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Niqash - economy - social welfare flip-flop: why iraq’s ration card can’t be scrapped


social welfare flip-flop: why iraq’s ration card can’t be scrapped

It’s not the first time the Iraqi government has tried to abolish the ration card system. And it won’t be the last. Kufa University’s Hassan al-Zubaidi, an adviser on poverty reduction, explains why the ration card just won’t go away.

 

Last week the Iraqi Cabinet announced plans to abolish the ration card system, with which the government gives out household staples to the populace. The scrapping of the social welfare plan, which is over 20 years old, was seen as an important step toward economic development in the private sector; it’s something that has long been recommended by economic analysts. However, only five days after the decision was made, it proved to be so controversial – some have described it as political dynamite – that it was reversed. 

 

The ration card system was introduced to Iraq by the regime of former leader Saddam Hussein. A form of social welfare, the national food assistance programme began in the early 1990s after sanctions were imposed on Iraq following the country’s invasion of Kuwait. It allowed card holders to claim a variety of household staples.

 

However since the US-led invasion of Iraq that toppled Hussein’s government in 2003, the ration card system has been failing dramatically, plagued by inefficiency, widespread corruption and security issues. The long process of getting flour, rice, sugar, cooking oil, baby milk and other relevant staples from government warehouses into the hands of citizens as well the poor quality of the distributed items has made the ration card system more of a burden than a saviour.

 

Today there is no doubt that the system is an ever growing burden on the Iraqi government. As an article by news agency AFP noted: “a report by the International Monetary Fund in February 2010 described the system as ‘an inefficient generalised benefit that distorts private sector activity’."

 

The ration card system now serves double the amount of Iraqis it did when it was first introduced and that number is expected to increase by 800,000 annually simply because of population growth. All of which requires huge financial and human resources – resources that are lacking partially because of corruption within the relevant government departments that leads to waste - and partially because the Iraqi government simply doesn’t have the means to finance the scheme. According to the United Nations, the ration card funding accounts for about 7 percent of the federal budget.

 

The current Iraqi government has already said that it inherited the system from the former regime and that it could see no logical reason for keeping it – especially since international sanctions on Iraq were abolished some time ago. Scrapping the system would help move the Iraq towards becoming a real market economy and would make Iraqi consumers less dependent, they said.

 

However there are plenty of things that have made cancelling the ration card system very difficult. Certainly after the 2003 US-led invasion, as the security situation in Iraq deteriorated, there was more of a need for some sort of social welfare programme to protect Iraq’s vulnerable. The government is also well aware of the political significance of the ration card; they know only too well that the Iraqi people now see it as a basic right, no matter whether or not they actually still need the staples provided by the system.  

 

So in many ways perhaps it’s no surprise that this latest attempt to scrap the ration card system failed. After all, this is just one in a long line of attempts to reform or adjust the scheme.

 

In 2010 the Ministry of Trade initiated a plan to cancel ration cards for people earning more than IQD1.5 million (US$1,000) a month. But this didn’t make much impact on the overall scheme because only about 60,000 people out of the 31 million in the system were covered by that step - most of those were high ranking civil servants.

 

Even when ration cards were cancelled for the second tier of income earners – between 270,000 and 300,000 more people – the amendment didn’t make much of a dent in the system.

 

Later in 2010, another plan was instituted – the items available through the ration card would be reduced to just five basics: flour, rice, sugar, cooking oil and baby milk.

 

However according to a 2011 survey by the Iraqi Knowledge Network, a statistics and research offshoot of the federal Ministry of Planning, over three quarters (80 percent) of Iraqi families who had ration cards had only ever received one of the items on the ration card list between 2010 and 2011. Only 65 percent had only ever managed to lay hands on two of the items on the list in the same period and exactly a quarter had managed to get three of the items. Astoundingly less than 5 percent of the eligible families had ever had all five items. All of which clearly reflects the kinds of problems that plague the system. That also indicates that just reducing the goods the card entitles holders to, can’t make much difference either.  

 

Received through ration card system

Flour: 71%

Rice: 64%

Cooking oil: 30%

Baby milk: 5% of eligible families

 

However there’s also no doubt that cancelling the system outright as proposed last week, would have lead to further problems. Various reports from as far back as 2004 have concluded that scrapping the ration card system would lead to lower living standards in Iraq in general. There are a large number of food-insecure individuals in Iraq – early estimates range from between 11 and 16 percent of the population – and analysts have suggested that that number could double or even triple should the ration card system be scrapped. 

 

So for the time being, the Iraqi government, having rescinded its earlier decision to get rid of the system altogether, has decided that citizens may now have a choice – choose the ration card which allegedly supplies around IQD12,000 worth of goods or a cash payout of IQD15,000 per month.

 

Of course there are no guarantees that the cash will be used by the needy to buy the food they need and there’s obviously still plenty of room for social welfare fraud and for corruption. Only one thing seems certain when it comes to the ration card: with elections coming up in Iraq soon – they’re planned for early 2013 - it also seems highly unlikely there will be any further major “improvements” made to the ration card system in the near future.