Reference Article

Reference Article on U.S.-Iraq Business Relationships

Updated on December 30, 2003

Basic Link Set for local news stories on University of Maine U.S.-Iraq Business Alliance Conference:

UMaine web site devoted to information on the POSTPONED 11/13 conference
http://www.umaine.edu/globalfocusseries/

Press release (11/11/2003) on conference postponement, "The conference will be moved to a date early in 2004, most likely in March."
http://www.umaine.edu/globalfocusseries/press.asp

University of Maine News Oct. 23, 2003
UMaine to Co-Host Conference on Private Sector Business in Iraq; Speakers to Include Key Members of Iraqi Governing Council and Weinberger
http://www.umaine.edu/news/Archives/2003/oct03/102703/Iraq.htm

Bangor Daily News November 1-2, 2003; front-page story
Gold Rush: National business group's Maine conference seeks to lure investors into post-war Iraq's new economy
By Liz Chapman, Of the NEWS Staff
http://www.bangordailynews.com/editorialnews/articles/411003_110103goldrush_lchapman.cfm

Commentary on "Gold Rush" story and Dennis Sokol in Deep Blade Journal
http://deep_blade.tripod.com/journal/index.blog?entry_id=128255

Bangor Daily News November 1-2, 2003; bio-piece on Dennis Sokol
Businessman finds wealth in world health
By Liz Chapman, Of the NEWS Staff
http://www.bangordailynews.com/editorialnews/articles/411053_110103businessmanfindswe_lchapman.cfm

Our op-ed responding to the Iraq Business Conference appeared November 8, 2003 in the Bangor Daily News
UMaine's War Profiteering
http://www.bangornews.com/editorialnews/articles/411415_110803umaineandwarprofi_.cfm
Alternate link: http://archive.deepblade.net/UMEWar.htm

Also see "Sovereignty violated", Letter to the Editor, November 8, 2003 in the Bangor Daily News
http://www.bangornews.com/editorialnews/articles/411410_110803letterstotheedito_.cfm

Bangor Daily News; Wednesday, November 12, 2003; Conference is postponed
UM conference on Iraq postponed: Foreign councilors unable to travel
http://www.bangornews.com/editorialnews/articles/411603_111203umconferenceonira_.cfm

Bangor Daily News; Thursday, November 13, 2003; report on our 11/12/2003 protest
Protests target UMaine support of Iraq meeting: Postponed forum's focus on trade opportunities
By Aimee Dolloff, Of the NEWS Staff
http://www.bangornews.com/editorialnews/articles/411709_111303proteststargetumai_adolloff.cfm

Bangor Daily News; Friday, November 14, 2003; Letter to the editor from business school faculty member
letter http://www.bangornews.com/editorialnews/articles/411749_111403letterstotheedito_.cfm

Portland Press Herald Wednesday, September 24, 2003; initial story on conference
Conference to examine business in post-war Iraq
By Matt Wickenheiser, Portland Press Herald Writer

Portland Press Herald Monday, November 3, 2003; AP version of BDN story
Entrepreneurs to meet, discuss investing in Iraq
Associated Press
http://www.pressherald.com/news/local/031103invest.shtml

Maine Public Radio / Maine Things Considered
October 29, 2003
http://www.mainepublicradio.org/search/ (enter the date 10/29/2003 as the search term)
Audio interview with Dennis Sokol.

Brokering War Spoils Should Not be the Business of the UMaine College of Business

By ERIC T. OLSON
M.S. Physics, University of Maine, 1983

Iraq never posed a weapons threat to America. So why did our leadership send the most powerful military force in all of history to invade and occupy this weak country?

Now we know—if we are willing to ask one more question: Why is the University of Maine College of Business, Public Policy and Health on November 13 hosting an $850 per head Conference on Conducting Private Business in Iraq ?

The answer to both questions is the same. The invasion of Iraq is in large part about major multinational corporations divvying up the spoils of war while tens of billions of U.S. taxpayer dollars are captured by these corporations to support their taking of the country.

The result for the people of Iraq is already planned. The country is to be turned into a privatized corporate haven where taxes are low to non-existent, workers are cheap, and regulation is lax. This is war profiteering of the worst kind.

As an alumnus of the University of Maine, I call for this conference to be cancelled. Furthermore, because of the falsehoods used to justify the invasion, all U.S.-based corporations should be permanently disqualified from Iraq reconstruction contracts. Even so, U.S. taxpayers, preferably through a surcharge on wealthy corporations, should pay for substantial reparations to the Iraqi people for 20 years of disastrous policies that have destroyed the country—including nearly ten years of support for Saddam Hussein, 12 years of brutally-drawn economic sanctions that punished only the population but not Saddam, and two unnecessary yet devastating wars. All U.S. troops should be brought home from Iraq immediately.

Assuming that my objections will be ignored, I still want everyone to know exactly what my University endorses through this conference. What it will support is nothing short of a looting of the U.S. Treasury in order to pay for a property grab in Iraq. This is dirty business with heartbreaking consequences. The notion that the United States is building a "new Iraq for the benefit of the Iraqi people" is an outrageous mischaracterization. The cost in lives leaves me grief-stricken, as it should every caring human being. The U.S. leadership is criminally culpable for using the fine, dedicated men and women of our armed forces to enforce a pacified environment where corporations can go about this business of extraction and exploitation.

BACKGROUND

According to the original Portland Press Herald story on the conference (September 24, 2003), University of Maine's business school has a desire "to be recognized as a force in international business."

"Doing Business in Iraq: the Private Sector, scheduled for Nov. 13 at the Black Point Inn, is targeted at business people throughout the eastern United States. The price of admission is $850 [initially $1500] per person, according to Daniel Innis, dean of UMaine's College of Business, Public Policy and Health.

"Innis said the conference will be the first in the Global Focus Series of talks, and will be 'focused on business opportunities in Iraq and helping business people understand the short-term, medium-term and long-term opportunities that will exist in the Iraqi marketplace.'"

But what policies are creating these "opportunities?" This reference article looks at how American authority over Iraq has functioned since the March 2003 invasion. Also provided are a myriad of references to news stories and reports from non-profit organizations concerning the dubious financial machinations and dubious conduct of the occupation. The contents of this article has the following sections:

I. Political & Financial authority in Iraq and its misuse

II. The privatization program for Iraq

III. Developing events

IV. Additional resources

V. Conclusions

I. Political & Financial authority in Iraq and its misuse

In May, the UN Security Council unanimously adopted Resolution 1483 ending sanctions, establishing U.S. control over the country, and endorsing the creation of Development Fund for Iraq (DFI). This fund is run by U.S. Administrator L. Paul Bremer and supposedly is overseen by the International Advisory and Monitoring Board, including UN, World Bank, and IMF representatives. (Questions have been raised about Fund oversight, because the United States has stymied implementation of the Monitoring Board.) Over $1 billion (of Iraqi oil money) was transferred from the Oil-for-Food program into the Development Fund. All proceeds from the sale of Iraqi oil and natural gas are also placed into the fund.

Almost immediately after UNSCR 1483 was enacted, President Bush issued Executive Order 13303 giving U.S. corporations blanket immunity in any activities that gain possession or control of Iraqi oil or products through any means. According to the Government Accountability Project in a press release dated August 15, 2003, EO 13303 shields the value of anything related to the sale or marketing of Iraqi petroleum or a petroleum product, as long as the oil is making money domestically or abroad. There is no cutoff date for the immunity, which "renders the judicial process null and void."

A piece entitled "Operation Oily Immunity" by Steve Kretzmann and Jim Valette (July 24, 2003) explains how U.N. Security Counsel resolution 1483 and Executive Order 13303 issued by President Bush opens the door for private exploitation of Iraqi oil while it forces Iraq into the neoliberal economic framework of the World Trade Organization. The U.S.-taxpayer-supported Export-Import bank apparently will be the conduit for credit to American companies moving into the Iraqi oil fields.

While a debate about Iraq's "sovereignty" involving the U.S. and countries originally opposed to the invasion raged throughout the month of September and into October, and in the midst of the $87 billion budget request from President Bush, L. Paul Bremer issued a stunning decree, named Order 39, on September 19.

According to a September 22 story in The Independent (UK), "In an unexpected move unveiled at the meeting in Dubai of the Group of Seven rich nations, the Iraqi Governing Council announced sweeping reforms to allow total foreign ownership without the need for prior approval.... The moves, ... approved by the US and UK's coalition provisional authority, include: 100 per cent foreign ownership in all sectors except natural resources; direct ownership as well as joint ventures and setting up branches; full, immediate remittance to the host country of profits, dividends, interest and royalties."

An editorial in the same edition of the paper suggested this was the "second looting of Iraq."

This must seem like an outrageous giveaway to ordinary Iraqis at a time when they are being told that "there really is no shortcut to sovereignty" by U.S. Iraq boss Bremer.

In an interview with Jim Lehrer on the PBS News Hour (September 24, 2003), Mr. Bremer continued,

L. PAUL BREMER: We've laid out, the president has laid out, basically, a plan which gets to full sovereignty by means of getting a constitution written. I think we Americans, of all people, understand the importance of a good, legal, constitutional framework as the basis of political life. The Iraqis don't have a constitution. [Note: This is not true. Iraq does have an existing constitution, it is dismissed, probably illegally, by the occupying authorities.] They need one, and you really can't get to sovereignty without elections, and you can't have elections without a constitution. So I think this idea of some early sovereignty that's been floated by some members of the governing council and some of our allies in Europe is really a non-starter."

JIM LEHRER: And is it non-negotiable, from your point of view?

L. PAUL BREMER: I think it has to be a real fundamental approach, and I don't see how we can change it, because I think if we change it, we run the risk of coming out wrong in Iraq.

What would be wrong? He never explains, Lehrer never asks. Lehrer never asks Bremer about Order 39, either. I think the rush to privatize before the Iraqi people can take control of their country is the key mission Mr. Bremer is seeking to fulfill. A wrong outcome would be one where wholesale privatization was derailed.

In parallel with the discussion of Iraq's sovereignty, a debate raged in the United Nations Security Council over a new resolution. As it turned out, the passage of UNSCR 1511. on October 16 included a vague schedule for turnover of power to the Iraqi people.

The United States also sought donations of funds and troops from the international community, in addition to an $87 billion appropriation from the U.S. taxpayer (now passed, in the U.S. Senate by voice vote with only 5 senators present!).

But there seems to be deep distrust of the financial management of the Coalition Provisional Authority. Numerous articles and reports have appeared in the last few weeks that raise a plethora of serious questions about the conduct of the occupation. The most trenchant of these is the report (see below) from Christian Aid pointing out that the Coalition Provisional Authority has blocked meaningful accounting of DFI funds, and billions of dollars are not accounted for. Furthermore, damning findings on the CPA's approach to labor relations in Iraq are almost unreported in the United States. Here is the list.

New York Times
Washington Insiders' New Firm Consults on Contracts in Iraq
by Douglas Jehl
Tuesday, September 30, 2003

Washington Post
Spending On Iraq Sets Off Gold Rush
Lawmakers Fear U.S. Is Losing Control of Funds
Thursday, October 9, 2003; Page A01

The Guardian (UK)
Monday October 13, 2003
Spoils of war
http://www.guardian.co.uk/elsewhere/journalist/story/0,7792,1062049,00.html

"Mr Bremer shows little interest in drawing lessons from the problems caused by economic "shock therapy" reforms in the former Soviet Union, and in Iraq - with the added factor of military occupation - this can only fuel hostility towards the US.

"His order number 39 is also, almost certainly, illegal. The Hague regulations of 1907 spell out the obligations of an occupying power under international law.

"Article 43 says that, when occupying forces take over a country, they must "ensure, as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the country".

"This means that Mr Bremer is not allowed to change Iraq's existing laws, including those that govern investment, unless it is "absolutely" essential to do so.

"Article 55 says that an occupying power is only the "administrator and usufructuary" of state property. "It must safeguard the capital of these properties, and administer them in accordance with the rules of usufruct," it adds.

"Mr Bremer, therefore, appears to have no right to sell off nationalised industries."

See below (in II. The privatization program for Iraq) for more detail on the Russian "shock therapy" parallel.

The Guardian (UK)
Firms get ready for business in Iraq
Ewen MacAskill, diplomatic editor
Tuesday October 14, 2003
http://www.guardian.co.uk/international/story/0,3604,1062315,00.html

"About two dozen people from Voices UK, a group opposed to the war in Iraq and which campaigned against pre-war sanctions imposed on Iraq, protested outside. A spokeswoman, Emma Sangster, said: 'A neo-liberal economy is being imposed on an already impoverished country with unprecedented haste and with absolutely no democratic process.'"

Keeping Secrets: America and Iraq’s Public Finances
October 2003
http://www.iraqrevenuewatch.org/reports/101403.pdf

"Almost five months after establishment of the DFI and following some $1 billion in expenditures there is minimal information about these financial flows and no mechanisms have been established allowing the international community to monitor the Fund. With international donors gathering for an Iraq reconstruction meeting in Madrid on October 24 the operations of the DFI must become a priority."

Christian Aid report on unaccountable funds
October 23, 2003
http://www.christianaid.org.uk/indepth/310iraqoil/iraqoil.pdf

"Key decisions about how the Iraqi oil industry will be run and managed in the future have yet to be made. Both Iraqi politicians and the major oil companies recognise that fundamental policy decisions cannot precede the establishment of a legitimate government, and an improvement in the security situation. The more radical schemes for privatisation favoured by some American policymakers are on hold, probably indefinitely, since it is unlikely that any incoming Iraqi government could implement them and remain electable.11 Iraq’s oilfields and oil wells are set to stay in government hands. The privatisation of the ‘downstream’ components of the industry, from pipelines to petrol stations, is more likely, and less controversial or politically problematic.

"...developments thus far have been discouraging. It is impossible to tell exactly how these revenues have been spent – though it is clear that a limited number of US corporations have benefited considerably, and that more cost-effective options with Iraqi companies (that could reduce the cost of reconstruction) have been given very limited consideration.”

"...The principal mechanisms through which the coalition uses these funds are set out below. It should be noted that in all of the bodies involved in the allocation and monitoring of the use of Iraqi money, there is an extremely limited amount of Iraqi representation or participation at decision-making levels. Christian Aid feels this fundamentally undermines the chances of Iraqi funds being used in the best interests of the Iraqi people.”

"...According to the PRB’s founding regulations, it must operate transparently and is required both to publish and disseminate funding plans in Arabic, and to publish the minutes of all its formal sessions. Neither of these requirements has been met.”

"..However, despite the framework set out in Resolution 1483, the CPA and the intended representatives of the IAMB could not agree on what power and responsibility the board would have. According to a UN diplomat involved in the negotiations, the CPA was trying to limit the authority of the IAMB to that of simply monitoring auditors chosen by the CPA without the power to more closely examine how funds were being used or accounted for.”

"Despite a major compromise proposed at the end of August by the four international bodies of the IAMB, by mid-October the impasse remained, with suggestions that the CPA was even less inclined to allow the IAMB significant autonomy or independence. In the meantime, the CPA has been using Iraqi funds through the DFI without accounting for the money being used. It has effectively been operating outside its mandate.”

Follow-up story: Asia Times
More mystery over missing Iraqi millions
By Emad Mekay
Oct 31, 2003
http://www.atimes.com/atimes/Middle_East/EJ31Ak01.html

The U.S. and CPA responded to the charges of mismanagement, but the publicly available material is laughable.

"The charges prompted the authority on Monday to publish a skeleton budget for the DFI on its website in which it said it had received only $3 billion for the fund....

" 'There's less things on that [published DFI budget] than there are on my bank statements,' said Dominic Nutt of Christian Aid in a phone interview from London.

"We are pleased that they've acknowledged there's a need to publish the figures ... But this doesn't fulfill the need by any stretch of the imagination. I think that the treasury special fund is where there are no accounts at all ... There's $1.5 billion worth of that fund alone which is not accounted for at all," he said....

"The group again called on the department and the CPA to come out in the open with clear figures. 'You kind of wonder what's the problem guys? You are mandated by the UN to spend this money and account for it ... so why are you afraid to sort of publish the figures?'

"But a treasury official told Inter Press Service that, with the exception of a little more than $100 million that was used to pay out judgements against the former Iraqi regime under US law, all of the $1.5 billion in question were actually returned to Iraq after the war ended in April.

The money, he said, is now part of the overall CPA budget and remains outside of the DFI. 'The money is not missing at all,' said Taylor Griffin of the treasury's public affairs office. 'It was being used before the DFI even existed so it never went into the DFI. The money is in Iraqi hands and is pretty much spent.' "

Iraq business deals may be invalid, law experts warn
by Thomas Catán, Financial Times
October 28th, 2003
http://www.occupationwatch.org/article.php?id=1648

"The US-led provisional authority in Iraq may be breaking international law by selling state assets, experts have warned, raising the prospect that contracts signed now by foreign investors could be scrapped by a future Iraqi government.

"International businesspeople attending a conference in London this week heard that some orders issued by the US-led Coalition Provisional Authority (CPA) may be in breach of the 1907 Hague Regulations and the Fourth Geneva Convention.

" 'Is what they are doing legitimate, is it legal?' asked Juliet Blanch, a partner at the London-based international law firm Norton Rose. "Most [experts] believe that their actions are not legal", she said. "There would be no requirement for a new government to ratify their [actions]."

Asia Times [this item added 11/06/03]
Dying for a McDonald's in Iraq
By Herbert Docena
Oct 24, 2003

http://www.atimes.com/atimes/Middle_East/EJ24Ak02.html

"Attracting up to 145 multinational prospectors, the London conference was held less than a month after the United States announced its economic masterplan for Iraq, a blueprint which The Economist heralded as a 'capitalist dream' that fulfills the 'wish list of international investors.' ...

"The Iraqis and the taxpayers who are bankrolling the occupation better not know to whom they're being made to give their checks. Bechtel sold chemical weapons to Saddam Hussein back in the 1980s and had been accused of gross overpricing in Massachusetts and Bolivia. MCI was involved in history's biggest accounting scandal and has totally no experience building cell networks. Halliburton had been accused of inflating costs and had even settled a number of fraud charges. Dyncorp had been accused of covering up sex trafficking. Flour faces a multibillion dollar lawsuit for exploiting black workers and making security guards wear Ku Klux Klan robes to attack their workers.

"The business records of the recipients are less than flattering. According to well-documented reports summarizing the histories of those that had been awarded contracts, they are variously riddled with "cost overruns, accounting irregularities, financial dereliction, fraud, bankruptcy, overcharging, price gouging, profiteering, wage-cheating, deception, corruption, health and safety violations, worker and community exploitation, human and labor rights abuses, union-busting, strike-breaking, environmental contamination, ecological irresponsibility, malpractice, criminal prosecutions, civil law suits, privatization of public resources, collusion with dictators, trading with regimes in violation of international sanctions, drug-running, prostitution, excessive executive compensation, and breach of fiduciary duty to shareholders and the public.".

Asia Times
October 28, 2003
Spoilers gatecrash the Iraq spoils party
By Herbert Docena
http://www.atimes.com/atimes/Middle_East/EJ28Ak02.html

"But it could also have been a conscious and deliberate decision not to prop up and finance what many majorities still hold to be an illegal occupation."

No Money for the Halliburton Development Fund
By Ian Williams, AlterNet
October 29, 2003
http://www.alternet.org/story.html?StoryID=17070

"They have good reasons for their reluctance to trust Uncle Sam with their money. To begin with, it has taken six months for the U.S. to allow the establishment of the International Advisory and Monitoring Board, which is supposed to supervise the allocations made by the Development Fund, which increasingly resembles a Halliburton/Bechtel moneybox."

The Nation [this item added 11/09/2003]
column | Posted November 6, 2003
LOOKOUT by Naomi Klein
Bring Halliburton Home
http://www.thenation.com/doc.mhtml?i=20031124&s=klein

"Any movement serious about Iraqi self-determination must call not only for an end to Iraq's military occupation, but to its economic colonization as well. That means reversing the shock therapy reforms that US occupation chief Paul Bremer has fraudulently passed off as 'reconstruction' and canceling all privatization contracts 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 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 US Army's own code of war."

The Coalition Provisional Authority has taken a chapter out of Saddam's book to mete out labor relations under the occupation. Here are two references:

David Bacon appeared on Democracy Now! on October 30. http://www.democracynow.org/article.pl?sid=03/10/30/1627246

"Labor journalist David Bacon exposes how the Bush administration is systematically busting unions in Iraq to facilitate privatization and how none of the $87 billion appropriated by Congress for reconstruction will go to Iraqi workers or the unemployed.

"As the Bush administration prepares the way for the transformation of the Iraqi economy through privatization of state enterprises it is not considering protecting or reinforcing labor rights in Iraq. Iraqi workers have suffered a drastic cut in income since April as a result of Coalition Provisional Authority decisions and are now getting paid on the same wage scale that prevailed under the last few years of the Saddam Hussein regime. None of the $87 billion recently appropriated by Congress for reconstruction in Iraq will go to Iraqi workers or the unemployed - which now total about 70% of the population.

"In response, Iraqis have been protesting at workplaces throughout the country demanding better salaries and working conditions. But since April the CPA has essentially banned unions in Iraqi state enterprises, and even issued a decree prohibiting strikes.

"David Bacon, labor journalist who returned from Iraq last week. His article “The Occupation’s War on Iraqi Workers” appears in the upcoming issue of the P

Socialist Worker Online
Delegation of U.S. unionists report back: Rise of Iraq’s new labor movement
By Alan Maass
October 31, 2003
http://www.socialistworker.org/2003-2/474/474_06_IraqiUnion.shtml

This story indicates that the occupation will stoop to using remnants of the old regime they find useful.

"When it comes to unions, though, the occupation authorities 'found a law passed by Saddam Hussein that they like,' Bacon said, 'a law passed in 1987 where anyone working for a state enterprise is considered a civil servant.' That means that workers in Iraq’s oil industry, for example, are legally forbidden from organizing a union--under a Saddam-era law that U.S. officials refuse to reconsider."

MONDO WASHINGTON Vol. 8 No. 34 April 25 - May 1, 2003
Colonial Capitalism
by James Ridgeway
http://www.ocweekly.com/ink/03/34/mondo-ridgeway.php

"Like one of the 19th century European colonial empires, the Bush administration is calling on Bechtel, Halliburton and other major corporations to take over the job of running the Iraqi colony. These companies are to act in the name of the government. They are to be paid out of our taxes. The colonial corporations are the instrument of the nation-state—in this case, to undertake the reconstruction of Iraq. They, not the government, are now the purveyors of laws and customs and democratic ideals.

"Both Fluor and Shell have aroused controversy in the past. Fluor is a Fortune 500 company with a backlog of global contracts totaling $10.6 billion. Along with two other companies, Fluor has contracts for as much as $100 million from the Army Corps of Engineers for work in Afghanistan.

"The company also currently faces a lawsuit by South African black workers claiming Fluor 'exploited and brutalized them during the apartheid era.' Among other things, the claimants say Fluor security men dressed up as Ku Klux Klan members in white robes and attacked unarmed workers. Fluor denies all the allegations."

Perhaps the most important set of reports was released from The Center for Public Integrity on October 30:

Winning Contractors: U.S. Contractors Reap the Windfalls of Post-war Reconstruction
http://www.publicintegrity.org/wow

"WASHINGTON, October 30, 2003 — More than 70 American companies and individuals have won up to $8 billion in contracts for work in postwar Iraq and Afghanistan over the last two years, according to a new study by the Center for Public Integrity. Those companies donated more money to the presidential campaigns of George W. Bush—a little over $500,000—than to any other politician over the last dozen years, the Center found."

One observer summed up the situation. Juan Cole of the University of Michigan, at his excellent blog site, Informed Comment, posted remarks of Professor Timothy Mitchell, of the New York University Political Science Department, who spoke on contemporary Middle East affairs in Ann Arbor, [Mich.] on Thursday 10/30:

"So far the CPA plan for Iraq appears to be to just let businessmen and wealthy landlords run wild, with all the risks of repeating the disastrous errors made in post-Soviet Russia.

"Mitchell also wryly pointed out that the main form of American economic activity in Iraq hasn't been market driven at all, but rather has consisted of a few big corporations with pre-arranged contracts feeding safely at the public trough (the $20 bn. Congress just passed for Iraqi reconstruction will largely go to these champions of the free market).

"I'd add that it is widely recognized that the trade unions played key roles in Japanese and German reconstruction and prosperity after WW II, whereas Bremer has been dissolving all such associations. It is not clear that the Iraqi workers will even retain the right to organize or strike (this right has largely been denied to US workers over the past 30 years, as judges have permitted corporations to engage in union-busting with impunity).

"I'd say that one could forgive the Iraqis if they conclude that the American system in Iraq is a form of state socialism, with Bremer playing the Politburo, giving orders and exercising a veto even though no one elected him to office, and Halliburton and Bechtel playing state-supported industries. Perhaps it looks more like Cuba so far than like capitalist democracy."

II. The privatization program for Iraq

Well before the September 19 decree, a planning contract called "Economic Recovery, Reform and Sustained Growth in Iraq" was awarded to BearingPoint, Inc. of McLean, Virginia on July 25, 2003

Washington Post business columnist Steven Pearlstein writes "BearingPoint Plays the Game Well." in a Friday, October 17, 2003 column.

"The firm was spun off four years ago from accounting firm KPMG. Back then it was known largely as a 'box kicker' hired by companies to advise on which hardware and software to buy -- and then put the stuff together. Since then, it's gone upmarket, changed its name and recast itself as more of a management consulting firm advising companies and government agencies on how to use technology to re-engineer key business processes.

"Now, with more than $3 billon in revenue, an expanded customer list, a global footprint and more than 15,000 employees, BearingPoint finds itself in a sweet spot in the information technology sector. Its strong presence in the government market -- including a recent Iraq contract with a potential value of $80 million."

Pearlstein also writes, "Over the past year, BearingPoint has had to change its audit firm and restate three quarters' worth of profits because of how it accounted for its recent acquisitions."

So trouble has surfaced recently. In this AP wire release, it is reported that BearingPoint has joined the plethora of corporations that overstate earnings in order to inspire undeserved market gains.

The Motley Fool business site calls BearingPoint's behavior "ridiculous."

So what is Iraq in for with this economic "reform" ? Let's take a look at the proposal documents (RFP). USAID, the agency responsible for planning Iraq's economic transformation, has been kind enough to post the Iraq Economic RFP on their website.

The contract "seeks to foster economic rehabilitation and reform for Iraq to stimulate the country's international trade and employment." The schedules proposed in the document can only be described as fast track. Much of the work is to be done within 1–3 years! This is ahead of a proposed development schedule for an Iraqi constitution.

But not often is it reported just what these plans are for Iraq's economy. So here are some examples of the assessment, support, and task functions the Contractor is supposed to fulfill.

In close collaboration under CTO supervision with US Government officials and the evolving Iraqi government, Contractor will assess state-owned enterprises (SOEs) in Iraq in terms of their potential market value for sale as on-going concerns. Subject to appropriate guidance, Contractor will categorize the SOEs from largest to smallest in terms of economic impact. Subject to appropriate guidance, Contractor will also evaluate and recommend the potential for liquidation or dissolution of specific firms or industries, as necessary. Contractor judgments will elaborate on the potential of specific firms or industries for sale to strategic investors and identify the range of potential strategic investors. For specific SOEs or industries where strategic investment is unlikely, then the Contractor will discuss the feasibility for undertaking a 'mass privatization' and discuss various options for its implementation possibilities, such as vouchering...

Contractor therefore needs to reflect the range of views available regarding these potentially controversial matters adequately in its initial judgments and be prepared for direction to implement a differing perspective. (page 10)

If changes to legislation are required, contractor will assist legislative reform specifically to allow for the privatization of State-owned industries and firms and/or establishing a privatization entity. The Contractor will implement USAID-approved recommendations to begin supporting the privatization of strategic industries and appropriate privatization of public utilities, including potentially food distribution and agro-processing industries. (page 11)

It seems the plan is for (1) Dissembling and liquidation of state industries; (2) Introduction of private agriculture and food distribution while state systems on which Iraqis have depended for basic sustenance are phased out; (3) Private ownership of public utilities.

Assistance to be delivered on trade will focus on trade policy in goods, services, and agricultural matters and initially the impact of proposals that have been made for a dual customs exchange rates and tariff structure, to provide separately for the impacts of oil and natural gas. The effort is designed to assure adequate preparations for WTO accession, provided it has not already been accomplished for Iraq. The other focus will be to explore trade and export possibilities and opportunities for investment to support that objective. (page 50)

Iraq must be seen to have great potential for sweatshop development. When combined with a low- or no- tax environment, 100% foreign ownership, and extremely low wages, Iraq must envisioned to become the perfect environment for WTO

Based on the results of the assessments and evaluations, the contractor, with USAID approval, will begin implementation of a Comprehensive Privatization Program (CPP), focusing potentially on strategic investors or on creating and supporting the institution responsible for undertaking privatization. If changes to legislation are required, contractor will provide assistance to develop authorizing legislative reform specifically to allow for the privatization of State-owned industries and firms and/or establishing a privatization entity. The contractor will implement USAID-approved recommendations to begin supporting the privatization, especially those in the oil and supporting industries. (page 62)

That last line is telling. The September 21 decree excluded immediate privatization of oil industries. But it seems the Iraqis could loose public ownership in their oil fields long before a Constitution can be developed or elections can be held under the vague schedule of UN Security Council Resolution 1511 passed on October 16. The situation on what is and is not immediately slated for privatization is fluid and it is difficult to obtain. However, recent increases in violent resistance to the occupation have delayed many projects.

Finally, the Russian privatization parallel is given currency, as the CPA has hired a one of the most infamous characters from the Russian episode.

MoscowTimes
Tuesday, Sep. 9, 2003. Page 1
Gaidar Invited to Shock, Awe Iraq
By Catherine Belton and Oksana Yablokova
http://www.moscowtimes.ru/stories/2003/09/09/001.html

“The architect of Russia's at times disastrous transition to a market economy, Yegor Gaidar, has been invited by the U.S.-led coalition authority in Iraq to help craft a recovery plan for that country's war-torn economy.

"Seeing himself as a "kamikaze" who didn't have much time to bring about revolutionary change before opposition forces moved in, his program of "shock therapy" was aimed at combating potentially disastrous shortages of goods. It ended up sparking a wave of hyperinflation that saw prices increase by a factor of 26 within a year, wiping out the life savings of an entire generation overnight."

New York Press
Shock the Monkey
Yegor Gaidar brings his heavy bag of instruments to Iraq
Volume 16, Issue 38; 9/17/2003 - 9/23/2003
http://www.nypress.com/16/38/news&columns/cage.cfm

"The theft was a surprisingly quick and brutal process. If Iraq is in for the same treatment, here are some of the things Iraqis have to look forward to.

"First, stealing money from people’s pockets. In 1992, Gaidar began implementing a program known as "Shock Therapy" (yet another cruel irony of this business: first Shock and Awe, now Shock Therapy?). Shock Therapy was the brainchild of another Harvard villain, Jeffrey Sachs. In the early phase, this took the form of Gaidar’s move to free the ruble before the end of state-controlled prices. This resulted–as even a child could have predicted it would–in hyperinflation. By the end of 1992, prices in Russia had increased by a factor of 26. Money from 1991 became worthless overnight. Families that had been stuffing mattresses since the siege of Stalingrad saw their life savings disappear in a few weeks.

"The benficiaries? The banks that had been licensed by the state to handle currency exchange operations, which naturally became lucrative as Russians fled to foreign currencies. This small group of bankers, hand-picked by the Gaidar government, would become the first bidders on public properties in the next phase, privatization. After all, who else could bid? Nobody else had any money.

"There is not enough space here to detail the many obscene nuances of the privatization effort, but roughly speaking it came down to one thing: The crown jewels of the Russian economy were handed over to a small group of thugs and gangsters at fractions of their actual cost. In some cases the Chubais/Gaidar clan actually lent state money to friends to help them buy properties."

III. Developing events

Additions for December 30,2003: The U.S. media has paid scant attention to economic planning for occupied Iraq. Perhaps for this reason this story reported Sunday December 28, 2003 in The Washington Post has yet to be picked up very widely:

Attacks Force Retreat From Wide-Ranging Plans for Iraq
By Rajiv Chandrasekaran, Washington Post Foreign Service
Sunday, December 28, 2003; Page A01
http://www.washingtonpost.com/ac2/wp-dyn/A35053-2003Dec27?language=printer

"BAGHDAD, Dec. 27 -- The United States has backed away from several of its more ambitious initiatives to transform Iraq's economy, political system and security forces as attacks on U.S. troops have escalated and the timetable for ending the civil occupation has accelerated.

"Plans to privatize state-owned businesses -- a key part of a larger Bush administration goal to replace the socialist economy of deposed president Saddam Hussein with a free-market system -- have been dropped over the past few months. So too has a demand that Iraqis write a constitution before a transfer of sovereignty.

"With the administration's plans tempered by time and threat, the U.S. administrator of Iraq, L. Paul Bremer, and his deputies are now focused on forging compromises with Iraqi leaders and combating a persistent insurgency in order to meet a July 1 deadline to transfer sovereignty to a provisional government.

" 'There's no question that many of the big-picture items have been pushed down the list or erased completely,' said a senior U.S. official involved in Iraq's reconstruction, who spoke on the condition of anonymity. 'Right now, everyone's attention is focused [on] doing what we need to do to hand over sovereignty by next summer.' "

" The new approach, U.S. diplomats said, calls into question the prospects for initiatives touted by conservative strategists to fashion Iraq into a secular, pluralistic, market-driven nation. While the diplomats maintain those goals are still attainable, the senior official said, 'ideology has become subordinate to the schedule.' "

"... Bremer's plan for Iraqis to write a constitution before he departed had been intended to prevent extremists from dominating the drafting process. U.S. officials acknowledge that risk exists, but said it had been outweighed by the need to end the civil occupation by the summer. The presence of U.S. troops in Iraq will go on longer, military officials have said.

"With goodwill toward Americans ebbing fast, Bremer and his lieutenants have also concluded that it does not make sense to cause new social disruptions or antagonize Iraqis allied with the United States. Selling off state-owned factories would lead to thousands of layoffs, which could prompt labor unrest in a country where 60 percent of the population is already unemployed.

This article goes on to describe how the Americans are backing away from "monetization" of the food rationing system, and privatization of food processing facilities as well. It discusses how Iraqi state-owned enterprises are "decrepit", "bloated", and "inefficient", but that in the interest of promoting stability, authorities have begun, against the advice of American "free-market" consultants, to insist that economic policy, for the moment, not increase already extreme levels of unemployment.

Here is an expansive, detailed examination of how sustenance for the Iraqi people is under control of the American authorities:

Iraqi Food Security in Hands of Occupying Powers
Nathaniel Hurd (Nathaniel Hurd is a consultant on Iraq policy based in New York.)
December 2, 2003
http://www.merip.org/mero/mero120203.html

"After the Iraqi invasion of Kuwait and the UN Security Council's imposition of comprehensive economic sanctions upon Iraq, the former Iraqi government assembled a food ration database, which was later expanded under the UN's so-called Oil for Food program. Grand Ayatollah Ali Sistani and Iraqi Shiite political leaders have recently proposed that the rationing rosters double as makeshift voter rolls for early national elections. Whether or not this proposal is adopted, at least until June 2004 the rosters will serve as guides for food rationing under the US-British occupation government in Iraq, the Coalition Provisional Authority (CPA). On November 21, 2003, as per the stipulation of Security Council Resolution 1483 passed in May, the UN "terminated" the Oil for Food program and turned over the UN's records and warehouse assets to the CPA. Though Resolution 1483 ended 13 years of economic sanctions on Iraq, the food dependency and eroded purchasing power that Iraqis experienced during the economic sanctions era stubbornly persist.

"According to the October 2003 joint assessment of the UN and the World Bank, at least 60 percent of Iraqi civilians, or 15.8 million people, 'completely depend' on the monthly basket of such items as flour, tea, cooking oil and soap distributed under the rationing system. The UN's Food and Agriculture Organization (FAO) and World Food Program (WFP) go further, estimating in a joint report on September 23 that 'approximately 80 percent of the Iraqi population would become vulnerable to food insecurity if the current food rations were no longer accessible'.

"Faced with these numbers, Steven Mann, the CPA coordinator for the Oil for Food program transition, told the UN 661 Committee on November 17 that 'you're not going to see any change in [the public distribution system of a food basket]' before the planned dissolution of the CPA and installment of an Iraqi provisional government in June 2004. The 661 Committee, which oversaw Oil for Food as part of its mandate to monitor the sanctions, watched Mann deliver a 19-slide Power Point presentation intended to assure them that the transition will be controlled and smooth. Yet as of early December, Security Council members, UN agencies and concerned NGOs were still waiting for the CPA to detail -- in depth -- its plans for the distribution of rations. Because the CPA is known to be pondering major changes to the structure of the ration system, its failure to publicize a plan is worrisome."

Here is another related item from the Post:

The Washington Post
Iraq
U.S. Policy and Strategy
Chris Toensing
Editor, 'Middle East Report'
Wednesday, December 10, 2003; 11:00 AM
(This is a Q & A session from an online interactive feature)
http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A50332-2003Dec9&notFound=true

"Kensington, Md.: Hello. I was wondering, in your opinion, what percent of the American public understands the connection between the Bush administration privatizing Iraq's economy straight into the hands of corporate interests that contributed to its 2000 presidential campaign (for the most part), and the fact that we can't get significant help from other countries. The unwillingness of the president to share the spoils of his personal conquest is directly leading our soldiers in particular to be targeted week after week, month after month. Do they really expect the European powers to unilaterally contribute more human help when our "leadership" is jealously holding onto control over who gets what they seem to view as "conquered material"?

"Chris Toensing: A lot of the public knows about the sweetheart deals for Halliburton and so on. But fewer people know about the more consequential decision of the US-British occupation authority to place nearly 200 state-owned Iraqi companies on the auction block. (Orders 39 and 40.) If this "shock therapy" privatization goes through, it could generate social discontent in Iraq that will extend far beyond the so-called Sunni triangle. By the way, as the historian John Dower wrote in the LA Times over the weekend, this is the *major* reason why the occupation of Iraq does not resemble the "successful" US occupation of Japan. In Japan, the US installed structure to protect the Japanese economy from outside competition...the result being an economy that in the 1980s was competing with the US. What's happening economically in Iraq looks to be creating a dependency, not a nation."

One additional item added December 30, 2003; this is a full-length follow-up on Iraq labor issues:

The Progressive, December 2003 issue.
Saddam's Labor Laws Live On
by David Bacon
http://www.progressive.org/dec03/bac1203.html

"Most Iraqi workers hoped the fall of Saddam Hussein would liberate them, enabling them to recover their lost rights. Chief among them was the right to an independent union. In 1987, the regime of Saddam Hussein reclassified most Iraqi workers--those who labored in the huge state enterprises that are the heart of the country's economy--as civil servants. As such, they were prohibited from forming unions and bargaining.

"The occupation, however, didn't lift this decree. It is still in force, as privatization looms like a sword of Damocles over those workers and the factories on which they depend for survival. And while keeping in place the ban on unions, the occupation authorities have kept wages low and unemployment high.

"For Iraqi workers, the signal could not be clearer: The overthrow of Saddam did not bring liberation.

"Iraq has a long history of labor and radical activity, born in the fight against Britain's six-year occupation at the end of World War I. Starting with oil, railroad, and dock workers, unions mounted strike after strike, which the British suppressed at gunpoint, often killing strikers. The monarchy the British installed, lasting until 1958, continued to make union organizing illegal. After the 1958 revolution, unions and radical political parties were able to come above ground for the first time. But in 1963, the CIA helped mount a coup against the Kassem government, and the Ba'ath Party took over. In 1977, Saddam Hussein purged the unions and made radical parties illegal again. Many labor activists were executed, and others fled into exile.

"Following the fall of the Saddam regime in April, organizers of the independent unions resurfaced. In Basra, they mounted a strike two days after the arrival of British troops, demanding the right to organize and protesting the appointment of a Ba'ath Party member as the new mayor. In June, 400 union activists met in Baghdad, forming the Workers Democratic Trade Union Federation. The group laid plans to reorganize unions in twelve of the country's main industries.

"After that meeting, organizers fanned out to workplaces, including the Al Daura oil refinery, located just outside Baghdad. There they encouraged workers in each of the nine departments to elect union committees and to choose leaders for the entire installation. While the plant manager seemed willing to talk with the union, he was not able to sign any kind of contract with the federation. The refinery and all other state enterprises are still covered by the law issued by Saddam in 1987" ....

Announcements have been made the weekend of Nov. 15–16 that the U.S.-controlled, handpicked Iraq Governing Council (IGC) would hand over power to a transitional government by June 2004. Colin Powell suggests that the IGC would have to approve the arrangement, even though, as one commentator (Sam Kubba on PBS News Hour, Friday Nov. 14) points out, the IGC has no legitimacy with most Iraqis.

Iraqis Say U.S. to Cede Power by Summer
Town Meetings to Set Process in Motion By Rajiv Chandrasekaran
Washington Post Foreign Service
Saturday, November 15, 2003; Page A01
http://www.washingtonpost.com/wp-dyn/articles/A42778-2003Nov14.html

BAGHDAD, Nov. 14 -- The Bush administration told leaders of Iraq's Governing Council on Friday that it intends to transfer sovereignty of Iraq by next summer to a provisional government selected by delegates chosen in town meetings across the country, officials of the U.S.-appointed council said.

Sat November 15, 2003 11:07 AM ET
By Alistair Lyon
http://www.reuters.com/newsArticle.jhtml;jsessionid=JUYZH5OFCA32ICRBAEOCFEY?type=topNews&storyID=3828097

BAGHDAD (Reuters) - Iraq's U.S.-appointed Governing Council announced on Saturday a transitional government would take over in June from the U.S.-led powers, in a far swifter restoration of Iraqi sovereignty than first envisaged.

The interim council, created by U.S. administrator Paul Bremer in July, said an elected government would follow by the end of 2005 after a constitution had been drafted and ratified.

Philadelphia Inquirer
CIA has a bleak analysis of Iraq: A report found more civilians there are supporting the resistance. It conflicts with upbeat public assessments.
By Jonathan S. Landay, Washington Bureau
Posted on Wed, Nov. 12, 2003
http://www.philly.com/mld/inquirer/news/front/7239049.htm

" The report's bleak tone and Bremer's private endorsement differ sharply with the upbeat public assessments that President Bush, his chief aides, and even Bremer are giving as part of an aggressive publicity campaign aimed at countering rising anxieties over increasing U.S. casualties in Iraq."

PBS News Hour
IRAQIFICATION November 14, 2003
http://www.pbs.org/newshour/bb/middle_east/july-dec03/iraqification_11-14.html

Sam Kubba is chairman of the American-Iraqi Chamber of Commerce. He's a member of the Iraqi National Movement.

SAM KUBBA: Because one of the problems we are facing in Iraq is the governing council and I don't like using the word but it is like an Iraqi mafia -- people that have been appointed by us by Ambassador Bremer, the CPA, and they don't represent the Iraqi people. So if they are going to have more power, that's not going to help the Iraqis. The Iraqis, at this point, see them more as a bad alternative to Saddam. [emphasis added !!!!] So I think what we need to do is to find a way of trying to give more power to the Iraqis by getting representation by having, for example, each government could have representatives. That's the way I think we should go forward and have some sort of elections there.

SAM KUBBA: Yes, Ray, I think they can take over security, for example. This is something they're good at. But again, I think the problem with legitimacy is that the Governing Council, there's so much corruption in certain areas -- one doesn't want to generalize because a lot of them are very good people -- but there are two or three, for example, where corruption is rampant. And unless we can resolve this issue because the Iraqis are saying, look, under Saddam we had corruption, and now we have corruption. What has changed? So we have to find -- first of all resolve this. We have to remove the people who are corrupt within the governing council and then we might have a little bit more representation.

Press Availability with British Foreign Secretary Jack Straw
Secretary Colin L. Powell / Benjamin Franklin Room / Washington, DC
November 13, 2003 (12:47 p.m. EST)
http://www.state.gov/secretary/rm/2003/26171.htm

QUESTION: Mr. Secretary, actually we've heard a little bit from the Governing Council, not about these ideas that you've been discussing in recent days, but they apparently are rejecting the idea of writing a constitution in coming months and choosing the members of a constitutional drafting committee, saying it would be too divisive. If I could get you to respond to that, sir.

And then for the Foreign Secretary. You were mentioning the upcoming trip of President Bush to your country. What does President Bush need to say to assuage the concerns of the United States' European allies to heal the riffs of recent months? Thank you.

SECRETARY POWELL: As you noted, there has been concern expressed that the time required to write a constitution, if you are going to go through an election process to determine who should be on that constitutional writing commission, could eat up a great deal of time, more time than we think can be allowed before we start transferring sovereignty back. And so we're trying to work through those concerns and see if there's a way to work through them or to find alternatives that would speed up the process in a way that would be acceptable to all members of the Governing Council and other interested parties in Iraq.

IV. Additional Resources

We hear very little from ordinary Iraqis in our mainstream news. But below is a pithy comment on how the behavior of the participants at the recent Madrid "donors conference" might look to an ordinary Iraqi citizen.

"Riverbend," the author of a blog called Baghdad Burning, writes on October 25,

"Always, there was Aznar's big teeth and Palacio's big hair. What struck me in particular was how lavish the whole conference looked. I wonder how much was spent on it… how many schools it could have renovated… how many clinics it could have provided with medication... But that's not reconstruction, of course- clinics and schools are luxuries what's really important is making sure the CPA, Governing Council and ministerial cabinet are all housed comfortably in the palaces and hotels they call home."

If I were an Iraqi citizen, I would react angrily to these developments. While Mr. Bremer is refusing Iraqi citizens any shortcuts, the fate of whole economy and all the public property of Iraq is being short-circuited into a spiral of privatization without broad public participation.

We should not accept the bromide explanations President Bush, Mr. Bremer, and other administration offer concerning the possible sources of violence in Iraq. But maybe we should pay attention to Maj. Gen. Raymond Odierno, who said (sort of accidentally) in an interview broadcast on CSPAN on October 27, "They [the Iraqis] really don't like people from other countries, ah...adjoining countries, operating in their country."

This is truer than even the Major General knows. What society would want an invader to decide its history and its future?

On the subject of the $87bn US taxpayer appropriation, see also:

NEWSWEEK
November 3, 2003 issue
http://www.msnbc.com/news/985304.asp

V. Conclusions

The University of Maine Iraq business conference would take place in the midst of all of this turmoil, and increasing violence within Iraq as many Iraqi people have decided to resist the decisions and financial goals of the invaders. Let's not give the resources of our University to this corrupt endeavor.

Please return here frequently for updates. More resources will be added all the time. Please contribute updates.