Privatization in Disguise
by Naomi Klein, The Nation, April 28, 2003 Issue
On April 6, Deputy Defense Secretary Paul Wolfowitz spelled it
out: There will be no role for the United Nations in setting up an
interim government in Iraq. The US-run regime will last at least six
months, “probably…longer than that.”
And by the time the Iraqi people have a say in choosing a
government, the key economic decisions about their country’s future
will have been made by their occupiers. “There has got to be an
effective administration from day one,” Wolfowitz said. “People need
water and food and medicine, and the sewers have to work, the
electricity has to work. And that’s a coalition responsibility.”
The process of getting all this infrastructure to work is usually
called “reconstruction.” But American plans for Iraq’s future economy
go well beyond that. Rather, the country is being treated as a blank
slate on which the most ideological Washington neoliberals can design
their dream economy: fully privatized, foreign-owned and open for
Some highlights: The $4.8 million management contract for the port
in Umm Qasr has already gone to a US company, Stevedoring Services of
America, and the airports are on the auction block. The US Agency for
International Development has invited US multinationals to bid on
everything from rebuilding roads and bridges to printing textbooks.
Most of these contracts are for about a year, but some have options
that extend up to four. How long before they meld into long-term
contracts for privatized water services, transit systems, roads,
schools and phones? When does reconstruction turn into privatization
California Republican Congressman Darrel Issa has introduced a
bill that would require the Defense Department to build a CDMA
cell-phone system in postwar Iraq in order to benefit “US patent
holders.” As Farhad Manjoo noted in Salon, CDMA is the system used in
the United States, not Europe, and was developed by Qualcomm, one of
Issa’s most generous donors.
And then there’s oil. The Bush Administration knows it can’t talk
openly about selling off Iraq’s oil resources to ExxonMobil and Shell.
It leaves that to Fadhil Chalabi, a former Iraq petroleum ministry
official. “We need to have a huge amount of money coming into the
country,” Chalabi says. “The only way is to partially privatize the
He is part of a group of Iraqi exiles who have been advising the
State Department on how to implement that privatization in such a way
that it isn’t seen to be coming from the United States. Helpfully, the
group held a conference on April 4-5 in London, where it called on
Iraq to open itself up to oil multinationals after the war. The
Administration has shown its gratitude by promising there will be
plenty of posts for Iraqi exiles in the interim government.
Some argue that it’s too simplistic to say this war is about oil.
They’re right. It’s about oil, water, roads, trains, phones, ports and
drugs. And if this process isn’t halted, “free Iraq” will be the most
sold country on earth.
It’s no surprise that so many multinationals are lunging for
Iraq’s untapped market. It’s not just that the reconstruction will be
worth as much as $100 billion; it’s also that “free trade” by less
violent means hasn’t been going that well lately. More and more
developing countries are rejecting privatization, while the Free Trade
Area of the Americas, Bush’s top trade priority, is wildly unpopular
across Latin America. World Trade Organization talks on intellectual
property, agriculture and services have all bogged down amid
accusations that America and Europe have yet to make good on past
So what is a recessionary, growth-addicted superpower to do? How
about upgrading Free Trade Lite, which wrestles market access through
backroom bullying, to Free Trade Supercharged, which seizes new
markets on the battlefields of pre-emptive wars? After all,
negotiations with sovereign nations can be hard. Far easier to just
tear up the country, occupy it, then rebuild it the way you want. Bush
hasn’t abandoned free trade, as some have claimed, he just has a new
doctrine: “Bomb before you buy.”
It goes further than one unlucky country. Investors are openly
predicting that once privatization of Iraq takes root, Iran, Saudi
Arabia and Kuwait will be forced to compete by privatizing their oil.
“In Iran, it would just catch like wildfire,” S. Rob Sobhani, an
energy consultant, told the Wall Street Journal. Soon, America may
have bombed its way into a whole new free-trade zone.
So far, the press debate over the reconstruction of Iraq has
focused on fair play: It is “exceptionally maladroit,” in the words of
the European Union’s Commissioner for External Relations, Chris
Patten, for the United States to keep all the juicy contracts for
itself. It has to learn to share: ExxonMobil should invite France’s
TotalFinaElf to the most lucrative oilfields; Bechtel should give
Britain’s Thames Water a shot at the sewer contracts.
But while Patten may find US unilateralism galling and Tony Blair
may be calling for UN oversight, on this matter it’s beside the point.
Who cares which multinationals get the best deals in Iraq’s
post-Saddam, pre-democracy liquidation sale? What does it matter if
the privatizing is done unilaterally by Washington or multilaterally
by the United States, Europe, Russia and China?
Entirely absent from this debate are the Iraqi people, who
might–who knows?–want to hold on to a few of their assets. Iraq will
be owed massive reparations after the bombing stops, but without any
real democratic process, what is being planned is not reparations,
reconstruction or rehabilitation. It is robbery: mass theft disguised
as charity; privatization without representation.
A people, starved and sickened by sanctions, then pulverized by
war, is going to emerge from this trauma to find that their country
has been sold out from under them. They will also discover that their
newfound “freedom”–for which so many of their loved ones
perished–comes pre-shackled with irreversible economic decisions that
were made in boardrooms while the bombs were still falling.
They will then be told to vote for their new leaders, and welcomed
to the wonderful world of democracy.