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Context of 'September 19, 2003: US Administrator in Iraq Rewrites Foreign Investment Laws'

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An alliance of Republican lobbyists form the company New Bridge Strategies to seek rights for major US companies to distribute their products in Iraq. The website states the company has been “created specifically with the aim of assisting clients to evaluate and take advantage of business opportunities in the Middle East following the conclusion of the US-led war in Iraq.” As one unnamed partner at New Bridge will explain to the Washington Post in the fall of 2003, “Getting the rights to distribute Procter & Gamble products would be a gold mine. One well-stocked 7-Eleven could knock out 30 Iraqi stores; a Wal-Mart could take over the country.” Another person involved in the company will note that an order signed by Paul Bremer in September (see September 19, 2003) allowing foreign companies to establish 100 percent ownership of firms in Iraq increases the attraction of doing business in Iraq. [Washington Post, 9/12/2003; New York Times, 9/30/2003; Washington Post, 10/2/2003] New Bridge has close connections to the Bush administration and highlights these ties on its website noting that its chairman, Joe Allbaugh, was “chief of staff to then-Gov. Bush of Texas and was the national campaign manager for the Bush-Cheney 2000 presidential campaign.” The site also says, “The opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in Washington, D.C., and on the ground in Iraq.” [New York Times, 9/30/2003] Allbaugh dismisses criticisms that he is using his connections to profit from the war. “The stories I’ve seen have been couched as if people are trying to game the system, and that’s not what we’re about,” Allbaugh tells the New York Times. “We are trying to help Iraq become a capitalist country, and a leader throughout the Middle East. Iraqis themselves are asking for help…. We fought a war, we displaced a horrible, horrible regime, and as a part of that we have an obligation to help Iraqis. We can’t just leave in the middle of the night.” [New York Times, 10/6/2003] Individuals involved in the company include:
bullet Joe M. Allbaugh, chairman. The majority of Allbaugh’s career was spent in Texas politics. He was chief of staff to Governor Bush; later became his 2000 presidential campaign manager, and then was appointed by Bush as director of the Federal Emergency Management Agency (FEMA). Allbaugh currently runs his own consulting firm, the Allbaugh Company. [Allbaugh Company, 3/17/2007]
bullet John Howland, president. He is currently a principal of Crest Investment in Houston and formerly headed the company American Rice, which was once a major exporter to Iraq. [New York Times, 9/30/2003]
bullet Edward M. Rogers, vice chairman. Rogers served as a deputy assistant to President Bush Sr. and as an executive assistant to the White House chief of staff. In addition to his involvement in New Bridge Strategies, he is also vice chairman of Barbour Griffith & Rogers, an extremely well-connected Republican lobbying firm. Rogers’s wife, Edwina, is an associate director of the White House National Economic Council. [New York Times, 9/30/2003]
bullet Lanny Griffith, a director. He is chief operating officer of Barbour Griffith & Rogers. He served under the first President Bush as special assistant for intergovernmental affairs and then worked under him again as an assistant secretary of education. [New York Times, 9/30/2003]
bullet Jamal Daniel, a principal. Daniel has been an associate of George Bush’s younger brother, Niel, for more than a decade. An investigation by the Financial Times will find that Daniel, along with John Howland, has “attempted to exploit their association with the president’s brother to help win business and investors” on several occasions. “Three people contacted by the FT have seen letters written by Neil Bush recommending business ventures promoted by Mr Howland, Mr Daniel and his family in the Middle East. Mr Daniel has also had his photograph taken with the elder Mr Bush. Such letters and photographs can be valuable props when doing business in the Middle East.” Daniel is also involved in the investment fund, Crest Investment Corporation, of which Howland is also a member. The firm, which employs Neil Bush as its co-chairman, helped fund Neil Bush’s educational software company, Ignite. And according to one Middle Eastern businessman, Daniel sometimes introduces himself to potential investors as a founding backer of the Ignite. [Financial Times, 12/11/2003] Daniel, from a Christian Syrian family, also has links to Saddam Hussein’s Baathist party. The Financial Times reports he “is said to have been involved in the founding of the Baath Party and sustained links with it in both Syria and Iraq even after being expelled from Syria in about 1966 after Hafez al-Assad came to power. Mr Daniel has told friends that when he was young Tariq Aziz, later foreign minister of Iraq, was a visitor to the family home.” [Financial Times, 12/12/2003]

Entity Tags: Lanny Griffith, New Bridge Strategies, Jamal Daniels, Edward M. Rogers, John Howland, Joseph M. Allbaugh

Timeline Tags: Iraq under US Occupation

Jay Garner, a retired general selected by the Pentagon a month before to direct reconstruction efforts in Iraq, is replaced by diplomat Paul Bremer III as head of the Coalition Provisional Authority (CPA). Bremer is thought more capable of dealing with the increasing rebellion and lawlessness in Iraq. [CNN, 5/11/2003]

Entity Tags: Jay Garner, L. Paul Bremer

Timeline Tags: Iraq under US Occupation

L. Paul Bremer, the head administrator of the Coalition Provisional Authority, abandons a goal put forth by Jay Garner and Zalmay Khalizad to assemble a meeting by the end of May in order to establish an interim Iraqi government. Bremer instead chooses to go with a “step-by-step” approach whereby the constitution would be drafted before elections are held. [Gordon and Trainor, 3/14/2006, pp. 479]

Entity Tags: L. Paul Bremer

Timeline Tags: Iraq under US Occupation

US administrator for Iraq Paul Bremer signs CPA Order 39 setting terms for foreign investment that are far more favorable than those that existed under the previous government. The order eliminates Iraq’s longstanding restrictions on foreigners’ rights to own property and invest in Iraqi companies. It grants foreign investors the right to fully own Iraqi enterprises and transfer 100 percent of all profits outside of Iraq. Prior Iraqi law, which allowed citizens of Arab countries to invest in Iraq, required that a certain percentage of investment profits be reinvested in Iraq. Order 39 also prohibits the government from establishing any terms for investment that would favor Iraqi investors over foreign investors. The order also states that in cases “where an international agreement to which Iraq is a party provides for more favorable terms with respect to foreign investors undertaking investment activities in Iraq, the more favorable terms under the international agreement shall apply.” [Coalition Provisional Authority, 9/19/2003 pdf file]

Entity Tags: L. Paul Bremer, Coalition Provisional Authority

Timeline Tags: Iraq under US Occupation

At the annual World Bank/IMF meeting in Dubai, Iraq’s nominal finance minister Kamel al-Gailani announces Bremer’s shock therapy program of economic reforms. The announcement comes two days after Bremer signed a number of orders opening up Iraq’s economy to foreign investment (see September 19, 2003, September 19, 2003, and September 19, 2003). Collectively, the orders allow foreign investors to acquire 100 percent ownership of Iraqi assets in any sector except oil production and refining, give foreign investors equal legal standing with local firms, and allow them to repatriate all profits made in Iraq without any requirements for local re-investment. The laws also cap income and corporate taxes at 15 percent and slash tariffs down to 5 percent, with the exception of tariffs on food, drugs, books, and other humanitarian imports, which can be imported duty-free. Al-Gailani says these “measures will be implemented in the near future and represent important steps in advancing Iraq’s reconstruction effort.” As an article in Economist magazine will note, the changes, which “bear the signature of Paul Bremer… and the imprimatur of the American consultants it has hired to frame economic policies,” represent “a radical departure for Iraq.” The article—titled “Let’s all go to the yard sale”—calls these reforms “the kind of wish-list that foreign investors and donor agencies dream of for developing markets.” The caption of an image accompanying the article reads, “If it all works out, Iraq will be a capitalist’s dream.” But the magazine also acknowledges that there will be resistance to these reforms. “Given the shock and awe expressed by many Baghdad businessmen at the scale of the changes, it is not clear that such a future regime would be able to resist pressures to reimpose protectionism.” It also predicts that the rapid overlay of this legal framework over Iraq’s existing economic system will create disparities. “The instant discarding of 40 years of national-socialist commercial culture is likely to create serious distortions,” the magazine says. [New York Times, 9/21/2003; Daily Telegraph, 9/22/2003; Economist, 9/27/2003]

Entity Tags: Kamel al-Gailani

Timeline Tags: Iraq under US Occupation

The White House announces a new plan for Iraqi governance. It is drastically different from the one unilaterally announced by Coalition Provisional Authority (CPA) administrator L. Paul Bremer two months before (see September 8, 2003). It flip-flops Bremer’s plan, putting a transfer of power to a provisional Iraqi government first, then having elections for an interim government, and finally providing for the drafting and adoption of a new constitution. [Roberts, 2008, pp. 130]

Entity Tags: L. Paul Bremer, Bush administration (43), Coalition Provisional Authority

Timeline Tags: Iraq under US Occupation

Coalition Provisional Authority administrator L. Paul Bremer (see May 1, 2003) asserts his independence from US government oversight, a stance assisted by Defense Secretary Donald Rumsfeld. Bremer is formally slated to report to Rumsfeld, but says Rumsfeld has no direct authority over him. Instead, Bremer insists, he reports directly to the White House. Rumsfeld, usually jealously protective of his bureaucratic prerogatives, tells National Security Adviser Condoleezza Rice: “He doesn’t work for me. He works for you” (see Late September, 2003). But Bremer is not willing to report to either Rice or the National Security Council (NSC) either. The White House had already announced that it had no intention of playing a large role in guiding the reconstruction of Iraq, and the NSC’s Executive Steering Group, set up in 2002 to coordinate war efforts, has been dissolved. Finally, Bremer flatly refuses to submit to Rice’s oversight. As a result, Bremer has already made fundamental policy shifts on his own authority that are at odds with what Pentagon planners had intended (see May 16, 2003 and May 23, 2003), with what many feel will be—or already have caused—disastrous consequences. [Roberts, 2008, pp. 128-129]

Entity Tags: Coalition Provisional Authority, Bush administration (43), National Security Council, L. Paul Bremer, Donald Rumsfeld, Condoleezza Rice

Timeline Tags: Iraq under US Occupation

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