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[casi-analysis] casi-news digest, Vol 1 #119 - 3 msgs

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Today's Topics:

   1. Iraqi resistance (Muhamed Ali)
   2. [Peace&Justice] Mounting Costs of the Iraq War (IRC Communications)
   3. The Economic Colonization of Iraq: Illegal and Immoral (Mark Parkinson)


Message: 1
Subject: Iraqi resistance
Date: Fri, 25 Jun 2004 14:31:31 +0100
From: "Muhamed Ali" <>
To: <>

[ Presenting plain-text part of multi-format email ]

Dear colleagues,

'This is the only fun the kids get - shooting at the US sitting ducks'

Who exactly are the Iraqi resistance? In a remarkable essay, Ghaith
Abdul-Ahad joins the front-line anti-American fighters in Kerbala,
Falluja and Sadr City, and discovers that they are not always the
well-trained, highly motivated fanatics we imagine

Ghaith Abdul-Ahad
Friday June 25, 2004

The Guardian,3858,4955981-103550,00.html



London Borough of Hackney may exercise its right to intercept any communication on its networks - 
for more information see


Message: 2
Date: Fri, 25 Jun 2004 13:45:38 -0600
From: IRC Communications <>
Subject: [Peace&Justice] Mounting Costs of the Iraq War

[ Presenting plain-text part of multi-format email ]

Peace and Justice News from FPIF

June 25, 2004

Introducing a new Special Report from Foreign Policy In Focus

Paying the Price: The Mounting Costs of the Iraq War

The Institute for Policy Studies and Foreign Policy In Focus are proud to
announce the release of, =93Paying the Price: The Mounting Costs of the Ira=
War.=94 Authored chiefly by IPS=92 Iraq and UN expert Phyllis Bennis, this
study is the first comprehensive account of the costs of the Iraq war and
the ensuing occupation to the U.S., Iraq, and the world.

This report demonstrates that we have paid a very high price for the war
and have become less secure at home and in the world.

Most Americans are somewhat aware of the body count for the United States
and its allies, now amounting to 952 dead and 5,134 wounded. Yet, most are
not aware that the number of Iraqis killed is more than 10 times the number
of Americans who have lost their lives. Most don=92t know or haven=92t thou=
about how many children could have obtained health insurance or how many
elementary school teachers could have been hired with the $151 billion
spent on the war so far. Most don=92t know the enormous financial burden
shouldered by the majority of U.S. military families. Most are barely aware
of the legion of other costs =AD- economic, human, environmental and more -=
born by millions of people in Iraq and around the world.=94

We hope that you find this report useful in your work to stimulate broad
debate about the costs and legitimacy of the war and occupation in Iraq.

See new FPIF Special Report online at:


With printer friendly PDF version at:

For more information or to order print copies of the report contact:

Institute for Policy Studies


Distributed by FPIF:=93A Think Tank Without Walls,=94 a joint program of
Interhemispheric Resource Center (IRC) and Institute for Policy Studies (IP=

For more information, visit If you would like to add a name
to the =93What=92s New At FPIF=94 specific region or topic list, please ema=
il:, with =93subscribe=94 and giving your area of

To add your name to this list, send a blank email, send a blank email to: unsubscribe, send a blank
email to:


Interhemispheric Resource Center (IRC)
Siri D. Khalsa
Communications Coordinator


Message: 3
From: "Mark Parkinson" <>
Date: Sat, 26 Jun 2004 09:35:59 +0100
Subject: The Economic Colonization of Iraq: Illegal and Immoral

by Antonia Juhasz

International Forum on Globalization

Testimony to the World Tribunal on Iraq New York, NY May 8, 2004

The Bush Administration is using the military invasion and occupation
of Iraq to advance a corporate globalization agenda that is illegal
under international law, has not been chosen by the Iraqi people and
may ultimately prove to be even more devastating than twelve years of
economic sanctions, two U.S.-led wars and one occupation. The
Administration's ultimate goal is to take the agenda to the entire

In direct conflict with its obligations under international law, the
Bush Administration is fundamentally altering Iraq's economic laws to
U.S. corporate advantage and is not adequately restoring and
providing Iraqis with fundamental necessities such as water and
electricity. Fortunately, clear alternatives exist to ensure that the
U.S. adheres to its obligations and that Iraq's reconstruction is
achieved. These policies are provided at the end of this testimony.

The goal of the Bush Administration, as stated in the economic orders
already enacted in Iraq is to, "transition Iraq from a ... centrally
planned economy to a market economy."

This goal is explained even more clearly by BearingPoint, Inc. =82 the
Virginia based corporation that has received the $250 million
contract to facilitate this transition. The contract states:

"It should be clearly understood that the efforts undertaken will be
designed to establish the basic legal framework for a functioning
market economy; taking appropriate advantage of the unique
opportunity for rapid progress in this area presented by the current
configuration of political circumstances... Reforms are envisioned in
the areas of fiscal reform, financial sector reform, trade, legal and
regulatory, and privatization."

Transformation of an occupied country's fundamental laws is illegal
under international law. It directly violates the international
convention governing the behavior of occupying forces, the Hague
regulations of 1907 (the companion to the 1949 Geneva conventions,
both ratified by the United States), as well as the U.S. Army's own
code of war =82 as stated in the Army field manual "The Law of Land
Warfare." Article 43 of the Hague Regulations requires that an
occupying power "re-establish and insure, as far as possible, public
order and safety, while respecting, unless absolutely prevented, the
laws in force in the country." Resolution 1483 of the UN Security
Council issued in May 2003, specifically instructs the occupying
powers to follow the Hague Regulations and the Geneva Convention in
Iraq. Indeed, in a leaked memo written on March 26, 2003, the British
attorney general, Lord Goldsmith, warned Tony Blair that "the
imposition of major structural economic reforms would not be
authorized by international law."

In other words, the occupying power is like a temporary guardian. It
is supposed to restore order and protect the population but still
apply the laws in place when it arrived. As Naomi Klein has written,
"bombing something does not give you the right to sell it," yet this
is precisely what the Bush Administration is doing.

Changing Iraq's Laws

In direct conflict with U.S. government obligations under
international law, the Bush Administration has begun fundamentally
altering the economic laws of Iraq. For example, the provision in
Iraq's Constitution outlawing privatization of key state assets has
been over-ridden, as has the law barring foreigners =82 other than
citizens of Arab countries =82 from owning property or investing in
Iraqi businesses. Both the tax code and the banking laws have been

Other changes outlined in the BearingPoint contract include the near
elimination of the guaranteed food program and "reestablishing"
property rights to agricultural land and housing. Iraqi law provides
for subsidized housing, cheap energy and free food. The food program
uses 300 government warehouses and more than 60,000 workers to
deliver a billion pounds of groceries every month =82 a basket of
rations guaranteed to every citizen, rich or poor. BearingPoint plans
to phase out this program to all but the neediest Iraqis, while
transitioning the agricultural sector to a market-based industrial
model with an emphasis on export trade and luxury crops. BearingPoint
explains that "now may be the time to look beyond traditional
patterns and explore new market potential with new products such as
high valued fruits and vegetables, flowers, seed export and other

The exhaustively well-documented devastating impacts of export-led
industrial agriculture =82 particularly based on luxury crops =82 on
countries around the world as implemented by the International
Monetary Fund (IMF), World Bank, World Trade Organization (WTO),
North American Free Trade Agreement (NAFTA) and other institutions
and agreements, demonstrates the danger that these proposed changes
pose to Iraq. Those who have been made landless, jobless and
impoverished by them are increasingly raising their voices in
opposition. One of the most dramatic demonstrations of which occurred
at the most recent WTO ministerial meeting in Cancun, Mexico with the
protest-suicide of South Korean farmer Lee Kyung Hae. Thus, it should
not come as a surprise that conflicts over these same policies have
led to the collapse of talks at both the WTO and the Free Trade Area
of Americas in the last year alone. Clearly, there is no
international consensus that such policies will aid Iraq's

The Bush Administration's proposed changes for Iraqi law go even
further, with a special focus on Iraq's oil. BearingPoint describes
how current Iraqi commercial law is "woefully deficient in terms of
establishing a market-friendly legal and regulatory environment for
business formation and operation." Changes to those laws will
therefore be necessary "to assure an appropriate legal and regulatory
framework for major utilities such as gas, oil, water, and power."
The contract includes every sector of the Iraqi economy, from public
services, media, banking, investment, taxes, agriculture and the oil
sector =82 implementing "private-sector involvement in strategic
sectors, including privatization, asset sales, concessions, leases
and management contracts, especially those in the oil and supporting

The Bremer Orders

Iraq's laws are being replaced and the BearingPoint contract
implemented by L. Paul Bremer, Administrator of the Coalition
Provisional Authority (CPA) in Iraq. The Bremer Orders most relevant
to this discussion are detailed below.

Bremer Order #39: Foreign Investment

Bremer Order #39, enacted on September 19, 2003, has five key
elements: (1) Privatization of state-owned enterprises; (2) 100%
foreign ownership of businesses in all sectors except oil and mineral
extraction, banks and insurance companies (the latter two are
addressed in a separate order); (3) "national treatment" of foreign
firms; (4) unrestricted, tax-free remittance of all funds associated
with the investment, including, but not limited to, profits; and (5)
40 year ownership licenses which have the option of being renewed.


The Order allows for privatization of all state-owned entities. It is
difficult to overstate how fundamental a change this is to the Iraqi
economy. As the preamble to the Order explains, it will move Iraq
from a "centrally planned economy to a market economy" in one fell
swoop by U.S. fiat. This will involve some 200 state-owned
enterprises. Thus, everything from water services, electric
utilities, schools, hospitals, television and newspapers, to prisons
could be privatized under the Order.

The water sector is already being "reconstructed" by the Bechtel
Corporation of San Francisco =82 one of the top ten water privatization
companies in the world. Bechtel is the second largest recipient of
reconstruction dollars in Iraq after Halliburton =82 totaling nearly $3
billion. Bechtel's contract includes the repair of Iraq's water,
sewage and electricity systems, as well as many of its hospitals and

Cliff Mumm, head of Bechtel's Iraq operation, told the San Francisco
Chronicle that Iraq "has two rivers, it's fertile, it's sitting on an
ocean of oil. Iraq ought to be a major player in the world. And we
want to be working for them long term."

Bechtel's track record does not bode well for the Iraqi people-in
fact, the citizens of Bolivia have written a letter to the people of
Iraq warning them of what to expect from Bechtel. A subsidiary of
Bechtel privatized the water systems of Cochabamba, Bolivia and
immediately sent prices sky-rocketing. Families earning a minimum
wage of $60 per month faced water bills of $20 per month. The
citizens rose in protest and at least one seventeen year-old boy lost
his life to Bolivian troops sent into the streets to defend Bechtel's
right to privatize with deadly force. Ultimately, the government
relented and cancelled the contract. Bechtel has responded with a $25
million lawsuit against Bolivia for lost profits.

Not surprisingly, when Thomas Foley, former director of Private
Sector Development for the CPA, announced a list of the first state
enterprises to be sold off last fall which included cement and
fertilizer plants, phosphate and sulfur mines, pharmaceutical
factories, and the country's airline, there was immediate unrest.
With anywhere from 50% - 70% of the Iraqi workforce already
unemployed, additional layoffs =82 which always follow on the heels of
privatization =82 were unacceptable. Furthermore, those remaining
workers who still have jobs only receive "emergency pay" mandated by
the CPA =82 about half of what they made before the war, while prices
have skyrocketed and the social safety net has been virtually
eliminated. The CPA promised that the U.S. corporations doing the
reconstruction would solve the unemployment problem, promising
300,000 jobs in an August 13, 2003 letter. Only a handful of these
jobs have materialized. One reason is that many firms are bringing in
non-Iraqis to do the bulk of the work.

Thus, privatization was met with stiff organized resistance. In
response, Bremer was forced to put the immediate privatization plans
on hold for the short-term. However, the long-term plans are clear.
BearingPoint, the U.S. Agency for International Development (USAID)
and others both in or contracted by the U.S. government will
implement the majority of the economic policies with the new Iraqi
government. Therefore, implementation can wait until the friction
over how that government is created is resolved. Furthermore, the
process of preparing for privatization has not slowed, while the
emphasis on privatization is already rearing its head in Iraq. For

On April 25, 2004, Iraq's minister of public works told The
Independent that Iraq was considering privatizing its water industry
to "fund essential works." While the U.S. government is obligated to
ensure that water is provided to the people of Iraq, it is telling
that the Minister did not discuss going to the CPA to demand
restoration of water services nor to Bechtel to demand that it
fulfill the requirements of its contract. Rather, she speaks
immediately of privatization.

Meetings among global corporations to discuss privatization and
investment in Iraq have been taking place unabated at least since the
invasion. For example, in February, the U.S. Commerce Department held
a "Doing Business in Iraq" conference attended by some five hundred
U.S. companies including Boeing, Caterpillar, DaimlerChrysler,
Microsoft, IBM, Motorala, Bechtel and Flour. This conference took
place immediately following vocal criticism by the Iraqi Governing
Council's top representative in Washington that the U.S. was passing
over Iraqi firms in awarding reconstruction contracts. The latest of
these meetings took place just over a week ago in London. Called
"Iraq Procurement 2004 =82 Meet the Buyer" =82 it was sponsored by
ExxonMobil, Oxy, Volvo, Shell, Raytheon and ChevronTexaco =82 among
others. You can visit web sites like or to learn more and similar meetings taking
place monthly around the world.

The CPA's continued interest in luring the private sector to Iraq is
evidenced by the fact that it recently named a new director of
Private Sector Development. He is Ari Fleischer's brother, Michael.

Most importantly, it is abundantly clear from BearingPoint's contract
that full implementation is intended to take place after the new
Iraqi government is in place =82 not in the few months remaining before
the "hand-over." The contract is for three years with the option of
renewal. They are not going anywhere. Of course, the contract
specifically states that while there is a commitment to place "Iraq's
leaders and stakeholders in the driver's seat" their input on
policies will only be used "as long as these are consistent with the
overall objectives of the project and with USAID policies,
regulations and guidelines."

In regard to whether the Iraqis intend to change these U.S. imposed
laws, Sinan Shabibi =82 the governor of Iraq's central bank, told an
investors services roundtable in Washington recently that the
international financial community need not fear Bremer's banking laws
will be abolished after the hand-over of sovereignty on June 30
because, "It is unreasonable to enact an economic strategy and then
abolish it within two month." Thus, U.S. pressure is already clearly
being felt in Iraq and on its leaders.

100% foreign ownership

All of Iraq's businesses can be completely owned, run and employed by
non-Iraqis. Iraq, like many countries =82 particularly developing
countries =82 had a ban on foreign ownership (many require partnerships
with local companies as well) in order to ensure local retention of
revenue, employment and other financial gains. Order #39 states that
Iraq cannot restrict access to foreign owners to any sector of the
economy except resource extraction.

Thus, even Iraq's media could be completely owned by U.S. companies.
The first step towards U.S. ownership may have come with the awarding
of a $90 million contract to Science Applications International
Corporation (SAIC) of San Diego, CA, to "restore broadcast media to
uncensored operation." According to the Center for Public Integrity
(CPI), SAIC will be rebuilding Iraq's mass media, including
television stations, radio stations and newspapers, in a program
called the Iraqi Media Network. However, not much more is known
because the Pentagon has steadfastly refused to release any specific
information about the contract. What little information that has
leaked out has come mainly from disgruntled employees and press
freedom advocates, who have alleged military censorship, cronyism and
significant mishandling of the work. In just one example, SAIC used
the U.S. government-run Voice of America to patch together nightly
news shows made up entirely of dubbed stories from U.S. television
network news shows.

Concerns over foreign ownership go farther. Iraq is home to the most
extensive river system in the Middle East, including the Tigris and
Euphrates rivers and the Greater and Lesser Zab rivers. As Stephen C.
Pelletiere, a former CIA senior political analyst on Iraq, wrote in
the New York Times, "America could alter the destiny of the Middle
East in a way that probably could not be challenged for decades =82 not
solely by controlling Iraq's oil, but buy controlling its water. Even
if America didn't occupy the country, once Mr. Hussein's Baath Party
is driven from power, many lucrative opportunities would open up for
American companies." The military invasion of Iraq has put Bechtel in
the position to become one of these companies.

National Treatment

Order #39 states that "A foreign investor shall be entitled to make
foreign investments in Iraq on terms no less favorable than those
applicable to an Iraqi investor." National treatment makes it
impossible to require that Iraqis be given preferential treatment
(over foreigners) as investors, owners, contractors or employees.
Thus, foreign companies can do all of the reconstruction, own every
business, do all of the work and not a single Iraqi need to employed
or involved in the process whatsoever.

This is a particularly troublesome provision given reports of bloated
U.S. corporate budgets. For example, Time magazine recently reported
that an American firm was awarded a $15 million contract to build a
cement factory in Iraq (using U.S. taxpayer dollars). When the firm
was prevented from doing the work, an Iraqi businessman (using
Saddam's confiscated funds) spent just $80,000 to build the same

National treatment is also a powerful tool used by companies to
circumvent domestic regulations on the environment, public health and
worker and consumer safety. Virtually every challenge brought to such
laws under the investment chapter of the NAFTA include claims that
the government violated national treatment. For example, national
treatment was one of the tools used successfully by the Virginia-
based Ethyl Corporation to force the government of Canada to reverse
its ban on the gasoline additive MMT, a ground water pollutant also
believed to be a human carcinogen. Ethyl sued and Canada settled:
reversing its ban, paying Ethyl $13 million in compensation for its
"trouble," and writing a letter of apology.

Given corporate success in challenging such laws in Canada, the
United States, and Mexico, it is likely that Iraq's environmental,
health, and public interest laws=82or those that any new government may
wish to enact=82will be severely at risk.

The impact of this one provision alone is devastating and has
facilitated the Bush Administration's failure to meet its obligations
under international law to provide for the basic necessities of Iraq.

Failure to Meet International Obligations to Provide for Iraqi Basic


The Washington Post tells the story of Al-Ani, a PhD civil engineer
with 40 years experience who is one the top experts in water
treatment in Iraq. He is an employee of the General Co. for Water
Projects, one of the 200-odd ventures in Iraq that are owned wholly
or in part by the state and have been told they are ineligible for
contracts being issued by the occupation. The company's 187 workers
still collect their government salaries but they now spend their days
playing video games, reading books and chitchatting to pass the time.
This story is repeated over and over again across Iraq. Qualified,
experienced and interested Iraqi engineers and workers sitting idle
while U.S. corporations blunder about Iraq at the expense of Iraqi
health and U.S. tax-payer money.

Bechtel has the contract that could have gone to General Co. Rather
than hire or talk to Al-Ani or his numerous colleagues, Bechtel
employees spent their first months in Iraq touring the country doing
an assessment of the water and electrical systems only to discover
that the systems were in much worse condition and more complicated
than they had originally assumed. This explains why Bechtel is not
living up to the conditions of their contract for water and
electricity provision and why the U.S. government doesn't care.
According to the San Francisco Chronicle, USAID, which oversees
Bechtel's contract, has "reduced expectations of what could be fixed,
how long repairs would take and how much money would be required."
Good for Bechtel, but too bad for the people of Iraq who are
virtually without electricity or water and are living in sewage-
filled streets.

According to USAID's own reports, one year after the invasion
"Baghdad's three sewage treatment plants, which together comprise
three-quarters of the nation's sewage treatment capacity, are
inoperable, allowing the waste from 3.8 million people to flow
untreated directly into the Tigris River. In the rest of the country,
most sewage treatment plants were only partially operational prior to
the conflict, and shortage of electricity, parts and chemicals have
exacerbated the situation. Water that is pumped through the system is
largely untreated, especially in South."

The most extensive on-the-ground assessment of Iraq's water systems
by Dahr Jamail for the consumer watchdog group Public Citizen reached
the same conclusion. Drinking water throughout the country is in a
crisis state, with some villages having no access to water while
larger cities receive water approximately 50% of the time. This has
led to vast outbreaks of cholera, diarrhea, nausea and kidney stones,
among other diseases.


The same condition exists for Iraq's electricity =82 reconstruction of
which is also Bechtel's responsibility. According to a memo by an
anonymous U.S. government official written to the CPA in early March
2004, there is "no consistency" in power flows in Iraq. "Street
lights function irregularly and traffic lights not at all"
"Electricity in Baghdad fluctuating between three hours, on and off,
in rotation, and four hours on and off."

U.S. Airforce Colonel Sam Gardiner, author of a 2002 study of the
likely effect US bombardment would have on Iraq's power system,
recently told the Village Voice, "I continue to get very upset about
the electricity issue... Frankly, if we had just given the Iraqis
some baling wire and a little bit of space to keep things running, it
would have been better. But instead we've let big US companies go in
with plans for major overhauls."

Thus, while Bechtel reports that they have "returned electricity
generation to pre-conflict levels," this claim is not supported by
the U.S. government or Iraqis themselves. Power outages lasting for
24 hours a day are still more often the rule than the exception. The
Daura power plant, Baghdad's largest, which should supply one third
of the city's generating capacity was producing only 10% as recently
as December. Helmut Doll, the German site manager for Babcok Power, a
s subcontractor of Siemens, told Newsweek that "Bechtel only came and
took photos. We can't judge Bechtel's work progress because they're
not here."

The same story is repeated across Iraq. Either they haven't seen
Bechtel, or the work that has been provided is inadequate and
intermittent. Bechtel representatives have admitted as much, citing
the constant sabotage of their work and their ill-preparedness going
in, commenting that they did not realize how intertwined the
electricity, water and sewage systems were, greatly complicating
their repair efforts.

Of course, the Iraqis knew this and could have told them =82 if they
had asked. Iraqis point out that after the first Gulf War, they were
able to restore electricity in just three months. Mohsen Hassan,
technical director for power generation at the Iraqi ministry of
electricity, told Southern Exposure Magazine, "We, the Iraqi
engineers, can repair anything, but we need money and spare parts and
so far Bechtel has provided us with neither. The only thing that the
company has given us so far is promises."

Schools and Hospitals

Bechtel has also failed in its contractual obligations to restore
hospitals and schools in Iraq. Bechtel repeatedly cites the 1595
schools it has "rehabilitated" in Iraq. However, this is less than a
fifth of Iraq's 10,000 schools. And, as Newsweek reported, "many of
the rehabilitated schools don't look ready for the morning bell." The
constant complaint from Iraqi Ministry of Education officials and
headmistresses and ministers of schools that Bechtel has worked on,
is that the work is either non-existent or shoddy, often putting
students health and safety at risk.

An internal study by U.S. Army personnel cited in Southern Exposure,
strongly criticized Bechtel's attempts to renovate Iraqi schools.
Comments such as the following were common: "the new fans are cheap
and burned out immediately upon use. All inspected were already
broke." "Lousy paint job. Major clean-up work required. Bathrooms in
poor condition." Southern Exposure visited four Baghdad schools all
listed as renovated by Bechtel. They found rain leaking through
ceilings, shorting out power, new paint peeling and floors that had
not been completely repaired. New brass taps and doors painted, but
toilets and sinks that had not been touched. At Hawa School, for
example, the headmistress showed the authors toilets where a new
water system had been installed, pipes, taps and a motor to pump the
water. However, the motor didn't work, so the toilets reeked with
unflushed sewage. The conditions reported in Bechtel hospitals are
similar =82 shoddy or non-existent work accompanied with desperate and
unmet human needs.

The Bush Administration is not even living up to its own requirements
under national treatment because it is treating foreign providers
differently. The U.S. has banned countries that did not participate
in the invasion for profiting off of the invasion. Thus, in many
cases, repairs that could be performed quickly to the water and
electrical systems are left undone because they require parts from
countries such as Russia, Germany or France.

Unrestricted Repatriation of Profits

Order #39 authorizes foreign investors to "transfer abroad without
delay all funds associated with [their]] investment." Thus, they can
put their money wherever they like and take it out whenever they want
to, "without delay." Nothing need be reinvested locally to service
the floundering Iraqi economy. Nothing need be targeted to help
specifically damaged regions, communities or services. All the money
can go home with the foreign owners and they can take out their
investments at any time.

U.S. corporations are already reaping staggering revenues from their
Iraqi operations. However, due to Order #39, not a cent of this money
need be reinvested in Iraq. Halliburton, with contracts worth as much
as $16.8 billion in Iraq has seen its revenues increase 80% in the
first quarter of 2004 compared to the same quarter of 2003. According
to the Financial Times, they are receiving steep "profits from their
Iraq operations." Bechtel, with nearly $3 billion in Iraqi contracts,
has seen their non-U.S.-generated revenues increase by a whopping
158% since last year =82 turning around a three-year slump. Bechtel is
not publicly traded and therefore does not have to reveal profits.
However, both Bechtel and Halliburton have cost-plus contracts that
guarantee a specified rate of profit on their work. ChevronTexaco
which has a comparatively minor contract for transporting Iraqi oil
has also seen revenues soar.

It is important to note that neither Halliburton nor Bechtel
participated in the most recent round of Iraq reconstruction contract
bids. A good guess as to why would be the constant barrage of public
criticism they have faced over the failures in Iraq.

These are just three of the hundreds of U.S. companies now operating
in Iraq =82 all of their money could return to the U.S. =82 non of it
need be used to benefit Iraq whatsoever.

Unfortunately, we don't really know how much money the Iraqis are
missing out on, nor exactly what work is being done nor by whom. This
is because, as the Center for Public Integrity =82 the organization
which has done the most extensive Freedom of Information Act requests
and investigations into these contracts =82 so aptly states, "it does
not appear that any one government agency knows that total number of
contractors or what they are doing." This finding has since been
upheld by both the General Accounting Office and the Pentagon's
inspector-general - both of which have recently concluded studies
demonstrating little or no government over site over contractors and
contracts being granted, renewed and increased with virtually no
inspection of written documents nor work performed.

Finally, returning to repatriation of profits =82 the potential long-
term impact of this provision for the Iraqi economy is monumental, as
evidenced by the impact of the same rules on the "financial tigers"
of East Asia, as well as Argentina and Russia. Each of these
countries experienced devastating financial collapse when foreign
investors simultaneously withdrew billions of dollars from their
economies while the governments were powerless to enact restrictions
on either the inward or outward flow of investments. Iraq is now
poised to meet the same fate.

40-year leases

Under Order #39 Iraq will be locked in to its contracts under these
rules for 40 years, with an option of unlimited renewal. If the
contracts are broken, the Order gives the companies the legal
authority to enact any international trade agreement of which both
countries are party. If the Bush Administration is successful in
implementing its trade goals outlined below, the U.S. will have a
Bilateral Investment Treaty (BIT) with Iraq. The BIT provides access
to courts such as the World Bank's International Centre for the
Settlement of Investment Disputes (ICSID), a venue notorious for its
undemocratic, untransparent and unjust proceedings and rulings on
behalf of multinational corporations.

Bremer Order #40: Banking

Order #40 fundamentally alters Iraq's banking structure by turning
this sector from a state-run to a market-driven system over night by
allowing foreign banks to enter the Iraqi market and to purchase up
to 50 percent of an Iraqi bank. Specifically, it permits six foreign
banks over the next five years the right to enter the Iraqi market.

A similar provision included in NAFTA paved the way for Citigroup to
purchase Mexico's largest commercial bank, Banamex. In Aotearoa/New
Zealand, liberalization of financial banking services left every one
of the nation's banks, including the bank of New Zealand, under
foreign control. Affordable financial services and low-cost loans
quickly dried up =82 so much so that the government proposed setting up
a new bank, the People's Bank, to be owned and operated by the
government itself in order to redress the inequities of the foreign-
owned banks.

Local ownership of banks is critical because it facilitates access to
credit for all sectors of society. It may deter disloyal behavior;
foreign finance companies are much more likely to flee in times of
crisis. And ensuring that a foreign company holds some domestic
assets within the country in which it is operating can help ensure it
can satisfy any legal liabilities it might accrue. Moreover, Iraq
simply does not have adequate regulatory structures in place to
handle the economic power and marketing prowess of global financial
companies. For example, Iraq does not have a counter-part to U.S.
laws such as the Community Reinvestment Act =97 obligating banks to
make credit available in lower-income neighborhoods =97 and the Truth
in Lending Act =97 requiring full disclosure to consumers of the cost
of loans. Finally, with the banks under foreign ownership, the lobby
against adoption of such rules may be too strong to fight.

JPMorgan, the second-largest bank in the U.S., which was implicated
in the Enron scandal, has been awarded a contract to run a consortium
of 13 banks from 13 countries that will constitute the Trade Bank of
Iraq. The Trade Bank may be just the point of entry for JPMorgan,
giving it "first dibs" on the full privatization yet to come.

Bremer Order #37: Taxes

Order #37 changes Iraq's tax law by implementing a flat tax that
provides for a marginal income tax rate of 15% for both corporations
and individuals. Thus, an Iraqi earning .50 cents per hour will pay
the same tax rate as another earning $1 billion an hour. Flat rates
have a record of reducing the tax burden on the poorest in the
economy, increasing the burden on the middle class tremendously, and
drastically reducing the taxes paid by the wealthiest in society =82
particularly corporations.

As the Washington Post reports, "it took L. Paul Bremer, the U.S.
administrator in Baghdad, no more than a stroke of the pen Sept. 15
to accomplish what eluded the likes of publisher Steve Forbes, Reps.
Jack Kemp (R-N.Y.) and Richard K. Armey (R-Tex.), and Sen. Phil Gramm
(R-Tex.) over the course of a decade and two presidential campaigns."

Bremer Order #12: Trade Liberalization

On June 12, Bremer signed the "Trade Liberalization Policy,"
suspending "all tariffs, customs duties, import taxes, licensing fees
and similar surcharges for goods entering or leaving Iraq, and all
other trade restrictions that may apply to such goods." This led to
an immediate and dramatic inflow of cheap consumer products, which
has essentially wiped out all local providers of the same products.
This could have significant long-term implications for domestic
production as well.

But tariff elimination is just the beginning. In early February 2004,
BearingPoint was right on schedule when the Bush Administration
achieved WTO observer status for Iraq =82 even without a government =82
over the strong objections of many of our European allies. This is
the first step towards WTO membership, which also requires the
fundamental transformation of Iraq's laws to bring them in to WTO-

The longer-term goal was announced by President Bush just two months
after the invasion of Iraq. On May 9, 2003, President Bush announced
plans for an U.S.-Middle East Free Trade Area (MEFTA) by 2013 =82
bringing all of the policies outlined above, and more, to the entire

The Middle East, insulated by oil revenue, has historically been less
susceptible than other regions to the extreme sacrifices required by
governments under corporate free trade agreements. But with the
invasion and occupation of Iraq, the Bush Administration demonstrated
that it would defy global public opinion and the United Nations to
use military force when and where it deems necessary. Thus, it can
now return to the more traditional model of advancing corporate
globalization, the free trade agreement.

As George Wolfe, director of Economic Policy for the CPA told the New
York Times, "in the long run, the United States hopes that Iraq will
become an economic model for the Middle East." Or, put more bluntly
by Neil King of the Wall Street Journal, "For many conservatives,
Iraq is now the test case for whether the U.S. can engender American-
style free-market capitalism within the Arab world."

Bringing the U.S. in to Accord with International Law and Morality

It is illegal and immoral for the Bush Administration to use the
military invasion and occupation of Iraq to fundamentally alter that
nation's basic laws. It is also illegal and immoral for the Bush
Administration to continue to ignore its obligation under
international law to provide for the basic necessities of Iraqis. The
first step needed to bring the U.S. in to accord with international
law and morality is to repeal the Bremer Orders detailed above. The
second step is to allow detailed public scrutiny of the BearingPoint
plan in both Iraq and the U.S. Most of it should be repealed. At
most, it should provide only for the short-term economic necessities
required of the U.S. under international law to restore Iraq's basic
infrastructure and services and to ensure that the economy does not
collapse during reconstruction.

Once the Iraqi government is elected, it is the Iraqis themselves who
must determine their long-term economic future =82 not the U.S. In the
short-term, the following alternatives drawn from more detailed
analysis provided by International Occupation Watch Center in
Baghdad, the Institute for Policy Studies in Washington, DC and the
International Forum on Globalization (,,, are offered to help restore the Iraqi
economy to a functioning position.

The military occupation of Iraq must end.

Iraq's foreign debts, accrued by Hussein in the suppression of the
people of Iraq, must be forgiven.

Only with the end of the U.S.-UK occupation should the United
Nations, including an UN-commanded multilateral peacekeeping force,
return to Iraq. Their mandate should be for a very short and defined
period, with the goal of assisting Iraq in reconstruction and
overseeing election of a governing authority.

As belligerent powers who initiated the war, and as occupying powers,
the U.S. and the UK are obligated to provide for the humanitarian
needs of the Iraqi people and to pay the continuing costs of Iraq's
reconstruction, including the bulk of the cost of UN humanitarian and
peacekeeping deployments. Washington should reverse the spending
priorities of its $87 billion request from Congress, and turn over to
full UN authority (on behalf of the Iraqi people as a whole, not
simply given to the U.S.-appointed Council) a starting grant of at
least $75 billion (the initial amount Washington spent on waging the
war) for reconstruction in Iraq.

The $15 billion (out of the $87 billion) requested by the Bush
administration for Iraqi reconstruction is insufficient to meet
Washington's obligations under international law. The $65 billion
scheduled for the Pentagon to continue the occupation of Iraq should
be challenged. The additional reconstruction funds should not come
from ordinary taxpayers. They should be raised from (a) an excess
profits tax on corporations benefiting from the war and post-war
privatization in Iraq; and (b) the Pentagon budget lines currently
directed at continuing war in Iraq.

Reconstruction of Iraq should be based on rebuilding the economy to
maximize fulfilling the needs of the Iraqi people. All contract
processes should be completely transparent and accessible to Iraqis.
The awarding of contracts should be done with preference given first
to Iraqi companies, experts and workers. Preference should then be
given to international humanitarian organizations with a record of
performing similar reconstruction work. If a non-Iraqi private
company must be used, the contract must be open to global competition
and the profit margin must be held as low as possible at a fixed fee.
Oversight must be transparent, public and thorough.

Labor laws should ensure protection and security for local workers.

A broad U.S. Federal Government investigation must be launched to
scrutinize U.S. corporate expenditures and actions in Iraq, with the
power to impose or seek punitive measures for contract violations and
over-expenditure, and to provide oversight, regulation and
accountability of U.S. contractor's work in the application of their
contracts. The citizens of Iraq and the U.S. Congress and public
should be informed of the findings.

Iraq should be allowed to join the worldwide movement for local
sustainability by moving away from export oriented economics that
make trade and multinational corporations the basis of economic
development. Government spending, taxes, subsidies, tariff
structures, etc. should be reoriented to support local
environmentally sustainable production that meets local needs (these
ideas are expanded upon in the IFG publication, Alternatives to
Economic Globalization).
Mark Parkinson

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