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[casi] Iraq is not America's to sell

1) Iraq is not America's to sell
2) Q + A: Why the privatisation of Iraq is illegal


Iraq is not America's to sell

International law is unequivocal - Paul Bremer's economic reforms are

Naomi Klein
Friday November 7, 2003
The Guardian

Bring Halliburton home. Cancel the contracts. Ditch the deals. Rip up the
rules. Those are just a few of the suggestions for slogans that could help
unify the growing movement against the occupation of Iraq. So far, activist
debates have focused on whether the demand should be for a complete
withdrawal of troops, or for the United States to cede power to the United
But the "troops out" debate overlooks an important fact. If every last
soldier pulled out of the Gulf tomorrow and a sovereign government came to
power, Iraq would still be occupied: by laws written in the interest of
another country; by foreign corporations controlling its essential services;
by 70% unemployment sparked by public sector layoffs.

Any movement serious about Iraqi self-determination must call not only for
an end to Iraq's military occupation, but to its economic colonisation as
well. That means reversing the shock therapy reforms that US occupation
chief Paul Bremer has fraudulently passed off as "reconstruction", and
cancelling all privatisation contracts that are flowing from these reforms.

How can such an ambitious goal be achieved? Easy: by showing that Bremer's
reforms were illegal to begin with. They clearly violate the international
convention governing the behaviour 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 US army's own code of war.

The Hague regulations state that an occupying power must respect "unless
absolutely prevented, the laws in force in the country". The coalition
provisional authority has shredded that simple rule with gleeful defiance.
Iraq's constitution outlaws the privatisation of key state assets, and it
bars foreigners from owning Iraqi firms. No plausible argument can be made
that the CPA was "absolutely prevented" from respecting those laws, and yet
two months ago, the CPA overturned them unilaterally.

On September 19, Bremer enacted the now infamous Order 39. It announced that
200 Iraqi state companies would be privatised; decreed that foreign firms
can retain 100% ownership of Iraqi banks, mines and factories; and allowed
these firms to move 100% of their profits out of Iraq. The Economist
declared the new rules a "capitalist dream".

Order 39 violated the Hague regulations in other ways as well. The
convention states that occupying powers "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."

Bouvier's Law Dictionary defines "usufruct" (possibly the ugliest word in
the English language) as an arrangement that grants one party the right to
use and derive benefit from another's property "without altering the
substance of the thing". Put more simply, if you are a housesitter, you can
eat the food in the fridge, but you can't sell the house and turn it into
condos. And yet that is just what Bremer is doing: what could more
substantially alter "the substance" of a public asset than to turn it into a
private one?

In case the CPA was still unclear on this detail, the US army's Law of Land
Warfare states that "the occupant does not have the right of sale or
unqualified use of [non-military] property". This is pretty straightforward:
bombing something does not give you the right to sell it. There is every
indication that the CPA is well aware of the lawlessness of its
privatisation scheme. In a leaked memo written on March 26, the British
attorney general, Lord Goldsmith, warned Tony Blair that "the imposition of
major structural economic reforms would not be authorised by international

So far, most of the controversy surrounding Iraq's reconstruction has
focused on the waste and corruption in the awarding of contracts. This badly
misses the scope of the violation: even if the sell-off of Iraq were
conducted with full transparency and open bidding, it would still be illegal
for the simple reason that Iraq is not America's to sell.

The security council's recognition of the United States' and Britain's
occupation authority provides no legal cover. The UN resolution passed in
May specifically required the occupying powers to "comply fully with their
obligations under international law including in particular the Geneva
conventions of 1949 and the Hague regulations of 1907".

According to a growing number of international legal experts, that means
that if the next Iraqi government decides it doesn't want to be a wholly
owned subsidiary of Bechtel and Halliburton, it will have powerful legal
grounds to renationalise assets that were privatised under CPA edicts.

Juliet Blanch, global head of energy and international arbitration for the
huge international law firm Norton Rose, says that because Bremer's reforms
directly contradict Iraq's constitution, they are "in breach of
international law and are likely not enforceable". Blanch argues that the
CPA "has no authority or ability to sign those [privatisation] contracts",
and that a sovereign Iraqi government would have "quite a serious argument
for renationalisation without paying compensation". Firms facing this type
of expropriation would, according to Blanch, have "no legal remedy".

The only way out for the administration is to make sure that Iraq's next
government is anything but sovereign. It must be pliant enough to ratify the
CPA's illegal laws, which will then be celebrated as the happy marriage of
free markets and free people. Once that happens, it will be too late: the
contracts will be locked in, the deals done and the occupation of Iraq

Which is why anti-war forces must use this fast-closing window to demand
that the next Iraqi government be free from the shackles of these reforms.
It's too late to stop the war, but it's not too late to deny Iraq's invaders
the myriad economic prizes they went to war to collect in the first place.

It's not too late to cancel the contracts and ditch the deals.

 A version of this article appears in the Nation.



Pillage is forbidden

Why the privatisation of Iraq is illegal

Aaron Mate
Friday November 7, 2003

What are the US-UK's responsibilities as occupier of Iraq?
On May 22 2003, the United Nations Security Council passed Resolution 1483,
abolishing sanctions against Iraq and recognising the United States and
United Kingdom as the country's occupying powers. The resolution called upon
the US-UK authority to "comply fully with their obligations under
international law, including in particular the Geneva Conventions of 1949
and the Hague Regulations of 1907." [1]

How has the CPA changed Iraq's economy and laws?

Among many changes, the US-UK Coalition Provisional Authority (CPA), has
laid off hundreds of thousands of Iraqi workers, virtually eliminated trade
tariffs and enacted laws that radically alter Iraq's economy. Order 39,
decreed by CPA head Paul Bremer on September 20 2003, abolished Iraq's ban
on foreign investment, allowing foreigners to own up to 100% of all sectors
except natural resources. Over 200 state-owned enterprises, including
electricity, telecommunications and pharmaceuticals have been privatised.
Iraq's highest tax rate has been lowered from 45% to a flat rate of 15%.
Although foreign ownership of land remains illegal, companies or individuals
will be allowed to lease properties for up to 40 years. [2]

Are these changes legal?

These laws stand in clear violation of Iraq's constitution, as is openly
admitted. The US department of commerce notes that "the Iraqi constitution
prohibits foreign ownership of immovable (real) property," and "prohibits
investment in, and establishment of, companies in Iraq by foreigners who are
not resident citizens of Arab countries." [3]

Consider how the CPA's new laws and massive layoffs conform to its
obligations under international law [4]:

 Hague Regulations

Art 43: The 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.

Art 46: Family honour and rights, the lives of persons, and private
property, as well as religious convictions and practice, must be respected.
Private property cannot be confiscated.

Art 47: Pillage is formally forbidden.

Art 53: An army of occupation can only take possession of cash, funds, and
realisable securities which are strictly the property of the state, depots
of arms, means of transport, stores and supplies, and, generally, all
movable property belonging to the state which may be used for military
operations. All appliances, whether on land, at sea, or in the air, adapted
for the transmission of news, or for the transport of persons or things,
exclusive of cases governed by naval law, depots of arms, and, generally,
all kinds of munitions of war, may be seized, even if they belong to private
individuals, but must be restored and compensation fixed when peace is made.

Art 55: 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.

 Geneva Conventions:

Article 53: Any destruction by the occupying power of real or personal
property belonging individually or collectively to private persons, or to
the state, or to other public authorities, or to social or cooperative
organisations, is prohibited, except where such destruction is rendered
absolutely necessary by military operations.

Article 54: The occupying power may not alter the status of public officials
or judges in the occupied territories, or in any way apply sanctions to or
take any measures of coercion or discrimination against them, should they
abstain from fulfilling their functions for reasons of conscience.

What is usufruct?

In accordance with Article 55 of the Hague Regulations, the US-UK are
"regarded only as administrator and usufructuary" of Iraq's resources and
immovable property, which it must administer "in accordance with the rules
of usufruct." Bouvier's Law dictionary defines usufruct as: "The right of
enjoying a thing, the property of which is vested in another, and to draw
from the same all the profit, utility and advantage which it may produce,
provided it be without altering the substance of the thing." [5]

As usufructary, the US-UK coalition would have the right to use Iraq's
resources without altering or destroying the character of the resource
itself. It is widely-recognised that agriculture, wherein crops can grow
again and no serious effect is made on the soil or the land, is an
appropriate usage of the right of usufruct. But oil is far different: the
extraction of oil is the process of extracting the original resource itself,
as the fossil fuels are not renewable and the character of the land from
which it comes is severely altered, if not depleted. In addition, the
responsibilities of usufruct can also apply to structural changes to a
public resource or service. As Naomi Klein points out, "what could more
substantially alter 'the substance' of a public asset than to turn it into a
private one?"

Does the CPA know this already?

In a leaked March 26 memo that caused a stir in the UK, attorney general
Lord Peter Goldsmith advised prime minister Blair that the invasion and
subsequent occupation of Iraq was illegal. "My view is that a further
security council resolution is needed to authorise imposing reform and
restructuring of Iraq and its government," Lord Goldsmith wrote. He added
that in his view "the imposition of major structural economic reforms would
not be authorised by international law," and that "the longer the occupation
of Iraq continues, and the more the tasks undertaken by an interim
administration depart from the main objective [of disarming Saddam], the
more difficult it will be to justify the lawfulness of the occupation." [6]


1. UN Security Council Resolution 1483, adopted May 22 2003.

2. Coalition Provisional Authority Order 39, enacted September 19 2003.

3. US Department of Commerce, "Overview of Commercial Law in Iraq".

4. Convention (IV) respecting the Laws and Customs of War on Land and its
annex: Regulations concerning the Laws and Customs of War on Land (Hague
Regulations). The Hague, 18 October 1907.

Convention (IV) relative to the Protection of Civilian Persons in Time of
War (Geneva Conventions). Geneva, 12 August 1949.

5. Bouvier's Law Dictionary, cited in University of Tulsa Law Professor R.
Dobie Langenkamp, What Happens to the Oil: International Law and the
Occupation of Iraq", January 2003,

6. John Innes, "US and UK Action in post-war Iraq May be Illegal," The
Scotsman, May 22, 2003.

07.11.2003: Naomi Klein: Iraq is not America's to sell


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