Monday, August 23, 2004

Like a lot of folks, I'm used to thinking of the economic disaster in Iraq as being the result of the security mess. So it's interesting to read in Naomi Klein's article in the September Harper's (not on line), how much unemployment there has to do with simple mismanagement:

"The looters were good-hearted", one of [a factory's] painters told me, explaining that they left the tools and machines behind, "so we could work again." Because the machines are still there, many factory managers in Iraq say that it would take little for them to return to full production. They need emergency generators to cope with daily blackouts, and they need capital for parts and raw materials. If that happened, it would have tremendous implications for Iraq's stalled reconstruction, because it would mean that many of the key materials needed to rebuild -- cement and steel, bricks and furniture -- could be produced inside the country.

But it hasn't happened. Immediately after the nominal end of the war, Congress appropriated $2.5 billion for the reconstruction of Iraq, followed by an additional $18.4 billion in October. Yet as of July, 2004, Iraq's state-owned factories had been pointedly excluded from the reconstruction contracts. Instead, the billions have all gone to Western companies, with most of the materials for the reconstruction imported at great expense from abroad.

In fact, to a considerable extent, it's the economic disaster that's fueling the security mess:

With unemployment as high as 67 percent, the imported products and foreign workers flooding across the borders have become a source of tremendous resentment in Iraq and yet another open tap fueling the insurgency.

In this context, it's a particular insult that the ubiquitous concrete blast walls separating "coalition" personnel from the populace at large are imported, while Iraq's own cement factories lie idle. And there's more:

It turns out that many of the businessmen who are threatened by Bremer's investment laws have decided to make investments of their own -- in the resistance. It is partly their money that keeps fighters in Kalashnikovs and RPGs.

At this point, American readers may be asking, "Say what? Businessesmen imposed to investment laws?" Well, yeah. Bremer came in with a notion of privatization as the way to do things, and proceeded to try to privatize -- a plan which ran into a slight snag when too many potential foreign buyers of state-owned firms noticed that under international law, an occupying power was forbidden to sell them. But that idea, and foreign competition generally, was still seen as a significant threat by anyone associated with the businesses that were to be sold -- including, I presume, their private suppliers.

In the meantime, Bremer obviously failed to sell the policy to the Iraqi population at large. (Klein quotes workers in one factory as saying that they will blow it up rather than see it under foreign ownership). And he tried to proceed anyway. Which tells you something about his notion of promoting democracy. Bremer believed that his policy was the right thing to do. But rather than promote it to the people at large, and wait for some kind of consensus, he just went ahead and did it -- the will of the people be damned. And we're stuck with the result.


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