The Economics of Baghdad’s Sectarian Cleansing

Megan Greenwell writes in today’s Washington Post of the financial consequences of sectarian cleansing in Baghdad. If you think housing prices have suffered in the US with the sub-prime mortgage collapse, just think about what’s happening to those fleeing mixed neighborhoods in Baghdad. As Greenwell summarizes:

With hundreds of thousands of Baghdad residents having fled their homes for the relative safety of segregated neighborhoods or foreign countries, a clandestine system of buying and selling property off the books has supplanted more traditional real estate practices. If families being pushed out are lucky, they are able to sell their homes for some small price, as Ismael did. Wait too long, and their houses might be seized at gunpoint.

This form of panic selling is a sort of militarized version of what took place in many American cities in the 1960s, as real estate agents used racial threats to “blockbust” a neighborhood, converting it from all white to all black almost overnight. Desperate to earn any value on their declining home, white families rushed to sell their houses to realtors who, in turn, jacked up the panic-reduced price and sold them to black families who thought they were moving to a middle class neighborhood. This process singlehandedly converted whole sections of cities like Detroit and Chicago from white to black neighborhoods.

The pressures collapsing the Baghdad real estate market are different. Here, Shi’ite militiamen have largely succeeded in taking over the city and have used corrupt real estate agents to pressure Sunnis into selling their homes, always with the implied threat that failure to sell will result in more direct and violent pressures. As a result, wealthy Sunnis in palatial Mansour homes find themselves shedding properties for a fraction of their 2003 value.

What’s particularly interesting about this story is its relationship to the larger narrative of violence and militia activity in Baghdad. Instead of merely using terror tactics to cleanse neighborhoods of Sunnis, militiamen deploy an array of tools that typically begin with financial pressure and, failing that, murder. What makes the financial aspect of this so troubling, though, is its permanence. Sunnis who flee to Ramadi or Syria at gunpoint can maintain the hope of returning to their former homes once the war calms down in Baghdad. But once Sunnis actually sell their properties – even under pressure – they lose all legal rights to reclaim their old homes and, more importantly, their neighborhoods. The collapse in the Baghdad real estate market, driven entirely by sectarian militia activity, has served to codify the new demographic reality: Baghdad is a Shi’ite city now and will be for the future.