BAGHDAD — U.S. reconstruction officials will soon hand out pink slips to nearly half a million Iraqi military and civilian personnel, exacerbating an unemployment crisis that experts say could slow the pace of postwar reconstruction.
The layoffs will mean the loss of a government paycheck for roughly 1 in 10 Iraqi workers. The Bush administration hopes to soften the blow by making cash "termination payments" to members of Saddam Hussein's armed forces, Information Ministry employees and other government workers whose services are no longer wanted. The amount of the payments had not been announced.
Officials of the U.S.-led reconstruction effort acknowledged that the dismissal of so many people will magnify the economic misfortune of a country where a majority of the population depends on food rations; an estimated 30% of the labor force works for the government; and unemployment, as best anyone can tell, already exceeds 20%. The layoffs will be the latest blow to the once-thriving trading nation, already reduced to Third World subsistence levels by nearly three decades of authoritarian rule, international sanctions and intermittent war.
"We are fully aware of the difficulties that have been created," Iraq civilian administrator L. Paul Bremer III said Monday. "The purpose of our policy is not to punish people. We are looking for ways that those who did not have a prominent role or an active role in [Hussein's now-outlawed] Baath Party can find employment."
Several economists, investors and business owners familiar with conditions in Iraq said the effect of the mass firings could be more severe than Bremer and other officials of the Pentagon-run Office of Reconstruction and Humanitarian Assistance are anticipating.
"It will be catastrophic for the Iraqi economy," said Humam Shamaa, senior professor of finance and economics at Baghdad University. "There will be a depression. It is a contraction to the reconstruction."
Shamaa and other experts said they understand the need for the U.S. to downsize the Iraqi army and retire Hussein's propaganda apparatus. But they urged that the reductions be phased in slowly, that new jobs be found for at least some of those laid off, and that as much severance pay be distributed to as many Iraqis as possible to mitigate the impact.
