Abstract

RISKY BUSINESS

The author comments on the issues discussed at "Rebuilding Iraq 2," a recent gathering of businesspeople interested in investing in the reconstruction of Iraq. It seems finally to have dawned on the investment community that Iraq is not only an "exciting emerging market"; it's also a country on the verge of civil war. It turns out that there is a rather significant hitch in Paul Bremer's bold plan to auction off Iraq while it is still under occupation: The insurance companies aren't going for it. In Iraq, Bremer has overseen the creation of a business climate so volatile that private insurers--including his old colleagues at Marsh & McLennan--are simply unwilling to take the risk, Bremer's Iraq is, by all accounts, uninsurable. If a new Iraqi government expropriates and re-regulates across the board, the U.S. government agency OPIC could be forced to compensate dozens of US firms for billions of dollars in lost investments and revenues, possibly tens of billions. While the enormous profits being made in Iraq are strictly private, it turns out that the entire risk is being shouldered by the public. The reconstruction of Iraq has emerged as a vast protectionist racket, a neocon New Deal that transfers limitless public funds tin contracts, loans and insurance to private firms, and even gets rid of the foreign competition to boot, under the guise of "national security." A legal adviser to Bremer, Carole Basri has a simple message: Reconstruction is being sabotaged by Iraqi corruption.