October 15, 2003

Iraqi privatization schemes

Here's a great article describing the latest US moves in their efforts to rebuild Iraq.

Chief US administrator in Iraq Paul Bremer announced that all Iraqi state- owned companies will be sold to private investors, including foreigners, in efforts to accelerate the recovery of Iraq's decayed economy and promote stability.

I think the argument that selling off state assets might spur the "recovery" of the Iraqi economy is plausible. But I don't see how it would "promote stability." In fact, you might argue that instability is the inevitable price Iraq must pay for its economy to have any chance of recovery.

Let's not make the common mistake of holding up privatisation as a panacea that is sure to solve ALL problems everywhere.

The United Nations was not consulted by Bremer's Coalition Provisional Authority (CPA) on the matter, despite the CPA's interest in UN resources for rebuilding Iraq. The World Bank, however, praised the new policy.

The UN's approval would be nice. The World Bank's is nicer.

But the new policies could prove controversial among the many Iraqis who have not aligned themselves with the US. Some Iraqi businessmen expressed concern that well- capitalised foreign firms will enjoy an unfair advantage and siphon profits out of the country. Most disquieting is the fact that the reforms read like a free-market manifesto devised by Washington to sign off more than 30 years of a socialist-oriented economy that provided millions of Iraqis with subsidised food and services, even through Saddam's costly wars and blunders.

Are we failing to distinguish the evils of Saddam from the "evils" of failing to toe the neoconservative IMF/World Bank line? Sounds like we are.

Posted by Carey at October 15, 2003 08:49 AM

I'm not sure about this bit:

The World Bank's [approval] is nicer.

Are you being serious?

Posted by: Heidi at October 15, 2003 09:02 AM

Actually, I was being sarcastic. :)

Posted by: Carey at October 15, 2003 02:47 PM

Hey, the World Bank is my dream job. Along with working for Exxon or something.

Posted by: Heidi at October 16, 2003 10:27 AM

I think this is a HUGE mistake. I think the reconstruction effort would be further down the road if Bremer wouldn't hold up the awarding of contracts in order to give the Western folks time to bid them out. Many of these contracts should be going to firms in Iraq or certainly in the mid-east. If the majority of Irag's assets are sold off to Western investors (even though it seems the oil reserves will remain with Irag "for now"), the Iraqi people will wake up someday and find their country's assets gone, sold to the highest bidder, and instead of "freeing the Iraqi people" they may eventually feel imprisoned by these large conglomerate, wealthy, western companies who will then be pulling the strings in every aspect of their lives.

Posted by: Nallie at October 21, 2003 11:05 AM