IRAQ - How Post-Embargo Iraq May Cope With Globalisation.

Iraq cannot consider dealing with issues of globalisation at a time when it is facing the exact opposite - i.e. total isolation. Thus the prospects in terms of how Iraq may meet the challenges of globalisation would have to be assessed in light of the past. Prior to the Gulf war, Iraq was a fairly self-sufficient country with good technical capabilities and a well-diversified economy, relative to most other states in the Gulf region, and indeed much of the Arab World.

The regime had been careful to provide a high standard of living for ordinary Iraqis. Education was free, and the universities of Iraq were among the better educational institutions in the Arab World in a qualitative sense; they provided the basic training for many Iraqis who went on to join in the development of Iraq's conventional and unconventional weapons programmes. Iraqi scientists and technologists had a good reputation both within and outside the Middle East.

In general, Iraqis were better off than most of their Arab counterparts, although they did not approach the standard of living of those in the Gulf Co-operation Council (GCC). That, however, was partly due to the fact that Iraq been at war with Iran and much of its revenues during the 1980s were expended on the war effort.

Politically, the regime has always been tough but it was not much different from other Arab ruling super-structures in its level of tolerance for opposition. Challenges to the regime were not tolerated, although the rights of minorities were generally respected unless they rebelled - in which case they could face drastic repercussions, such as the chemical attacks against Kurds in Halabja. Within Iraq, Saddam Hussein was feared as a very ruthless man, so opponents either went into exile or - if they remained in Iraq - did not cross any red lines.

The ruling structure was based on a Baath organisational system, with the Revolutionary Command Council at the top followed by regional and local levels of Baath commands. This system kept the country stable, and it continues to be effective in preventing the ouster of the regime.

So the chances of real democratisation measures being introduced in Iraq in the foreseeable future are close to zero. It is not inconceivable that Saddam may introduce some gestures towards democracy if that would help to ease the embargo, but these measures would remain cosmetic in nature and would not amount to any real shifts in power. In fact, most observers agree that there is virtually no possibility of any democratisation in Iraq so long as the current regime is in power.

Equally important, there is no guarantee that any regime which may replace the existing super-structure in the future would have democratic tendencies. According to the observers, there are no democrats waiting in the wings to take over Iraq. They argue Iraq needs a tough ruler to unite the various tribes, sects and ethnic groups if the country is to remain in one piece.

In the best case scenario, in terms of prospects for stability, Saddam would be ousted by a military coup and another ruthless but less brutal pro-Western Baathist ruler may take over. In the worst-case scenario, Saddam would be assassinated and the country would sink into chaos with the possibility of eventually being split up into three or more entities.

The observers believe that the Bush administration's hopes of ousting Saddam and replacing it with a real democracy, or at least a leadership that is pro-American, amounts to wishful thinking. Any attempt to impose democracy in Iraq will not get the backing of even Washington's closest allies in the GCC, because of the implications that would have for their own ruling families.

On the other hand, the prospects for a liberalised economic environment are better than on the political front. At present, the regime is prepared to do whatever is necessary to subvert the embargo. Over the years it has become very successful in using sanctions-busting techniques, to the extent that the leadership elite live comfortable lives with access to all the latest luxuries.

Yet busting the embargo has also meant developing means of self-sufficiency in basic foodstuffs and other needs, and Iraq has achieved this to some extent as well. Private enterprise is encouraged to the point that it helps overcome the negative effects of the sanctions on the population. But strong measures, including executions, are applied for those who try to take advantage of the situation and make money by hoarding and other means.

Most observers agree that Iraq would be able to liberalise the economy in a "rational" way only after the embargo is fully lifted. Until then it would have to operate in "economic limbo" and resort to ad hoc measures to keep the economy performing in a way that would minimise the potential for social unrest. After sanctions are lifted, Iraq can be expected to apply economic policies not much different from other oil-rich countries. It may even become more aggressive than them in applying free market principles.

The country will become the biggest reconstruction zone in the world. It will also become one of the most attractive areas for foreign companies in oil, infrastructure and other areas. Iraq has already negotiated huge oil development projects with Russia, France, China and other countries. A range of non-oil business agreements has also been arranged with countries ranging from Italy to India.