The effective economic policy of the US occupation in Iraq has been: confiscate Iraq’s oil revenues; hand out the cash to the US administration’s American and Iraqi cronies, with minimal supervision; justify this in the name of the virtues of privatisation; and impose decrees mandating privatisation as the only way Iraq’s economy can develop in future.
A United Nations audit published on 14 December, though cautiously worded, paints a devastating picture.
Up to 28 June 2004, the US occupation authority spent $20 billion in Iraqi money — mostly oil revenues, either new or unfrozen from the sanctions period. The amount is bigger than the annual gross domestic product of the country — and quite enough to restore basic public utilities and services.
Yet Baghdad still has electricity for only eight hours a day. The Interim Government has advised the people of the city to buy their own electric generators. Basra still has no piped supply of clean water.
The billions have been handed out to contractors, often American, with very little to
show for it. The biggest single contract, worth $1.4 billion, went to the US corporation Halliburton, to rebuild oil infrastructure, without any process of considering alternative bids.
Halliburton recently had the US government freeze payments to it on its relatively easily-monitored contract to provide food to US troops in Iraq, because the government suspected
Halliburton of overcharging. What happens with contracts for Iraqi reconstruction is in a different league.
At least the US troops get their dinners. Investigators have found that many of the reconstruction projects paid for and supposedly completed have not been touched at all.
The US contractors are generally too scared to venture into the streets of Iraq. They send people to sit in offices in the UN-controlled Green Zone in Baghdad and run up expenses, they spend about 30% of the contract money on imported security guards, and they hand some out to Iraqi sub-contractors.
The US Congress has voted $18 billion of American money for Iraqi reconstruction. Only about $1 billion had been spent to the end of 2004. Accounting requirements for the US money were stricter, so the occupation authority preferred to use Iraq’s own money instead. According to the Financial Times (9 December), it kept hundreds of millions of dollars in an vault in the Green Zone. The vault was often unlocked and unattended, and when it was locked the key was just kept in someone’s backpack.
No wonder Iraq has now, according to an official CIA think-tank report on 12 January, replaced Afghanistan as the chief global base and training ground for “professionalised” Islamist terrorists. The US government said that its invasion of Iraq in 2003 would turn the country into a power-base for expanding democracy in the Middle East. Actually it has turned the country into a power-base for Islamist militarism.
Things look bad for the elections due on 30 January. That there are elections is better than triumph for the Sunni ultra-Islamists who despise elections on principle or oppose any elections so long as US troops remain in Iraq; but Farid Ayar, head of Iraq’s electoral commission, said he will consider it “not too bad” if “about half” the registered electors vote. In Sunni-majority areas the US and the Interim Government may not even be able to open polling stations, or protect them from being blown up if they are opened. Candidates’ names have not been and will not be published, for fear that the resistance militias will kill them.
According to the US State Department’s own surveys, only 12% of Sunni Arab Iraqis think the elections are legitimate or fair.
After 30 January, the new Assembly is due to elect a “presidential council” of three people, each of whom must be approved by a two-thirds majority of the Assembly. The council then elects the prime minister, who can appoint ministers and judges and control the process by which the Assembly is due to present a new constitution to a referendum around October 2005, and then give way to a new assembly elected under that constitution in December 2005.
These procedures will give the US leverage to block the desire for a clerical state of the Shia-Islamist parties which are likely to do best in the elections, and to impose a coalition involving Kurds and some Sunni politicians. Whether they will produce an “elected government” with any popular credibility in Iraq is another matter.
Chas Freeman, former US ambassador to Saudi Arabia, says that George W Bush recently asked outgoing Secretary of State Colin Powell how he thought the war in Iraq was going. “We’re losing”, Powell said. Bush then asked Powell to leave the room.