Setback for Corporate Globalization

It was only a few short months ago that the neoconservative Project for the New American Century was on track and on schedule. The projection of US power by the Bush administration appeared poised to remake the Middle East. Statist tyrannies throughout the region were about to become market democracies. One-man or one-party rule was a thing of the past. Western-style democratic institutions would be planted and bloom in the desert sun. Most important of all, from the viewpoint of global capital, insular socialist economies were ready to be transformed into paragons of laissezfaire advertising the blessings of international free trade. Saddam's Iraq would be the model test case.

It isn't happening. The interminable struggle to pacify and normalize Iraqi society is a staple of the evening news. The failure thus far to stamp out resistance forces in the occupied country has been well publicized, as has the rising American casualty rate -- upwards of 500 dead and 3,000 wounded to date. The slow progress toward democratic government -- slow because the Bush team is reluctant to trust Iraqis with self-government and loath to approve elections -- has also been fully documented. Baghdad, it is painfully obvious, is not yet Peoria.

Politically, the grand imperial experiment is in stasis -- and may be for some time. What is mostly known only to insiders, however, is that its accompanying economic component is also foundering, and capital markets are not amused. There are exceptions, of course. The Halliburton company, Dick Cheney's pride and joy, is doing well in the reconstruction business, having garnered a $7 billion, no-bid contract to restore Iraq's oil industry. Other corporate vultures are circling as well. L. Paul Bremer's Coalition Provisional Authority (CPA) has $25 billion to spend on Iraq rebuilding contracts in coordination with the Defense, State, and Commerce departments, and companies with inside contacts to the Bush administration are lining up for the booty.

There's more involved here than just raw war profiteering, however. Jane Mayer reports in The New Yorker that visionary free-market enthusiasts like former Republican HUD Secretary Jack Kemp are hatching plans to use the profit motive to shape Iraq's future economy with the assistance of the CPA's section on private-sector development. Kemp's own ventures include Free Market Global, a prospective multinational company that would trade in oil, natural gas, and other natural resources; and al-Ruba'yia, a proposed $200 million investment fund whose stateside subscribers would dabble in business projects ranging from energy to education. Also active is the Iraqi International Law Group, headed by the exile community's politically connected Chalabi family, a coalition of lawyers and businessmen (including prominent Bush loyalists) formed to help investors in Iraq and facilitate international marketing for its clients.

Unfortunately for these avid free-enterprisers, Iraq's economic restructuring, like its political restructuring, is on indefinite hold. A year-end survey by Washington Post correspondent Rajiv Chandrasekaran indicated that Administrator Bremer had backed off from several ambitious initiatives to radically transform the Mesopotamian economy. The apparent reasons included a general lack of security due to the country's continuing chaos and an administration desire to accelerate the end of civil (though not yet military) occupation with a US election looming closer. High-profile plans to summarily privatize state-owned businesses, a key objective of coalition planners, have been abruptly dropped. They obviously don't square with the more pressing goal of creating some semblance of a sovereign Iraqi government by the beginning of July, when a phased US withdrawal is slated to begin.

Not so long ago, in June of last year, Proconsul Bremer was telling eager business executives at the World Economic Forum in Jordan that Iraq would shortly become a free-market mecca, as US policies opened up its formerly controlled economy to international investors. That was before the unappetizing prospect of thousands of layoffs following any fire sale of stateowned enterprises began to hit home. With a third of prewar Iraqis having worked in the public sector and the postwar unemployment rate running rampant (60%, according to Chandrasekaran), even ideologically motivated promarket types saw the handwriting on the wall. Add to this the expressed desire of officials in Iraq's State Ministry of Industry and members of the American-appointed Governing Council to make their own decisions, in their own good time, about what sort of economy to have, and the pragmatic conclusion was obvious: Privatization would alienate more Iraqis, and America didn't need more enemies.

So, the great economic project for Iraq is indefinitely on the back burner, to the dismay and disappointment of the global corporations. The country's 48 state-owned companies will stay that way until Iraqis themselves decide otherwise. That's as it should be; it's their nation, not the property of Western financiers. There will still be reconstruction activities aimed at restoring Iraq's devastated infrastructure, of course, and US companies will get the lion's share of the government contracts. It's one of the many ironies of this chapter in our foreign-policy history that an administration committed to ending Ba'athist state socialism is sponsoring a form of corporate socialism to physically reconstitute Iraq. American taxpayers funded their military's destruction of the country through the Pentagon budget, and those same taxpayers will now fund the cost of rebuilding it through the CPA budget, with crony capitalists as the prime beneficiaries.

There are other models for handling this sort of situation. The best one is undoubtedly the post-World War II European Recovery Plan of the Truman administration. The Marshall Plan, as it was popularly known (after Secretary of State George Marshall), used US economic aid to rescue war-ravaged Western Europe and prevent it from turning in desperation to political totalitarianism. In 1948, the then-enormous sum of $17 billion was distributed to the needy nations of the Continent to be used at their discretion. Although they provided the money, Americans neither unilaterally planned the rebuilding of Europe nor directly carried it out. The Marshall Plan accomplished its humanitarian and strategic goals; Europe survived, fed and employed its people, and prospered as a bastion of democracy -- social democracy in places -- without either active US intervention or corporate profiteering. Somebody please tell Paul Bremer and the folks at the White House.

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