"Let's say Iraqis used to spend $10m a year on shoes made in Iraq. Now they only spend $5m on imported shoes, so they have $5m extra to spend. Except the Iraqi shoemakers are no longer earning anything, so they have $10m less to spend. Overall, Iraqi people have $5m less cash to spend. Rather than creating new jobs, more jobs will be lost in other industries - leaving the shoemakers with rather limited opportunities to find new employment."

Wrong. Turnover does not equal profit! If Iraqi shoemakers sell $10m shoes a year, they only actually make something like $1m (if they're lucky). So even if the Iraqi shoemakers can't find another job (which they would). Iraqis would have 4 million bucks extra to spend overall. Thanks for proving my point.