[casi-analysis] casi-news digest, Vol 1 #147 - 2 msgs

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Today's Topics:

   1. The case against objective reporting (Hassan)
   2. Baghdad Year Zero (Mark Parkinson)

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Message: 1
Date: Tue, 28 Sep 2004 07:33:34 -0700 (PDT)
From: Hassan <hasseini@DELETETHISyahoo.com>
Subject: The case against objective reporting
To: CASI newsclippings <newsclippings@casi.org.uk>,
  iac-discussion <iac-discussion@lists.riseup.net>


http://www.williambowles.info/

Embedded in a media fantasy world: The case against
objective reporting

William Bowles

I recently had a brief exchange with the Washington
correspondent for the Independent, Andrew Buncombe
over his 'paper's coverage of events in Iraq. Now
although I've never actually met Andy, and I'm sure
he's a decent fellow, I brought to his attention a
recent 'War Report' compiled by an Iraqi journalist
that itemizes the horrors being visited on the Iraqi
people eg, 14 enormous cluster (anti-personnel) bombs
each of which contains 2000 so-called bomblets as well
as napalm bombs dropped on the village of Zaydan, 20km
south of al-Fallujah. At least forty-four people were
massacred in the small village. According to the
report 15 of the dead were children, 10 women, and
nine were elderly persons. Seven children are in
critical condition, and eight women and five men were
also wounded. Also killed in the raid was 'Adil 'Ali
Hamdan the General Administrative Director of al-
Fallujah General Hospital. His wife and two of his
children were killed as well, and two other children
of his were wounded. [1]

These illegal and vengeful war crimes go unreported
and at best, misreported in the Western media as far
as I know, and the example cited above is just one of
many. So why do they not warrant the kind of coverage
that for example the British hostage Ken Bigley has
gotten?

In response to the story I referred to above, Andy
wrote in part, the following:

      =93=85[W]e have one person in Iraq, Patrick
Cockburn, who's generally considered to have one of
the best takes on what is happening. He's certainly
been covering the US's killing of civilians =96 I'm sure
you saw the stuff he wrote when the apache helicopter
killed all of those people in the street. It seems
that every day we report about the chaos and violence,
the daily bombing raids on Fallujah, the estimated
37,000 dead. I don't for a moment argue that our
coverage is comprehensive but I don't think that we
are missing the 'real deal'.=94

So what is the 'real deal'? For a start, to fully
appreciate the Apache helicopter story it has to be
set in its context in order to appreciate the
appalling state of media coverage of events in Iraq
and just as importantly, our connection to them.

Firstly, it took place in Baghdad where virtually all
the journalists are based. Secondly, the situation was
being covered by journalists at the time it occurred
of whom one was killed by the US attack. Hence it was
virtually a 'ready-made' event that simply could not
be avoided and also because (yet another) a journalist
was murdered who by the way, was of Arab background,
and hence didn't warrant the same attention (read
concern) as a Western journalist would have under the
same circumstances.

But perhaps it's the over the top coverage of hostage
Ken Bigley that really puts the issue into focus, a
story that the Independent has covered extensively
including two front pages devoted exclusively to the
event. One just can't help speculating on the 'odd'
circumstances surrounding the spate of hostage takings
by the almost mythical Abu Zarqawi and and 'his'
various and sundry 'organisations' that come and go,
not only because of the suspicious circumstances
surrounding the first beheading (if that's what it
was) of the American Berg but because of their timings
coming as they do at critical occasions for the
'coalition'.

As I've pointed out before, even the circumstances
surrounding the Websites from where the 'beheading'
videos are Webcast raise serious issues about Western
involvement in the hostage takings. The Berg
'beheading' first appeared on a Website whose domain
was registered in London with an address in High
Holborn as I think, was first reported here, yet there
was no followup by the British security services who
you would have thought would have been somewhat
interested in the information. And whilst I have no
proof of Western involvement, according to Michel
Chossudovsky of Global Research, the reporter for Time
Magazine Michael Ware, who was the single, lone source
of information for the Zarqawi/Berg story is reputed
to have US intelligence connections. [2]

And given the history of journalists acting as
conduits for disinformation eg Judith Miller of the
New York Times and her Ahmed Chalabi/CIA connection,
one is forced to view stories that contain the classic
lines 'it is believed (by an unnamed CIA source) to be
the voice of Abu Zarqawi' or 'it is thought to be the
work of al-Qu'eda' with extreme suspicion. After all,
the story concerning Berg/Abu Zarqawi came and went
with absolutely no followup that either confirmed or
refuted the alleged Zarqawi connection to the Berg
'beheading'.

Today (26/9/04) for example, BBC Radio 4's morning
news show 'Broadcasting House' visited the town in
Jordan where Zarqawi supposedly comes from but apart
from interviewing a few people from the town, one of
whom voiced the opinion that Iraqi and Palestinian
children being blown to bits didn't get comparable
coverage in the Western media to that of Bigley, we
learned absolutely nothing about Zarqawi, not even if
he actually came from the town or even if anybody knew
him. In other words, it was a non-story and a complete
waste of airtime.

The issue is not that Zarqawi is a Western invention
or 'asset' (although he could well be) but the role of
'foreign insurgents' in diverting attention away from
the fact that every major city and town in Iraq
including large chunks of Baghdad are no-go areas for
the USUK occupation forces. Unwilling to admit that
what is really happening in Iraq is a national
uprising against the occupation, the imperium has no
other choice but to create an alternate reality, with
the invaluable assistance of the mass media.

It would also be na=EFve to ignore the history of
Western intelligence agencies in such dirty tricks,
the evidence is just too overwhelming to ignore not
the least of which is the entire WMD fabrication that
the Western media went along with in spite of the
overwhelming evidence that Iraq's 'WMDs' (itself a
misnomer) were all destroyed by 1991.

As during the earlier period following Iraq's
'liberation' we are also being told once more that the
country could well be 'degenerating into civil war'
(eg see 'Possibility of Iraq Civil War Looms Large'
The Washington Post, September 21, 2004) [3], although
there is not a shred of evidence of opposing Iraqi
forces vying for control of the state, the commonly
accepted definition of a civil war. The collusion of
the mass media in what amounts to the ongoing creation
of an illusory reality is all too evident.

This is what passes for 'objective reporting' in the
Western media, namely the passive acceptance of
whatever the ruling elites dish out as fact, for
nowhere in either story is there a questioning of the
claim of an imminent civil war on the basis of what
constitutes a civil war, it is merely relayed as fact
simply because the ruling powers say it's so.

Returning once more to Andrew Buncombe's assertion
that the Independent carried the stories of Robert
Fisk who is generally viewed as being 'anti-war' thus
justifying the more 'liberal' or even anti-war
editorial position of the Independent, it's worth
noting that for every story by Fisk there must be at
least eight stories that carry the so-called objective
news tag. Fisk's view therefore is the exception to
the rule and indeed, his stories come across as
'op-ed' pieces rather than as 'news'.

In all fairness it's worth noting that it's the
editorial position that is under scrutiny here rather
than the words (assuming they are the actual words) of
an individual journalist. For underpinning the
editorial position of a newspaper like the Independent
is the (false) assumption that the invasion of Iraq
was based on good (if mistaken) intentions. Were the
reportage of Iraq on a day-to-day basis to be more
critical then readers would get an entirely different
understanding of events and their causes. Even the
most obvious question is not asked, namely what on
earth possessed the leaders of the US and the UK to
come such momentously false conclusions?

To take the most obvious example, the refusal by the
corporate media to call or even infer or imply that
either Blair or Bush are liars (that they most
obviously are by any normal understanding of the word
lie) alters the entire perspective on events, their
causes, possible reasons and outcomes. For calling
into question the honesty of our political leaders
would inevitably undermine the entire relationship
between the 'established' press and the state and
hence the readers, an unacceptable and intolerable
situation.

Hence one or even several stories of the kind that
Andy Buncombe referred to (eg the Apache helicopter
attack) are used as examples of the Independent's
'objective' reporting as if one story somehow makes up
for the entire set of assumptions that the
Independent's coverage is based upon, namely that USUK
intentions are honourable (if misguided), that the
crimes committed by the occupation forces are
'aberrations', 'exceptions' or just plain 'mistakes'.

Once these assumptions are made and then acted upon,
as sure as night follows day, all reportage is twisted
and read in the context of for example, the US's 'good
intentions' and once seen in this light, 'objective'
news reporting takes on an entirely new meaning.

Contrary to this view of the world, events are not
fixed, immutable or neutral objects devoid of history,
context or the role they play in the objectives of the
state or the other major players, regardless of the
'honesty' of the reporter or even his or her 'good
intentions'. Editorial control makes sure that events
are set in the 'right' context, a context that doesn't
challenge the basic 'honesty' of the state and the
machinery that operates on its behalf, the civil
service.

'Objective' reporting then is an illusion based upon a
set of false assumptions about how the world works,
for it assumes that there is some kind of 'neutral'
ground occupied exclusively by the media who from
their exulted position have some special view of the
world that enables them to escape the 'rules' that
govern the rest of us.

Blessed with this 'special' relationship to the state
and its operations, the media has the right
apparently, to interpret events on our behalf that
when challenged it retorts that it simply reports 'how
things are' and that it can't cover everything, nor
give every available point of view and a host of other
justifications for occupying such a privileged
relationship with an alleged reality. Not only is such
a position an arrogant one, it hides behind a
pseudo-scientific fa=E7ade of objectivity that is even
taught at universities thus giving it the official
stamp of approval.

Notes

1. Iraqi Resistance Report for events of Friday, 17
September 2004
2. al-Zarqawi or al-Invention? I=91n=92I 06/07/04
3. Possibility of Iraq Civil War Looms Large By Hamza
Hendawi, The Associated Press, Tuesday, September 21,
2004



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Message: 2
From: "Mark Parkinson" <mark44@DELETETHISmyrealbox.com>
To: casi-analysis@lists.casi.org.uk
Date: Wed, 29 Sep 2004 00:16:23 +0100
Subject: Baghdad Year Zero

A long article but worth reading.

We are getting much more reporing on the violence rather than the
economic reforms.


By: Naomi Klein, Harper's Magazine on: 26.09.2004

Pillaging Iraq in pursuit of a neocon utopia.

It was only after I had been in Baghdad for a month that I found what
I was looking for. I had traveled to Iraq a year after the war began,
at the height of what should have been a construction boom, but after
weeks of searching I had not seen a single piece of heavy machinery
apart from tanks and humvees. Then I saw it: a construction crane. It
was big and yellow and impressive, and when I caught a glimpse of it
around a corner in a busy shopping district I thought that I was
finally about to witness some of the reconstruction I had heard so
much about. But as I got closer I noticed that the crane was not
actually rebuilding anything - not one of the bombed-out government
buildings that still lay in rubble all over the city, nor one of the
many power lines that remained in twisted heaps even as the heat of
summer was starting to bear down. No, the crane was hoisting a giant
billboard to the top of a three-story building. SUNBULAH: HONEY 100%
NATURAL, made in Saudi Arabia.

Seeing the sign, I couldn't help but think about something Senator
John McCain had said back in October. Iraq, he said, is "a huge pot
of honey that's attracting a lot of flies." The flies McCain was
referring to were the Halliburtons and Bechtels, as well as the
venture capitalists who flocked to Iraq in the path cleared by
Bradley Fighting Vehicles and laser-guided bombs. The honey that drew
them was not just no-bid contracts and Iraq's famed oil wealth but
the myriad investment opportunities offered by a country that had
just been cracked wide open after decades of being sealed off, first
by the nationalist economic policies of Saddam Hussein, then by
asphyxiating United Nations sanctions.

Looking at the honey billboard, I was also reminded of the most
common explanation for what has gone wrong in Iraq, a complaint
echoed by everyone from John Kerry to Pat Buchanan: Iraq is mired in
blood and deprivation because George W. Bush didn't have "a postwar
plan." The only problem with this theory is that it isn't true. The
Bush Administration did have a plan for what it would do after the
war; put simply, it was to lay out as much honey as possible, then
sit back and wait for the flies.

The honey theory of Iraqi reconstruction stems from the most
cherished belief of the war's ideological architects: that greed is
good. Not good just for them and their friends but good for humanity,
and certainly good for Iraqis. Greed creates profit, which creates
growth, which creates jobs and products and services and everything
else anyone could possibly need or want. The role of good government,
then, is to create the optimal conditions for corporations to pursue
their bottomless greed, so that they in turn can meet the needs of
the society. The problem is that governments, even neoconservative
governments, rarely get the chance to prove their sacred theory
right: despite their enormous ideological advances, even George
Bush's Republicans are, in their own minds, perennially sabotaged by
meddling Democrats, intractable unions, and alarmist
environmentalists.

Iraq was going to change all that. In one place on Earth, the theory
would finally be put into practice in its most perfect and
uncompromised form. A country of 25 million would not be rebuilt as
it was before the war; it would be erased, disappeared. In its place
would spring forth a gleaming showroom for laissez-faire economics, a
utopia such as the world had never seen. Every policy that liberates
multinational corporations to pursue their quest for profit would be
put into place: a shrunken state, a flexible workforce, open borders,
minimal taxes, no tariffs, no ownership restrictions. The people of
Iraq would, of course, have to endure some short-term pain: assets,
previously owned by the state, would have to be given up to create
new opportunities for growth and investment. Jobs would have to be
lost and, as foreign products flooded across the border, local
businesses and family farms would, unfortunately, be unable to
compete. But to the authors of this plan, these would be small prices
to pay for the economic boom that would surely explode once the
proper conditions were in place, a boom so powerful the country would
practically rebuild itself.

The fact that the boom never came and Iraq continues to tremble under
explosions of a very different sort should never be blamed on the
absence of a plan. Rather, the blame rests with the plan itself, and
the extraordinarily violent ideology upon which it is based.

Torturers believe that when electrical shocks are applied to various
parts of the body simultaneously subjects are rendered so confused
about where the pain is coming from that they become incapable of
resistance. A declassified CIA "Counterintelligence Interrogation"
manual from 1963 describes how a trauma inflicted on prisoners opens
up "an interval - which may be extremely brief - of suspended
animation, a kind of psychological shock or paralysis. . . . At this
moment the source is far more open to suggestion, far likelier to
comply." A similar theory applies to economic shock therapy, or
"shock treatment," the ugly term used to describe the rapid
implementation of free-market reforms imposed on Chile in the wake of
General Augusto Pinochet's coup. The theory is that if painful
economic "adjustments" are brought in rapidly and in the aftermath of
a seismic social disruption like a war, a coup, or a government
collapse, the population will be so stunned, and so preoccupied with
the daily pressures of survival, that it too will go into suspended
animation, unable to resist. As Pinochet's finance minister, Admiral
Lorenzo Gotuzzo, declared, "The dog's tail must be cut off in one
chop."

That, in essence, was the working thesis in Iraq, and in keeping with
the belief that private companies are more suited than governments
for virtually every task, the White House decided to privatize the
task of privatizing Iraq's state-dominated economy. Two months before
the war began, USAID began drafting a work order, to be handed out to
a private company, to oversee Iraq's "transition to a sustainable
market-driven economic system." The document states that the winning
company (which turned out to be the KPMG offshoot Bearing Point) will
take "appropriate advantage of the unique opportunity for rapid
progress in this area presented by the current configuration of
political circumstances." Which is precisely what happened.

L. Paul Bremer, who led the U.S. occupation of Iraq from May 2, 2003,
until he caught an early flight out of Baghdad on June 28, admits
that when he arrived, "Baghdad was on fire, literally, as I drove in
from the airport." But before the fires from the "shock and awe"
military onslaught were even extinguished, Bremer unleashed his shock
therapy, pushing through more wrenching changes in one sweltering
summer than the International Monetary Fund has managed to enact over
three decades in Latin America. Joseph Stiglitz, Nobel laureate and
former chief economist at the World Bank, describes Bremer's reforms
as "an even more radical form of shock therapy than pursued in the
former Soviet world."

The tone of Bremer's tenure was set with his first major act on the
job: he fired 500,000 state workers, most of them soldiers, but also
doctors, nurses, teachers, publishers, and printers. Next, he flung
open the country's borders to absolutely unrestricted imports: no
tariffs, no duties, no inspections, no taxes. Iraq, Bremer declared
two weeks after he arrived, was "open for business."

One month later, Bremer unveiled the centerpiece of his reforms.
Before the invasion, Iraq's non-oil-related economy had been
dominated by 200 state-owned companies, which produced everything
from cement to paper to washing machines. In June, Bremer flew to an
economic summit in Jordan and announced that these firms would be
privatized immediately. "Getting inefficient state enterprises into
private hands," he said, "is essential for Iraq's economic recovery."
It would be the largest state liquidation sale since the collapse of
the Soviet Union.

But Bremer's economic engineering had only just begun. In September,
to entice foreign investors to come to Iraq, he enacted a radical set
of laws unprecedented in their generosity to multinational
corporations. There was Order 37, which lowered Iraq's corporate tax
rate from roughly 40 percent to a flat 15 percent. There was Order
39, which allowed foreign companies to own 100 percent of Iraqi
assets outside of the natural-resource sector. Even better, investors
could take 100 percent of the profits they made in Iraq out of the
country; they would not be required to reinvest and they would not be
taxed. Under Order 39, they could sign leases and contracts that
would last for forty years. Order 40 welcomed foreign banks to Iraq
under the same favorable terms. All that remained of Saddam Hussein's
economic policies was a law restricting trade unions and collective
bargaining.

If these policies sound familiar, it's because they are the same ones
multinationals around the world lobby for from national governments
and in international trade agreements. But while these reforms are
only ever enacted in part, or in fits and starts, Bremer delivered
them all, all at once. Overnight, Iraq went from being the most
isolated country in the world to being, on paper, its widest-open
market.

At first, the shock-therapy theory seemed to hold: Iraqis, reeling
from violence both military and economic, were far too busy staying
alive to mount a political response to Bremer's campaign. Worrying
about the privatization of the sewage system was an unimaginable
luxury with half the population lacking access to clean drinking
water; the debate over the flat tax would have to wait until the
lights were back on. Even in the international press, Bremer's new
laws, though radical, were easily upstaged by more dramatic news of
political chaos and rising crime.

Some people were paying attention, of course. That autumn was awash
in "rebuilding Iraq" trade shows, in Washington, London, Madrid, and
Amman. The Economist described Iraq under Bremer as "a capitalist
dream," and a flurry of new consulting firms were launched promising
to help companies get access to the Iraqi market, their boards of
directors stacked with well-connected Republicans. The most prominent
was New Bridge Strategies, started by Joe Allbaugh, former Bush-
Cheney campaign manager. "Getting the rights to distribute Procter &
Gamble products can be a gold mine," one of the company's partners
enthused. "One well-stocked 7-Eleven could knock out thirty Iraqi
stores; a Wal-Mart could take over the country."

Soon there were rumors that a McDonald's would be opening up in
downtown Baghdad, funding was almost in place for a Starwood luxury
hotel, and General Motors was planning to build an auto plant. On the
financial side, HSBC would have branches all over the country,
Citigroup was preparing to offer substantial loans guaranteed against
future sales of Iraqi oil, and the bell was going to ring on a New
York-style stock exchange in Baghdad any day.

In only a few months, the postwar plan to turn Iraq into a laboratory
for the neocons had been realized. Leo Strauss may have provided the
intellectual framework for invading Iraq preemptively, but it was
that other University of Chicago professor, Milton Friedman, author
of the anti-government manifesto Capitalism and Freedom, who supplied
the manual for what to do once the country was safely in America's
hands. This represented an enormous victory for the most ideological
wing of the Bush Administration. But it was also something more: the
culmination of two interlinked power struggles, one among Iraqi
exiles advising the White House on its postwar strategy, the other
within the White House itself.

As the British historian Dilip Hiro has shown, in Secrets and Lies:
Operation =91Iraqi Freedom' and After, the Iraqi exiles pushing for the
invasion were divided, broadly, into two camps. On one side were "the
pragmatists," who favored getting rid of Saddam and his immediate
entourage, securing access to oil, and slowly introducing free-market
reforms. Many of these exiles were part of the State Department's
Future of Iraq Project, which generated a thirteen-volume report on
how to restore basic services and transition to democracy after the
war. On the other side was the "Year Zero" camp, those who believed
that Iraq was so contaminated that it needed to be rubbed out and
remade from scratch. The prime advocate of the pragmatic approach was
Iyad Allawi, a former high-level Baathist who fell out with Saddam
and started working for the CIA. The prime advocate of the Year Zero
approach was Ahmad Chalabi, whose hatred of the Iraqi state for
expropriating his family's assets during the 1958 revolution ran so
deep he longed to see the entire country burned to the ground -
everything, that is, but the Oil Ministry, which would be the nucleus
of the new Iraq, the cluster of cells from which an entire nation
would grow. He called this process "de-Baathification."

A parallel battle between pragmatists and true believers was being
waged within the Bush Administration. The pragmatists were men like
Secretary of State Colin Powell and General Jay Garner, the first
U.S. envoy to postwar Iraq. General Garner's plan was straightforward
enough: fix the infrastructure, hold quick and dirty elections, leave
the shock therapy to the International Monetary Fund, and concentrate
on securing U.S. military bases on the model of the Philippines. "I
think we should look right now at Iraq as our coaling station in the
Middle East," he told the BBC. He also paraphrased T. E. Lawrence,
saying, "It's better for them to do it imperfectly than for us to do
it for them perfectly." On the other side was the usual cast of
neoconservatives: Vice President Dick Cheney, Secretary of Defense
Donald Rumsfeld (who lauded Bremer's "sweeping reforms" as "some of
the most enlightened and inviting tax and investment laws in the free
world"), Deputy Secretary of Defense Paul Wolfowitz, and, perhaps
most centrally, Undersecretary of Defense Douglas Feith. Whereas the
State Department had its Future of Iraq report, the neocons had
USAID's contract with Bearing Point to remake Iraq's economy: in 108
pages, "privatization" was mentioned no fewer than fifty-one times.
To the true believers in the White House, General Garner's plans for
postwar Iraq seemed hopelessly unambitious. Why settle for a mere
coaling station when you can have a model free market? Why settle for
the Philippines when you can have a beacon unto the world?

The Iraqi Year Zeroists made natural allies for the White House
neoconservatives: Chalabi's seething hatred of the Baathist state fit
nicely with the neocons' hatred of the state in general, and the two
agendas effortlessly merged. Together, they came to imagine the
invasion of Iraq as a kind of Rapture: where the rest of the world
saw death, they saw birth - a country redeemed through violence,
cleansed by fire. Iraq wasn't being destroyed by cruise missiles,
cluster bombs, chaos, and looting; it was being born again. April 9,
2003, the day Baghdad fell, was Day One of Year Zero.

While the war was being waged, it still wasn't clear whether the
pragmatists or the Year Zeroists would be handed control over
occupied Iraq. But the speed with which the nation was conquered
dramatically increased the neocons' political capital, since they had
been predicting a "cakewalk" all along. Eight days after George Bush
landed on that aircraft carrier under a banner that said MISSION
ACCOMPLISHED, the President publicly signed on to the neocons' vision
for Iraq to become a model corporate state that would open up the
entire region. On May 9, Bush proposed the "establishment of a U.S.-
Middle East free trade area within a decade"; three days later, Bush
sent Paul Bremer to Baghdad to replace Jay Garner, who had been on
the job for only three weeks. The message was unequivocal: the
pragmatists had lost; Iraq would belong to the believers.

A Reagan-era diplomat turned entrepreneur, Bremer had recently proven
his ability to transform rubble into gold by waiting exactly one
month after the September 11 attacks to launch Crisis Consulting
Practice, a security company selling "terrorism risk insurance" to
multinationals. Bremer had two lieutenants on the economic front:
Thomas Foley and Michael Fleischer, the heads of "private sector
development" for the Coalition Provisional Authority (CPA). Foley is
a Greenwich, Connecticut, multimillionaire, a longtime friend of the
Bush family and a Bush-Cheney campaign "pioneer" who has described
Iraq as a modern California "gold rush." Fleischer, a venture
capitalist, is the brother of former White House spokesman Ari
Fleischer. Neither man had any high-level diplomatic experience and
both use the term corporate "turnaround" specialist to describe what
they do. According to Foley, this uniquely qualified them to manage
Iraq's economy because it was "the mother of all turnarounds."

Many of the other CPA postings were equally ideological. The Green
Zone, the city within a city that houses the occupation headquarters
in Saddam's former palace, was filled with Young Republicans straight
out of the Heritage Foundation, all of them given responsibility they
could never have dreamed of receiving at home. Jay Hallen, a twenty-
four-year-old who had applied for a job at the White House, was put
in charge of launching Baghdad's new stock exchange. Scott Erwin, a
twenty-one-year-old former intern to Dick Cheney, reported in an
email home that "I am assisting Iraqis in the management of finances
and budgeting for the domestic security forces." The college senior's
favorite job before this one? "My time as an ice-cream truck driver."
In those early days, the Green Zone felt a bit like the Peace Corps,
for people who think the Peace Corps is a communist plot. It was a
chance to sleep on cots, wear army boots, and cry "incoming" - all
while being guarded around the clock by real soldiers.

The teams of KPMG accountants, investment bankers, think-tank lifers,
and Young Republicans that populate the Green Zone have much in
common with the IMF missions that rearrange the economies of
developing countries from the presidential suites of Sheraton hotels
the world over. Except for one rather significant difference: in Iraq
they were not negotiating with the government to accept their
"structural adjustments" in exchange for a loan; they were the
government.

Some small steps were taken, however, to bring Iraq's U.S.-appointed
politicians inside. Yegor Gaidar, the mastermind of Russia's mid-
nineties privatization auction that gave away the country's assets to
the reigning oligarchs, was invited to share his wisdom at a
conference in Baghdad. Marek Belka, who as finance minister oversaw
the same process in Poland, was brought in as well. The Iraqis who
proved most gifted at mouthing the neocon lines were selected to act
as what USAID calls local "policy champions" - men like Ahmad al
Mukhtar, who told me of his countrymen, "They are lazy. The Iraqis by
nature, they are very dependent. . . . They will have to depend on
themselves, it is the only way to survive in the world today."
Although he has no economics background and his last job was reading
the English-language news on television, al Mukhtar was appointed
director of foreign relations in the Ministry of Trade and is leading
the charge for Iraq to join the World Trade Organization.

I had been following the economic front of the war for almost a year
before I decided to go to Iraq. I attended the "Rebuilding Iraq"
trade shows, studied Bremer's tax and investment laws, met with
contractors at their home offices in the United States, interviewed
the government officials in Washington who are making the policies.
But as I prepared to travel to Iraq in March to see this experiment
in free-market utopianism up close, it was becoming increasingly
clear that all was not going according to plan. Bremer had been
working on the theory that if you build a corporate utopia the
corporations will come - but where were they? American multinationals
were happy to accept U.S. taxpayer dollars to reconstruct the phone
or electricity systems, but they weren't sinking their own money into
Iraq. There was, as yet, no McDonald's or Wal-Mart in Baghdad, and
even the sales of state factories, announced so confidently nine
months earlier, had not materialized.

Some of the holdup had to do with the physical risks of doing
business in Iraq. But there were other more significant risks as
well. When Paul Bremer shredded Iraq's Baathist constitution and
replaced it with what The Economist greeted approvingly as "the wish
list of foreign investors," there was one small detail he failed to
mention: It was all completely illegal. The CPA derived its legal
authority from United Nations Security Council Resolution 1483,
passed in May 2003, which recognized the United States and Britain as
Iraq's legitimate occupiers. It was this resolution that empowered
Bremer to unilaterally make laws in Iraq. But the resolution also
stated that the U.S. and Britain must "comply fully with their
obligations under international law including in particular the
Geneva Conventions of 1949 and the Hague Regulations of 1907." Both
conventions were born as an attempt to curtail the unfortunate
historical tendency among occupying powers to rewrite the rules so
that they can economically strip the nations they control. With this
in mind, the conventions stipulate that an occupier must abide by a
country's existing laws unless "absolutely prevented" from doing so.
They also state that an occupier does not own the "public buildings,
real estate, forests and agricultural assets" of the country it is
occupying but is rather their "administrator" and custodian, keeping
them secure until sovereignty is reestablished. This was the true
threat to the Year Zero plan: since America didn't own Iraq's assets,
it could not legally sell them, which meant that after the occupation
ended, an Iraqi government could come to power and decide that it
wanted to keep the state companies in public hands, or, as is the
norm in the Gulf region, to bar foreign firms from owning 100 percent
of national assets. If that happened, investments made under Bremer's
rules could be expropriated, leaving firms with no recourse because
their investments had violated international law from the outset.

By November, trade lawyers started to advise their corporate clients
not to go into Iraq just yet, that it would be better to wait until
after the transition. Insurance companies were so spooked that not a
single one of the big firms would insure investors for "political
risk," that high-stakes area of insurance law that protects companies
against foreign governments turning nationalist or socialist and
expropriating their investments.

Even the U.S.-appointed Iraqi politicians, up to now so obedient,
were getting nervous about their own political futures if they went
along with the privatization plans. Communications Minister Haider al-
Abadi told me about his first meeting with Bremer. "I said, =91Look, we
don't have the mandate to sell any of this. Privatization is a big
thing. We have to wait until there is an Iraqi government.'" Minister
of Industry Mohamad Tofiq was even more direct: "I am not going to do
something that is not legal, so that's it."

Both al-Abadi and Tofiq told me about a meeting - never reported in
the press - that took place in late October 2003. At that gathering
the twenty-five members of Iraq's Governing Council as well as the
twenty-five interim ministers decided unanimously that they would not
participate in the privatization of Iraq's state-owned companies or
of its publicly owned infrastructure.

But Bremer didn't give up. International law prohibits occupiers from
selling state assets themselves, but it doesn't say anything about
the puppet governments they appoint. Originally, Bremer had pledged
to hand over power to a directly elected Iraqi government, but in
early November he went to Washington for a private meeting with
President Bush and came back with a Plan B. On June 30 the occupation
would officially end - but not really. It would be replaced by an
appointed government, chosen by Washington. This government would not
be bound by the international laws preventing occupiers from selling
off state assets, but it would be bound by an "interim constitution,"
a document that would protect Bremer's investment and privatization
laws.

The plan was risky. Bremer's June 30 deadline was awfully close, and
it was chosen for a less than ideal reason: so that President Bush
could trumpet the end of Iraq's occupation on the campaign trail. If
everything went according to plan, Bremer would succeed in forcing a
"sovereign" Iraqi government to carry out his illegal reforms. But if
something went wrong, he would have to go ahead with the June 30
handover anyway because by then Karl Rove, and not Dick Cheney or
Donald Rumsfeld, would be calling the shots. And if it came down to a
choice between ideology in Iraq and the electability of George W.
Bush, everyone knew which would win.

At first, Plan B seemed to be right on track. Bremer persuaded the
Iraqi Governing Council to agree to everything: the new timetable,
the interim government, and the interim constitution. He even managed
to slip into the constitution a completely overlooked clause, Article
26. It stated that for the duration of the interim government, "The
laws, regulations, orders and directives issued by the Coalition
Provisional Authority . . . shall remain in force" and could only be
changed after general elections are held.

Bremer had found his legal loophole: There would be a window - seven
months - when the occupation was officially over but before general
elections were scheduled to take place. Within this window, the Hague
and Geneva Conventions' bans on privatization would no longer apply,
but Bremer's own laws, thanks to Article 26, would stand. During
these seven months, foreign investors could come to Iraq and sign
forty-year contracts to buy up Iraqi assets. If a future elected
Iraqi government decided to change the rules, investors could sue for
compensation.

But Bremer had a formidable opponent: Grand Ayatollah Ali al Sistani,
the most senior Shia cleric in Iraq. al Sistani tried to block
Bremer's plan at every turn, calling for immediate direct elections
and for the constitution to be written after those elections, not
before. Both demands, if met, would have closed Bremer's
privatization window. Then, on March 2, with the Shia members of the
Governing Council refusing to sign the interim constitution, five
bombs exploded in front of mosques in Karbala and Baghdad, killing
close to 200 worshipers. General John Abizaid, the top U.S. commander
in Iraq, warned that the country was on the verge of civil war.
Frightened by this prospect, al Sistani backed down and the Shia
politicians signed the interim constitution. It was a familiar story:
the shock of a violent attack paved the way for more shock therapy.

When I arrived in Iraq a week later, the economic project seemed to
be back on track. All that remained for Bremer was to get his interim
constitution ratified by a Security Council resolution, then the
nervous lawyers and insurance brokers could relax and the sell-off of
Iraq could finally begin. The CPA, meanwhile, had launched a major
new P.R. offensive designed to reassure investors that Iraq was still
a safe and exciting place to do business. The centerpiece of the
campaign was Destination Baghdad Exposition, a massive trade show for
potential investors to be held in early April at the Baghdad
International Fairgrounds. It was the first such event inside Iraq,
and the organizers had branded the trade fair "DBX," as if it were
some sort of Mountain Dew-sponsored dirt-bike race. In keeping with
the extreme-sports theme, Thomas Foley traveled to Washington to tell
a gathering of executives that the risks in Iraq are akin "to
skydiving or riding a motorcycle, which are, to many, very acceptable
risks."

But three hours after my arrival in Baghdad, I was finding these
reassurances extremely hard to believe. I had not yet unpacked when
my hotel room was filled with debris and the windows in the lobby
were shattered. Down the street, the Mount Lebanon Hotel had just
been bombed, at that point the largest attack of its kind since the
official end of the war. The next day, another hotel was bombed in
Basra, then two Finnish businessmen were murdered on their way to a
meeting in Baghdad. Brigadier General Mark Kimmitt finally admitted
that there was a pattern at work: "the extremists have started
shifting away from the hard targets . . . and are now going out of
their way to specifically target softer targets." The next day, the
State Department updated its travel advisory: U.S. citizens were
"strongly warned against travel to Iraq."

The physical risks of doing business in Iraq seemed to be spiraling
out of control. This, once again, was not part of the original plan.
When Bremer first arrived in Baghdad, the armed resistance was so low
that he was able to walk the streets with a minimal security
entourage. During his first four months on the job, 109 U.S. soldiers
were killed and 570 were wounded. In the following four months, when
Bremer's shock therapy had taken effect, the number of U.S.
casualties almost doubled, with 195 soldiers killed and 1,633
wounded. There are many in Iraq who argue that these events are
connected - that Bremer's reforms were the single largest factor
leading to the rise of armed resistance.

Take, for instance, Bremer's first casualties. The soldiers and
workers he laid off without pensions or severance pay didn't all
disappear quietly. Many of them went straight into the mujahedeen,
forming the backbone of the armed resistance. "Half a million people
are now worse off, and there you have the water tap that keeps the
insurgency going. It's alternative employment," says Hussain Kubba,
head of the prominent Iraqi business group Kubba Consulting. Some of
Bremer's other economic casualties also have failed to go quietly. It
turns out that many of the businessmen whose companies are threatened
by Bremer's investment laws have decided to make investments of their
own - in the resistance. It is partly their money that keeps fighters
in Kalashnikovs and RPGs.

These developments present a challenge to the basic logic of shock
therapy: the neocons were convinced that if they brought in their
reforms quickly and ruthlessly, Iraqis would be too stunned to
resist. But the shock appears to have had the opposite effect; rather
than the predicted paralysis, it jolted many Iraqis into action, much
of it extreme. Haider al-Abadi, Iraq's minister of communication,
puts it this way: "We know that there are terrorists in the country,
but previously they were not successful, they were isolated. Now
because the whole country is unhappy, and a lot of people don't have
jobs . . . these terrorists are finding listening ears."

Bremer was now at odds not only with the Iraqis who opposed his plans
but with U.S military commanders charged with putting down the
insurgency his policies were feeding. Heretical questions began to be
raised: instead of laying people off, what if the CPA actually
created jobs for Iraqis? And instead of rushing to sell off Iraq's
200 state-owned firms, how about putting them back to work?

From the start, the neocons running Iraq had shown nothing but
disdain for Iraq's state-owned companies. In keeping with their Year
Zero-apocalyptic glee, when looters descended on the factories during
the war, U.S. forces did nothing. Sabah Asaad, managing director of a
refrigerator factory outside Baghdad, told me that while the looting
was going on, he went to a nearby U.S. Army base and begged for help.
"I asked one of the officers to send two soldiers and a vehicle to
help me kick out the looters. I was crying. The officer said, =91Sorry,
we can't do anything, we need an order from President Bush.'" Back in
Washington, Donald Rumsfeld shrugged. "Free people are free to make
mistakes and commit crimes and do bad things."

To see the remains of Asaad's football-field-size warehouse is to
understand why Frank Gehry had an artistic crisis after September 11
and was briefly unable to design structures resembling the rubble of
modern buildings. Asaad's looted and burned factory looks remarkably
like a heavy-metal version of Gehry's Guggenheim in Bilbao, Spain,
with waves of steel, buckled by fire, lying in terrifyingly beautiful
golden heaps. Yet all was not lost. "The looters were good-hearted,"
one of Asaad's painters told me, explaining that they left the tools
and machines behind, "so we could work again." Because the machines
are still there, many factory managers in Iraq say that it would take
little for them to return to full production. They need emergency
generators to cope with daily blackouts, and they need capital for
parts and raw materials. If that happened, it would have tremendous
implications for Iraq's stalled reconstruction, because it would mean
that many of the key materials needed to rebuild - cement and steel,
bricks and furniture - could be produced inside the country.

But it hasn't happened. Immediately after the nominal end of the war,
Congress appropriated $2.5 billion for the reconstruction of Iraq,
followed by an additional $18.4 billion in October. Yet as of July
2004, Iraq's state-owned factories had been pointedly excluded from
the reconstruction contracts. Instead, the billions have all gone to
Western companies, with most of the materials for the reconstruction
imported at great expense from abroad.

With unemployment as high as 67 percent, the imported products and
foreign workers flooding across the borders have become a source of
tremendous resentment in Iraq and yet another open tap fueling the
insurgency. And Iraqis don't have to look far for reminders of this
injustice; it's on display in the most ubiquitous symbol of the
occupation: the blast wall. The ten-foot-high slabs of reinforced
concrete are everywhere in Iraq, separating the protected - the
people in upscale hotels, luxury homes, military bases, and, of
course, the Green Zone - from the unprotected and exposed. If that
wasn't injury enough, all the blast walls are imported, from
Kurdistan, Turkey, or even farther afield, this despite the fact that
Iraq was once a major manufacturer of cement, and could easily be
again. There are seventeen state-owned cement factories across the
country, but most are idle or working at only half capacity.
According to the Ministry of Industry, not one of these factories has
received a single contract to help with the reconstruction, even
though they could produce the walls and meet other needs for cement
at a greatly reduced cost. The CPA pays up to $1,000 per imported
blast wall; local manufacturers say they could make them for $100.
Minister Tofiq says there is a simple reason why the Americans refuse
to help get Iraq's cement factories running again: among those making
the decisions, "no one believes in the public sector."1

This kind of ideological blindness has turned Iraq's occupiers into
prisoners of their own policies, hiding behind walls that, by their
very existence, fuel the rage at the U.S. presence, thereby feeding
the need for more walls. In Baghdad the concrete barriers have been
given a popular nickname: Bremer Walls.

As the insurgency grew, it soon became clear that if Bremer went
ahead with his plans to sell off the state companies, it could worsen
the violence. There was no question that privatization would require
layoffs: the Ministry of Industry estimates that roughly 145,000
workers would have to be fired to make the firms desirable to
investors, with each of those workers supporting, on average, five
family members. For Iraq's besieged occupiers the question was: Would
these shock-therapy casualties accept their fate or would they rebel?


The answer arrived, in rather dramatic fashion, at one of the largest
state-owned companies, the General Company for Vegetable Oils. The
complex of six factories in a Baghdad industrial zone produces
cooking oil, hand soap, laundry detergent, shaving cream, and
shampoo. At least that is what I was told by a receptionist who gave
me glossy brochures and calendars boasting of "modern instruments"
and "the latest and most up to date developments in the field of
industry." But when I approached the soap factory, I discovered a
group of workers sleeping outside a darkened building. Our guide
rushed ahead, shouting something to a woman in a white lab coat, and
suddenly the factory scrambled into activity: lights switched on,
motors revved up, and workers - still blinking off sleep - began
filling two-liter plastic bottles with pale blue Zahi brand
dishwashing liquid.

I asked Nada Ahmed, the woman in the white coat, why the factory
wasn't working a few minutes before. She explained that they have
only enough electricity and materials to run the machines for a
couple of hours a day, but when guests arrive - would-be investors,
ministry officials, journalists - they get them going. "For show,"
she explained. Behind us, a dozen bulky machines sat idle, covered in
sheets of dusty plastic and secured with duct tape.

In one dark corner of the plant, we came across an old man hunched
over a sack filled with white plastic caps. With a thin metal blade
lodged in a wedge of wax, he carefully whittled down the edges of
each cap, leaving a pile of shavings at his feet. "We don't have the
spare part for the proper mold, so we have to cut them by hand," his
supervisor explained apologetically. "We haven't received any parts
from Germany since the sanctions began." I noticed that even on the
assembly lines that were nominally working there was almost no
mechanization: bottles were held under spouts by hand because
conveyor belts don't convey, lids once snapped on by machines were
being hammered in place with wooden mallets. Even the water for the
factory was drawn from an outdoor well, hoisted by hand, and carried
inside.

The solution proposed by the U.S. occupiers was not to fix the plant
but to sell it, and so when Bremer announced the privatization
auction back in June 2003 this was among the first companies
mentioned. Yet when I visited the factory in March, nobody wanted to
talk about the privatization plan; the mere mention of the word
inside the plant inspired awkward silences and meaningful glances.
This seemed an unnatural amount of subtext for a soap factory, and I
tried to get to the bottom of it when I interviewed the assistant
manager. But the interview itself was equally odd: I had spent half a
week setting it up, submitting written questions for approval,
getting a signed letter of permission from the minister of industry,
being questioned and searched several times. But when I finally began
the interview, the assistant manager refused to tell me his name or
let me record the conversation. "Any manager mentioned in the press
is attacked afterwards," he said. And when I asked whether the
company was being sold, he gave this oblique response: "If the
decision was up to the workers, they are against privatization; but
if it's up to the high-ranking officials and government, then
privatization is an order and orders must be followed."

I left the plant feeling that I knew less than when I'd arrived. But
on the way out of the gates, a young security guard handed my
translator a note. He wanted us to meet him after work at a nearby
restaurant, "to find out what is really going on with privatization."
His name was Mahmud, and he was a twenty-five-year-old with a neat
beard and big black eyes. (For his safety, I have omitted his last
name.) His story began in July, a few weeks after Bremer's
privatization announcement. The company's manager, on his way to
work, was shot to death. Press reports speculated that the manager
was murdered because he was in favor of privatizing the plant, but
Mahmud was convinced that he was killed because he opposed the plan.
"He would never have sold the factories like the Americans want.
That's why they killed him."

The dead man was replaced by a new manager, Mudhfar Ja'far. Shortly
after taking over, Ja'far called a meeting with ministry officials to
discuss selling off the soap factory, which would involve laying off
two thirds of its employees. Guarding that meeting were several
security officers from the plant. They listened closely to Ja'far's
plans and promptly reported the alarming news to their coworkers. "We
were shocked," Mahmud recalled. "If the private sector buys our
company, the first thing they would do is reduce the staff to make
more money. And we will be forced into a very hard destiny, because
the factory is our only way of living."

Frightened by this prospect, a group of seventeen workers, including
Mahmud, marched into Ja'far's office to confront him on what they had
heard. "Unfortunately, he wasn't there, only the assistant manager,
the one you met," Mahmud told me. A fight broke out: one worker
struck the assistant manager, and a bodyguard fired three shots at
the workers. The crowd then attacked the bodyguard, took his gun,
and, Mahmud said, "stabbed him with a knife in the back three times.
He spent a month in the hospital." In January there was even more
violence. On their way to work, Ja'far, the manager, and his son were
shot and badly injured. Mahmud told me he had no idea who was behind
the attack, but I was starting to understand why factory managers in
Iraq try to keep a low profile.

At the end of our meeting, I asked Mahmud what would happen if the
plant was sold despite the workers' objections. "There are two
choices," he said, looking me in the eye and smiling kindly. "Either
we will set the factory on fire and let the flames devour it to the
ground, or we will blow ourselves up inside of it. But it will not be
privatized."

If there ever was a moment when Iraqis were too disoriented to resist
shock therapy, that moment has definitely passed. Labor relations,
like everything else in Iraq, has become a blood sport. The violence
on the streets howls at the gates of the factories, threatening to
engulf them. Workers fear job loss as a death sentence, and managers,
in turn, fear their workers, a fact that makes privatization
distinctly more complicated than the neocons foresaw.2

As I left the meeting with Mahmud, I got word that there was a major
demonstration outside the CPA headquarters. Supporters of the radical
young cleric Moqtada al Sadr were protesting the closing of their
newspaper, al Hawza, by military police. The CPA accused al Hawza of
publishing "false articles" that could "pose the real threat of
violence." As an example, it cited an article that claimed Bremer "is
pursuing a policy of starving the Iraqi people to make them
preoccupied with procuring their daily bread so they do not have the
chance to demand their political and individual freedoms." To me it
sounded less like hate literature than a concise summary of Milton
Friedman's recipe for shock therapy.

A few days before the newspaper was shut down, I had gone to Kufa
during Friday prayers to listen to al Sadr at his mosque. He had
launched into a tirade against Bremer's newly signed interim
constitution, calling it "an unjust, terrorist document." The message
of the sermon was clear: Grand Ayatollah Ali al Sistani may have
backed down on the constitution, but al Sadr and his supporters were
still determined to fight it - and if they succeeded they would
sabotage the neocons' careful plan to saddle Iraq's next government
with their "wish list" of laws. With the closing of the newspaper,
Bremer was giving al Sadr his response: he wasn't negotiating with
this young upstart; he'd rather take him out with force.

When I arrived at the demonstration, the streets were filled with men
dressed in black, the soon-to-be legendary Mahdi Army. It struck me
that if Mahmud lost his security guard job at the soap factory, he
could be one of them. That's who al Sadr's foot soldiers are: the
young men who have been shut out of the neocons' grand plans for
Iraq, who see no possibilities for work, and whose neighborhoods have
seen none of the promised reconstruction. Bremer has failed these
young men, and everywhere that he has failed, Moqtada al Sadr has
cannily set out to succeed. In Shia slums from Baghdad to Basra, a
network of Sadr Centers coordinate a kind of shadow reconstruction.
Funded through donations, the centers dispatch electricians to fix
power and phone lines, organize local garbage collection, set up
emergency generators, run blood drives, direct traffic where the
streetlights don't work. And yes, they organize militias too. Al Sadr
took Bremer's economic casualties, dressed them in black, and gave
them rusty Kalashnikovs. His militiamen protected the mosques and the
state factories when the occupation authorities did not, but in some
areas they also went further, zealously enforcing Islamic law by
torching liquor stores and terrorizing women without the veil.
Indeed, the astronomical rise of the brand of religious
fundamentalism that al Sadr represents is another kind of blowback
from Bremer's shock therapy: if the reconstruction had provided jobs,
security, and services to Iraqis, al Sadr would have been deprived of
both his mission and many of his newfound followers.

At the same time as al Sadr's followers were shouting "Down with
America" outside the Green Zone, something was happening in another
part of the country that would change everything. Four American
mercenary soldiers were killed in Fallujah, their charred and
dismembered bodies hung like trophies over the Euphrates. The attacks
would prove a devastating blow for the neocons, one from which they
would never recover. With these images, investing in Iraq suddenly
didn't look anything like a capitalist dream; it looked like a
macabre nightmare made real.

The day I left Baghdad was the worst yet. Fallujah was under siege
and Brig. Gen. Kimmitt was threatening to "destroy the al-Mahdi
Army." By the end, roughly 2,000 Iraqis were killed in these twin
campaigns. I was dropped off at a security checkpoint several miles
from the airport, then loaded onto a bus jammed with contractors
lugging hastily packed bags. Although no one was calling it one, this
was an evacuation: over the next week 1,500 contractors left Iraq,
and some governments began airlifting their citizens out of the
country. On the bus no one spoke; we all just listened to the mortar
fire, craning our necks to see the red glow. A guy carrying a KPMG
briefcase decided to lighten things up. "So is there business class
on this flight?" he asked the silent bus. From the back, somebody
called out, "Not yet."

Indeed, it may be quite a while before business class truly arrives
in Iraq. When we landed in Amman, we learned that we had gotten out
just in time. That morning three Japanese civilians were kidnapped
and their captors were threatening to burn them alive. Two days later
Nicholas Berg went missing and was not seen again until the snuff
film surfaced of his beheading, an even more terrifying message for
U.S. contractors than the charred bodies in Fallujah. These were the
start of a wave of kidnappings and killings of foreigners, most of
them businesspeople, from a rainbow of nations: South Korea, Italy,
China, Nepal, Pakistan, the Philippines, Turkey. By the end of June
more than ninety contractors were reported dead in Iraq. When seven
Turkish contractors were kidnapped in June, their captors asked the
"company to cancel all contracts and pull out employees from Iraq."
Many insurance companies stopped selling life insurance to
contractors, and others began to charge premiums as high as $10,000 a
week for a single Western executive - the same price some insurgents
reportedly pay for a dead American.

For their part, the organizers of DBX, the historic Baghdad trade
fair, decided to relocate to the lovely tourist city of Diyarbakir in
Turkey, "just 250 km from the Iraqi border." An Iraqi landscape, only
without those frightening Iraqis. Three weeks later just fifteen
people showed up for a Commerce Department conference in Lansing,
Michigan, on investing in Iraq. Its host, Republican Congressman Mike
Rogers, tried to reassure his skeptical audience by saying that Iraq
is "like a rough neighborhood anywhere in America." The foreign
investors, the ones who were offered every imaginable free-market
enticement, are clearly not convinced; there is still no sign of
them. Keith Crane, a senior economist at the Rand Corporation who has
worked for the CPA, put it bluntly: "I don't believe the board of a
multinational company could approve a major investment in this
environment. If people are shooting at each other, it's just
difficult to do business." Hamid Jassim Khamis, the manager of the
largest soft-drink bottling plant in the region, told me he can't
find any investors, even though he landed the exclusive rights to
produce Pepsi in central Iraq. "A lot of people have approached us to
invest in the factory, but people are really hesitating now." Khamis
said he couldn't blame them; in five months he has survived an
attempted assassination, a carjacking, two bombs planted at the
entrance of his factory, and the kidnapping of his son.

Despite having been granted the first license for a foreign bank to
operate in Iraq in forty years, HSBC still hasn't opened any
branches, a decision that may mean losing the coveted license
altogether. Procter & Gamble has put its joint venture on hold, and
so has General Motors. The U.S. financial backers of the Starwood
luxury hotel and multiplex have gotten cold feet, and Siemens AG has
pulled most staff from Iraq. The bell hasn't rung yet at the Baghdad
Stock Exchange - in fact you can't even use credit cards in Iraq's
cash-only economy. New Bridge Strategies, the company that had gushed
back in October about how "a Wal-Mart could take over the country,"
is sounding distinctly humbled. "McDonald's is not opening anytime
soon," company partner Ed Rogers told the Washington Post. Neither is
Wal-Mart. The Financial Times has declared Iraq "the most dangerous
place in the world in which to do business." It's quite an
accomplishment: in trying to design the best place in the world to do
business, the neocons have managed to create the worst, the most
eloquent indictment yet of the guiding logic behind deregulated free
markets.

The violence has not just kept investors out; it also forced Bremer,
before he left, to abandon many of his central economic policies.
Privatization of the state companies is off the table; instead,
several of the state companies have been offered up for lease, but
only if the investor agrees not to lay off a single employee.
Thousands of the state workers that Bremer fired have been rehired,
and significant raises have been handed out in the public sector as a
whole. Plans to do away with the food-ration program have also been
scrapped - it just doesn't seem like a good time to deny millions of
Iraqis the only nutrition on which they can depend.

The final blow to the neocon dream came in the weeks before the
handover. The White House and the CPA were rushing to get the U.N.
Security Council to pass a resolution endorsing their handover plan.
They had twisted arms to give the top job to former CIA agent Iyad
Allawi, a move that will ensure that Iraq becomes, at the very least,
the coaling station for U.S. troops that Jay Garner originally
envisioned. But if major corporate investors were going to come to
Iraq in the future, they would need a stronger guarantee that
Bremer's economic laws would stick. There was only one way of doing
that: the Security Council resolution had to ratify the interim
constitution, which locked in Bremer's laws for the duration of the
interim government. But al Sistani once again objected, this time
unequivocally, saying that the constitution has been "rejected by the
majority of the Iraqi people." On June 8 the Security Council
unanimously passed a resolution that endorsed the handover plan but
made absolutely no reference to the constitution. In the face of this
far-reaching defeat, George W. Bush celebrated the resolution as a
historic victory, one that came just in time for an election trail
photo op at the G-8 Summit in Georgia.

With Bremer's laws in limbo, Iraqi ministers are already talking
openly about breaking contracts signed by the CPA. Citigroup's loan
scheme has been rejected as a misuse of Iraq's oil revenues. Iraq's
communication minister is threatening to renegotiate contracts with
the three communications firms providing the country with its
disastrously poor cell phone service. And the Lebanese and U.S.
companies hired to run the state television network have been
informed that they could lose their licenses because they are not
Iraqi. "We will see if we can change the contract," Hamid al-Kifaey,
spokesperson for the Governing Council, said in May. "They have no
idea about Iraq." For most investors, this complete lack of legal
certainty simply makes Iraq too great a risk.

But while the Iraqi resistance has managed to scare off the first
wave of corporate raiders, there's little doubt that they will
return. Whatever form the next Iraqi government takes - nationalist,
Islamist, or free market - it will inherit a shattered nation with a
crushing $120 billion debt. Then, as in all poor countries around the
world, men in dark blue suits from the IMF will appear at the door,
bearing loans and promises of economic boom, provided that certain
structural adjustments are made, which will, of course, be rather
painful at first but well worth the sacrifice in the end. In fact,
the process has already begun: the IMF is poised to approve loans
worth $2.5- $4.25 billion, pending agreement on the conditions. After
an endless succession of courageous last stands and far too many lost
lives, Iraq will become a poor nation like any other, with
politicians determined to introduce policies rejected by the vast
majority of the population, and all the imperfect compromises that
will entail. The free market will no doubt come to Iraq, but the
neoconservative dream of transforming the country into a free-market
utopia has already died, a casualty of a greater dream - a second
term for George W. Bush.

The great historical irony of the catastrophe unfolding in Iraq is
that the shock-therapy reforms that were supposed to create an
economic boom that would rebuild the country have instead fueled a
resistance that ultimately made reconstruction impossible. Bremer's
reforms unleashed forces that the neocons neither predicted nor could
hope to control, from armed insurrections inside factories to tens of
thousands of unemployed young men arming themselves. These forces
have transformed Year Zero in Iraq into the mirror opposite of what
the neocons envisioned: not a corporate utopia but a ghoulish
dystopia, where going to a simple business meeting can get you
lynched, burned alive, or beheaded. These dangers are so great that
in Iraq global capitalism has retreated, at least for now. For the
neocons, this must be a shocking development: their ideological
belief in greed turns out to be stronger than greed itself.

Iraq was to the neocons what Afghanistan was to the Taliban: the one
place on Earth where they could force everyone to live by the most
literal, unyielding interpretation of their sacred texts. One would
think that the bloody results of this experiment would inspire a
crisis of faith: in the country where they had absolute free reign,
where there was no local government to blame, where economic reforms
were introduced at their most shocking and most perfect, they
created, instead of a model free market, a failed state no right-
thinking investor would touch. And yet the Green Zone neocons and
their masters in Washington are no more likely to reexamine their
core beliefs than the Taliban mullahs were inclined to search their
souls when their Islamic state slid into a debauched Hades of opium
and sex slavery. When facts threaten true believers, they simply
close their eyes and pray harder.

Which is precisely what Thomas Foley has been doing. The former head
of "private sector development" has left Iraq, a country he had
described as "the mother of all turnarounds," and has accepted
another turnaround job, as co-chair of George Bush's reelection
committee in Connecticut. On April 30 in Washington he addressed a
crowd of entrepreneurs about business prospects in Baghdad. It was a
tough day to be giving an upbeat speech: that morning the first
photographs had appeared out of Abu Ghraib, including one of a hooded
prisoner with electrical wires attached to his hands. This was
another kind of shock therapy, far more literal than the one Foley
had helped to administer, but not entirely unconnected. "Whatever
you're seeing, it's not as bad as it appears," Foley told the crowd.
"You just need to accept that on faith."

Notes
1. Tofiq did say that several U.S. companies had expressed strong
interest in buying the state-owned cement factories. This supports a
widely held belief in Iraq that there is a deliberate strategy to
neglect the state firms so that they can be sold more cheaply - a
practice known as "starve then sell." Back
2. It is in Basra where the connections between economic reforms and
the rise of the resistance was put in starkest terms. In December the
union representing oil workers was negotiating with the Oil Ministry
for a salary increase. Getting nowhere, the workers offered the
ministry a simple choice: increase their paltry salaries or they
would all join the armed resistance. They received a substantial
raise.


Mark Parkinson
Bodmin
Cornwall







End of casi-news Digest

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