Opening Iraq for (Big) Business

Among the fruits of victory the Bush administration is seizing upon in Iraq is the opportunity to create a model economic entity for the Middle East. Donald Rumsfeld, eminence grise of the White House, is on record as saying the president is committed to privatizing state-owned Iraqi enterprises and establishing market systems throughout the conquered country. The recently anointed czar of postwar reconstruction, L. Paul Bremer, is reportedly gearing up even now for the conversion of key elements of Iraq's economy.

Following on the theme, George W. Bush announced in May a proposal to establish a US-Middle East free-trade area, with Iraq a core participant. In the process, he said, the Iraqis and their neighbors will be introduced to hallowed Western concepts like property law and standard business practices (absent creative accounting, we assume). Local corruption and self-dealing will be replaced by "free markets and fair laws." Best of all, the nations of the region will be tied inextricably to American corporate interests and will presumably live happily ever after. Neoliberalism uber alles!

Ironically, this grand vision of capitalism unchained, which will be implemented by a combination of imperial edict and implied military interventionism, is making less stellar progress in places where the US does not have "boots on the ground." The vaunted Free Trade Area of the Americas initiative is in trouble, especially following the election of skeptical populist Lula da Silva in Brazil. At home, plans to privatize Social Security and Medicare are running into a political buzz saw, as the somnolescent Democrats gradually get their act together for 2004. But in Iraq, the neoliberal project is on track to proceed -- by force of arms, if necessary. To be sure, the State Department would like to present Iraqis with a national health-insurance scheme, but that's the exception that proves the rule; White House neoconservatives have largely marginalized Colin Powell's diplomatic staff, and such statist notions are likely to evaporate in the face of the laissez-faire market imperative.

This established sense of economic priorities is an essential reason why postwar Iraq remains a basket case, with little or no functioning infrastructure, the basic prerequisite for a properly operating society. The only on-scene people capable of making the trains run on time, so to speak, are the very ones barred from doing so: the high-level bureaucrats and civil servants of Saddam's displaced Ba'ath party administration. They are suspected of lingering loyalty to the old regime, but more to the point, they are the former representatives of a semi-socialistic system and are therefore beyond the pale. General Patton used ex-Nazis to run a portion of the prostrate Reich, but Administrator Bremer will have no truck with Ba'athists, no matter how technically skilled or knowledgeable.

The Bush administration has been rather circumspect about its economic plans for Iraq, preferring to focus public attention at home on the afterglow of military victory, or on such silly ephemera as the deck of playing cards depicting wanted Iraqis. The administration's ideological supporters in the media, on the other hand, are avidly looking ahead. As the war ended, the sympathetic journal The Economist was already trumpeting that "economic reform should begin right away" and making the case for linking political and economic reconstruction. It called for instituting such "basic principles of sound economic management" as minimized government oversight, maximized competition, and limited taxation -- all leading ultimately to the desired outcome of broad structural privatization.

On another front, author and global-market enthusiast Daniel Yergin argued in the Washington Post that 35 years of Ba'ath party rule had "devastated" Iraq's economy. Disregarding the debilitating effects of three wars in 20 years and over a decade of trade sanctions, Yergin traced the country's economic woes solely to Ba'athist centralized planning, price controls, regulation, and state ownership; all of these violations of the free market, he intoned, must be eradicated. As if on cue, the United Nations Security Council voted in May to accept "the occupying authority" (the US and Britain) as arbiter of all things political and economic in Iraq, including the future disposition of the state-owned oil sector.

The drumbeat of neoliberal propaganda, particularly the assertion by Daniel Yergin that Iraq's prewar economic structure was based on Eastern European Communism, deliberately neglects the history of the Iraqi Ba'ath party, a history unknown to most Americans. Until subverted by despotic elements in the 1960s and fully corrupted by Saddam Hussein the following decade, the Ba'ath party was a positive, some would say idealistic, force composed in equal parts of pan-Arab nationalism and economic socialism. According to Middle Eastern historian Amatzia Baram, the Ba'ath movement began in French-occupied Syria in 1940 (where it still flourishes) and spread from there to Iraq. The party's roots were in Western, not Eastern, Europe; its founders were French-educated secular intellectuals, and its economic theories were borrowed from the British Fabian Society, the democratic-socialist cadre that inspired England's Labour party.

Economically, the Ba'ath favored state ownership or control of big industry, transport, banks, and foreign trade; it nationalized Iraq's oil industry in 1972. Most interestingly perhaps, Baghdad's Ba'athists, like Israel's founders, established for a time a system of agricultural cooperatives. Mostly, however, the Ba'ath experiment concentrated on nationalizing the country's major economic assets. When the American-British invasion began this past spring, roughly a third of the Iraqi work force was employed in the public sector.

Under Saddam Hussein, the Ba'ath party obviously became a tool of political repression and abandoned its ideals; yet, says Amatzia Baram, it can claim modest accomplishments in the form of a limited social safety net, a narrowing of the income gap between rich and poor, and an improvement in the status of women. Prominent and influential Iraqis like artist and surgeon Ala Bashir, recently profiled in The New Yorker, still believe in its founding principles: democratic socialism, Arab unity, and a secular society. Such educated and dedicated citizens are among the 30,000 party members Paul Bremer has banned from civic life. The question is whether post-Saddam Iraq can really thrive without these people. Moreover, what really constitutes a better bulwark against terrorism, a reformed and cleansed Ba'athism, or a ruthlessly exploitive commercial regime imposed by colonial diktat?

Wayne O'Leary is a writer in Orono, Maine.

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