One of the reasons Iraq looked promising for democracy at the beginning of the occupation was its relatively large middle class. In hindsight, it is now obvious that a middle class was made possible by the Saddam's suppression of Islam. After the invasion, the private sector collapsed and is unlikely to be revived due to resurgent Islam's suffocating effects - effects our planners refused to take into account and refused to check, even going so far as to allow Islam to be placed above the Iraqi Constitution. Cambell Robertson writes in New Duranty:

BAGHDAD — Hampered by years of violence, a decimated infrastructure, a lack of foreign investors and a flood of imports that undercut local businesses, Iraq’s private sector, particularly its small non-oil economy, has so far failed to flourish as its American patrons had hoped.

In its absence, the Iraqi government has been sustaining the economy the way it always has: by putting citizens on its payroll. Since 2005, according to federal budgets, the number of government employees has nearly doubled, to 2.3 million from 1.2 million.

The impetus is not only economic: In exchange for abandoning the insurgency that plunged the nation into civil war, many of the 100,000 members of civilian patrols known broadly as the Awakening movement have been promised jobs in the security forces or in reconstruction, though many Sunni Muslim members complain it is not happening quickly enough.

But this growth has not come without problems. Already, a huge wage increase to government workers that was instituted — but then suspended because of fears that it was pushing up inflation — has underscored the difficulties of being far and away the largest employer in an unstable country.

In 2006, 31 percent of Iraq’s labor force was working in the public sector, according to the agency for statistics in the Ministry of Planning. The agency expects that figure to reach 35 percent this year, about 5 percentage points short of where the C.I.A. estimated it to be on the eve of the 2003 invasion.

This figure is not atypical for the region, but it hardly indicates the free market state initially envisioned by the United States-led Coalition Provisional Authority, which pushed for full and rapid privatization in its first few months...