The upsurge in violence in Iraq this week has been troubling and sent me back to my notes and a couple of authors that I relied on because of their documentation of data and quotes. It’s too cumbersome to give you chapter and verse citations; suffice it to say that if your pore over two books–Naomi Klein’s The Shock Doctrine: The Rise of Disaster Capitalism and Rajiv Chandrasekaran’s Imperial Life in the Emerald City: Inside Iraq’s Green Zone–you will have all the references that you need and want.
Knowing that you share a curiosity for the workings of foreign societies, for what it is worth, I decided to summarize my notes on the economic issues of Iraq and to share them with you. (My notes on religious affiliations and political entanglements exist but in a more esoteric and unmanageable form.)
You need to know that as a Keynesian, my perceptions go against privatization for the sake of privatization and that, as a Marxist, I am well convinced that the economic manifestations of a society reflect the central core of belief of that society–not always flattering to us.
While Iraqis were consumed with the daily emergencies in Iraq we sold it off through privatization. What we called “nation building” was really “nation creating.” We destroyed everything that was in existence and established Paul Bremer and the CPA as the ruling government with the mission of redoing everything.
(As an aside, one contractor was convicted in the US of fraud and fined $10 million. He appealed on the basis that he gave his [fraudulent] reports to the CPA, which, he contended, was not an official government and he won when the court in Virginia sided with him.)
Bremer fired 500,000 government workers and 400,000 military (who went home with their weapons) and he was left to govern 25 million people with a staff of 1,500. (Halliburton had a staff of 50,000) Iraq had a number of government-owned businesses ranging from the oil industry to cement factories, medical facilities, and food producers. It also had 67% unemployment. In the face of that, in the name of privatization, we stopped food handouts and ended subsidized gas prices. Then we opened the border to unrestricted imports, permitted foreign companies to own 100% of Iraqi firms (which meant that a Kuwaiti business would buy a factory at fire sale prices, lay off most of the workers and bring Kuwaitis in to staff it). It destroyed the Iraqi businessmen. Bremer, taking his orders from the Pentagon, privatized the 200 essential government-owned businesses and cut the corporate tax rate from 45% to 15% — but foreign investors could take out all of their profits and pay no tax. This is The Chicago School of Economics (Milton Freidman) run amok–as they did in Chile and Uruguay.
Bremer, on his own authority, took $80 billion from the Iraqi oil fund for “discretionary spending.” $8.5 billion is still missing.
Eight days after declaring “Mission Accomplished,” Bush announced the establishment of a U.S.-Middle East free-trade effort and appointed Dick Cheney’s daughter, Liz, in charge. This was to give us access to Iraqi oil. Iraq has one-third of the known oil reserves in the world. Those who say this fight wasn’t about oil are mistaken.
Although we created a “Marshall Plan for Iraq,” we ran an anti-Marshall Plan. The original Marshall Plan did not permit foreign ownership of rebuilt factories in Germany and profits and workers stayed in the German economy. We made no move to rebuild factories in Iraq until 2006, when the blow-back brought us to our senses and the Iraqi government began to exercise more influence in the economy. (In February 2004, 21% of the Iraqis said that they preferred an Islamic government. Six months later, 70% had that preference.)
Our ignorance and incompetence was outstanding but not surprising. One observer noted, “Conservatives cannot govern well, just as vegetarians cannot make a world-class beef bourguignon: If you believe that what you are doing is wrong, you are unlikely to do it well.”
We gave Creative Associates $100 million to produce new textbooks. The Iraqis tossed them as not acceptable.
Research Triangle had a $466 million contract to “bring democracy to Iraq”! RT is run by Mormons who believed that they could persuade the Moslems that the Book of Mormon was compatible with the teachings of Mohammed. The point man, Mayfield, was even so audacious as to email that “that the Iraqis will erect a statue of me as their founder of democracy.”
The contractors–Halliburton, Parsons, Bechtel, etc–brought in thousands of foreign workers rather than employ the skilled, out-of-work Iraqis. In one narrative, a worker tells about a confrontation with the manager of a cement factory that was going under foreign ownership and a huge projected layoff. He said that before that would happen they would burn the factory down or go inside and blow it up.
Instead of rebuilding cement factories (under Iraqi ownership) the contractors imported cement at 10 times the cost. When they were brought to their knees in 2006 they got some Iraqi cement factories up and running and expressed surprise that they weren’t is such bad shape and that they had good workers. The American who put the effort together was called a “Stalinist” by his colleagues because he had abandoned the privatization model.
The American who was put in charge of health care was an opponent of publicly run clinics and tried to even privatize the prescription delivery system to children. 70% of the children’s deaths in Iraq are preventable with proper medication and sanitary conditions.
Often the US contractors would sub-contract with Kuwaiti firms who would sub-contract with Saudi firms who used foreign (often Pakistani) workers. If they had to use Iraqis, they would go to the Iraqi Kurds.
Parsons was contracted to build 142 clinics. They built 6 (poorly).
You’ve read recently of several American troops being electrocuted in facilities that are maintained by a Halliburton subsidiary. The firm said that they had noted the faulty groundings, but “it wasn’t their responsibility to repair them.”
Of 8 water projects that were completed, only one was in operation a year later.
Bremer tried to lock in all of his laws and that was why Bush was so adamant about a new Constitution for Iraq. The existing Constitution was quite satisfactory–the problem was that Saddam didn’t abide by it.
Much of the chaos that created the blow-back and the civil war could be attributed to Bremer’s (Pentagon-directed) decisions. The firings removed skilled people from the government and weakened the voice of the secular Iraqis. It also fueled the resistance with angry people. And the businessmen who resented the foreign takeovers gave what little money they had to the resisters.
When Bremer left and the Iraqis took over there was poor water quality, no sewage treatment, limited gas supplies, and, at best, two hours of electricity a day. That’s still true today.
Meanwhile on the home front, as part of the Disaster Capitalism (while the people are still in shock, sock it to them economically) effort, Rumsfeld cut 55,000 jobs from the Department of Defense and the Veterans’ Administration and privatized them. You wonder how Heath Net had such strong profits and growth–they got the contract to provide medical care for returning, injured military and we know what a lousy job they did to keep the bottom line attractive to shareholders.
In Iraq, Moqtada al-Sadr, Shiite cleric, filled the vacuum by creating his large militia but, more important, created a cadre of workers who went into the community repairing electrical problems, providing food and medical care, etc.
This week the Iraqi Army went after al-Sadr’s militia in Basra. Friday was the deadline for them to surrender their weapons but Malaki has now extended it by ten days. I think he sees that he is in a losing cause.
Brother, we created an economic mess–outside of the invasion–beyond all comprehension and we did it in the name of placing the neoconservative ideal of unrestrained capitalism ahead of the wishes of an informed democracy. Iraqis are well-educated, secular people but we messed it up and now they, more than us, will be paying a heavy price for years to come. When emotion trumps reason there is no limit to the extremes to which people will go in desperate times. Don’t you agree that we should get Nixonian and declare a victory and leave? Let’s support the IMF and the World Bank in reconstructing the Iraqi economy and stop our partisan meddling.
My guess is that you are as outraged by all this as I am.
The Old Viking (and brother)