December 21, 2006

The Corporate Occupation Of Iraq

The untold story from Antonia Juhasz:
After firing Iraq’s senior bureaucrats, Bremer’s next law in Iraq allowed for, among other things, the privatization of Iraq's state-owned enterprises—excluding oil—and for American companies to receive preferential treatment over Iraqis in the awarding of reconstruction contracts. These laws were part of a series of economic policies implemented by Bremer, virtually all of which remain in place today, to "transition [Iraq] from a … centrally planned economy to a market economy" virtually overnight and by U.S. fiat. The laws reduced taxes on all corporations by 25 percent, opened every sector of the Iraqi economy (except oil) to private foreign investment, allowed foreign firms to own 100 percent of Iraqi businesses (as opposed to partnering with Iraqi firms), and to send their profits home without having to invest a cent in the struggling Iraqi economy. Thus, Iraqi laws governing banking, foreign investment, patents, copyrights, business ownership, taxes, the media, and trade were all changed according to U.S. goals, with little participation from the Iraqi people.

What followed was a U.S. corporate invasion of Iraq.

While some 150 U.S. companies received contracts for work in Iraq following the invasion, the big reconstruction winners (after Halliburton) were: Parsons Corporation of Pasadena, Calif. ($5.3 billion); Fluor Corporation of Aliso Viejo, Calif. ($3.75 billion); Washington Group International of Boise, Idaho ($3.1 billion); Shaw Group of Baton Rouge, Louisiana ($3 billion); Bechtel Corporation of San Francisco, Calif. ($2.8 billion); Perini Corporation of Framingham, Mass. ($2.5 billion); and Contrack International, Inc. of Arlington, Va. ($2.3 billion).

These seven companies are responsible for virtually all reconstruction in Iraq, including water, electricity, bridges, roads, hospitals and sewers. One reason for their failure was that companies, such as Bechtel, came to Iraq with the hopes of ultimately winning contracts to privatize the services they were hired to rebuild. Because many U.S. contracts guaranteed that all of the companies’ costs would be covered, plus a set rate of profit—known as “cost-plus contracts”—they took their time, built expensive new facilities that showcased their skills and would serve their own needs were they to run the systems one day.

The American companies were hired instead of Iraqi companies that had successfully rebuilt Iraq after the previous U.S. invasion. And, because the Americans did not have to hire Iraqis, many imported foreign workers instead. The Iraqis were of course well aware that American firms had received billions of dollars for reconstruction, that Iraqi companies and workers had been rejected and that the country was still without basic services. The result was increasing hostility, acts of sabotage targeted directly at foreign contractors and their work and a rising insurgency.

In the end, Iraq has not emerged as the wealthy free-market haven these companies and others waiting on the horizon had hoped for, at least not yet (the economic policies put in place by the Bush administration remain and the work is ongoing to turn Iraq into a corporate-friendly Middle East Mecca).


Blog Archive