Indirect Losses of the World Economy from the War in Iraq May Amount to One Trillion Dollars

Pravda Ru 13:58 2003-03-24

According to the estimates of economists, the indirect losses of the world economy from the war in Iraq may amount to one trillion dollars, says the research done by the Sheikh Sayed Coordination and Monitoring Centre in Abu Dhabi, an information body of the League of Arab States.

According to this research, the cost of rehabilitation work and the modernisation of the Iraqi economy, including the oil industry, will amount to 120 billion dollars. As a consequence of the war, the document forecasts turbulence at the world stock exchanges, a trade war between Europe and the United States, the dropping of the dollar exchange rate, a sharp lowering of investment activity and also an outburst of terrorist activity in the world.

The restoration of Iraq's oil potential and the removal of international sanctions from it will allow Baghdad to quickly increase its oil exports, which in turn will negatively affect the oil prices and the incomes of the OPEC member countries, points out the document.

The return of Iraq to the international oil market will take place at the expense of the OPEC countries, mainly the Saudi Arabia, Venezuela and other key oil producers which will have to lower the level of their production, giving way to additional Iraqi deliveries, says the document.

Taking into account the slow growth in oil demand due to the slow development of the global economy, the oil prices will sharply fall, which will force oil producers to continue lowering their oil extraction. Quite possible that a new price war will start between the OPEC members, because this organisation will be forced to change its policy to defend its share on the world market, underscores the research.