Former electricity minister warns Iraq could face conditions worse than sanctions era

BAGHDAD — Academic and former electricity minister Luay al-Khatib warned Tuesday that Iraq could face economic conditions worse than the 1990s sanctions period if the regional war continues, and said the government may move toward implementing compulsory savings within two to three months.

“Iraq has lost 90 percent of its oil exports, and even the remaining 10 percent is being sold at significant discounts due to the difficult situation,” al-Khatib told Awla TV. He said that even if the conflict ends by the end of the month, at least five months would be needed for economic conditions to return to normal, adding to the financial deficit already projected in the federal budget.

Al-Khatib said Iraq’s current cash mass is estimated at around 100 trillion dinars, with 90 percent held outside the banking system. He described compulsory savings — a system under which a portion of individual income is mandatorily deducted under state law — as a measure that could be adopted soon if conditions do not improve. “We currently need to restore citizens’ confidence in the banking system,” he said.

He warned that a prolonged war could prove more damaging than the 1990s sanctions, noting that Iraq previously had access to the oil-for-food program while current conditions restrict exports entirely, and that the country’s population has grown from less than 18 million in the 1990s to around 46 million today. He also called on the political class to reduce disparities with the public, citing regional examples including Iran, saying such steps are necessary to help citizens cope with the crisis.

The UN imposed sweeping sanctions on Iraq following its invasion of Kuwait in August 1990, severely restricting trade, oil exports and access to international financial systems for more than a decade.