Opening the Iraqi Market – at the barrel of a gun

“War makes privatization easy: first you destroy the society and then you let the corporations rebuild it.” — Hacene Djeman, general secretary of the International Confederation of Arab Trade Unions

Although Iraqis and US troops alike are getting shot everyday in Iraq, the hand-picked US governing council in Iraq has already selected a finance minister who has announced a plan to privatize Iraqi state owned industries. The announcement makes clear that the war wasn’t just about oil — the war gives US authorities a chance to carry out dramatic economic restructuring in Iraq without the pesky local political opposition to such right-wing schemes that has been increasing everywhere else in the world. Apparently, the US government sees wars and global treaty negotiations to create “free” markets as two means to the same goal — economic domination by multinational corporations over everyone on earth.

The idea is simple. The US invades and sets up a puppet “interim” governing council during the transition period. During the interim period, the council lays the groundwork for economic privatization and large scale “free” market reform. US corporations are hired to reconstruct the country, ensuring foreign corporate control of the economy. After the economic restructuring is well underway and all of the important foundations and decisions are made, the US occupation force calls elections to ratify the results.

This appears to be what is currently happening in Iraq, although many Iraqis are resisting and attempting to delay crucial economic decisions until after elections.

Long before the invasion, right-wing think tanks were already excited about the possibility of trying their policies of economic restructuring, privatization and “free” markets without the opposition regular folks usually mount against these policies.

For instance, in a paper published in September, 2002, Ariel Cohen, the former Director of the Center for International Trade and Economics at the right-wing Heritage Foundation, suggests that a new regime in Iraq would privatize state industries (including especially the oil industry), seek to layoff workers, deregulate energy prices, keep taxes and tariffs low, apply to join the World Trade Organization, and liberalize trade policies. Cohen notes “During this time, the U.S. government and the IFIs [i.e. IMF/World Bank] would have to ensure that the political will for privatization remains intact.”

He also emphasizes the specifically ideological work to be done to ensure the Iraqi people would accept these measures: [the US should] “Educate and prepare the Iraqi population for structural reform and privatization through a public information campaign[.] Only when the public, including key stakeholders, elites, and the population at large, understand the goals of economic reform will they become more receptive to change and less likely to succumb to the anti-Western demagoguery that undoubtedly will emanate from the remnants of the discredited Ba’ath establishment and Islamic fundamentalists. The new Iraqi government will need to use the media and the educational system to explain the benefits of privatization and the changes to come in order to ensure broad public support.”

Kamel al-Keylanim, the finance minister appointed by the Governing Council in September, 2003 has already announced a plan to privatize state industries within two years. Although he notes that the government will “make sure the issue is acceptable to the Iraqi people” before privatization, he announced immediate plans to “lay the foundations” for privatization. Cohen conveniently lists some of these foundations: “creating government-held companies instead of ministries, issuing stock for these companies”, hiring foreign-trained consultants, “taking inventory of assets and liabilities; Exercising necessary efficiency-improvement steps, such as retraining and layoffs ; Introducing GAAP and other modern financial and management practices; Signing international conventions against nationalization of foreign investments . . . .”

Under Saddam’s regime, most important industries were government owned. Thus, privatizing these assets could put foreign investors and corporations in control of most economic activity in Iraq. Such dramatic privatization would mean massive layoffs and unemployment, while Iraq’s wealth would be siphoned out of the country. Proposals for low tariffs and free trade would have the same result — workers in Iraq would have to compete with the lowest paid workers around the world, and local environmental resources would be subject to global economic forces aimed at their extraction and destruction.

A particularly disturbing development is the US military’s hostility to independent political organization and protest during the “reconstruction” period. Already, the US has attacked protests organized by the unemployed and workers, arresting and shooting at the participants. International and US unions have protested the hostile environment for Iraqi workers under the occupation.

The records of corporate involvement in the reconstruction effort so far is also telling. Huge US corporations are making billions on reconstruction contracts, often bringing in low-wage foreigners in to do the work while millions of skilled Iraqi workers are unemployed. Contracts are being distributed as trophies to major corporate Bush supporters, often with no competitive bidding or any pretext that the contracts are for a fair price. For instance, it has come out that the US is paying corporations millions to rebuild bridges that could be rebuilt locally for a tenth of the cost.

And don’t misunderstand the situation and believe things would be much different if the United Nations, instead of the US military, were to step in and take over the situation. At the recent UN donors conference to seek financial grants and loans for Iraq reconstruction efforts, it was generally understood that corporations from nations which donated to the reconstruction would win reconstruction contracts. To the extent the international community increases its involvement and the US steps back, that will only mean Iraq will be privatized by a diverse group of international corporations, instead of primarily US based firms, as is now the case. Economic colonialism is still colonialism whether it is carried out by the US alone, or by the US, Europe and Japan, acting together under the cover of the UN.

Before and during the war, Bush talked a lot about democracy, elections, and giving power to the Iraqi people. People who opposed the war should demand that all decisions about Iraq’s economic system be made by Iraqis, not the US occupation authority controlled by right-wing free market promoters — or anyone else.