Prof. Dr. Haider Ali Al-Dulaimi Eradicating poverty in all its forms is one of the most important Sustainable Development Goals (SDGs) and constitutes the first goal of the United Nations Sustainable Development Goals. In Iraq, achieving this goal is closely linked to the economy’s ability to provide employment opportunities, improve income levels, promote domestic production, and ensure that households have access to essential goods and services. In this context, the decision to liberalize fuel prices assumes particular importance, given that energy is a fundamental input in various economic activities. Fuel is not only used in production and transportation, but its cost is also directly or indirectly linked to the prices of food, goods, and services. Consequently, any significant increase in fuel prices can have widespread effects on living standards, particularly among low-income groups. Rising Fuel Prices and Their Impact on Households Fuel price liberalization may generate several economic benefits, including reducing waste and smuggling, improving energy-use efficiency, increasing public revenues, and directing resources toward more productive uses. However, these benefits may be accompanied by short-term effects, particularly higher transportation and production costs. These increases gradually pass through to the prices of goods and services. Higher costs of transporting food and goods between provinces, for example, can lead to higher prices, while the production costs of many goods that depend directly on fuel may also increase. In such circumstances, low-income households face a double burden: rising prices on the one hand and limited capacity to increase their income on the other. This highlights the direct relationship between fuel-pricing policy and the first Sustainable Development Goal. Rising living costs may lead to a decline in households’ real income, even if their nominal monetary income remains unchanged. Poverty Is Not Measured by Income Alone Assessing the impact of fuel price liberalization on poverty requires moving beyond the concept of monetary poverty toward a broader approach that takes into account households’ actual ability to access food, housing, transportation, healthcare, education, and other basic needs. For example, higher transportation costs may increase the cost of commuting to workplaces or accessing educational and healthcare institutions, while higher prices for construction materials and energy may raise housing costs. Thus, the effects of price liberalization can extend to multiple dimensions of household welfare. Moreover, low-income households generally spend a larger share of their income on basic necessities. As a result, they are more vulnerable to the inflationary effects of rising energy costs than higher-income households. Protecting the Poor as a Condition for Successful Reform This does not mean that fuel price subsidies should continue in their existing general form indefinitely. Untargeted subsidies may deplete public resources and benefit groups that do not actually need them. However, shifting from universal subsidies to targeted support represents the option most consistent with the objectives of sustainable development. This requires allocating part of the additional revenues generated by price liberalization to social protection programs, supporting the most vulnerable households, improving public transportation services, enhancing employment opportunities, and financing small and medium-sized enterprises. Such measures can help households cope with rising living costs. Energy-intensive productive sectors should also be protected temporarily and in a carefully designed manner, because maintaining production and preserving employment opportunities represent the most important line of defense against poverty. Economic Reform and Poverty Reduction Fuel price liberalization can be transformed from a source of pressure on poor households into a tool for supporting development if it is implemented as part of an integrated economic policy. Additional revenues should not be used solely to finance current expenditure; a significant portion should instead be directed toward productive investment, infrastructure, education, healthcare, and employment opportunities. Accordingly, the success of fuel price liberalization from the perspective of the first Sustainable Development Goal should not be measured solely by the government’s ability to reduce subsidies or increase revenues. Rather, it should be assessed by its ability to prevent the cost of reform from being passed on to the poor and to transform the resources generated by the reform into opportunities for production, income generation, and social protection. The most sustainable economic policy is therefore one that makes price reform a means of enhancing economic efficiency without allowing the reform itself to become a new cause of expanding poverty.