Global Policy Forum

My Sadness at the Privatisation of Iraq


By Michael Meacher

Times, London
August 12, 2005

The US transnational companies are taking over — and they'll benefit for years to come.

If democracy is the goal of American policy in Iraq, as President Bush repeatedly says it is — not eliminating WMD, not controlling Middle East oil, not removing a dictator guilty of genocide — then with the Sunni walkout from government and Kurdish intransigence over federalism and Kirkuk, that policy is nearing breakdown. But democracy was always only an after-thought, and anyway never really on offer in the first place.

Before the US proconsul Paul Bremer left Baghdad, he enacted 100 orders as chief of the occupation authority in Iraq. Perhaps the most infamous was Order 39 which decreed that 200 Iraqi state companies would be privatised, that foreign companies could have complete control of Iraqi banks, factories and mines, and that these companies could transfer all of their profits out of Iraq. The "reconstruction" of the country amounts in effect to wholesale privatisation of the economy and is little short of economic colonisation.

These laws will not be reversed while 140,000 US troops remain in the country, or a network of US military bases planned to be retained in Iraq for a much longer period. Aid for rebuilding the electricity and water services, the oil industry, and the legal and security systems will reside with the US Embassy for many years to come.

If all 100 orders are taken together, they set the overall legal framework for overriding foreign exploitation of Iraq's domestic market. They cover almost all facets of the economy, including Iraq's trading regime, the mandate of the Central Bank, and regulations governing trade union activities. Collectively, they lay down the foundations for the real US objective in Iraq, apart from keeping control of the oil supply, namely the imposition of a neoliberal capitalist economy controlled and run by US transnational corporations.

But what is remarkable about these laws is not only their overall degree of control, but their far-reaching application. Order 81, for example, has the status of binding law over "patent industrial design, undisclosed information, integrated circuits and plant variety" — a degree of detailed supervision normally associated with a Soviet command-and-control economy. While historically the Iraqi Constitution prohibited private ownership of biological resources, the new US-imposed patent law introduces a system of monopoly rights over seeds. This is virtually a takeover of Iraqi agriculture.

The rights granted to US plant breeding companies under this order include the exclusive right to produce, reproduce, sell, export, import and store the plant varieties covered by intellectual property right for the next 20-25 years. During this extended period nobody can plant or otherwise use plants, trees or vines without compensating the breeder.

In the name of agricultural reconstruction this new law deprives Iraqi farmers of their inherent right, exercised for the past 10,000 years in the fertile Mesopotamian arc, to save and replant seeds. It enables the penetration of Iraqi agriculture by Monsanto, Syngenta, Bayer, Dow Chemical and other corporate giants that control the global seed trade. Food sovereignty for the Iraqi people has therefore already been made near-impossible by these new regulations.

This is merely one example of the pervasiveness of the orders left behind by Bremer. But their impact is largely concentrated in the near-monopolisation by US corporations of the economic contracts awarded by the US-dominated Coalition Provisional Authority. Overwhelmingly they have been allocated to big US companies, notably Bechtel and Halliburton, which happens to be Vice-President Dick Cheney's former company, sometimes on a secret no-bid basis — such as the contract to repair and operate oil wells awarded to the Halliburton subsidiary Kellogg, Brown and Root.

Almost no contracts have gone to UK companies, apart from one to repair and rebuild the Baghdad sewage system. For oilfield repairs over a two-year period the contracts have been worth some $7 billion. For the little known and disarmingly entitled Logistics Civil Augmentation Programme, the contracts value is far greater. The funding of these massive contracts has largely come from the Iraqi oil revenues expropriated for US corporate use. The oil money is held in the US Federal Reserve, and the US Government is determined to keep control of it under an international board. The US has already spent around half the revenue, mainly on these long-term contracts with their construction companies. Of course John Negroponte, who was then the American Ambassador to Iraq, made clear that these enormous funds will be managed in consultation with the Iraqi Government, but there can be little doubt where the decision-making power will lie.

Whether this enforced takeover of the economy and imposed privatisation across the board of all the main economic sectors is in accordance with international law is now much disputed. But whether it can be reversed when America holds all the military, political and economic cards is another matter. The only way for the US authorities to sidestep the potential conflict is to ensure that the new Iraqi Government is pliant enough not to press for full sovereignty. Paul Bremer thought of that too.

His Transitional Administrative Law (TAL) effectively gives the Kurds, the most pro-American section of the population, a veto over the new constitution because the TAL itself states that it can only be amended by a 75 per cent vote in parliament. The Kurds hold more than 25 per cent of the seats.

More Information on Iraq
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