Economic Surge Needed
An interesting column by Fareed Zakaria over at Newsweek. Fareed argues that the military surge in Iraq “tackles the conflict that defined Iraq from 2003 to 2005—the insurgency—rather than the civil war now raging across the country.” Even “worse, in trying to solve yesterday’s problem we are exacerbating today’s.”
He goes on to write that:
In Baghdad, Shiite militias have melted away. Almost all U.S. military operations are now directed against Sunni insurgents. If those are successful, the picture could look less violent in six months, but it will be a dangerous stasis. A senior U.S. military officer, who is not allowed to speak on the record on these matters, said to me, “If we continue down the path we’re on, the Sunnis in Iraq will throw their lot behind Al Qaeda, and the Sunni majority in the Arab world will believe that we helped in the killing and cleansing of their brethren in Iraq. That’s not a good outcome for the security of the American people.”
We don’t intend to side with anyone. We’re trying to be evenhanded and build a single, democratic nation. But this attempt at neutrality is collapsing in Iraq’s bloody sectarian reality. Last week’s uproar over allegations that Shiite policemen in Baghdad had raped a 20-year-old Sunni woman vividly illustrates how trust between the two communities has been shattered. Shiite Prime Minister Nuri al-Maliki first ordered an investigation, then 12 hours later declared the woman a liar, freed and rewarded the alleged rapists and later fired a Sunni official who had called for an unbiased investigation. Meanwhile we’re stuck in the middle, promising to uncover the truth while both sides are convinced that we’ve betrayed them. This is the definition of a no-win strategy.
Then, what does Iraq need? How can the U.S. still win the war in Iraq? Fareed’s answer: an economic surge. He explains that such a surge “is long overdue. One of the less-remarked-upon blunders of the Coalition Provisional Authority was that—consumed by free-market ideology—it shut down all of Iraq’s state-owned enterprises. This crippled the bulk of Iraq’s non-oil economy, threw hundreds of thousands of workers into the streets and further alienated the Sunnis, who were the managerial class of the country. The economic effects of this decision have been seismic. For example, Iraq’s agricultural productivity has plummeted because fertilizer plants were summarily closed. Unemployment in non-Kurdish Iraq remains close to 50 percent, which helps explain why so many young men are joining gangs, militias and insurgent groups. For the moment at least, democracy in Iraq has sharpened the country’s divisions. Capitalism and commerce can make them less relevant. That is the lesson of many conflict-ridden countries from Northern Ireland to Mozambique to Vietnam.”
Paul Brinkley, deputy under secretary of defense, recently got a bus factory up and running again: it’s a success. Workers were more than willing to go back to work and insurgents don’t dare attack the factories out of fear of alienating locals.
Brinkley also said that 143 of the 193 state-owned factories could be restarted soon except for one problem… money. It’s incredibly difficult for Brinkley to convince the American government that it needs to invest in these factories. The U.S. is investing $18 billion in reconstruction… but virtually nothing in state-owned companies.
The sad part? It would cost the U.S. only $100 million for the next 12 months. $100 million… that’s, Fareed explains, what the U.S. military will spend in Iraq in the next 12 hours.
This $100 million would result in more than 150 000 jobs. It would boost Iraq’s economy tremendously. More jobs = less unrest. More jobs = less bitterness, etc.
It’s quite incredible.
Note to George W. Bush: give Brinkley the freaking money.
Now.
The U.S. can think that the role of the government should be limited, etc. but to do that now? To start reforming the economy tremendously right now is a bit early, isn’t it? First rebuild the economy, then reform it. First economic security then economic reforms.
11 Responses to “Economic Surge Needed”
This is an old story that gets ignored, the radical privitzation of Iraqis industry. This policy, implemented by Bremer, contributed to the security problem, unemployed Sunnis Iraqis had nothing to do and their anger was directed to the US. Two generals were opposed to this policy, Garner and Patreus, one was fired and the other is the ‘next great white hope’ From Harpers and another link.
Should anyone forget, Joe Allbaugh brought ‘heck of a job Brownie’ to FEMA.
Rudi: yes this is an ‘old story’ on the one hand, on the other, someone is busy trying to restart those state owned companies right now, so if people would spend more attention to it… who knows, it just might change something…
What I find discouraging is that this post has virtually no comments (only your comment and now mine). You write: “this is an old story that gets ignored”… but the sad reality seems to be that when it’s not ignored by journalists and / or bloggers, readers don’t pick it up.
This is quite a major story, one that has to be addressed, if implemented what Zakaria suggests there will be considerable improvement…
Anyway, I also suggest that, if people want to know what kind of mistakes exactly were made in Iraq, one reads In Denial. I’m rereading it right now
Maybe the capitalist bonanza for US consulting firms, headed by well-connected Republicans is what Cheney means when he talks about the “enormous successes” that we have had in Iraq. If you think about it in a narrow sense, it has been a huge windfall for some of the “Pioneers” and “Rangers” that kept the Bush campaign afloat in 2000. It certainly has not been an “enormous success” for American taxpayers or for the unemployed, angry Iraqis.
I get that complaining about mistakes made in 2003 will not fix what is going on now, but I’m afraid I no longer trust Bushco to make an honest attempt to rebuild Iraq or offer a sound economic incentive plan for its citizens to aid in a national reconcilliation. It is too late for that.
MvdG The Bush failure was trying to implement these radical changes on the cheap. The ME has a history of nationalozing industry and resources(Nasser and pre-Shah). Other than Chalibi, I don’t recall any Arabs calling for radical free markets in Iraq. It might of worked if:
1) The Iraqis really wanted this radical change.
2) The security situation wasn’t a disater. Economics and state ownership don’t matter if you fear for your life going to the market.
I believe Zakaria brought this up before on ABC appearances. Riversbend had a post about Iraqis rebuilding after GW1 for pennies compared to the corruption and incompetence of the US and CPA. The change is working in the Old Eastern Europe. The change to free markets in Russia is having populist problems because of the corruption associated with market takeover. Putin and the old Soviet elites took over large segments of the economy, while the average Russian goes nowhere.
Rudi, Mvdg- Do you think the move by Bremer to dismantle government-owned industry was just a blunder by Bremer, who just was trying to make sure that the Baathist government couldn’t return to power, or that the whole issue of joblessness for the Iraqis was ignored because the real priority was opening up markets for American corporations? Bremer, quite honestly, did not seem that stupid to me.
I’m going with naive idealogy over pragmatism. The Bushanistas overreached and tried the whole PNAC neo-liberal agenda across the board. Nobody wanted to here the downside to sweeping reform of a foreign culture and country. There was a battle over the CPA between DoD and DoState, with the idealogues there to do a grand experiment. What is good at a think-tank or on a whitepaper doesn’t always translate over to the real world. Garner and others fought with Bremmer over his sweeping changes, I think the Rummy model (out quick) allowed for Bremmer’s misteps. Chalabi and the villagers with flowers and candies would install a Western government and Arab teahouses would be replaced with Starbucks and KFC. Look how great things are working in the Greenzone.
KR – Have you read this before? It covers the overreach of Bremmer and the US. The UN and a Shia Iraqis government will probably undo all of CPA orders.
http://www.harpers.org/BaghdadYearZero.html
Baghdad Year Zero
Pillaging Iraq in pursuit of a neocon utopia
Rudi-OMG- That was stunning. It confirmed what I’ve always suspected- no wonder 66% of Iraqis don’t care if Americans get shot! Bushco raped that country just as colonialism raped Africa. And many in our country now have the attitude that they are too savage or ungrateful to appreciate the “gift” of democracy that we gave them. Great article. The neocon wetdream was never about Iraqis voting, it was about free markets opening up, and billions going to well-connected GOP contributors who would work in the CPA or help with the reconstruction of Iraq. These people are really scum.
KR Take a breath and relax, we did the same thing to Russia and Eastern Europe with the shock-therapy to the former stae run economies. A big difference is that Poland and Hungary weren’t ocupied by a foreign army. The CPA tried shock-therapy in the middle of a war zone, the Eastern European countries were secure after the Communisms fall. If Iraq was secure, the CPA policies had a slim chance, without security the chance was zero.
I’m with Rudi: naive ideology.
Money: would they like to make money? Sure, but it was not the reason. Bremer, for instance, simply thought that the American multinationals should come in with their money and knowledge and start rebuilding Iraq / the economy and then Iraqis would be better of as well (it would go quickly, it would not cost the Iraqis a lot of money, etc.).
Obviously that’s quite the wrong approach BUT… as Rudi said “What is good at a think-tank or on a whitepaper doesn’t always translate over to the real world.”
LOL The Four Horsemen have gathered up Ronny Reagan and their on the way……