Shock Doctrine by Naomi Klein, 2007, Edited Excerpts
In the original Washington plan, Iraq was going to become a frontier just as Russia had been in the early nineties, but this time it would be U.S. firms - not local ones or European, Russian or Chinese – that would be first in line for the easy billions. In Iraq, Washington cut out the middlemen: the IMF and the World Bank were regulated to supporting roles, and the U.S. was front and center.
Paul Bremer was the government. Paul Bremer received trade and investment laws by email for the Department of Defense, printing them out, signing them and imposing them by fiat on the Iraqi people. Peter McPherson, the senior economic advisor to Paul Bremer, his job, as Iraq’s top economic shock therapist, was to radically downsize the state and privatize its assets.
Bremer spent his first four months in Iraq almost exclusively focused on economic transformation, passing a series of laws that together make up a classic Chicago School shock therapy program. Before the invasion, Iraq’s economy had been anchored by its national oil company and bytwo hundred state owned companies, which produced the staples of the Iraqi diet and the raw materials of its industry, everything from cement to paper and cooking oil. The month after he arrived at his new job, Bremer announced that the two hundred firms were going to be privatized immediately. “Getting inefficient state enterprises into private hands,” Bremer said, “is essential for Iraq’s economic recovery.”
One law lowered Iraq’s corporate tax rate from roughly 45 percent to a flat 15 percent. Even better, investors could take 10 percent of the profits they made in Iraq out of the country; they would not be required to reinvest, and they would not be taxed.
The White House was so focused on unveiling a shiny new Iraq economy that it launched a brand-new currency. Bills were delivered in fleets of planes and distributed in armored vehicles and trucks that ran at least a thousand missions throughout the country. Within a few months, there was talk of a McDonald’s opening in downtown Baghdad, the ultimate symbol of Iraq joining the global economy.
The model pioneered by Cheney for Halliburton in the Balkans, where bases were transformed into mini Halliburton towns, was adopted on a vastly larger scale. In addition to Halliburton’s construction and management of military bases across the country, the Green Zone was, from the start, a Halliburton-run city-state, with the company in charge of everything from road maintenance to pest control to movie and disco nights.
Even the job of building “local democracy” was privatized, given to the North Carolina-based Research Triangle Institute in a contract worth up to $66 million, though it’s not clear what qualified RTI to bring democracy to a Muslim country. The leadership of the company’s Iraq operation was dominated by high-level Mormons – people like James Mayfield, who told his mission back in Houston that he thought Muslims could be persuaded to embrace the Book of Mormon as compatible with the teachings of the prophet Muhammad.
Privatizing Iraq’s Oil
In December 2006, the bipartisan Iraq Study Group fronted by James Baker issued its long awaited report, It called for the U.S. to “assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise” and to “encourage investment in Iraq’s oil sector by the international community and by international energy companies.
Washington’s timing was extremely revealing. At the point when the law was pushed forward, Iraq was facing its most profound crisis to date: the country was being torn apart by sectarian conflict with an average of one thousand Iraqis killed every week. Saddam Hussein had just been put to death in a depraved and provocative episode. Simultaneously, Bush was unleashing his surge of troops in Iraq, operating with less restricted rules of engagement. Iraq in this period was fat too volatile for the oil giants to make major investments, so there was no pressing need for a new law – except use the chaos to bypass public debate on the most contentious issue facing the country.
Iraq’s main labor unions declared the “the privatization of oil is a red line that may not be crossed” and condemned the law as an attempt to seize Iraq’s “energy resources at a time when the Iraqi people are seeking to determine their own future while still under conditions of occupation.” The law that was finally adopted by Iraq’s cabinet in February 2007 was even worse than anticipated. The law called for Iraq’s publicly owned oil reserves, the country’s main source of revenues, to be exempted from democratic control and run instead by a powerful, wealthy oil dictatorship, which would exist along Iraq’s broken and ineffective government.
It’s hard to overstate the disgrace of this attempted resource grab. Iraq’s oil profits are the country’s only hope of financing its own reconstruction when some semblance of peace returns. To lay claim to that future wealth in a moment of national disintegration was disaster capitalism at its most shameless.
