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Iraq under US Occupation

Neoliberal Reforms

Project: Iraq Under US Occupation
Open-Content project managed by AJB, KJF, mtuck

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Article 43 of the 1907 Hague IV convention on “Laws and Customs of War on Land” states that “[t]he authority of the legitimate power having in fact passed into the hands of the occupant, the latter shall take all the measures in his power to restore, and ensure as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the country.” Article 55 states, “The occupying State shall be regarded only as administrator and usufructuary of public buildings, real estate, forests, and agricultural estates belonging to the hostile State, and situated in the occupied country. It must safeguard the capital of these properties, and administer them in accordance with the rules of usufruct.” Most legal experts interpret these provisions to mean that an occupying military power cannot change the laws of a country it occupies. [Hague Convention IV, 10/18/1907; Whyte, 3/2007, pp. 181]

Category Tags: Neoliberal Reforms

Jay Hallen, a 24-year old Yale graduate, is bored with his job at a real-estate firm. He is fascinated with the Middle East, and has taken some Arabic classes and read some history books about the region. He contacts Reuben Jeffrey, an adviser to CPA head L. Paul Bremer whom Hallen had met in 2002 when trying to land a job at the White House, and asks if there is a job for him in Baghdad.
'I Don't Have a Finance Background' - Three weeks later, Hallen is in Baghdad, and meets with Thomas Foley, the CPA official in charge of privatizing Iraq’s state-owned enterprises. Foley, a former classmate of President Bush and a major Republican donor, says he is putting Hallen in charge of Baghdad’s stock exchange. Hallen is shocked. “Are you sure?” Hallen asks. “I don’t have a finance background.” No problem, Foley responds. He will be the project manager; his subordinates will do the actual work. Before the invasion, Baghdad’s stock exchange was primitive by American standards; author Rajiv Chandrasekaran will describe it as loud, boisterous, and, despite all appearances, quite functional. After the invasion it was looted to the bare walls and ignored by the first wave of US economic reconstruction specialists. But Iraqi brokers and businessmen want it reopened, so the CPA acquiesces.
Revamping the Exchange - Hallen launches an ambitious, if almost entirely ignorant, plan to modernize and upgrade the stock exchange to make it the most technologically sophisticated exchange in the Arab world. He also wants to implement a new securities law that would make the exchange independent of the Finance Ministry. The Iraqi brokers and businessmen who clamored for the exchange to reopen are horrified at Hallen’s plans. “People are broke and bewildered,” broker Talib Tabatabai—a graduate of Florida State’s business department—tells Hallen. “Why do you want to create enemies? Let us open the way we were.” Tabatabai, like other brokers, believes Hallen’s plan is ludicrously grandiose. “It was something so fancy, so great, that it couldn’t be accomplished,” he will later recall. But Hallen is unmoved.
Hallen's View - “Their laws and regulations were completely out of step with the modern world,” Hallen will later say. “There was just no transparency in anything. It was more of a place for Saddam and his friends to buy up private companies that they otherwise didn’t have a stake in.” To just reopen the exchange the way it was, Hallen will insist, “would have been irresponsible and short-sighted.” Hallen recruits a team of American volunteers, most with no more experience or knowledge of finance than he has, to rewrite the securities laws, train the brokers, and purchase the necessary computers. By the spring of 2004, CPA head Bremer approves the new laws and appoints nine Iraqis hand-picked by Hallen to become the exchange’s board of governors.
No CPA Role - The new exchange board names Tabatabai as its chairman. The new laws have no place for a CPA adviser as a decision-maker; immediately a conflict between Hallen and the board arises. Hallen wants to wait several more months for the new computer system to arrive and be installed; unwilling to wait, Tabatabai and the board members buy dozens of dry-erase boards for the exchange floor, and two days after Hallen’s tour ends, the exchange is open for business. Without CPA oversight, the exchange quickly begins functioning more or less as it did before the invasion. When asked what would have happened had Hallen not been assigned to reopen the exchange, Tabatabai will answer: “We would have opened months earlier. He had grand ideas, but those ideas did not materialize.… Those CPA people reminded me of Lawrence of Arabia.” [Washington Post, 9/17/2006]

Entity Tags: Rajiv Chandrasekaran, Reuben Jeffrey, Talib Tabatabai, Thomas Foley, Iraq Finance Ministry, Coalition Provisional Authority, Jay Hallen, L. Paul Bremer

Category Tags: Economic Reconstruction, Political Administration, Neoliberal Reforms, Oversight and Transparency

James Haveman, a 60-year old social worker and the director of a faith-based international relief organization, is recommended by the former Republican governor of Michigan, John Engler, to run Iraq’s health care system. Haveman earned Engler’s approval by running a large Christian adoption agency in Michigan that pushed pregnant women not to have abortions. Engler recommends Haveman to Paul Wolfowitz, the deputy secretary of defense; Haveman is soon dispatched to Baghdad to oversee the rebuilding of Iraq’s health-care system.
Replacing the Expert with the 'Loyalist' - Wolfowitz orders the immediate firing of Dr. Frederick Burkle, who worked the issue during the invasion. Unlike Haveman, Burkle has extensive experience in such areas: he has multiple degrees in public health, taught disaster-response issues at Johns Hopkins University, and is currently a deputy assistant administrator for the US Agency for International Development (USAID), who sent him to Baghdad in the days after the invasion. Burkle has extensive experience working in postwar climates such as Kosovo, Somalia, and Iraq after the 1991 Persian Gulf War. A USAID colleague will call him the “single most talented and experienced post-conflict health specialist working for the United States government.” However, Burkle lacks the Republican political connections. A USAID official tells Burkle that the White House wants a “loyalist” in the job, and Haveman fits the bill.
Anti-Smoking Campaigns, Fee-Based Care - Haveman’s tenure is marked by voluble recitations of how well the reconstruction is going: he tells anyone who will listen about how many Iraqi hospitals have reopened and about the pay raises Iraqi doctors have received. He refuses to discuss how decrepit most Iraqi hospitals still are, or the fact that many of Iraq’s best doctors are fleeing the country. Haveman mounts an aggressive anti-smoking campaign (and appoints a closet smoker to head it), ignoring comments that Iraqis have far bigger dangers in their lives than tobacco and recommendations that CPA funds might better be spent trying to combat fatal maladies running rampant through Iraqi populations. Haveman, a conservative ideologue, is offended by the idea that health care in Iraq is free. He institutes a fee-based health care system instead. Most importantly, he allocates almost all of the Health Ministry’s share of US reconstruction funds—some $793 million—to renovating Iraqi maternity hospitals and building community medical clinics. He later explains that his goal is “to shift the mind-set of the Iraqis that you don’t get health care unless you go to a hospital.” Unfortunately, his decision means that no funds are available to reconstruct emergency rooms and operating theaters in Iraqi hospitals, which are being overrun with injuries from insurgent attacks.
Privatizing the Drug Supply Distribution Process - Haveman opposes the idea of state-based drug and medical supply distribution on ideological grounds. Instead, he decides to privatize the dysfunctional government firm that imports and distributes drugs and medical supplies to Iraqi hospitals. When he served as Michigan’s director of community health, he dramatically cut the amount of money Michigan spent on prescription drugs for poor citizens by limiting the medications doctors could prescribe to Medicaid patients. He instituted a short list of cheaper drugs that poor patients were limited to using. Haveman decides that the same approach will work in Iraq. Currently, Iraq has around 4,500 drugs on its formulary, and Haveman decides the list is much too long. Any private firm who wants to bid on the job of supplying drugs and medical supplies will not want to deal with such a long list. Haveman also wants to restrict the firm to buying American-made drugs and supplies—no more medicines from Iran, Syria, or Russia. The Pentagon sends Haveman three formulary experts to help him implement his plan, including Lieutenant Commander Theodore Briski, a Navy pharmacist. Haveman’s order, as Briski later recalls, is “Build us a formulary in two weeks and then go home.” Two days into his position, Briski decides that Haveman’s plan is untenable. The existing formulary works well enough, he believes. Haveman wants to redesign “the entire Iraqi pharmaceutical procurement and delivery system, and that was a complete change of scope—on a grand scale.” Most importantly, Briski recalls, Haveman and his advisers “really didn’t know what they were doing.” Others agree, including many on Haveman’s team. Rewriting the formulary is a major distraction, they argue, as is privatizing the pharmaceutical distribution process. Haveman ignores the immediate needs of the populace for his grandiose, ill-considered plans.
No Progress - When Haveman leaves Iraq, the hospitals are as decrepit and dysfunctional as they were when he arrived. Baghdad’s largest medical facility, Yarmouk Hospital, lacks basic equipment to monitor blood pressure and heart rate. Operating rooms lack essential surgical tools and sterilizers. Pharmacy shelves are bare. The Health Ministry estimates that of the 900 drugs it deems essential, hospitals lack 40 percent of them. Of the 32 medicines used in combating chronic diseases, 26 are unavailable. Health Minister Aladin Alwan asks the United Nations for help, asks neighboring nations for emergency donations, and throws out Haveman’s idea for a new formulary. “We didn’t need a new formulary,” he later says. “We needed drugs. But the Americans did not understand that.” [Washington Post, 9/17/2006]

Entity Tags: US Agency for International Development, Iraqi Health Ministry, Frederick Burkle, Bush administration (43), Aladin Alwan, James Haveman, John Engler, Paul Wolfowitz, Theodore Briski, United Nations, Yarmouk Hospital

Category Tags: Economic Reconstruction, Political Administration, Neoliberal Reforms, Oversight and Transparency

President Bush, in a commencement address at the University of South Carolina, says: “Soon, Iraqis from every ethnic group will choose members of an interim authority. The people of Iraq are building a free society from the ground up, and they are able to do so because the dictator and his regime are no more…. Across the globe, free markets and trade have helped defeat poverty, and taught men and women the habits of liberty. So I propose the establishment of a US-Middle East free trade area within a decade, to bring the Middle East into an expanding circle of opportunity, to provide hope for the people who live in that region. We will work with our partners to ensure that small and mid-sized businesses have access to capital, and support efforts in the region to develop central laws on property rights and good business practices. By replacing corruption and self-dealing, with free markets and fair laws, the people of the Middle East will grow in prosperity and freedom.” [US President, 5/12/2003]

Entity Tags: George W. Bush

Timeline Tags: Events Leading to Iraq Invasion

Category Tags: Economic Reconstruction, Neoliberal Reforms

Bush signs Executive Order 13303, which declares: “Unless licensed or otherwise authorized pursuant to this order, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is prohibited, and shall be deemed null and void, with respect to the following: the Development Fund for Iraq, and all Iraqi petroleum and petroleum products, and interests therein, and proceeds, obligations, or any financial instruments of any nature whatsoever arising from or related to the sale or marketing thereof, and interests therein, in which any foreign country or a national thereof has any interest, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons.” Watchdog groups interpret this as a way of granting a sweeping legal immunity from lawsuits and criminal charges to US oil firms that do business with Iraqi oil. [US President, 5/26/2003 pdf file; Los Angeles Times, 8/7/2003]

Entity Tags: George W. Bush

Category Tags: Neoliberal Reforms, Economic Reconstruction

Coalition Provisional Authority administrator Paul Bremer (see May 1, 2003) meets with Iraqi Communications Minister Haider al-Abadi and Minister of Industry Mohamad Tofiq for the first time. Al-Abadi will later recall in an interview with journalist Naomi Klein that he told Bremer he would not support a policy of privatization. “I said, ‘Look, we don’t have the mandate to sell any of this. Privatization is a big thing. We have to wait until there is an Iraqi government.’” Tofiq likewise tells Bremer, “I am not going to do something that is not legal, so that’s it.” [Harper's, 9/24/2004]

Entity Tags: Haider al-Abadi, Mohamad Tofiq, L. Paul Bremer

Category Tags: Economic Reconstruction, Neoliberal Reforms

A team of economists and officials from the World Bank, IMF, and UN meet in Iraq to consider a new economic policy for the country. Nicholas Krafft, one of the economists with the World Bank, says that Iraq’s economy would be more accurately described as a “socialist command economy” than a “post-conflict economy.” He says “a macro-economic framework for Iraq including budget, fiscal, and monetary issues” needs to be established as part of the country’s transition to a market economy. “The issues of subsidies, prices, and state enterprises will have to be dealt with,” he adds. Kraft also says “it is important to involve Iraqis in this decision and the coalition is increasingly doing that.” [Agence France-Presse, 6/10/2003]

Entity Tags: Nicholas Krafft, International Monetary Fund, World Bank, United Nations

Category Tags: Economic Reconstruction, Neoliberal Reforms

Paul Bremer, US administrator for Iraq, signs Order 12, suspending all trade restrictions such as tariffs and customs duties until December 31, 2003. [Coalition Provisional Authority, 6/7/2003 pdf file] The policy is expected to have a negative impact on Iraq’s economy. In 2002, the gross domestic product (GDP) of Iraq was $25 billion. In 2003, it is expected to be $15 billion. Iraqi manufacturers complain that after 12 years of strangulation by UN sanctions they are nowhere near ready to compete with cheap foreign imports. A month after Bremer’s order, the San Francisco Chronicle will report that textile plants and clothing factories are being devastated by clothing from China. And chicken legs dumped on the Iraqi market by the American company Tyson will force Al-Helli Chicken Co., a former major chicken butcher, to lay off all but 20 of the firm’s 140 workers. [San Francisco Chronicle, 7/10/2003] The move also reportedly leads disgruntled Iraqi businessmen and manufacturers to begin funding the insurgency. [Harper's, 9/24/2004]

Entity Tags: L. Paul Bremer, Al-Helli Chicken Co., Tyson Foods, Inc.

Category Tags: Economic Reconstruction, Neoliberal Reforms

In an op-ed piece published by the Wall Street Journal, Paul Bremer argues that if Iraqis are to enjoy higher living standards and political freedom, the country will need to adopt a market-based economic reform policy. He says that economic growth in Iraq will “require the wholesale reallocation of resources and people from state control to private enterprise, the promotion of foreign trade, and the mobilization of domestic and foreign capital.” [Wall Street Journal, 6/20/2003]

Entity Tags: L. Paul Bremer

Category Tags: Neoliberal Reforms, Economic Reconstruction

Paul Bremer travels to the shores of Jordan on the Dead Sea to attend the World Economic Forum and promote US reconstruction efforts in Iraq. Here, he states his goal of privatizing state-owned firms. He says that the US-led occupation will “set in motion policies which will have the effect of reallocating people and resources from state enterprises to the more-productive private firms.” [Agence France-Presse, 6/17/2003; State Department, 6/23/2003]

Entity Tags: L. Paul Bremer

Category Tags: Neoliberal Reforms, Economic Reconstruction

At a press briefing in Baghdad, Paul Bremer says that Iraq should consider privatizing its state-owned sectors and allowing foreign investment into its oil industry soon, even if that means doing so before Iraq has an elected government. He says that the soon-to-be-appointed Iraq Governing Council will need to reassure private investors by taking a friendly stance toward foreign capital. “Privatization is obviously something we have been giving a lot of thought to,” he says. “When we sit down with the governing council… it is going to be on the table. The governing council will be able to make statements that could be seen as more binding and the trick will be to figure out how we do this. Everybody knows we cannot wait until there is an elected government here to start economic reform.” [Reuters, 7/8/2003]

Entity Tags: L. Paul Bremer, Iraqi Governing Council

Category Tags: Economic Reconstruction, Neoliberal Reforms

A senior Coalition Provisional Authority (CPA) official announces plans to waive an existing Iraqi law requiring foreign investors in the telecommunications industry to subcontract at least 51 percent of their work to Iraqi companies. The CPA justifies the move saying that the waiver would encourage investment by reducing the risk for foreign telecom companies. The waiver will expire in two years. [Revenue Watch Institute, 2003, pp. 4 pdf file; Financial Times, 7/18/2003]

Entity Tags: Coalition Provisional Authority

Category Tags: Neoliberal Reforms, Economic Reconstruction

Iraqi Prime Minister Iyad Allawi provides the Supreme Council for Oil Policy with a set of guidelines upon which the council is to base its petroleum policy. According to the guidelines, fields currently in production should continue to be developed by the Iraq National Oil Company (INOC), but development of all other fields should be contracted to private oil firms through production sharing agreements (PSAs). Eighty oilfields are known to exist in Iraq, but only 17 of them are currently being developed. Under the policy advocated by Allawi, the remaining 63 would be operated by the oil companies. New fields, according to Allawi, should be developed exclusively by the private sector. [Deutsche Presse-Agentur (Hamburg), 9/13/2003; Agence France-Presse, 9/26/2003; Muttitt, 2005] One critic of this proposed policy will later note that since Iraq’s 17 known fields “represent only 40 billion of Iraq’s 115 billion barrels of known oil reserves, the policy to allocate undeveloped fields to foreign companies would give those companies control of 64 percent of known reserves. If a further 100 billion barrels are found, as is widely predicted, the foreign companies could control as much as 81 percent of Iraq’s oil; if 200 billion are found, as the Oil Ministry predicts, the foreign company share would be 87 percent. Given that oil accounts for over 95 percent of Iraq’s government revenues, the impact of this policy on Iraq’s economy would be enormous.” [Muttitt, 2005] Another one of Allawi’s recommendations is that the INOC should be partially privatized. Allawi also feels that Iraqis should avoid spending time negotiating with the oil companies, and instead agree to whatever terms the companies will accept, with a possibility of renegotiating the contracts at a later date. [Deutsche Presse-Agentur (Hamburg), 9/13/2003; Agence France-Presse, 9/26/2003; Muttitt, 2005]

Entity Tags: Iyad Allawi

Category Tags: Economic Reconstruction, Neoliberal Reforms, The Oil Law, Production Sharing Agreements

Paul Bremer signs Order 37, titled “Tax Strategy for 2003,” reducing the tax rate on corporations from a high of 40 percent to a flat rate of 15 percent. The income tax rate is also capped at 15 percent. “The highest individual and corporate income tax rates for 2004 and subsequent years shall not exceed 15 percent,” the order says. [Coalition Provisional Authority, 9/19/2003 pdf file] The flat tax has long been a goal of economic conservatives and was planned for Iraq in pre-war planning sessions with Iraqi exiles. According to one Middle East expert interviewed by the Washington Post, the new tax system “has almost no support from other members of the US-appointed Iraqi Governing Council.” The new tax law will take effect in January. In the meantime, reports the Post, “Bremer has abolished all taxes except for real estate, car sales, gasoline and the pleasantly named ‘excellent and first class hotel and restaurant tax.’ Even while leaving these Hussein-era levies in place, Bremer exempted his coalition authority, the armed forces, their contractors, and humanitarian organizations. Exempting occupation personnel leaves only the Iraqis to pay taxes, as well as journalists, business people, and other foreigners.” [Washington Post, 11/2/2003]

Entity Tags: L. Paul Bremer

Category Tags: Economic Reconstruction, Neoliberal Reforms

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

Category Tags: Neoliberal Reforms

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

Category Tags: Economic Reconstruction, Neoliberal Reforms

The twenty-five members of the Iraqi Governing Council and the twenty-five interim ministers unanimously decide to reject cooperation with the CPA in the privatization of state-owned companies and publicly owned infrastructure. [Harper's, 9/24/2004]

Entity Tags: Iraqi Governing Council

Category Tags: Neoliberal Reforms

Paul Bremer meets with President Bush in Washington for a private meeting. The Coalition Provision Authority’s effort to implement a number of structural changes to Iraq’s economy is failing, and Washington needs to rethink its strategy. Members of the US-backed Iraqi interim government oppose the changes, and corporate attorneys are advising their clients that Bremer’s orders opening up Iraq to foreign investment could be challenged by a future Iraqi government on the basis that the orders violated UN Resolution 1483 (see May 22, 2003). That resolution stated that the US and Britain were bound to the Hague Regulations of 1907, which bars occupying powers from changing the laws of the occupied country (see October 18, 1907). If corporations purchase Iraqi state assets, and a future elected government declares Bremer’s orders illegal, the companies could lose their investments, the lawyers warn. The risk is so great that not a single insurance company is willing to insure its corporate clients for the “political risk” of losing their investment to expropriation. Bremer returns to Iraq from Washington with a Plan B. On June 30, the Coalition Provisional Authority will be dissolved and the sovereignty of Iraq will be turned over to a US-backed transitional government. That government will be bound by an “interim constitution” (see March 8, 2004), which will contain a clause barring the transitional government from modifying any of Bremer’s laws. [Harper's, 9/24/2004]

Entity Tags: L. Paul Bremer, George W. Bush

Category Tags: Neoliberal Reforms

Coalition troops raid the Baghdad headquarters of the Iraqi Federation of Trade Unions (IFTU). They pillage its offices and arrest eight union workers, who are then released the next day. The offices will remain closed for several months. The detained workers later accuse the US of using intelligence from a former member of Saddam’s regime by the name of Abdullah Murad Ghny. Ghny owns a large private transport company and his workers have begun to organize. According to the workers, an American commander told them: “Iraq has no sovereignty and no political parties or trade unions. We do not want you to organize in either the north or south transport stations. You can organize only after June 2004; for now, you have an American governor.” [United Press International, 12/12/2003; Washington Monthly, 4/2005]

Entity Tags: Iraqi Federation of Trade Unions, Abdullah Murad Ghny

Category Tags: Economic Reconstruction, Human Rights Violations, Neoliberal Reforms

Jay Garner.Jay Garner. [Source: Representational Pictures]The US’s first administrator of post-invasion Iraq, Jay Garner, tells BBC reporter Greg Palast that he was replaced by Paul Bremer because of his insistence on early elections and resistance to the Bush administration’s plan to impose a free market system on Iraq. Garner says he felt it would have been wrong to impose a new economic system on the Iraqi people before they could elect a representative government. [Guardian, 3/18/2003]

Entity Tags: Bush administration (43), Jay Garner, Greg Palast

Category Tags: Political Administration, Neoliberal Reforms

Paul Bremer, the US administrator for Iraq, issues Order 81 rewriting Iraq’s 1970 patent law. The order extends intellectual property right protections to plants, making it illegal for Iraqi farmers to save, share, or replant seeds harvested from new varieties registered under the law. The order was written with the help of Linda Lourie, an attorney-advisor in the US Patent Office’s Office of External Affairs. She was invited to Iraq to help draft laws that would ensure Iraq’s eligibility into the World Trade Organization (WTO). Bremer’s order, however, makes Iraq’s patent law stricter even than the WTO-compliant 1991 International Convention for the Protection of New Varieties of Plants (see March 19, 1991), which allows its member-states to exempt farmers from the prohibition against seed saving. Lourie claims these changes were sanctioned by the Iraqi governing council, which she says wants Iraq to have the strongest intellectual property rules in the region in order to attract private investment. [Administrator of the Coalition Provisional Authority of Iraq, 4/4/2004 pdf file; GRAIN, 10/2004; National Public Radio, 11/24/2004]

Entity Tags: L. Paul Bremer, Linda Lourie

Timeline Tags: Seeds

Category Tags: Economic Reconstruction, Neoliberal Reforms

The United Nations Security Council unanimously passes Resolution 1546, formally transferring control of Iraq’s political and economic affairs to an interim government. While the resolution states that Iraq’s government has “full sovereignty,” the Iraqis will not have authority over the activities of the 160,000-strong US-led multinational force. Rather the resolution only states that the coalition forces have the right to “take all necessary measures to contribute to the maintenance of security and stability in Iraq,” albeit in a “security partnership” with the government. If the Iraqi government objects to a military operation in the country, its only option is to veto the participation of Iraqi personnel. This means, for example, that US and British forces retain the right to detain Iraqis, search homes, and respond to perceived threats employing whatever force they deem necessary, without approval from Iraq’s government. The French and Germans had proposed a provision that would have given the Iraqi government veto power over any military operations it objects to, but the US would not agree to it. The resolution does allow the Iraqi government to order the withdrawal of all international troops, however as observers have noted, given the current security situation, that is an unlikely scenario. [United Nations, 6/8/2004; New York Times, 6/9/2004] In spite of Kurdish demands, the resolution makes no references to Iraq’s interim constitution (see March 8, 2004), which Ayatollah Sistani has said is “counter to the will of the Iraqi people” (see June 8, 2004). The Kurds wanted the UN to affirm the validity of the interim constitution because it includes a clause that would give the Kurdish minority more leverage in crafting the country’s permanent constitution. Another provision in the constitution asserts that the interim government is bound by the laws passed under the authority of the Coalition Provisional Authority. However many Iraqis oppose the laws that were passed by the CPA because those laws made drastic changes to Iraq’s economic policy, opening it up to unrestricted foreign investment. The absence of any reference to the interim constitution in the resolution undermines the validity of the constitution and Bremer’s laws, according to some experts and officials. [New York Times, 6/9/2004] Main points of the resolution include:
bullet A national conference of political, religious, and tribal representatives shall convene in July to choose consultative counsels that will advise the interim government.
bullet Elections will be held for a transitional national assembly no later than January 31, 2005. The assembly will form a transitional government, which will draft a permanent constitution. Iraqis will then have elections for a full-term government no later than December 31, 2005.
bullet The multinational force in Iraq will help the Iraqi government recruit, train, and equip Iraqi security forces.
bullet The Iraqi government has sole authority for the disbursement of oil and gas revenues.
bullet The interim government must refrain “from taking any actions affecting Iraq’s destiny.”
bullet The UN mandate for the multinational force will expire after elections are held under a new constitution; however the council “will terminate this mandate earlier if requested by the government of Iraq.”
The resolution is the product of two weeks of negotiation, undergoing five revisions. The original draft was submitted on May 24. [Associated Press, 6/8/2003] On at least one occasion during this process, the Iraqi Governing Council had complained that its views were not being adequately represented in the Security Council. In one statement, the governing council said they wanted to discuss full Iraqi control of “the activities of the Iraqi armed forces and security forces.” The council also objected to any moves to grant foreign soldiers immunity from prosecution under Iraqi law. [Associated Press, 5/25/2003] Though the resolution’s final context contains no such provision, Paul Bremer will sign an extension (see June 27, 2004) to Order 17, which granted US personnel and contractors immunity from prosecution by the Iraq government.

Entity Tags: Germany, United Nations Security Council, Iraqi Governing Council, United States, France

Category Tags: Political Administration, Neoliberal Reforms

Norwegian petroleum firm Det Norske Oljeselskap (DNO) signs a production-sharing agreement with the Kurdistan Regional Government (KRG) before a legal framework has been drawn up in Iraq to govern such actions. [Petroleum Economist, 2/8/2006]

Entity Tags: Det Norske Oljeselskap

Category Tags: Economic Reconstruction, Neoliberal Reforms

The International Tax & Investment Centre (ITIC), a corporate lobby group that advocates for pro-business investment and tax reform, issues a major report titled Petroleum and Iraq’s Future: Fiscal Options and Challenges, expressing the view that Iraq’s relationships with oil companies should be managed through the use of production sharing agreements (PSAs). The paper calls PSAs the “simplest and most attractive regulatory… framework.” It says this view is supported by “international experience and regional preferences,” though critics of PSAs will note that PSAs are not in fact popular among the major oil producing countries of the Middle East. “It is difficult to overstate how radical a departure PSAs would be from normal practice, both in Iraq and in other comparable countries of the region,” says Greg Muttitt of PLATFORM, a British oil industry watchdog group. “Iraq’s oil industry has been in public hands since 1972; prior to that the rights to develop oil in 99.5 percent of the country had also been publicly held since 1961. In Iraq’s neighbors Kuwait, Iran, and Saudi Arabia, foreign control over oil development is ruled out by constitution or by national law. These countries together with Iraq are the world’s top four countries in terms of oil reserves, with 51 percent of the world total between them.” The ITIC report also argues that foreign investment in Iraq’s oil sector will help “kick start” Iraq’s economy and free up funds for other programs. [Muttitt, 2005]

Entity Tags: International Tax and Investment Centre

Category Tags: Economic Reconstruction, Neoliberal Reforms, Production Sharing Agreements, The Oil Law

The UN World Food Programme announces the results of a survey in Iraq that found that some 6.5 million people—25 percent of the total population—remain highly dependent on the country’s food rationing system. If that system were to be dismantled, “many lower-income households, particularly women and children, would not be able to meet their food requirements,” the report says. “Although food is generally available, the poorest households cannot afford to buy from the markets.” According to the study, 2.6 million Iraqis are so poor they resell a portion of their food rations so they can buy basic necessities like medicines and clothing. [UN World Food Programme, 9/28/2004; Environment News Service, 4/3/2006] A day after the results of this study are released, the IMF will announce that Iraq has agreed to implement a number of economic reforms. One of those reforms would be a scaling back of food subsidies (see September 29, 2004).

Entity Tags: UN World Food Programme

Category Tags: Economic Reconstruction, Neoliberal Reforms

The Iraqi government agrees to meet conditions set by the IMF for an “enhanced post-conflict facility” program. The IMF program will include $436.3 million in Emergency Post-Conflict Assistance loans to the Iraqi government. The amount will be upped if Iraq meets more demanding conditions. A press release issued by the organization states that it intends to develop “a reform program in areas in which progress must be made in 2005 to set the economy on a sustainable path, including tax reform, financial sector reform, restructuring of state-owned enterprises, and enhancing the governance and transparency of the oil sector, all of which will be key in promoting the recovery and growth of the private sector.” [International Monetary Fund, 9/29/2004; Inter Press Service, 10/1/2004] One of the reforms the new Iraqi government agrees to implement is the rolling back of Iraq’s huge subsidies system. But as Inter Press Service notes, Iraq’s food subsidies system “kept millions of Iraqis from starvation under US and UK-pressed sanctions imposed by the United Nations after the 1991 Gulf War.… It is believed that many more Iraqis would have died if not for Hussein’s strong subsidies system that gave food to Iraqi families.” [US Department of State, 12/21/2004; Inter Press Service, 12/24/2004]

Entity Tags: International Monetary Fund

Category Tags: Economic Reconstruction, Neoliberal Reforms, The Oil Law

December 18, 2005: Iraq Cuts Fuel Subsidies

The Iraqi government cuts subsidies on gasoline, diesel, kerosene, and cooking fuel in order to meet an IMF requirement that Iraq allow fuel prices to increase to levels on par with prices elsewhere in the Middle East. The Iraq government agreed to implement this reform, and a number of others, in exchange for having as much as 80 percent of its debts forgiven (see September 29, 2004 and November 22, 2004). The debts had accumulated during the rule of Saddam Hussein. Iraq’s rolling back of the fuel subsidies is followed by violent protests across the country. The price of cooking fuel immediately increases by about three-fold, while gasoline prices increase by a factor of five. Diesel fuel prices rise about nine-fold. [Associated Press, 12/19/2005; BBC, 12/30/2005; New York Times, 12/31/2005]

Entity Tags: Iraq

Category Tags: Neoliberal Reforms

The IMF’s 24-member executive board approves a standby arrangement for a new $685 million loan for Iraq. The IMF previously provided the country with a $436.3 million emergency post-conflict loan in September 2004 (see September 29, 2004). The approval means that creditor nations will forgive an additional 30 percent of Iraq’s debt, all of which was incurred under the rule of Saddam Hussein. If Iraq fulfills the requirements in the standby arrangement, another 20 percent of its debt will be forgiven (see November 22, 2004). [Associated Press, 12/23/2005; Agence France-Presse, 12/23/2005] One of the reforms required by the stand-by arrangement is that Iraq work with the IMF on the drafting of an oil law to be implemented by the end of 2006. [Bretton Woods Project, 1/23/2006] The agreement states that Iraq needs to “draft a new petroleum law in line with the new constitution and international best practices, thereby defining the fiscal regime for oil and establishing the contractual framework for private investment in the sector.” It adds that IMF staff have underscored “the need to press ahead with structural fiscal reforms,” which include “the move forward toward the commercialization of oil-related state enterprises, and the drafting of a new petroleum law.” [International Monetary Fund, 12/7/2005, pp. 18 pdf file]

Entity Tags: Iraq, International Monetary Fund

Category Tags: Economic Reconstruction, Neoliberal Reforms, The Oil Law

Former Iraqi Prime Minister Iyad Allawi says that the violence in Iraq has reached the point of civil war and that his country is nearing a “point of no return.” Allawi, who leads a 25-member coalition of representatives in the Iraqi National Assembly, says: “It is unfortunate that we are in civil war. We are losing each day, as an average, 50 to 60 people through the country, if not more.” Answering claims that Iraq is not locked in such a conflict, Allawi says, “If this is not civil war, then God knows what civil war is.” General George Casey, commander of US forces in Iraq, contradicts Allawi, claiming, “We’re a long way from civil war.” Vice President Dick Cheney, part of an administration that is marking the three-year anniversary of the invasion of Iraq by US and coalition forces (see March 19, 2003) by presenting a unified front, echoes Casey’s remarks, and adds that the war must be viewed in a broader context. “It’s not just about Iraq, it’s not about just today’s situation in Iraq,” he says. “It’s about where we’re going to be 10 years from now in the Middle East and whether or not there’s going to be hope and the development of the governments that are responsive to the will of the people, that are not a threat to anyone, that are not safe havens for terror or manufacturers of weapons of mass destruction.” Cheney blames the news media for the perception that the war is going badly: “I think it has less to do with the statements we’ve made, which I think were basically accurate and reflect reality, than it does with the fact that there’s a constant sort of perception, if you will, that’s created because what’s newsworthy is the car bomb in Baghdad,” he says. Defense Secretary Donald Rumsfeld compares the Iraq war to the two great conflicts of his generation, World War II and the Cold War. “Turning our backs on postwar Iraq today would be the modern equivalent of handing postwar Germany back to the Nazis,” he writes in an op-ed published by the Washington Post. “It would be as great a disgrace as if we had asked the liberated nations of Eastern Europe to return to Soviet domination.” [New York Times, 3/19/2006]

Entity Tags: George Casey, Donald Rumsfeld, Richard (“Dick”) Cheney, Iraqi National Assembly, Iyad Allawi

Category Tags: Economic Reconstruction, Military Operations, Public Opinion, Neoliberal Reforms

US Energy Secretary Samuel Bodman, on a visit to Baghdad, refers to the drafting of a new oil that is underway and says it is important that the Iraqi Parliament—which apparently is not involved in the drafting process—pass it soon. [Time, 2/28/2007] Iraq needs to “pass a new law, a new hydrocarbon law under which international companies will be able to make investments in Iraq,” he says. Opening up Iraq’s oil industry will help Iraq realize “its very considerable potential with the benefit of investments from the international community.” He adds that Prime Minister Nuri al-Maliki, along with the oil and electricity ministers, are “optimistic of passing that law by the parliament and they hope to pass such a law by end of this calendar year.” He says that US oil companies won’t consider investing in Iraq’s oil sector until “first there is security and second there is a hydrocarbon law that will delineate the rules of the road.” [Agence France-Presse, 7/18/2006]

Entity Tags: Nouri al-Maliki, Samuel W. Bodman

Category Tags: Economic Reconstruction, Neoliberal Reforms, The Oil Law

A Congressional Budget Office (CBO) estimate based on a Congressional Research Service Report states that total funding for Iraq and the Global War on Terror could reach $808 billion by 2016. The report also states problems with oversight in that the Department of Defense has not provided Congress with the individual costs of each operation. The report begins by stating the administration has not answered frequently asked questions such as:
bullet How much has Congress appropriated for each of the three missions since the 9/11 attacks—Operation Iraqi Freedom (OIF), Operation Enduring Freedom (OEF, Afghanistan and other “Global War on Terror” operations), and Operation Noble Eagle (enhanced security for defense bases) for defense, foreign operations, and related VA medical care?
bullet How much has the Pentagon obligated on average per month for each of the three missions each year?
bullet What do trends in costs tell us about likely spending levels in the future?
It continues by outlining major unknowns which Congress may wish to pursue for accountability in government:
bullet What is the estimated cost to reset—repair and replace war-worn equipment—and how might that funding affect the Pentagon’s regular or baseline budget?
bullet How are some types of war costs affected by policy and contracting decisions as well as operational needs and troop levels?
bullet How have deployed troop levels changed since the 9/11 attacks and how could Congress get accurate information on past and future troop levels?
bullet What is the average cost per deployed troop for OIF and OEF, and how might that cost affect future war costs?
bullet What are the estimates of future war costs? [Congressional Budget Office, 9/22/2006, pp. 1-3 pdf file]

Entity Tags: Congressional Research Service, US Department of Defense

Category Tags: Economic Reconstruction, Political Administration, Neoliberal Reforms

Hasan Jum`ah `Awwad al-Asadi, head of the Federation of Oil Unions in Basra, condemns the draft oil law (see January 16, 2007) and argues that Iraqis are fully capable of managing their own industry. “They have the experience in the field and the technical training, have overcome hardships and proven to the world that they can provide the best service to Iraqis in the oil industry,” he says. “The best proof of that is how after the entry of the occupying forces and the destruction of the infrastructure of the oil sector the engineers, technical staff and workers were able to raise production from zero to 2,100,000 barrels per day without any foreign expertise or foreign capital. Iraqis are capable of further increasing production with their present skills. The Iraqi state needs to consult with those who have overcome the difficulties and to ask their opinion before sinking Iraq into an ocean of dark injustice. Those who spread the word that the oil sector will not improve except with foreign capital and production-sharing are dreaming. They must think again since we know for certain that these plans do not serve the sons and daughters of Iraq.” [General Union of Oil Employees in Basra, 2/6/2007]

Entity Tags: Hasan Jum`ah `Awwad al-Asadi

Category Tags: Neoliberal Reforms, The Oil Law, Production Sharing Agreements

Changes are again made to the draft of the proposed Iraqi oil law. [Asia Times, 2/28/2007] According to this draft:
bullet Foreign corporations would have access to nearly every sector of Iraq’s oil and natural gas industry, including service contracts on existing fields that are already being managed and operated by the Iraqi National Oil Company (INOC). For fields that have been discovered, but which are not currently being developed, the law would require INOC to be a partner in developing these fields. But the new oil law does not require participation of the INOC or any private Iraqi companies in contracts for fields that have not yet been discovered. In such cases, the new law would permit foreign companies to have full access. [Iraqi Council of Ministers, 2/2007; Inter Press Service, 2/28/2007; Asia Times, 2/28/2007]
bullet Companies contracted to develop oil fields would be given exclusive control of fields for up to 35 years, and would be guaranteed profits for 25 years. Foreign companies would not be required to partner with an Iraqi company or reinvest any of its profits in the Iraqi economy. Nor would they have to employ or train Iraqi workers, or engage in any other effort to transfer technology and skills to the Iraqis. [Iraqi Council of Ministers, 2/2007; Asia Times, 2/28/2007]
bullet An Iraqi Federal Oil and Gas Council would be established and given the ultimate decision-making authority in determining what kinds of contracts could be used to develop Iraq’s oil and what would be done with the existing exploration and production contracts already signed with French, Chinese, Russian, and other foreign companies. The law states that council members would include, among others, “executive managers from important related petroleum companies.” As an article in the Asian Times notes, “[I]t is possible that foreign oil-company executives could sit on the council. It would be unprecedented for a sovereign country to have, for instance, an executive of ExxonMobil on the board of its key oil-and-gas decision-making body.” There is no language in the law that would prevent foreign corporate executives sitting on the council from making decisions about their own contracts. And there is no requirement that a quorum be present when making decisions. The Asian Times article notes, “Thus, if only five members of the Federal Oil and Gas Council met—one from ExxonMobil, Shell, ChevronTexaco and two Iraqis—the foreign company representatives would apparently be permitted to approve contacts for themselves.” The new law does not specify what kind of oil agreements could be signed between Iraq and private firms to develop Iraq’s oil. Rather it leaves this question to the council, which would be permitted to approve and rewrite contracts using whatever type is agreed upon by a “two-thirds majority of the members in attendance.” Previous drafts of the law had specifically mentioned production sharing agreements (PSAs), a controversial type of contract that is favored by the oil companies. [Asia Times, 2/28/2007] That model, favored by the US and by oil companies, was opposed by many Iraqis, including Iraqi oil professionals, engineers, and technicians in the unions. The Iraqis prefer technical service contracts, like the ones used in Kuwait, Saudi Arabia, and Iran. Under such contracts foreign companies would be allowed to participate in the development of oil fields, but only for a limited time. [Democracy Now!, 2/20/2007] The companies would be paid to build a refinery, lay a pipeline, or offer consultancy services, but then would leave afterwards. This type of arrangement would help transfer technical expertise and skills to Iraqis. “It is a much more equitable relationship because the control of production, development of oil will stay with the Iraqi state,” notes Ewa Jasiewicz, a researcher at PLATFORM, a British human rights and environmental group that monitors the oil industry. She notes that no other country in the Middle East that is a large oil producer would ever sign a PSA because it’s “a form of privatization and… it’s not in their interests.” Critics also note that the signing of PSA agreements with US oil companies would add fuel to the unrest in Iraq and that the US would attempt to legitimize its continuing presence in Iraq with assertions about the need to safeguard US business interests. [Inter Press Service, 2/28/2007]
bullet Iraq’s national government would not have control over production levels. Rather, the contractee developing a field—e.g., the INOC, or a foreign or domestic company—would be able to decide how much oil to produce. However, the document does say: “In the event that, for national policy considerations, there is a need to introduce limitations on the national level of petroleum production, such limitations shall be applied in a fair and equitable manner and on a pro rata basis for each contract area on the basis of approved field-development plans.” But it does not specify who has the authority to introduce such nation-wide limitations or how production levels might be lowered in a “fair and equitable manner.” The language appears to signify that Iraq would no longer work with OPEC or other similar organizations. [Iraqi Council of Ministers, 2/2007; Asia Times, 2/28/2007]
bullet Oil revenues would be distributed to all of Iraq’s 18 provinces according to their population sizes. Regional administrations, not Iraq’s central government, would have the authority to negotiate contracts with foreign oil companies, monitor contracts, and deal with small disputes. But the ultimate authority would lie with the Federal Oil and Gas Council which would be able to veto decisions made by regional authorities. Critics say this arrangement almost encourages the split of Iraq into three different regions or even three different states. According to Raed Jarrar, Iraq Project Director for Global Exchange, a situation like this would mean that “Iraqis in different provinces will start signing contracts directly with foreign companies and competing between themselves, among themselves, among different Iraqi provinces, to get the oil companies to go… there without any centralized way in controlling this and thinking of the Iraqi interest and protecting Iraq as a country.” [Iraqi Council of Ministers, 2/2007; Inter Press Service, 2/28/2007]

Entity Tags: United States, Ewa Jasiewicz, Iraq, Raed Jarrar

Category Tags: Economic Reconstruction, Neoliberal Reforms, The Oil Law, Production Sharing Agreements

Nofa Khadduri, an Iraqi peace activist now studying at the University of Toronto, writes an op-ed for the Arabic news network al-Jazeera that terms the Iraq war, and the subsequent occupation, “corporate genocide.” Khadduri writes: “I cannot say this is a war like any other, or even that it is a just war. This war has been too long, too painful, too costly, too evil, too inhumane, and too unjust to simply be deemed an invasion, or even worse, a liberation.… I want this war to be recognized for what it truly is—a genocide against the Iraqi people. It is a corporate hate crime. It is not a ‘just’ war. It does not have a ‘just’ cause. It lacks legitimate authority, it was executed with all the wrong intentions, it was certainly not a last resort, the probability of success was slim.… If the international community recognizes the conflicts in Bosnia, Armenia, and Rwanda as genocides where human rights are replaced with the extermination of ethnic groups, then Iraq deserves the same recognition—and more.”
'Corporate Genocide' in Iraq - Khadduri explains the term “corporate genocide” as something new and horrifyingly different. “Corporate genocide is the mass cooperation of a business-led military invasion, where a population is sacrificed for the economic profit of the invader. A corporate genocide goes beyond blind hate and killing innocent civilians to gain power and territory. In pursuing its economic strategies, the US has caused the death and injury, deliberate or not, of millions of Iraqis.… Foreign businesses that profit and thrive on war have gained new power in Iraq, but lack accountability. Private security firms have little motivation to promote peace—though it is their job—and to end this genocide. Terrorizing my people puts bread in their mouths and takes it away from the mouths of starving Iraqi children. Our war is their income. To keep the money flowing, private security firms dehumanize Iraqi resistance and rebel groups by labeling them as terrorists. The international propagation of this portrayal is one element in the structuring of a corporate genocide. Another is the inability of neither international law nor the international community to hold these firms accountable for their actions, including their killings of innocent people. Individuals perceived to be a threat to the firm are treated as such and can be disposed of under the false guise of an attack, leaving the firms unaccountable. And because these firms have power, they can easily deny misusing it and be believed, if they admit to using it at all.”
Pretense of Democracy, Humanitarian Aid - Khadduri writes that the US has achieved little towards implementing democracy in Iraq. It has assuaged little of the suffering caused by the invasion and occupation, and the subsequent civil war raging in parts of the country. This, he writes, is not a failure of US policy, but an effect of the policy. “Iraqi natural resources are being distributed and scattered among the most powerful corporations, with very little profit earmarked towards the rebuilding of Iraq,” he writes. “This is what the corporate genocide is about. There is much debate about whether Iraq can stand on its own after the departure of the US Army. But it is crucial to keep in mind that the US never held Iraq up as a country and it never helped Iraqis come together as a nation.”
Leaving Iraq to Shape Its Own Future - The US will never impose its own form of government on Iraq, Khadduri asserts, stating: “I said it five years ago and repeat it now: a Western-style democracy cannot be forced on a nation that does not welcome it. To not believe that we, the Iraqi people, will establish a form of government that we see fit for our needs, by ourselves, is an insult to the Iraqi solidarity and historical heritage that has always, continues to, and will never cease to exist.” [Al-Jazeera, 3/18/2008]

Entity Tags: Nofa Khadduri

Category Tags: Economic Reconstruction, Neoliberal Reforms, Oversight and Transparency

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