Tuesday, December 05, 2006

Iraq – playground for big business

The invasion and occupation of Iraq was, as we know, not simply a military exercise aimed at overthrowing the Saddam Hussein regime. What it crucially did was put in place foreign investment rules long sought by corporations, according to Antonia Juhasz, a visiting scholar at the Institute for Policy Studies in Washington. Laws instituted by former US administrator Paul Bremer when he headed the Coalition Provisional Authority during the first year of the occupation, provided a flood of benefits for American corporation. These included 100% repatriation of profits earned in Iraq by foreign companies; 100% foreign ownership of Iraqi businesses, including banks; privatisation of Iraq's state owned enterprises; 100% immunity for US contractors and soldiers from Iraq's laws; and "national treatment" which allowed for Iraqis to be all but excluded from the reconstruction for years while the US government paid $50 billion to some 150 US corporations for work in Iraq. What followed was "a US corporate invasion of Iraq," says Juhasz. "Many companies had their sights set on privatisation in Iraq, also made possible by Bremer, which helps explain their interest in 'major overhauls' rather than getting the systems up and running." The US government split the economy into sectors and issued reconstruction contracts among nine big corporations. In most cases the contracts were distributed without competition and the contractors were guaranteed a profit margin calculated as a percentage of their costs, so the higher the costs, the higher the profits. In the rush to get profits flowing, many contracts were signed early in 2004, though hardly any work began until the end of the year, and little has been completed. In between contractors racked up huge bills for wages, hotels and restaurants. Parsons, a California company finished only six of 140 primary healthcare centres before its contract was terminated – but was paid in full. What work has been done has been of outstandingly bad quality. The plumbing in a Baghdad police college built by Parsons left urine and excrement raining down on the heads of the cadets.

Now, according to the US government’s own auditor, the occupation has introduced corruption, waste incompetence and fraud on a massive scale. In the hustle to funnel US taxpayers’ funds through to feed the profits of corporations like Kellog, Brown and Root, a subsidiary of Vice-President Dick Cheney’s former company, audit trails are absent. Nearly $9 billion in oil revenues has gone missing, and tens of thousands of weapons are unaccounted for – no doubt having made their way through the black clouds of corruption to stoke the civil war. Much of Iraq’s domestic economy has been destroyed, with not a single Iraqi brand remaining. A businessman who once owned a small textile factory that has gone bankrupt said he had not expected the coming in of an American administration to be bad for business. "The picture of Japan after World War II dominated the minds of businessmen in Iraq after occupation," he said. "Most of us thought the American invasion of Iraq was bad for many things, but it must be good for business in general and industry in particular. We were terribly wrong. The Iraqi economy was meant to be destroyed for political reasons."

Gerry Gold, economics editor

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