Ambitions of Empire, Part 2: Understanding and Opposing the Colonization of Iraq
Antonia Juhasz / International Forum on Globalization
February 14, 2004
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| L Paul Bremer, the colonial provost of Occupied Iraq. |
Bremer Order #40: Banking Privatized
Banking Order #40 turns the banking 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. Two or more banks may be "fast tracked," based on their agreement to accelerate the availability of local credit. An unlimited number of banks may purchase up to 50% of an Iraqi bank. Foreign banks may enter Iraq as branches, subsidiaries, representative offices, or through partnerships with Iraqi banks.
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 -- so much so that the government proposed setting up a new bank, the People's Bank, to be owned and operated by the government 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.
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 US laws such as the Community Reinvestment Act -- obligating banks to make credit available in lower-income neighborhoods -- and the Truth in Lending Act -- 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 US bank, 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 implements a flat tax in Iraq by providing 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 -- particularly corporations.
As the Washington Post reports, "it took L. Paul Bremer, the US 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
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| Credit:Vialardi.org |
On June 12, Bremer signed the "Trade Liberalization Policy," suspending until December 31, 2003 "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." BearingPoint's Plan makes clear that this Order is just the beginning -- it sets an amazing February 2004 target date for preparation of an application for Iraq to join the WTO. Of course, Iraq's laws must be fundamentally altered (as detailed by BearingPoint) in order to meet WTO obligations.
The Bush Administration has out-lined an identical plan for the entire region. On May 9, 2003, President Bush announced plans for an US-Middle East Free Trade Area (MEFTA) by 2013.
In speech on June 23, 2003 in Jordan, US Trade Representative Zoellick described the MEFTA as "a region-wide commitment to open trade with the United States" with the following components:- The US will actively support WTO membership for those "peaceful" countries in the region that seek it.
- The US will offer to negotiate Trade and Investment Framework Agreements (TIFAs) which establish a work program to expand trade and resolve outstanding disputes. The TIFAs will specifically "encourage private sector participation through business councils that drive trade agendas and help us address the specific concerns of business."
- The US will offer to negotiate BITs it in each country.
- The US will negotiate comprehensive free trade agreements "which remove all barriers to trade across all sectors -- with the aim of expanding the bilateral FTAs into "sub- regional" FTAs by mooring other interested and qualified countries in the safe harbors of existing free trade agreements."
- These agreements will be melded in to one "historic" regional MEFTA.
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 will 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.
The Bremer Orders and the BearingPoint Plan are not merely temporary fixes for a country under occupation: they are designed to permanently revolutionize the Iraq economy, yanking a state-run system into a model for global corporate capitalism by US fiat. Iraq is only the beginning.
A 7-Point Program for the True Liberation of Iraq
The Bremer orders are illegal and immoral. They must be repealed.
The BearingPoint Plan must be discussed publicly in Iraq and the US. At most, it should provide for short-term economic necessitates required to keep the Iraqi economy from collapsing during reconstruction. Once the Iraqi government is elected, it is the Iraqis themselves who must determine their long-term economic future -- not the US.
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.
( 1 ) The military occupation of Iraq must end.
( 2 ) Iraq's foreign debts, accrued by Hussein in the suppression of the people of Iraq, must be forgiven.
( 3 ) Only with the end of the US-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.
( 4 ) As belligerent powers who initiated the war, and as occupying powers, the US 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 US-appointed Council) a starting grant of at least $75 billion (the initial amount Washington spent on waging the war) for reconstruction in Iraq.
( 5 ) 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.
( 6 ) 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. Contracts should privilege local companies, towards the goal of strengthening and diversifying local production. Labor laws should ensure protection for local workers.
( 7 ) 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).
Antonia Juhasz is a Project Director at the International Forum on Globalization (IFG) and an organizer with Direct Action to Stop the War in San Francisco. She has written numerous articles and opinion pieces on globalization in publications such as The New York Times, The Cambridge University Review of International Relations Journal and Multinational Monitor. International Forum on Globalization, 1009 General Kennedy Avenue #2, San Francisco, CA 94129. (415) 561-3490, fax: 561-7651 www.ifg.org. For more information, contact: www.occupationwatch.org, www.ips-dc.org.
This is a slightly edited version of an article that will appear in LeftTurn Magazine (No. 12, Feb/Mar 2004). www.leftturn.org/Default.aspx. Portions of this article originally appeared in the January/February 2004 issue of Tikkun Magazine.
The full BearingPoint contract [PDF file] has since been made available on the Center for Public Integrity's website at: www.publicintegrity.org/wow/docs/BearingPoint.pdf.
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