad to avoid the instability they had helped create, leaving little of the proceeds for Iranians. The result was an economic culture that at once impoverished the weak, empowered the rich and effectively distanced potential international allies by blocking the foreign investment culture that Europeans, American and Japanese investors were used to which might have underpinned real economic recovery.

The consequences of war - Iraq

By contrast, Iraq had funded its war with unfettered debt from the oil exporting Gulf monarchies, from repayment deferments by the Soviets and the West and from bank guarantees from the US. It now emerged owing some $80bn, more or less twice the value of its Gross National Product and equivalent to two decades of oil output at levels which then amounted to around $13bn pa. Moreover, national reconstruction was set to cost as much as $230bn.

This hefty indebtedness felt unfair. Peace talks were making very little progress, no prisoners had been exchanged and the prospects of having to fund the vast expense of a fully mobilised Iraqi army were terrifying the treasury. Attempts at partial demobilisation left the economy staggering under the burden of huge numbers of young men flooding the jobs market. The traditionally insecure regime was on red alert; failure to deliver the benefits of the glorious national victory in short order would see it overturned.19 

Saddam Hussein felt Iraq had defended the interests of the wealthy Sunni Middle East and the world from the evils of Islamic fundamentalism and it was time others shared the burden. In Amman in early 1990 he demanded that Egypt’s President Mubarak and Jordan’s King Hussein remind the Gulf states that Iraq needed a moratorium on its debts and an additional $30bn to boot. The focus quickly tightened on Kuwait which was accused of deliberately stimulating oversupply and costing Iraq upwards of $89 billion between 1981 and 1990.  Saddam demanded it abide by a new oil quota set by OPEC and when Kuwait ignored these demands PM Tariq Aziz accused it of oil theft and demanded a hike in oil prices to $25 per barrel and for the Arab world to provide compensation on a scale similar to the Marshal plan. As well as a complete Arab moratorium on its loans. Kuwait issued a strongly worded refutation and on 2 August 1990 Iraq’s forces invaded and quickly occupied Kuwait. 

Bibliography 

Razoux, Pierre. The Iran-Iraq War. Harvard University Press, 3 Nov. 2015. 

Ansari, Ali M. Confronting Iran : The Failure of American Foreign Policy and the next Great Crisis in the Middle East. New York, Basic Books, 2007.