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[casi-analysis] Op-ed on privatisation in Iraq

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 1. No decision has yet been made - nor can be made on privatising or even risk-sharing contracts.  
However, the Ministry of Oil is finalising tenders on 3 oil field development projects and inviting 
20 pre-qualified international companies to tender.  15 of these have ruled themselves out because 
of the security situation.2. One of the first CPA decisions was to reverse the November 2000 
Ministry of Oil directive to denominate future oil contracts in euro.Regards,Daithi--- On Wed 
12/24, ppg < > wrote:From: ppg [mailto:]To:,, Wed, 24 Dec 2003 
03:02:46 -0500Subject: Re: [casi-analysis] Op-ed on privatisation in Iraq[ This message has been 
sent to you via the CASI-analysis mailing list ]My two questions are:Has there been legislation 
directly pertaining to the oil which the peopleof Iraq jealously regard as their birthright?What is 
the present situation with regard to euro vs dollar in Iraq?Thanks. pg----- Original Message 
-----From: "k hanly" To: "Colin Rowat" ; Sent: Tuesday, December 23, 2003 2:20 PMSubject: Re: 
[casi-analysis] Op-ed on privatisation in Iraq> [ This message has been sent to you via the 
CASI-analysis mailing list ]>>> While Colin does note that according to international law 
the CPA is not> authorised to make radical economic changes this is exactly what Bremerhas> 
done. As Colin remarks this creates legal uncertainty. However Colin does> not fill out the 
details of the reforms. They are quite radical and would> have the efffect of alienating assets 
to foreign capital. Against the Iraq> constitution, foreign ownership can be up to one hundred 
per cent; also> total repatriation of profits is allowed. Bremer as well initiated a flat> 
tax regime rather than a progressive system. The US economic penetrationof> Iraq is already 
pervasive with huge contracts won uncompetitively by> Halliburton, Bechtel and Dyncorp. Bremer's 
changes are probably> irreversible.While the successor to the present Iraqi Provisional 
Govt.may> not be chosen through quite the same US dominated processes any attemptby> a new 
Iraqi government to repeal Bremers changes would be very costly in> terms of discouraging 
capital investment even further What is more likely> is that former Iraqi business elites will 
jump on the bandwagon andattempt> to obtain their share of privatised state assets. The US 
intends to keep> troops in Iraq for some years to come, a reminder perhaps that a relapse> 
into any form of socialised production might not be welcomed> Privatisation should be considered 
not in terms of efficiency but in> terms of making available new outlets for private investment 
and hence> profits for private capital. In the USSR under US tutelage former elitesand> 
others were able to appropriate state assets for their own private profit,> creating a society 
basically run as a managed democracy by an elite of> wealthy oligarchs. While to some extent the 
economy is finally turning> around the result has been a horrendous disaster with steep declines 
inlife> expectancy, and disastrous increases in prices making it almost impossible> for the 
elderly on fixed incomes to survive. Similarly in China the> transition to a market capitalist 
economy is accompanied by widespread> looting of public assets, often by those within the higher 
echelons of the> Communist Party.>> Cheers, Ken Hanly>>> ----- Original Message 
-----> The former> > Soviet bloc countries now in transition are often cited as the 
closest> > parallels to Iraq, having also experienced simultaneous political and> > 
economic change. In 2000, economists Jeffrey Sachs, Clifford Zinnes and> > Yair Eilat 
published an analysis of privatization in these countries.> > They distinguished between two 
types of privatization reforms: First,> > "change of title" (COT) reforms - the actual sale 
of SOEs; and, second,> > deeper insti
 tutional reforms to reduce incentive problems, harden budget> > constraints, increase 
competition and strengthen state regulation. COT> > reforms were vigorously conducted 
throughout the transition countries.> > Institutional reform was patchier, suggesting it is 
more difficult to> > carry out.> > The paper's main finding was that COT reforms alone 
are "not enough to> > > These general results cannot be applied automatically to Iraq. 
Unlike> > Iraq, the former Soviet bloc countries remained sovereign throughout> > their 
turbulent reforms. If sovereignty makes a difference, then even> > these countries may be 
poor guides for Iraq. Worse, the rarity of> > foreign occupations leaves Iraq with few close 
recent parallels.> > One way forward may be to regard foreign occupations as "normal"> 
> dictatorships, but with two twists. First, occupying powers have fewer> > legal rights 
than do sovereign governments. As Britain's attorney> > general advised Prime Minister Tony 
Blair, the law of belligerent> > occupation "imposes an obligation to respect the laws in 
force in the> > occupied territory 'unless absolutely prevented.' ... wide-ranging> > 
reforms of governmental or administrative structures would not be lawful> > ... the 
imposition of major structural economic reforms would not be> > authorized by international 
law."> > A June report to the US Congress also took this view, claiming that "the> > 
establishment of a legitimate government" is the "second requirement"> > for Iraqi economic 
development.> > are archived on CASI's website at>>>> 
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