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In a Sign of Optimism, Iraqis Spending More

Many merchants report better business leading up to the Eid holiday, but Sunni Arabs are mostly pessimistic. Inflation is a concern.

November 02, 2005|Borzou Daragahi | Times Staff Writer

BAGHDAD — For Sahar Rubayie, the last days of Ramadan are a time to build up her spiritual strength by fasting and contemplating the Koran. But they're also a time to build up her wardrobe, and her country's economy, by shopping for clothes in anticipation of Eid al-Fitr, the annual three-day period of family gatherings and celebrations that marks the end of the holy month.

"Ramadan is a religious month, and we try to please God," said the 35-year-old Ministry of Health pharmacist, who spent the last days of Ramadan buying clothes and shoes with a friend in Baghdad's upscale Mansour district. "But Eid is also important, and people want to visit their relatives wearing the finest clothes."

Despite the ongoing insurgency, sectarian violence and an infrastructure ravaged by sabotage and neglect, Iraqis interviewed around the country generally appeared to be spending more money in the days leading up to Eid this year than last year, a possible indication of increased consumer confidence.

Some store owners and shoppers complained that times had gotten worse. But many more said recent political milestones had spread optimism about the country's future.

"Business is better than previous years," said Saleh Abed, 34, a Baghdad clothing wholesaler. "Although there is terrorism and the country is going through a very rough time, there is some kind of stability. We have an army. We have police. We have a constitution."

Abed and his colleagues, who wheel and deal from the upstairs stalls in the crumbling Arab Market on Baghdad's Rasheed Street, said sales were up 30% to 40% heading into this Eid compared with last year.

Even in violence-scarred stretches of the country, many merchants and consumers reported increased spending. The northern city of Samarra, for example, has been subjected to two large U.S.-led counterinsurgency operations over the last 15 months and recently was surrounded by a huge berm built to keep out militants.

But Safa Saheb Douri, who owns a clothing store in the Sunni Triangle city, said he had more paying customers this season.

"This is because of the relative security and stability this month in Samarra," he said. "This increases the desire of people to go shopping."

Merchants also credit last year's tariff cuts with enabling them to import better goods at lower prices.

Douri said his profit margin had jumped to 25% from 10% because of lower taxes that enabled him to charge customers less for better products.

Salaries for state employees, the bulk of Iraq's workforce, also have increased sharply. Mohammed Qais Nouri, a 38-year-old Samarra traffic cop, said his pay had increased from $20 a month before the U.S.-led invasion of March 2003 to between $500 and $600 a month now.

"Before, I used to worry about buying clothes for Eid," he said. "Now it's easy to get my four children whatever they want."

Some store owners were surprised by the increase in sales. In the weeks preceding last year's Eid, for example, the police department in the volatile city of Mosul collapsed. Shops stayed shuttered as gunmen battled with U.S. troops in the streets.

Many merchants there initially planned to sit out this year's Eid shopping season. But after the relative peace during the Oct. 15 constitutional referendum, some stores began to stock up on merchandise.

Salah Hamoud Bakuha, an employee at the Rabiyaa Fashion clothing store in Mosul, said the shop quickly imported goods from Syria, Turkey and China, aided by easier customs formalities at the border. On Tuesday, as the holiday approached, he said the store had sold more than 70% of its women's apparel stock so far, compared with 30% at this time last year.

"This goes back to the stability our province is experiencing," the 37-year-old said.

The retail mood, however, isn't entirely glowing. The sudden increase in salaries for state employees has caused inflation. Many Iraqis who don't have civil service jobs say they have less purchasing power.

"I couldn't buy any new clothes for the kids this year because prices have increased," said Thaer Abed, a 45-year-old taxi driver in Najaf. "The cheapest thing I could buy for the kids is around 7,000 dinars [about $4.80], and I just don't have it."

Despite the stability in some areas of Iraq, the security situation remains fragile. After a promising start to the Eid shopping season in Basra, consumers cleared out of commercial districts after a car bombing Monday night on busy Algiers Street killed at least 26 people and injured more than 80.

In contemporary Iraq, even perceptions about the consumer economy reflect the country's sectarian and ethnic divides, with Shiite Muslims and Kurds generally optimistic about the future and minority Sunni Arabs, who dominated the country under Saddam Hussein and are now the driving force behind the insurgency, more pessimistic.

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