Business Is the Next Big Casualty in Iraq

By Dahr Jamail and Ali Al-Fadhily, IPS News. Posted December 4, 2006.

"Iraq got the foreign investment rules long sought by U.S. corporations," says Antonia Juhasz, a visiting scholar at the Institute for Policy Studies in Washington.

Juhasz said the new laws, which were a part of the 100 'Bremer Orders' instituted by former U.S. administrator Paul Bremer when he headed the Coalition Provisional Authority during the first year of the occupation, provided a flood of benefits for U.S. companies.

These included "100 percent repatriation of profits earned in Iraq by foreign companies; 100 percent foreign ownership of Iraqi businesses, including banks; privatisation of Iraq's state owned enterprises; 100 percent immunity for U.S. contractors and soldiers from Iraq's laws; and 'national treatment' which allowed for Iraqis to be all but excluded from the reconstruction for years while the U.S. government paid 50 billion dollars to some 150 U.S. corporations for work in Iraq."

What followed was "a U.S. corporate invasion of Iraq," says Juhasz. "Many companies had their sights set on privatisation in Iraq, also made possible by Bremer, which helps explain their interest in 'major overhauls' rather than getting the systems up and running."

In contrast, there was much state support for businesses under the previous regime, which followed a socialist system under which the government allowed Iraqis to establish their own factories and workshops, and supported them in many ways.

Businesses were granted low interest loans and permission to transfer foreign currency. They could get state-owned land to build on. Administrative laws facilitated enterprise, and so small industry business bloomed during the 1970s and 1980s.

Major industries in Iraq for oil products, phosphates and cement, along with the military industry, were mostly state-run under the previous regime. Foreign companies were allowed, under state supervision, to build factories as Iraq moved towards increasing industrialisation.

This growth was reversed during the 1990's under the U.S-backed UN economic sanctions. The sanctions crippled the Iraqi dinar and people's ability to purchase goods and services.

The business situation worsened further during the U.S.-led invasion when most factories ceased to function. Many were bombed, and for other factories employees stayed at home. Following the invasion several were looted, and were never able to start again.

Some private businesses held out, but eventually security problems, lack of electricity and fuel, a staggering inflation rate (70 percent) and lack of safe transportation led many of these too to close down. Unemployment now stands at more than 50 percent -- but most people believe the real situation is far worse.

Thousands of business and factory owners sold what they could and fled to neighbouring countries. Those who did not now wish they had.

"I used to employ more than 30 workers in my plastic products factory, and business was good before the occupation," Abbas Ali said in Baghdad. "It is impossible to work now, and I had to go back to my old job as school teacher. I was offered 200,000 dollars for the business, but now it is not worth anything. I blame myself for not selling it to flee, like some of my colleagues who live safely in Syria now."

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Dahr Jamail is an independent journalist who reports from Iraq.

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