Bush's Iraq: A Bloodbath
Economy, by Joshua Holland, AlterNet: Iraqis have been brutalized not only by bombs and bullets; they've also been
the victims of economic violence in the form of the free market "shock therapy"
cooked up by a firm in Virginia on a $250 million no-bid contract before the
U.S. invasion. Transforming Iraq's economy overnight was a matter of ideology
trumping commonsense, and it's killed thousands of innocent Iraqis and shattered
a way of life for hundreds of thousands more.
That the radical restructuring of Iraq's political economy has received so
little critical attention -- even as Iraq's nascent government threatens to
crash and burn -- is a testament to how deeply indoctrinated we are --especially
our media -- in the narrative of what "American-style" capitalism is. It was
taken as a given that after knocking off Saddam, we'd rapidly privatize huge
swaths of Iraq's national companies, get rid of hundreds of thousands of civil
servants, completely restructure the country's tax and finance laws and throw
Iraq's economy wide open for foreign multinationals. File it under bringing
"democracy and capitalism" to the poor, backward Arabs.
The reality is that the economic policies we imposed on Iraq were not some
generic form of "capitalism"; they included the most radical business-state
rules imaginable -- policies that developing countries have vehemently resisted
for over a decade. ... And while "democratization" and "free markets" supposedly
go hand-in-hand, the truth is that Iraq's economic transformation was mutually
exclusive with the goal of forming a legitimate government, and the Bush
administration knew it well in advance of the occupation.
That's because it's universally accepted -- even among the most vocal
proponents of the very model of corporate globalization that inspired Iraq's new
economy -- that in the short-term those policies create economic pain,
displacement, anger and civil unrest, as well as a lack of faith in government.
That's no way to win hearts and minds.
Even the man who implemented the shock therapy, coalition boss L. Paul
Bremer, understood this quite well. Before his installation as "the dictator of
Iraq" ... Bremer was a risk management consultant. In 2002, he wrote in a report
to his corporate clients: "The painful consequences of globalization are felt
long before its benefits are clear… Restructuring inefficient state enterprises
requires laying off workers. And opening markets to foreign trade puts enormous
pressure on traditional retailers and trade monopolies." Bremer noted that
corporate globalization is "good for the economy and society in the long run,
[but has] immediate negative consequences for many people," and concluded that
those consequences cause "political and social tensions."
Pushing those policies in a country like Iraq was a matter of ideological
preference and greed, not necessity. A good example is Iraq's new flat-tax,
established by Order #37 (now Law #37). As the Washington Post
reported: "It took L. Paul Bremer, the U.S. administrator in Baghdad, no
more than a stroke of the pen … to accomplish what eluded [Republicans] over the
course of a decade and two presidential campaigns."
Former Reagan and Bush 41 official Bruce Bartlett said with no small amount
of envy that an occupation government doesn't have to "worry about all the
political and transition problems that have made adoption of fundamental tax
reform here so difficult" ...
Putting "free-markets" before what are recognized as "best practices" in
post-conflict reconstruction had an immediate relationship with Iraq's
insurgency. Consider the impact of two of
Bremer's 100 Orders. Order #1 was the "De-Ba`athification of Iraqi Society."
It laid off 120,000 senior civil servants (and a half million Iraqi soldiers and
officers), ostensibly to clean out the government of holdovers from Saddam's
Ba'ath party. But you had to be a Ba'athist to get those civil service jobs in
the first place. Antonia Juhasz, author of
The Bush Agenda, told me in
recent interview that "it wasn't an indication that they were a party to
Saddam Hussein's crimes ... they were fired because they could have stood in the
way of the economic transformation."
When I say "civil servants," don't think about the pasty men and women down
at the Social Security office. Think about mostly Sunni civil servants -- men
accustomed to influence -- fresh out of a job, with few prospects and facing a
new order of Shi'ite rule, and remember that they all had compulsory military
training and a collection of automatic weapons.
Now look at Order #1 in relation to Order #39, which made it a violation of
Iraqi law for the government to favor local Iraqi businesses or Iraqi workers
for reconstruction work, meaning that all those pissed off, heavily-armed and
newly unemployed men could not be put to work rebuilding their country.
That killed the State Department's own exhaustively prepared plans for
post-war Iraq -- plans that the administration had announced they'd follow prior
to the invasion. According to a report by the Center for Strategic and
International Studies (PDF):
The Administration … announced plans to employ the bulk of Iraq's regular
army to rebuild Iraq's critical infrastructure, such as roads and bridges, after
a conflict. The United States would pay the salaries of Iraqi soldiers to
perform this work, thereby ensuring - at least in the immediate term - against
their return to civilian life without any gainful employment.
We'll never know how differently things might have turned out if the
administration had listened to its own experts instead of the Chamber of
That's not to say these policies caused the insurgency -- it's not that
direct -- but they created circumstances in which it could flourish and
guaranteed it would have some popular support. This was, after all, an economic
order that had led people living in much better circumstances in places like
Seattle, Geneva and Montreal to riot. ... Michael O'Hanlon of the Brookings
Institution was right when
he called post-conflict Iraq "a debacle that was foreseeable and indeed
foreseen by most experts in the field."
Much of this policy mix also violated international and U.S. law. It's no
small irony given that one of the reasons given for the invasion was to confront
a "rogue" regime that scoffed at international law.
Article 43 of the Hague Convention says that an occupying power must "take
all the measures in his power to restore, and ensure, as far as possible, public
order and safety, while respecting, unless absolutely prevented, the laws in
force in the country." The only law that the American forces left standing
was Saddam Hussein's ban on public-sector unions.
Article 55 says an occupying force can only serve as the "administrator" of
"public buildings, real estate, forests, and agricultural estates." As the
Guardian pointed out, those rules also "apply to structural changes to a
public resource or service." Naomi Klein asked: "what could more substantially
alter 'the substance' of a public asset than to turn it into a private one?"
The questionable legality of the policy was also well understood. Just a week
after the bombs started falling on Baghdad, Britain's Attorney General Lord
Peter Goldsmith sent a memo to Tony Blair (PDF)
warning that "the imposition of major structural economic reforms would not be
authorized by international law."...
The Bush administration -- dominated by Big Business ideologues -- went ahead
with the plan nonetheless, and the consequences have been wholly predictable.
After all, we've seen them before, in the former Soviet states after the USSR's
The administration actually cited Russia's economic transition as a model for
Iraq. But the University of North Carolina's Jonathan Weiler, an expert on
Russia and author of
Human Rights in
Russia: A Darker Side of Reform told me that ... "Russia's transition to
a market-based economy was anything but smooth, and Weiler says "it's certainly
not a model that's compatible with trying to create a broadly legitimate
government in a country that's been torn up by war and years of dictatorship.
...[W]hen you look at Russian human rights since 1991, you see that the victims
have changed--to the socially disadvantaged rather than the politically
suspect--but the realities of life for many vulnerable Russians have in fact
None of this is to suggest that Iraq's economy didn't have serious
inefficiencies or wasn't in need of deep structural reform. But what economists
call "inefficiencies" are most commonly someone's job, or a farmer's subsidy --
people's livelihoods. The reforms could have been phased in over a long period,
or, better yet, started after an Iraqi government was established.
Common sense should have dictated that, after the destruction of its
infrastructure and the dismantling of its (brutal but stable) government, Iraq
didn't need to become a laboratory for neoliberal economics. It needed jobs and
basics like electricity, water and sewage systems, and it needed them quickly.
That meant local firms, local workers and small, local projects -- which make
less juicy targets for saboteurs -- to rebuild the country's public
infrastructure. Development experts call that "local ownership," and consider it
crucially important for good outcomes.
But commonsense has always been in short supply in the Bush administration,
and they chose to make the country into a trough full of slop for the big
multinationals. Make no mistake about it, Iraq's economic transformation is an
example of war profiteering by other means, and the disastrous results are plain