Selling (Off) Iraq
Echoes of Vietnam
According to AID administrator Andrew Natsios, the US government will spend no more than $1.7 billion for Iraq's immediate reconstruction needs. With Iraq's infrastructure a shambles, much of its government ministries and agencies looted, and its gross domestic product estimated by the Treasury Department at somewhere between $25 billion and $60 billion a year--less than half of what it was in 1978--many analysts believe the country will need at least $200 billion more to meet the Bush Administration's goal of creating a functioning market economy. Even if half of that is provided by oil revenues and multilateral institutions like the World Bank, that still leaves a gap of $100 billion for private investors. "FDI [foreign direct investment] is the answer to all Iraq's problems," said Bleyzer.
There is a kind of missionary fervor among those participating in the effort. "The United States has a moral obligation to make this country work," said Bart Fisher, a Washington trade lawyer who helped found the US-Iraq Business Council last June. Now that sanctions have been lifted and legal avenues are being cleared for foreign investment, Fisher predicts a surge of investment in information technology ("I think IBM would be very interested in getting them online"), oilfield-drilling suppliers, insurance companies and agribusiness, with companies like Schlumberger, American International Group (AIG) and Cargill leading the way. Because of the dilapidated state of Iraq's healthcare system, "you'll see US healthcare and pharmaceutical companies coming in there too." Manufacturing for export is another possibility. "I think it would be great if Toyota went there and built automobiles," said Fisher, who has represented the government of China and Mars Inc., one of the world's largest producers of chocolate.
Hoffmann, a former general counsel for the Pentagon who advised Rumsfeld on the US treatment of Al Qaeda detainees, sees a national security imperative in his proposals to use privatization to keep terrorism at bay. Countries in political chaos, he warned, will remain unstable unless they see immediate benefits from their American benefactors. "One of the ways you achieve security in a country like Afghanistan or Iraq is to start economic development really early, and the people get the idea that you're there," he said. He likened his philosophy to the strategic hamlets built by US forces in South Vietnam to relocate peasants from their villages during the US counterinsurgency campaigns of the 1960s. "That was basic economic development," Hoffmann said. "Once that village got itself arranged so it could see it had a future and there was cash in the economy because of the crops they were raising, they wouldn't let the Vietcong come in and ruin their future."
Gabriel Kolko, a historian who has written extensively about Vietnam and US economic policies during the cold war, called Hoffmann's reference to the strategic hamlets "mind-boggling." "These guys in Washington know how to win wars but know nothing about how a peace is won," he said. The Communist victory in Vietnam, Kolko argued, was largely due to the social chaos caused by US policies, and should serve as a lesson for US officials in their attempt to remake Iraq. In his book Anatomy of a War, Kolko described the strategic hamlet as "a concentration camp of sorts," where with "sheer brutality," recalcitrant peasants were compelled by South Vietnam's army, sometimes with artillery and aircraft, to seek refuge. But because the hamlets "weren't economically viable," Kolko told me, peasants were forced into the cities, where they were marginalized and forced to work as prostitutes or shoeshine boys. That ultimately caused "a political overload that South Vietnam's leaders couldn't manage," he said. "If the Americans had not mucked around with the social structure, the war might have lasted much longer. The people in the Army didn't have the foggiest notion of what they were doing."
Signing Up to Play
But many companies today seem to believe the opposite about Rumsfeld's military--and are eager to get a first crack at a market under US control. Since the fighting ended, the US-Iraq Business Council has been getting 80-120 calls or e-mails a day expressing interest in investing, said Rubar Sandi, a Kurdish-American investor who came to the United States twenty-eight years ago from Iraq and is the council's chairman.
Sandi has been trying to recruit influential Americans to support the council, including Henry Kissinger (through his global consulting firm, Kissinger said he is "willing to let the council tell him what they're doing, but would certainly not serve" in an advisory position). Recently Sandi made a pitch to the Center for International Private Enterprise, an affiliate of the US Chamber of Commerce that's partially funded by the National Endowment for Democracy, to promote US business practices in developing countries. (Congress created the NED to give money to the chamber, the AFL-CIO and indirectly to the Democratic and Republican parties to support pro-US democratic movements abroad.)
DynCorp International, a military contractor that is organizing law enforcement in Iraq under a contract with the State Department worth at least $50 million, has subcontracted with Sandi's bank to "provide information on housing and different sorts of infrastructure situations in Iraq," a spokesperson for DynCorp's parent, Computer Sciences Corporation, said. Other companies considering joining, council officials said, are Coca-Cola, AIG and Pfizer, the world's largest pharmaceutical manufacturer. Pfizer has another link to Iraq: A senior executive on leave, Emad Dhia, chairs the Pentagon's Iraqi Reconstruction and Redevelopment Council, a group of Iraqi exiles who are to assume key positions in Iraqi ministries (technically, they are employed by Science Applications International, a San Diego-based military contractor--a sign of how far privatization has already gone).
The Center for Democracy, a Washington political rights group that has monitored elections overseas, is headed by Allen Weinstein, who was instrumental in the founding of the NED. He is the council's political adviser, according to the council's website. "Allen has been helpful with relations with Congress and other broader political issues," said Fisher, who serves on the center's board, along with Kissinger, Senator Richard Lugar and other political figures (through his assistant, Weinstein said he has held discussions with the council but denied any formal connection).
Another major player is Thomas Miner, a Chicago business promoter and chairman emeritus of the Mid-America Committee of the Chicago Council on Foreign Relations, an exclusive group of CEOs from the largest multinationals in the Midwest. He has signed on to organize a conference in Chicago for corporations hoping to invest in Iraq. Arnold & Porter, a powerful Washington law firm, is hoping to serve as the council's law firm, according to Dennis Sokol, a New England healthcare executive. Sokol, whose company owns a chain of privately run clinics in Russia and Eastern Europe, has been advising the council about companies to approach for membership. An Arnold & Porter spokesperson would neither confirm nor deny the firm's interest in the council.