October 5, 2003
“Most of the Iraqi private sector was put up for sale yesterday.” For that startling bit of news you would have had to read the Times of London. Almost nobody took notice in this country when Iraq’s occupation government — run by U.S.-picked worthies — enacted laws allowing foreigners to buy 100 percent of Iraqi’s non-energy business and finance.
The Wall Street Journal, one of few U.S. media to pay attention, was less plain-spoken than the Brits, and respectfully reported initiatives to create “a low-tax economy offering wide access for foreign banks and businesses.”
The measures were disclosed Sept. 21 before International Monetary Fund meetings in Dubai by, fittingly enough, the U.S. delegation. Foreigners will be allowed to own 100 percent interest in any Iraqi company outside the energy industry. Up to six foreign banks will be permitted to purchase 100 percent of Iraqi banks over the next five years; thereafter there will be no limits on foreign ownership of Iraqi finance.
The rules allow for direct investment, not just joint ventures with Iraqis. No need for government approvals. Nor will there be restrictions on repatriating profits, dividends or royalties back to the home countries of investing companies. Money will leave Iraq freely.
Despite the country’s devastated health and educational systems, taxes will be low. The current tax holiday will continue until year end. After that, income taxes will be no more than 15 percent, even for Iraq’s richest. Import duties will be 5 percent. That will ensure U.S. and European manufacturers unfettered access to Iraqi consumers.
That’s for the private sector. The fate of the huge, corrupt Ba’athist-era state-owned enterprises is still being planned. Ambitious privatization plans are said to be in preparation, under which those companies — on which many Iraqis depend for employment in a country with a jobless rate of 50 percent — would be sold off, almost certainly to foreigners.
The energy sector is specifically excluded for now, but oil remains the Holy Grail of the wealth of Iraq, second only to Saudi Arabia as a source of known reserves.
“Of course the oil sector will not be, at this stage, there for foreign investment,” U.S. national security adviser Condoleeza Rice told a Sept. 22 press briefing. “But I’m sure that just like everybody else, people want to see the oil sector work, and they’ll want to invest.”
The moves to open up Iraq coincide with the U.S. diplomatic push to recruit international help with pacification and reconstruction, and the timing suggests that with political support can come economic rewards.
To be sure, Iraq is in desperate financial straits. Atop reconstruction costs estimated at $100 billion, its officials estimate foreign debts of $130 billion, including an overhang of $30 billion in reparations owed Kuwait from the 1991 invasion.
Still, a U.S. official in Baghdad told Agence France Presse that although security is still a concern, “you can make money in a country like Iraq. …You don’t need to have everything perfect to make money.”
So now that the Iraqi calf has been slaughtered and gutted it’s time to carve up the carcass.
What of the political consequences? Already, the Iraqis appear more willing to host a guerilla war than to tolerate a military occupation, even one that might plausibly seem benign. What happens when they face economic colonization too, and realize that liberation means their employers reside in London, New York and Houston?
One Baghdad monetary expert told AFP: “The measures which have been announced will lead to foreign domination over economic decision-making and largely sign away [Iraq’s] independence.”
Soon, others will pick up that theme.
And the jihadists outside Iraq who cynically embraced Saddam as a nationalist hero — what greater gift could they ask for but real evidence that the war has delivered the Iraqi economy to the mercies of U.S. and European capital?
These are hugely important policies, decided by unelected officials operating under the direction of a foreign occupier — itself insulated from public scrutiny by news media that either can’t, or don’t choose, to examine the potential consequences. No attention, no debate, no discussion.
And once again we, the public, will find ourselves ambushed by the furious response to actions that we had never had a chance to consider, let alone approve.