Downsizing in Disguise

June 4th, 2003
By Naomi Klein

The streets of Baghdad are a swamp of uncollected garbage and crime.

Battered local businesses are going bankrupt, unable to compete with cheap imports. Unemployment is soaring and thousands of laid off state workers are protesting in the streets.

In other words, Iraq looks like every other country that has undergone rapid fire "structural adjustments" prescribed by Washington, from Russia’s infamous "shock therapy" in the early nineties to Argentina’s disastrous "surgery without aesthetic" a few years later. Except that Iraq’s so-called reconstruction makes those wrenching reforms look like spa treatments.

Paul Bremer, the U.S. appointed governor of Iraq, has already proved something of a flop in the democracy department in his three weeks there, nixing plans for Iraqis to select their own interim government in favour of his own handpicked team of advisors. But Bremer has proved to have something of a gift when it comes to rolling out the red carpet for U.S. multinationals. No wonder George Bush looked so pleased when he met Bremer in Qatar.

For two weeks, Bremer has been hacking away at Iraq’s public sector like Chainsaw Al Dunlap in a flak jacket. On May 15, Bremer banned up to 30,000 senior Baath Party officials from jobs in government. Less than a week later, he dissolved the army and the information ministry, putting 400,000 Iraqis out of work without pensions or re-employment programs.

Of course if Saddam Hussein’s henchmen and propagandists held on to power in Iraq it would be a human rights disaster. "De-Baathification," as the purging of party officials has come to be called, may be the only way to prevent a comeback by Saddam’s crew-and hold onto the one true benefit that could come from George Bush’s illegal war.

But Bremer has gone far beyond purging powerful Baath loyalists and moved into a full-scale assault on the state itself. Doctors who joined the party as children and have no love for Hussein face dismissal, while low-level civil servants with no ties to the party have been fired en masse. Nuha Najeeb, who ran a Baghdad printing house, told Reuters, "I…had nothing to do with Saddam’s media, so why am I sacked?"

As the Bush administration becomes increasingly open about its plans to privatize Iraq’s state industries and parts of government, Bremer’s de-Baathification takes on new meaning. Is he working only get rid of Baath Party members, or is he also working to shrink the public sector as a whole so that hospitals, schools and even the army are primed for privatization by U.S. firms? Just as reconstruction is the guise for privatization, de-Baathification looks a lot like disguised downsizing.

Similar questions arise from Bremer’s chainsaw job on Iraqi companies, already pummeled by 12 years of sanctions and a month and half of looting. Bremer didn’t even wait to get lights back on in Baghdad, for the dinar to stabilise or for the spare parts to arrive for Iraq¹s hobbled factories before he declared, on May 26, that Iraq was "open for business."

Duty-free imported TV s and packaged food flooded across the border, pushing many Iraqi Businesses into bankruptcy, unable to compete. This is how Iraq joined the global "free market" economy: in the dark.

Paul Bremer is, according to Bush, "a can-do type of person." Indeed he is. In less than a month he has readied large swaths of state activity for corporate takeover, primed the Iraqi market for foreign importers to make a killing by doing away with much of the local competition, and made sure there won’t be any unpleasant Iraqi government interference — in fact, he’s made sure there will be no Iraqi government at all during this crucial period when so many key decisions will be made. Bremer is Iraq’s one-man IMF.

Like so many of the men who populate the Bush foreign policy landscape, Bremer sees war as a business opportunity. On October 11, 2001, just one month after the terror attacks in New York and Washington, Bremer, once Ronald Reagan’s ambassador-at-large for counter-terrorism, launched a company designed to capitalize on the new atmosphere of fear in U.S. corporate boardrooms. Crisis Consulting Practice, a division of insurance giant Marsh & McLennan Companies, specializes in helping multinationals to come up with "integrated and comprehensive crisis solutions" for everything from terror attacks to accounting fraud. And, thanks to a strategic alliance with Versar Inc., a biological and chemical weapons analyst, clients of the two companies are treated to "total counter-terrorism services."

To sell this kind of high-priced protection to U.S. firms, Bremer had to make the sort of frank links between terrorism and the failing global economy that activists are consistently called lunatics for articulating. In a November 2001 policy paper titled "New Risks in International Business," he explains that free trade policies "require laying off workers. And opening markets to foreign trade puts enormous pressure on traditional retailers and trade monopolies." This leads to "growing income gaps and social tensions," which in turn can lead to a range of attacks on U.S. firms, from terrorism to government attempts to reverse privatization and trade incentives.

He could be describing the backlash his own policies are provoking in Iraq. But then guys like Bremer always know how to play both sides. Like a hacker who cripples corporate websites then sells himself as a network security specialist, in a few months Bremer may well be selling terrorism insurance to the very companies he welcomed into Iraq.

And why not? As Bremer told his clients back at Marsh, globalization may “have immediate negative consequences for many” but it also leads to "the creation of unprecedented wealth." It has for Bremer and his cronies. On May 15, just days after he arrived in Iraq, his former boss, MMC Chairman Jeffrey W. Greenberg, announced that 2002 "was a great year for Marsh — operating income was up 31 percent…. Marsh’s expertise analyzing risk and helping clients develop risk management programs has been in great demand… Our prospects have never been better."

Many have pointed out that Paul Bremer is no expert on Iraqi politics. But that was never the point. He is an expert at profiting from the war on terror, and at helping U.S. multinationals make money in far off places where they are both unpopular and unwelcome.

In other words, he’s the perfect man for the job.

This article first appeared in The Nation.