09 Apr Privatization in Disguise

April 9th, 2003
By Naomi Klein

On April 6, Deputy Defense Secretary Paul Wolfowitz spelled it out: There will be no role for the United Nations in setting up an interim government in Iraq. The US-run regime will last at least six months, "probably…longer than that."

And by the time the Iraqi people have a say in choosing a government, the key economic decisions about their country’s future will have been made by their occupiers. "There has got to be an effective administration from day one," Wolfowitz said. "People need water and food and medicine, and the sewers have to work, the electricity has to work. And that’s a coalition responsibility."

The process of getting all this infrastructure to work is usually called "reconstruction." But American plans for Iraq’s future economy go well beyond that. Rather, the country is being treated as a blank slate on which the most ideological Washington neoliberals can design their dream economy: fully privatized, foreign-owned and open for business.

Some highlights: The $4.8 million management contract for the port in Umm Qasr has already gone to a US company, Stevedoring Services of America, and the airports are on the auction block. The US Agency for International Development has invited US multinationals to bid on everything from rebuilding roads and bridges to printing textbooks. Most of these contracts are for about a year, but some have options that extend up to four. How long before they meld into long-term contracts for privatized water services, transit systems, roads, schools and phones? When does reconstruction turn into privatization in disguise?

California Republican Congressman Darrel Issa has introduced a bill that would require the Defense Department to build a CDMA cell-phone system in postwar Iraq in order to benefit "US patent holders." As Farhad Manjoo noted in Salon, CDMA is the system used in the United States, not Europe, and was developed by Qualcomm, one of Issa’s most generous donors.

And then there’s oil. The Bush Administration knows it can’t talk openly about selling off Iraq’s oil resources to ExxonMobil and Shell. It leaves that to Fadhil Chalabi, a former Iraq petroleum ministry official. "We need to have a huge amount of money coming into the country," Chalabi says. "The only way is to partially privatize the industry."

He is part of a group of Iraqi exiles who have been advising the State Department on how to implement that privatization in such a way that it isn’t seen to be coming from the United States. Helpfully, the group held a conference on April 4-5 in London, where it called on Iraq to open itself up to oil multinationals after the war. The Administration has shown its gratitude by promising there will be plenty of posts for Iraqi exiles in the interim government.

Some argue that it’s too simplistic to say this war is about oil. They’re right. It’s about oil, water, roads, trains, phones, ports and drugs. And if this process isn’t halted, "free Iraq" will be the most sold country on earth. It’s no surprise that so many multinationals are lunging for Iraq’s untapped market. It’s not just that the reconstruction will be worth as much as $100 billion; it’s also that "free trade" by less violent means hasn’t been going that well lately. More and more developing countries are rejecting privatization, while the Free Trade Area of the Americas, Bush’s top trade priority, is wildly unpopular across Latin America. World Trade Organization talks on intellectual property, agriculture and services have all bogged down amid accusations that America and Europe have yet to make good on past promises.

So what is a recessionary, growth-addicted superpower to do? How about upgrading Free Trade Lite, which wrestles market access through backroom bullying, to Free Trade Supercharged, which seizes new markets on the battlefields of pre-emptive wars? After all, negotiations with sovereign nations can be hard. Far easier to just tear up the country, occupy it, then rebuild it the way you want. Bush hasn’t abandoned free trade, as some have claimed, he just has a new doctrine: "Bomb before you buy."

It goes further than one unlucky country. Investors are openly predicting that once privatization of Iraq takes root, Iran, Saudi Arabia and Kuwait will be forced to compete by privatizing their oil. "In Iran, it would just catch like wildfire," S. Rob Sobhani, an energy consultant, told the Wall Street Journal. Soon, America may have bombed its way into a whole new free-trade zone.

So far, the press debate over the reconstruction of Iraq has focused on fair play: It is "exceptionally maladroit," in the words of the European Union’s Commissioner for External Relations, Chris Patten, for the United States to keep all the juicy contracts for itself. It has to learn to share: ExxonMobil should invite France’s TotalFinaElf to the most lucrative oilfields; Bechtel should give Britain’s Thames Water a shot at the sewer contracts.

But while Patten may find US unilateralism galling and Tony Blair may be calling for UN oversight, on this matter it’s beside the point. Who cares which multinationals get the best deals in Iraq’s post-Saddam, pre-democracy liquidation sale? What does it matter if the privatizing is done unilaterally by Washington or multilaterally by the United States, Europe, Russia and China?

Entirely absent from this debate are the Iraqi people, who might — who knows? — want to hold on to a few of their assets. Iraq will be owed massive reparations after the bombing stops, but without any real democratic process, what is being planned is not reparations, reconstruction or rehabilitation. It is robbery: mass theft disguised as charity; privatization without representation.

A people, starved and sickened by sanctions, then pulverized by war, is going to emerge from this trauma to find that their country has been sold out from under them. They will also discover that their newfound "freedom" — for which so many of their loved ones perished — comes pre-shackled with irreversible economic decisions that were made in boardrooms while the bombs were still falling.

They will then be told to vote for their new leaders, and welcomed to the wonderful world of democracy.

This article first appeared in The Nation.