BAGHDAD YEAR ZERO Pillaging Iraq in Pursuit of a Neocon Utopia by Naomi Klein

BAGHDAD YEAR ZERO Pillaging Iraq in pursuit of a neocon utopia By Naomi Klein

It was only after I had been in Bagh- Seeing the sign, I couldn t help Hussein, then by asphyxiating Unit- dad for a month that I found what I was but think about something Senator ed Nations sanctions. looking for. I had traveled to Iraq a John McCain had said back in Octo- Looking at the honey billboard, I year after the war began, at the height ber. Iraq, he said , is " a huge pot of was also reminded of the most common of what should have been a construc- honey that's attracting a lot of flies. explanation for what has gone wrong tion boom, but after weeks of searching The flies McCain was referring to in Iraq, a complaint echoed by every- I had not seen a single one from John Kerry piece of heavy machin- to Pat Buchanan: Iraq ery apart ftom tanks and is mired in blood and humvees. Then I saw it: deprivation because a construction crane. It George W. Bush was big and yellow and didn t have "a postwar impressive, and when I . plan." The only prob- caught a glimpse of it lem with this theory around a corner in a that it isn t true. The busy shopping district I Bush Administration thought that I was fi- did have a plan for nally about to witness what it would do after some of the reconstruc- the war; put simply, it . tion I had heard so was to layout as much much about. But as I got honey as possible, then closer I noticed that the sit back and wait for crane was not actually the flies. rebuilding any thing- The honey theory not one of the bombed- of Iraqi reconstruction out government build- SUNBULAH HONEY BILLBOARD BAGHDAD stems from the most ings that still lay in cherished belief of the rubble all over the city, nor one of the were the Halliburtons and Bechtels, war s ideological architects: that greed many power lines that remained in as well as the venture capitalists who is good. Not good just for them and twisted heaps even as the heat of sum- flocked to Iraq in the path cleared by their friends but good for humanity, mer was starting to bear down. No, the Bradley Fighting Vehicles and laser- and certainly good for Iraqis. Greed crane was hoisting a giant billboard to guided bombs. The honey that drew creates profit, which creates growth the top of a three-story building. SUN- them was not just no-bid contracts which creates jobs and products and BULAH: HONEY 100% NATURAL, made and Iraq s famed oil wealth but the services and everything else anyone in Saudi Arabia. myriad investment opportunities of- could possibly need or want. The role fered by a country that had just been of good government, then, is to create cracked wide open after decades of the optimal conditions for corpora- Naomi Klein is the author of No Logo and writer/producer of The Take a new docu- being sealed off, first by the national- tions to pursue their bottomless greed mentary on Argentina s occuPied factories. ist economic policies of Saddam so that they in turn can meet the

Photographs ~ Andrew Stern/ AndrewStern.net REPORT 43 , "

needs of the society. The problem is an interval-which may be extreme- military onslaught were even extin- that governments, even neoconserv- ly brief-of suspended animation, a guished, Bremer unleashed his shqck ative governments, rarely get the kind of psychological shock or paraly- therapy, pushing through more wrench- chance to prove their sacred theory sis. . . . (A)t this moment the source is far ing changes in one sweltering summer right: despite their enormous ideo- more open to suggestion, far likelier to . than the International Monetary Fund logical advances, even George Bush' comply." A similar theory applies to has managed to enact over three Republicans are, in their own minds, economic shock therapy, or "shock decades in "Latin America. Joseph' perennially sabotaged by meddling treatment," the ugly term used to de- Stiglitz, Nobel laureate and former chief Democrats, intractable unions, and scribe the rapid implementation of free- economist at the World Bank, describes alarmist environmentalists. market reforms imposed on Chile in . Bremer s reforms as "an even more rad- Iraq was going to change all that. In the wake of General Augusto Pino- ical form of shock therapy than pur- one place on Earth, the theory would chet's coup. The theory is that if painful sued in the former Soviet world. finally be put into practice in its most economic "adjustments" are brought The tone of Bremer s tenure was set perfect and uncompromised form. with his first major act on the job: A country of 25 million would not he fired 500,000 state workers, be rebuilt as it was before the war; most of them soldiers, but also IRAQ WAS MEANT TO BE A GLEAMING it would be erased, disappeared. doctors, nurses , teachers, pub- In its place would spring forth a SHOWROOM FOR LAISSEZ-FAIRE lishers, and printers. Next, he gleaming showroom for laissez- ECONOMICS, A UTOPIA SUCH AS THE flung open the country s borders faire economics, a utopia such as to absolutely unrestricted imports: WORLD HAD NEVER SEEN the world had never seen. Every no tariffs, no duties, no inspec- policy that liberates multination- tions, no taxes. Iraq, Bremer de- al corporations to pursue their clared two weeks after he arrived quest for profit would be put into place: in rapidly and in the aftermath of a was "open for business. a shrunken state, a flexible workforce, seismic social disruption like a war, a One month later, Bremer unveiled open borders, minimal taxes, no tar- coup, or a government collapse, the the centerpiece of his reforms. Before iffs, no ownership restrictions. The population will be so stunned, and so the invasion, Iraq s non-oil-related people of Iraq would, of course, have to preoccupied with the daily pressures of economy had been dominated by 200 endure some short-term pain: assets, survival, that it too will go into sus- state-owned companies, which pro- previously owned by the state, would pended animation, unable to resist. As duced everything from cement to pa- have to be given up to create new op- Pinochet s finance minister, Admiral per to washing machines. In June, portunities for growth and investment. Lorenzo Goruzzo, declared, "The dog Bremer flew to an economic summit in Jobs would have to be lost and, as for- tail must be cut off in one chop. Jordan and announced that these firms eign products flooded across the border That, in essence , was the working would be privatized immediately. "Get- local businesses and family farms would thesis in Iraq, and in keeping with the ting inefficient state enterprises into unfortunately, be unable to compete. belief that private companies are more private hands " he said is essential But to the authors of this plan, these suited than governments for virtually for Iraq s economic recovery." It would would be small prices to pay for the every task, the White House decided to be the largest state liquidation sale economic boom that would surely ex- privatize the task of privatizing Iraq since the collapse of the Soviet Union. plode once the proper conditions were state-dominated economy. Two But Bremer s economic engineer- ' in place, a boom so powerful the coun- months before the war began, USAID ing had only just begun. In September try would practically rebuild itself. began drafting a work order, to be to entice foreign investors to come to The fact that the boom never came handed out to a private company, to Iraq, he enacted a radical set of laws and Iraq continues to tremble under , oversee Iraq s "transition to a sustain- unprecedented in their generosity to explosions of a very different sort should able market-driven economic system. multinational corporations. There was never be blamed on the absence of a The document states that the winning Order 37, which lowered Iraq s corpo- plan. Rather, the blame rests with the company (which turned out to be the rate tax rate from roughly 40 percent plan itself, and the extraordinarily KPMG offshoot Bearing Point) will to a flat 15 percent. There was Order violent ideology upon which take "appropriate advantage of the 39, which allowed foreign companies it is based. unique opportunity for rapid progress in to own 100 percent ofiraqi assets out- this area presented by the current con- side of the natural-resource sector. .orturers believe that when elec- figuration of political circumstances. Even better, investors could take 100 trical shocks are applied to various parts Which is precisely what happened. percent of the profits they made in of the body simultaneously subjects are L. Paul Bremer, who led the u.S. oc- Iraq out of the country; they would rendered so confused about where the cupation oflraq from May 2 2003 , un- not be required to reinvest and they pain is coming from that they become til he caught an early flight out of Bagh- would not be taxed. Under Order 39 incapable of resistance. A declassified dad on June 28, admits that when he they could sign leases and contracts CIA "Counterintelligence Interroga- arrived, "Baghdad was on fire, literally, that would last for forty years. Order 40 tion" manual from 1963 describes how as I drove in from the airport." But be- welcomed foreign banks to Iraq under a trauma inflicted on prisoners opens up fore the fires from the "shock and awe the same favorable terms. All that re-

44 HARPER'S MAGAZINE / SEPTEMBER 2004 mained of Sad dam Hussein s econom- group was preparing to offer substantial Future of IraqProject, which generat- ic policies was a law restricting trade loans guaranteed against future sales of ed a thirteen-volume report on how unions and collective bargaining. Iraqi oil, and the bell was going to ring to restore basic services and transition If these policies sound familiar, it on a New York-style stock exchange to democracy after the war. On the because they are the same ones multi- in Baghdad any day. other side was the "Year Zero" camp, nationals around the world lobby for In only a few months, the postwar those who believed that Iraq was so from national governments and in in- plan to turn Iraq into a laboratory for contaminated that it needed to be ternational trade agreements. But the neocons had been realized. Leo rubbed out and remade from scratch. while these reforms are only ever en- Strauss may have provided the intel- The prime advocate of the pragmatic acted in part, or in fits and starts, Brem- lectual framework for invading Iraq. approach was Iyad Allawi, a former er delivered them all, all at once. preemptively, but it was that other high-level Baathist who fell out with Overnight, Iraq went from being the University of Chicago professor, Mil- Saddam and started working for the most isolated country in the world to ton Friedman, author of the anti- CIA. The prime advocate of the Year being, on paper, its widest- government manifesto CaPitalism and Zero approach was Ahmad Chalabi, open market. Freedom, who supplied the manual for whose hatred of the Iraqi state for ex- what to do once the country was safe- propriating his family s assets during t first, the shock-therapy theo- ly in America s hands. This repre- the 1958 revolution ran so deep he ry seemed to hold: Iraqis, reeling from sented an enormous victory for the longed to see the entire country burned violence both military and economic most ideological wing of the Bush Ad- to the ground-everything, that is, but were far too busy staying alive to ministration. But it was also some- the Oil Ministry, which would be the mount a political response to Bremer thing more: the culmination of two nucle\ls of the new Iraq, the cluster of campaign. Worrying about the privatization of the sewage system was an unimaginable luxury with half the population lacking access to clean drink- ing water; the debate over the flat tax would have to wait until the lights were back on. Even in the international press, Bremer s new laws, though radical, were easily upstaged by more dramatic news of political chaos and rising crime. Some people were paying attention of course. That autumn was awash in rebuilding Iraq" trade shows, in Wash- ington, London, Madrid, and Amman. The Economist described Iraq under Bremer as "a capitalist dream," and a flurry of new consulting firms were launched promising to help companies get access to the Iraqi market, their boards of directors stacked with well- connected Republicans. The most prominent was New Bridge Strategies, AN IRAQI TELECOMMUNICATIONS CENTER, BOMBED DURING THE WAR started by Joe Allbaugh, former Bush- Cheney campaign manager. "Getting interlinked power struggles, one cells from which an entire nation the rights to distribute Procter & Gam- among Iraqi exiles advising the White would grow. He called this process ble products can be a gold mine " one House on its postwar strategy, the oth- de- Baathificatiori.. of the company s partners enthused. er within the White House itself. A parallel battle between pragma- One well-stocked 7 - Eleven could As the British historian Dilip Hiro tists and true believers was being waged knock out thirty Iraqi stores; a Wal- has shown , in Secrets and Lies: Opera- within the Bush Administration. The Mart could takeover the country. tion 'Iraqi Freedom' and After the Iraqi pragmatists were men like Secretary Soon there were rumors that a Mc- exiles pushing for the invasion were of State Colin Powell and General Jay Donald' s would be opening up in divided, broadly, into two camps. On Garner, the first u.s. envoy to postwar downtown Baghdad, funding was al- one side were "the pragmatists, " who Iraq. General Garner s plan was most in place for a Starwood luxury favored getting rid of Saddam and his straightforward enough: fix the infra- hotel, and General Motors was plan- immediate entourage, securing access structure, hold quick and dirty elec- ning to build an auto plant. On the to oil, and slowly introducing free- tions, leave the shock therapy to the financial side , HSBC would have market reforms. Many of these exiles International Monetary Fund, and branches all over the country, Citi- were part of the State Department concentrate on securing u.S. military

REPORT 45 bases on the model of the Philippines. in general, and the two agendas ef- A Reagan-era diplomat turned en~ I think we should look right now at fortlessly merged. Together, they came trepreneur, Bremer had recently proven Iraq as our coaling station in the Mid- to imagine the invasion of Iraq as a his ability to transform rubble into gold dle East, " he told the BBc. He also kind of Rapture: where the rest of the by waiting exactly one month after the paraphrased T. E. Lawrence, saying, world saw death, they saw birth-a . September 11 attacks to launch Crisis It' s better for them to do it imper- country redeemed through violence, Consulting Practice, a security com- fectly than for us to do it for them cleansed by fire. Iraq wasn t being de- pany selling "terrorism risk insurance perfectly." On the other side was the stroyed by cruise missiles, cluster to multinationals. Bremer had two lieu- tenants on the economic front: Thomas Foley and Michael Fleischer, the heads of "private sector development" for the Coalition Provisional Authority (CPA). Foley is a Greenwich, Con- necticut, multimillionaire, a longtime friend of the Bush family and a Bush- Cheney campaign "pioneer" who has described Iraq as a modern California gold rush." Fleischer, a venture capitalist, is the brother of former White House spokesman Ari Fleischer. Nei- ther man had any high- level diplo- matic experience and both use the term corporate "turnaround" specialist to describe what they do. According to Foley, this uniquely qualified them to manage Iraq s economy because it was the mother of all turnarounds. Many of the other CPA postings were equally ideological. The Green Zone, the city within a city that hous- BLAST WAlL TO PROTECT AGAINST EXPLOSIONS es the occupation headquarters in Sad- dam s former palace, was filled with usual cast of neoconservatives: Vice bombs, chaos, and looting; it was be- Young Republicans straight out of the President Dick Cheney, Secretary of ing born again. April 9, 2003 , the day Heritage Foundation, all of them giv- Defense Donald Rumsfeld (who laud- Baghdad fell, was Day en responsibility they could never have ed Bremer s "sweeping reforms " as One of Year Zero. dreamed of receiving at home. Jay some of the most enlightened and Hallen, a twenty-four-year-old who inviting tax and investment laws in , 'hile the war was being waged, it had applied for a job at the White the free world"), Deputy Secretary of still wasn t clear whether the pragma- House, was put in charge of launching Defense Paul Wolfowitz, and, perhaps tists or the Year Zeroists would be hand- Baghdad' s new stock exchange. Scott most centrally, Undersecretary of De- ed control over occupied Iraq. But the Erwin, a twenty-one-year-old former fense Douglas Feith. Whereas the State speed with which the nation was con- intern to Dick Cheney, reported in an Department had its Future of Iraq re- quered dramatically increased the neo- email home that "I am assisting Iraqis port, the neocons had USAID' s con- . cons' political capital , since they had in the management of finances and tract with Bearing Point to remake been predicting a "cakewalk" all along. budgeting for the domestic security Iraq s economy: in 108 pages, "priva- Eight days after George Bush landed forces." The college senior s favorite tization" was mentioned no fewer than on that aircraft carrier under a banner job before this one? "My time as an fifty-one times. To the true believers in that said MISSION ACCOMPLISHED, the ice-cream truck driver." In those early the White House, General Garner President publicly signed on to the neo- days, the Green Zone felt a bit like the plans for postwar Iraq seemed hope- cons' vision for Iraq to become a mod- Peace Corps, for people who think the lessly unambitious. Why settle for a /el corporate state that would open up Peace Corps is a communist plot. It mere coaling station when you can the entire region. On May 9, Bush pro- was a chance to sleep on cots, wear have a model free market? Why settle posed the "establishment of a U. army boots, and cry "intoming -all for the Philippines when you can have Middle East free trade area within a while being guarded around the clock a beacon unto the world? decade ; three days later, Bush sent by real soldiers. The Iraqi Year Zeroists made nat- Paul Bremer to Baghdad to replace Jay The teams of KPMG accountants ural allies for the White House neo- Garner, who had been on the job for investment bankers, think-tank lifers conservatives: Chalabi's seething ha- only three weeks. The message was un- and Young Republicans that populate tred of the Baathist state fit nicely equivocal: the pragmatists had lost; the Green Zone have much in com- with the neocons' hatred of the state Iraq would belong to the believers. mon with the IMF missions that re-

46 HARPER'S MAGAZINE / SEPTEMBER 2004 yet, no McDonald's or Wal-Mart in hands, or, as is the norm in the Gulf re- arrange the economies of developing gion , to bar "foreign firms from owning countries from the presidential suites of Baghdad, and even the sales of state factories, announced so confidently nine 100 percent of national assets. If that Sheraton hotels the world over. Ex- happened, investments made under cept for one rather significant differ- months earlier, had not materialized. Bremer s rules could be expropriated, ence: in Iraq they were not negotiating Some of the holdup had to do with leaving firms with no recourse because with the government to accept their the physical risks of doing business in their investments had violated inter- structural adjustments" in exchange Iraq. But there were other more sig- national law from the outset. for a loan; they were the government. nificant risks as well. When Paul Brem- , trade lawyers started Some small steps were taken, how- er shredded Iraq s Baathist constitu- By November ever, to bring Iraq s U.S:-appointed tion and replaced it with what The to advise their corporate clients not to go into Iraq just yet, that it would b~ politicians inside. Yegor Gaidar, the Economist greeted approvingly as "the mastermind. of Russia s mid-nineties wish list of foreign investors " there better to wait until after the transi- privatization auction that gave away was one small detail he failed to mention. Insurance companies were so spooked that not a single one of the big the country s assets to the reigning tion: It was all completely illegal. The firms would insure investors for "po- oligarchs, was in~ited to share his wis- CPA derived its legal authority from dom at a conference in Baghdad. United Nations Security Council Res- litical risk," that high-stakes area of Marek Belka, who as finance minister olution 1483, passed in May 2003, insurance law that protects companies oversaw the same process in Poland, which recognized the United States against foreign governments turning was bro~ght in as well. The Iraqis who and Britain as Iraq s legitimate occu- nationalist or socialist and expropri- proved most gifted at mouthing the piers. It was this resolution that em- ating their investments. neocon lines were selected to act as powered Bremer to unilaterally make Even the U. -appointed Iraqi what USAID calls local "policy cham- laws in Iraq. But the resolution also politicians, up to now so obedient, pions -men like Ahmad al Mukhtar, stated that the u.s. and Britain must were getting nervous about their own who told me of his countrymen, "They comply fully with their obligations political futures if they went along with are lazy. The Iraqis by nature, they under international law including in the privatization plans. Communica- Abadi told are very dependent. . . . They will have particular the Geneva Conventions of tions Minister Haider al- to depend on themselves, it is the 1949 and the Hague Regulations of me about his first meeting with Bremer. only way to survive in the world to- 1907." Both conventions were born as I said, 'Look, we don t have the man- day." Although he has no economics an attempt to curtail the unfortunate date to sell any of this. Privatization is background and his last job was read- historical tendency among occupying a big thing. We have to wait until ing the English-language news on tele- powers to rewrite the rules so that they there is an Iraqi government.'" Min- vision, al Mukhtar was appointed di- can economically strip the nations they ister of Industry Mohamad T ofiq was rector of foreign relations in the control. With this in mind, the con- even more direct: "I am not going to do Ministry of Trade and is leading the ventions stipulate that an occupier something that is not legal, so that s it. charge for Iraq to join the must abide by a country s existing laws Both al-Abadi and Tofiq told me reported in World Trade Organization. unless "absolutely prevented" from do- about a meeting-never ing so. They also state that ap. occupi- the press-that took place in late Oc- had been following the economic er does not own the "public buildings, tober 2003. At that gathering the front of the war for almost a year twenty-five members of Iraq al) the before I decided to go to Iraq. I at- Governing Council as well twenty-five interim ministers de- tended the "Rebuilding Iraq" trade INTERNATIONAL LAW PROHIBITS shows, studied Bremer s tax and cided unanimously that they investment laws, met with con- . OCCUPIERS FROM SELLING STATE would not participate in the privatization of Iraq s state-owned tractors at their home offices in ASSETS BUT DOESN'T SAY ANYTHING companies or of its publicly owned the United States, interviewed the ABOUT PUPPET GOVERNMENTS government officials in Washing- infrastructure. t give up. In- ton who are making the policies. But Bremer didn But as I prepared to travel to Iraq ternationallaw prohibits occupiers , but in March to see this experiment in free- real estate, forests and agricultural as- from selling state assets themselves market utopianism up close, it was be- sets" of the country it is occupying but it doesn t say anything about the pup- coming increasingly clear that all was is rather their "administrator" and cus- pet governments they appoint. Origi- not going according to plan. Bremer todian, keeping them secure until sov- nally, Bremer had pledged to hand over had been working on the theory that if ereignty is reestablished. This was the power to a directly elected Iraqi gov- you build a corporate utopia the cor- true threat to the Year Zero plan: since ernment, but in early November he porations will come-but where were America didn t own Iraq s assets, it went to Washington for a private meet- they? American multinationals were could not legally sell them, which ing with President Bush and came back happy to accept U.S. taxpayer dollars to meant that after the occupation ended, with a Plan B. On June 30 the occu- but not reconstruct the phone or electricity sys- an Iraqi government could come to pation would officially end- tems, but they weren t sinking their power and decide that it wanted to really. It would be replaced by an ap- , chosen by Wash- own money into Iraq. There was, as keep the state companies " in public pointed government

REPORT 47 ngton. This government would not be tani, the most senior Shia cleric in But three hours after my arrival in Jound by the international laws pre- Iraq. al Sistani tried to block Bremer Baghdad, I was finding these reassur- Tenting occupiers from selling off state plan at every turn, calling for imme- ances extremely hard to believe. I had not yet unpacked when my hotel room lSsets, but it would be bound by an "in- diate direct elections and for the con- erim constitution," a document that stitution to be written after those elec- was filled with debris and the windows 1V0uld protect Bremer s investment and tions, not before. Both demands, if in the lobby were shattered. Down the Jrivatization laws. met, would have closed Bremer s pri- street, the Mount Lebanon Hotel had The plan was risky. Bremer s June vatization window. Then, on March 2 just been bombed, at that point the jQ deadline was awfully close, and it with the Shia members of the Gov- largest attack of its kind since the of- .vas chosen for a less than ideal reason: erning Council refusing to sign the ficial end of the war. The next day, iO that President Bush could trumpet interim constitution, five bombs ex- another hotel was bombed in Basra, :he end of Iraq s occupation on the ploded in front of mosques in Karbala then two Finnish businessmen were :ampaign trail. If everything went ac- and Baghdad, killing close to 200 wor- murdered on their way to a meeting in :ording to plan, Bremer would suc- shipers. General John Abizaid, the top Baghdad. Brigadier General Mark Kim- :eed in forcing a "sovereign" Iraqi mitt finally admitted that there ;overnment to carry out his ille- was a pattern at work: "the ex- tremists have started shifting away ;al reforms. But if something MANY OF THE BUSINESSMEN WHOSE went wrong, he would have to go from the hard targets... (and) are 3.head with the June 30 handover COMPANIES ARE THREATENED BY now going out of their way to specifically target softer targets. my way because by then Karl BREMER' S INVESTMENT LAWS HAVE Rove, and not Dick Cheney or The next day, the State Depart- MADE INVESTMENTS IN THE RESISTANCE Donald Rumsfeld, would be call- ment updated its travel advisory: ing the shots. And if it came down S. citizens were "strongly to a choice between ideology in warned against travel to Iraq. Iraq and the electability of George W. S. commander in Iraq, warned that The physical risks of doing business Bush, everyone knew which the country was on the verge of civil in Iraq seemed to be spiraling out of would win. war. Frightened by this prospect, al control. This, once again, was not part Sistani backed down and the Shia of the original plan. When Bremer first t first, Plan B seemed to be right politicians signed the interim consti- arrived in Baghdad, the armed resis- on track. Bremer persuaded the Iraqi tution. It was a familiar story: the tance was so low that he was able to Governing Council to agree to every- shock of a violent attack paved the walk the streets with a minimal secu- thing: the new timetable, the interim way for more shock therapy. rity entourage. During his first four government, and the interim constitu- When I arrived in Iraq a week lat- months on the job, 109 u.S. soldiers tion. He even managed to slip into the er, the economic project seemed to be were killed and 570 were wounded. In constitution a completely overlooked back on track. All that remained for the following four months, when Brem- clause, Article 26. It stated that for the Bremer was to get his interim consti- s shock therapy had taken effect, the duration of the interim government tution ratified by a Security Council number of U.s. casualties almost dou- The laws, regulations, orders and di- resolution, then the nervous lawyers . bled, with 195 soldiers killed and 1,633 rectives issued by the Coalition Pro- and insurance brokers could relax and wounded. There are many in Iraq who visional Authority. . . shall remain in the sell-off of Iraq could finally begin. argue that these events are connect- force" and could only be changed after The CPA, meanwhile, had launched, ed-that Bremer s reforms were the general elections are held. a major new P.R. offensive designed to single largest factor leading to the rise Bremer had found his legallobP- reassure investors that Iraq was still a of armed resistance. hole: There would be a window- safe and exciting place to do business. Take, for instance, Bremer s first ca- seven months-when the occupation The centerpiece of the campaign was sualties. The soldiers and workers he was officially over but before general Destination Baghdad Exposition, a laid off without pensions or severance elections were scheduled to rake massive trade show for potential in- pay didn t all disappear quietly. Many place. Within this window, the Hague vestors to be held ,in early April at the of them went straight into the muja- and Geneva Conventions' bans on Baghdad International Fairgrounds. It hedeen, forming the backbone of the privatization would no longer apply, was the first such event inside Iraq, armed resistance. "Half a million people but Bremer s own laws, thanks to Ar- and the organizers had branded the are now worse off, and there you have ticle 26, would stand. During these trade fair "DBX," as if it were some the water tap that keeps the insurgency seven months, foreign investors could sort of Mountain Dew-sponsored dirt- going. It's alternative employment, come to Iraq and sign forty-year con- bike race. In keeping with the extreme- says Hussain Kubba, head of the promi- tracts to buy up Iraqi assets. If a future sports theme, Thomas Foley traveled nent Iraqi business group Kubba Con- elected Iraqi government decided to to Washington to tell a gathering of sulting. Some of Bremer s other eco- change the rules, investors could sue executives that the risks in Iraq are nomic casualties also have failed to go for compensation. akin "to skydiving or riding a motor- quietly. It turns out that many of the But Bremer had a formidable op- cycle, which are, to many, very ac- businessmen whose companies are ponent: Grand Ayatollah Ali al Sis- ceptable risks. threatened by Bremer s investment laws

48 HARPER'S MAGAZINE SEPTEMBER 2004 , " , "

have decided to make investments of tic crisis after September 11 and was owned factories had been pointedly their own-in the resistance. It is part- briefly unable to design structures re- excluded from the reconstruction con- ly their money that keeps fighters in sembling the rubble of modern build- tracts. Instead, the billions have all Kalashnikovs and RPGs. ings. Asaad' s looted and burned facto- gone to Western companies, with most These developments present a chal- ry looks remarkably like a heavy-metal of the materials for the reconstruction lenge to the basic logic of shock ther- version of Gehry s Guggenheim in Bil- imported at great expense from abroad. apy: the neocons were convinced that bao, Spain, with waves of steel, buck- With unemployment as high as 67 if they brought in their reforms quick- led by fire, lying in terrifyingly beauti- percent, the imported products and for- ly and ruthlessly, Iraqis would be too ful golden heaps. Yet all was not lost. eign workers flooding across the borders stunned to resist. But the shock ap- The looters were good-hearted," one have become a source of tremendous re- pears to have had the opposite effect; of Asaad's painters told me, explaining sentment in Iraq and yet another open rather than the predicted paralysis, it that they left the tools and machines tap fueling the insurgency. And Iraqis jolted many Iraqis into action, much of behind so we could work again." Be- don t have to look far for reminders of it extreme. Haider al-Abadi, Iraq cause the machines are still there, many this injustice; it s on display in the most minister of communication, puts it this factory managers in Iraq say that it ubiquitous symbol of the occupation: way: "We know that there are ter- the blast wall. The ten-foot-high rorists in the country, but previous- slabs of reinforced concrete are ly they were not successful , they everywhere in Iraq, separating the were isolated. Now because the protected--:-the people in upscale whole country is unhappy, and a lot hotels, luxury homes, military bases, of people don t have jobs. . : these and, of course, the Green Zone- terrorists are finding listening ears. from the unprotected and exposed. Bremer was now at odds not If that wasn t injury enough, all the only with the Iraqis who opposed blast walls are imported, from Kur- his plans but with u.S military com- distan, Turkey, or even farther afield manders charged with putting down this despite the fact tha,t Iraq was the insurgency his policies were feed- once a major manufacturer of ce- ing. Heretical questions began to be ment, and could easily be again. raised: instead of laying people off, There are seventeen state-owned ce- what if the CPA actually created ment factories across the country, jobs for Iraqis? And instead of rush- but most are idle or working at ing to sell off Iraq s 200 state-owned only half capacity. According to the firms, how about putting Ministry of Industry, not one of these them back to work? factories has received a single contract to help with the reconstruc- rom the start, the neocons run- tion, even though they could pro- ning Iraq had shown nothing but duce the walls and meet other needs disdain for Iraq s state-owned for cement at a greatly reduced cost. companies. In keeping with their The CPA pays up to $1 000 per im- Year Zero-apocalyptic glee, when ported blast wall; local manufactur- looters descended on the factories ers say they could make them for during the war, U. S. forces did AFTER THE ATTACK ON THE MOUNT LEBANON HOTEL $100. Minister Tofiq says there is a nothing. Sabah Asaad, managing simple reason why the Americans director of a refrigerator factory out- would take little for them to return to refuse to help get Iraq s cement facto- side Baghdad, told me that while the full production. They need emergency ries running ' again: among those mak- looting was going on, he went to a generators to cope with daily black- ing the decisions no one believes in nearby u.s. Army base and begged outs, and they need capital for parts the public sector. for help. "I asked one of the officers and raw materials. If that happened, it This kind of ideological blindness to send two soldiers and a vehicle to would have tremendous implications has turned Iraq s occupiers into pris- help me kick out the looters. I was for ,Iraq s stalled reconstruction, be- oners of their own policies, hiding be- crying. The officer said, 'Sorry, we cause it would mean that many of the hind walls that, by their very exis- can t do anything, we need an order key materials needed to rebuild-ce- tence , fuel the rage at the U. from President Bush. '" Back in ment and steel, bricks and furniture- presence, thereby feeding the need for Washington, Donald Rumsfeld could be produced inside the country. shrugged. "Free people are free to But it hasn t happened. Immedi- Tofiq did say that several U. S. companies make mistakes and commit crimes ately after the nominal end of the war had expressed strong interest in buying the and do bad things. state-owned cement factories. This supports Congress appropriated $2.5 billion for de- To see the remains of Asaad' a widely held belief in Iraq that there is a the reconstruction of Iraq, followed by liberate strategy to neglect the state firms football-field-size warehouse is to un- an additional $18.4 billion in Octo- that they can be sold more cheaply-a prac- derstand why Frank Gehry had an artis- ber. Yet as of July 2004, Iraq s state- tice known as "starve then sell."

REPORT 49 more walls. In Baghdad the concrete thing to a woman in a white lab coat, snapped on by machines were being barriers have been given a popular and suddenly the factory scrambled hammered in place with wooden mal- nickname: Bremer Walls. into activity: lights switched on, mo- lets. Even the water for the factory was As the insurgency grew, it soon be- tors revved up, and workers-still drawn from an outdoor well, hoisted came dear that if Bremer went ahead blinking off sleep-began filling two- by hand, and carried inside. with his plans to sell off the state com- liter plastic bottles with pale blue Zahi The solution proposed by the u.S. panies, it could worsen the violence. brand dishwashing liquid. occupiers was not to fix the plant but There was no question that privatiza- I asked Nada Ahmed, the woman in to sell it, and so when Bremer an- tion would require layoffs: the Min- the white coat, why the factory wasn nounced the privatization auction back istry of Industry estimates that rough- working a few minutes before. Sheex~ in June 2003 this was among the first ly 145 000 workers would have to be plained that they have only enough companies mentioned. Yet when I vis- fired to make the firms desirable to in- electricity and materials to run the ma- ited the factory in March, nobody vestors, with each of those workers sup- chines for a couple of hours a day, but wanted to talk about the privatization porting, on average, five family mem- when guests arrive-would-be investors, plan; the mere mention of the word in- bers, For Iraq s besieged occupiers the ministry officials, journalists-they get side the plant inspired awkward si- question was: Would these shock-ther- them going. "For show " she explained. lences and meaningful glances. This apy casualties accept their Behind us, a dozen bulky machines sat seemed an unnatural amount of sub- fate or would they rebel? idle, covered in sheets of dusty plastic text for a soap factory, and I tried to get rJ" and secured with duct tape. to the bottom of it when I interviewed .he answer arrived, in rather dra- In one dark corner of the plant, we the assistant manager. But the inter- matic fashion, at one of the largest came across an old man hunched over view itself was equally odd: I had spent state-owned companies, the General a sack filled with white plastic caps. half a week setting it up, submitting written questions for approval, getting a signed letter of permission from the minister of industry, being questioned and searched several times. But when I finally began the interview, the assistant manager refused to tell me his name or let me record the conversa- tion. "Any manager mentioned in the press is attacked afterwards, " he said. And when I asked whether the company was being sold, he gave this oblique response: "If the decision was up to the workers, they are against privatization; but if it s up to the high- ranking officials and government, then privatization is an order and orders must be followed. I left the plant feeling that I kneW' less than when I'd arrived. But on the way out of the gates, a young security guard handed my translator a note. He wanted us to meet him after work at a

A MAN AITEMPTS TO PROVIDE ELECTRICITY FOR HIS FAMILY, SADR CITY nearby restaurant, "to find out what is really going on with privatization." His Company for Vegetable Oils. The With a thin' metal blade lodged in a name was Mahmud, and he was a complex of six factories in a Baghdad wedge of wax, he carefully whittled twenty-five-year-old with a neat beard industrial zone produces cooking oil down the edges of each cap, leaving a and big black eyes. (For his safety, I hand soap, laundry detergent, shaving pile of shavings at his feet. "We don have omitted his last name. ) His sto- cream, and shampoo. At least that is have the spare part for the proper mold ry began in July, a few weeks after what I was told by a receptionist who so we have to cut them by hand " his Bremer s privatization announcement. gave me glossy brochures 'and calendars supervisor explained apologetically. The company s manager, on his way to boasting of "modern instruments" and We haven t received any parts from work, was shot to death. Press reports the latest and most up to date devel- Germany since the sanctions began." I speculated that the manager was mur- opments in the field of industry." But noticed that even on the assembly lines dered because he was in favor of pri- when I approached the soap factory, I that were nominally working there was vatizing the plant, but Mahmud was discovered a group of workers sleep- almost no mechanization: bottles were convinced that he was killed because ing outside a darkened building. Our held under spouts by hand because con- he opposed the plan. "He would nev- guide rushed ahead, shouting some- veyor belts don t convey, lids once er have sold the factorles like the

50 HARPER'S MAGAZINE / SEPTEMBER 2004 , "

Americans want. That s why they an:d managers, in turn, fear their work- the newspaper, Bremer was giving al killed him. ers, a fact that makes privatization dis- Sadr his response: he wasn t negotiat- The dead man was replaced by a new tinctly more complicated ing with this young upstart; he d rather manager, Mudhfar Ja far. Shortly after than the neocons foresaw. take him out with force. taking over, Ja far called a meeting with When I arrived at the demonstra- mi~istry officials to discuss selling off s I left the meeting with Mah- tion, the streets were filled with men the soap factory, which would involve mud, I got word that there was a ma- dressed in black, the soon-to-be leg- laying off two thirds of its employees. jor demonstration outside the CPA endary Mahdi Army. It struck me that Guarding that meeting were several headquarters. Supporters of the radical if Mahmud lost his security guard job security officers from the plant. They young cleric Moqtada al Sadr were at the soap factory, he could be one of listened closely to Ja far s plans them. That's who al Sadr s foot and promptly reported the alarm- soldiers are: the young men who have been shut out of the neo- ing news to their coworkers. " IF EVER THERE WAS A MOMENT WHEN were shocked," Mahmud recalled. cons' grand plans for Iraq, who If the private sector buys our com- IRAQIS WERE TOO DISORIENTED TO see no possibilities for work, and pany, the first thing they would RESIST SHOCK THERAPY, THAT MOMENT whose neighborhoods have seen do is reduce the staff to make more none of the promised recon- HAS DEFINITELY PASSED money. And we will be forced into struction. Bremer has failed these a very hard destiny, because the young men, and everywhere that factory is our only way of living. he has failed, Moqtada al Sadr Frightened by this prospect, a group protesting the closing of their news- has cannily set out to succeed. In Shia of seventeen workers, including Mah- paper al Hawza by military police. slums from Baghdad to Basra, a net- mud, marched into Ja far s office to The CPA accused al Hawza of pub- work of Sadr Centers coordinate a confront him on what they had heard. lishing "false articles" that could "pose kind of shadow reconstruction. Fund- Unfortunately, he wasn t there, only the real threat of violence." As an ex- ed through donations, the centers dis- the assistant manager, the one you ample, it cited an article that claimed patch electricians to fix power and met " Mahmud told me. A fight broke Bremer "is pursuing a policy of starv- phone lines, organize local garbage out: one worker struck the assistant ing the Iraqi people to make them pre- collection, set up emergency genera- manager, and a bodyguard fired three occupied with procuring their daily tors, run blood drives, direct traffic shots at the workers. The crowd then bread so they do not have the chance where the streetlights don t work. And att~cked the bodyguard, took his gun to demand their political and individ- yes, they organize militias too. Al Sadr and, Mahmud said stabbed him with ual freedoms." To me it sounded less took Bremer s economic casualties a knife in the back three times. He like hate literature than a concise sum- dressed them in black, and gave them spent a month in the hospitaL" InJan- mary of Milton Friedman s recipe for rusty Kalashnikovs. His militiamen uary there was even more violence. On shock therapy. protected the mosques and the state their way to work, Ja far, the manager, A few days before the newspaper factories when the occupation au- and his son were shot and badly in- was shut down, I had gone to Kufa thorities did not, but in some areas jured. Mahmud told me he had no idea during Friday prayers to 'listen to al they also went further, zealously en- who was behind the attack, but I was Sadr at his mosque. He had launched forcing Islamic law by torching liquor starting to understand why factory man- into a tirade against Bremer s newly stores and terrorizing women without agers in Iraq try to keep a low profile. signed interim constitution, calling it the veil. Indeed, the astronomical rise At the end of our meeting, I asked an unjust, terrorist document." The of the brand of religious fundamen- Mahmud what would happen if the message of the sermon was clear: talism that al Sadr represents is an- plant was sold despite the workers Grand Ayatollah Ali al Sistani may other kind of blowback from Bremer objections. "There are two choices, have' backed down on the constitu- shock therapy: if the reconstruction he said, looking me in' the eye and tion, but al Sadr and his supporters had provided jobs, security, and ser- smiling kindly. "Either we will set the were still determined to fight it-and vices to Iraqis al Sadr would have factory on fire and let the flames de- if they succeeded th~y would sabotage been deprived of both his mission and vour it to the ground, or we will blow the neocons' careful plan to saddle many of his newfound followers. ourselves up inside of it. But it will not Iraq s next government with their At the same time as al Sadr s fol- be privatized. wish list" oflaws. With the closing of lowers were shouting "Down with If there ever was a moment when America" outside the Green Zone, something was happening in another Iraqis were too disoriented to resist It is in Basra where the connections between shock therapy, that moment has defi- economic reforms and the rise of the resistance part of the country that would change nitely passed. Labor relations, like was put in starkest terms. In December the everything. Four American mercenary everything else in Iraq, has become a union representing oil workers was negotiating soldiers were killed in Fallujah, their blood sport. The violence on the with the Oil Ministry for a salo.ry increase. charred and dismembered bodies hung Gettingriowhere , the workers offered the min- like trophies over the Euphrates. The streets howls at the gates of the facto- istry a simple choice: increase their paltry ries, threatening to engulf them. Work- salo.ries or they would all join the armed resis- attacks would prove a devastating blow ers fear job loss as a death sentence tance. They received a substantial raise, for the neocons, one from which they

REPORT 51 would never recover. With these im- For their part, the organizers of anytime soon " company partner Ed ages, investing in Iraq suddenly didn DBX, the historic Baghdad trade fair, Rogers told the Washington Post. Nei- look anything like a capitalist dream; decided to relocate to the lovely ther is Wal- Mart. The Financial Times it looked like a macabre tourist city of Diyarbakir in Turkey, has declared Iraq "the most dangerous nightmare made real. just 250 km from the Iraqi border. place in the world in which to do busi- rJ"'" An Iraqi landscape, only without those ness. " It s quite an accomplishment: in .he day I left Baghdad was the frightening Iraqis. Three weeks later trying to design the best place in the worst yet. Fallujah was under siege and just fifteen people showed up for a world to do business, the neocons have Brig. Gen. Kimmitt was threatening Commerce Department conference in managed to create the worst, the most to "destroy the al-Mahdi Army." By Lansing, Michigan, on investing in eloquent indictment yet of the guiding the end, roughly 2 000 Iraqis were Iraq. Its host, Republican Congress- logic behind deregulated free markets. killed in these twin campaigns. I was man Mike Rogers, tried to reassure his The violence has not just kept in- dropped off at a security checkpoint skeptical audience by saying that Iraq vestors out; it also forced Bremer, be- several miles from the airport, then is " like a rough neighborhood any- fore he left, to abandon many' of his loaded onto a bus jammed with con- where in America." The foreign in- central economic policies. Privatiza- tractors lugging hastily packed bags. vestors, the ones who were offered tion of the state companies is off the Although no one was calling it one every imaginable free-market entice- table; instead, several of the state com- this was an evacuation: over the next ment, are clearly not convinced; there panies have been offered up for lease, week 1 500 contractors left Iraq, and is still no sign of them. Keith Crane, but only if the investor agrees not to lay some governments began airlifting a senior economist at the Rand Cor- off a single employee. Thousands of their citizens out of the country. On poration who has worked for the CPA, the state workers that Bremer fired have the bus no one spoke; we all just lis- put it bluntly: "I don t believe the been rehired, and significant raises have tened to the mortar fire, craning our board of a multinational company been handed out in the public sector as necks to see the red glow. A guy car- could approve a major investment in a whole. Plans to do away with the rying a KPMG briefcase decided to this environment. If people are shoot- food-ration program have also been lighten things up. "So is there busi- ing at each other, it s just difficult . scrapped-it just doesn t seem like a ness class on this flight?" he asked the do business." Hamid Jassim Khamis, good time to deny millions of Iraqis silent bus. From the back, somebody the manager of the largest soft-drink the only nutrition on which called out, "Not yet. bottling plant, in the region, told me they can depend. Indeed, it may be quite a while be- he can t find any investors, even rJ"'" fore business class truly arrives in Iraq. though he landed the exclusive rights ~e final blow to the neocon dream When we landed in Amman, to produce Pepsi in central Iraq. "A lot came in the weeks before the hand- learned that we had gotten out just in of people have approached us to invest over. The White House and the CPA time. That morning three Japanese in the factory, but people are really were rushing to get the u.N. Security civilians were kidnapped and their cap- hesitating now. " Khamis said he Council to pass a resolution endors- tors were threatening to burn them couldn t blame them; in five months ing their handover plan. They had alive. Two days later Nicholas Berg he has survived an attempted assassi- twisted arms to give the top job to for- went missing and was not seen again nation, a carjacking, two bombs plant- mer CIA agent Iyad Allawi, a move until the snuff film surfaced of his be- ed at the entrance of his factory, and that will ensure that Iraq becomes, at heading, an even more terrifying mes- the kidnapping of his son. the very least, the coaling station for sage for U.S. contractors than the Despite having been granted the first u.S. troops that Jay Garner originally charred bodies in Fallujah. These were license for a foreign bank to operate envisioned. But if major corporate in- the start of a wave of kidnappings and in Iraq in forty years, HSBC still vestors were going to come to Iraq in killings of foreigners, most of them busi- hasn t opened any branches, a deci- the future, they would need a stronger nesspeople, from a rainbow of nations: sion that may mean losing the covet- guarantee that Bremer s economic laws South Korea, Italy, China, Nepal, Pak- ed license altogether. Procter & Gam- would stick. There was only one way istan, the Philippines, Turkey. By the ble has put its joint venture on hold, of doing that: the Security Council end of June more than. ninety con- and so has General Motors. The u.S. resolution had to ratify the interim tractors were reported dead in Iraq. financial backers of the Starwood lux- constitution, which locked in Bremer When seven Turkish contractors were ury hotel and multiplex have gotten laws for the duration of the interim kidnapped in June, their captors asked cold feet, and Siemens AG has pulled government. But al Sistani once again the "company to cancel all contracts most staff from Iraq. The bell hasn objected, this time unequivocally, say- and pull out employees from Iraq. rung yet at the Baghdad Stock Ex- ing that the constitution has been "re- Many insurance companies stopped change-in fact you can t even use jected by the majority of the Iraqi selling life insurance to contractors, credit cards in Iraq s cash-only econo- people." On June 8 the Security Coun- and others began to charge premiums my. New Bridge Strategies, the com- cil unanimously passed a resolution as high as $10 000 a week for a single pany that had gushed back in October that endorsed the handover plan but West~rn executive-the same price about how "a Wal-Mart could take made absolutely no reference to the some insurgents reportedly pay for a over the country," is sounding distinctly constitution. In the face of this far- dead American. humbled. "McDonald' s is not opening reaching defeat, George W. Bush cel-

52 HARPER'S MAGAZINE / SEPTEMBER 2004 ebrated the resolution as a historic vic- . neoconservative dream of transform- Iraq global capitalism has retreated tory, one that came just in time for an ing the country into a free-market at least for now. For the neocons, this election trail photo op at the G-S Sum- utopia has already died, a casualty of a must be a shocking development: mit in Georgia. greater dream-a second term for their ideological belief in greed turns With Bremer s laws in limbo, Iraqi George W. Bush. out to be stronger than greed itself. ministers are already talking openly The great historical irony of the Iraq was to the neocons what about breaking contracts signed by the catastrophe unfolding in Iraq is that Afghanistan was to the T aliban: the CP A. Citigroup s loan scheme has the shock-therapy reforms that were one place on Earth where they could been rejected as a misuse of Iraq s oil supposed to create an economic force everyone to live by the most lit- revenues. Iraq s communication min- boom that would rebuild the country eral, unyielding interpretation of their ister is threatening to renegotiate con- have instead fueled a resistance that sacred texts. One would think that the tracts with the three communications ultimately made reconstruction im- bloody results of this experiment would firms providing the country with its possible. Bremer s reforms unleashed inspire a crisis of faith: in the country disastrously poor cell phone service. forces that the neocons neither pre- where they had absolute free reign, And the Lebanese and U.S. compa- dicted nor could hope to control where there was no local government nies hired to run the state tele- to blame, where economic re- vision network have been in- forms were introduced at their formed that they could lose most shocking and most per- their licenses because they are fect, they created, instead of a not Iraqi. "We will see if we model free market, a failed state can change the contract no right-thinking investor Hamid al-Kifaey, spokesperson would touch. And yet the for the Governing Council Green Zone neocons and their said in May. "They have no masters in Washington are no idea about Iraq." For most in- more likely tQ reexamine their vestors, this complete lack of core beliefs than the Taliban legal certainty simply makes mullahs were inclined to search Iraq too great a risk. their souls when their Islamic But while the Iraqi resistance state slid into a debauched has managed to scare off the Hades of opium and sex slavery. first wave of corporate raiders, When facts threaten true be- there s little doubt that they lievers, they simply close their will return. Whatever form the eyes and pray harder. next Iraqi government takes- Which is precisely what nationalist, Islamist , or free Thomas Foley has been doing. market-it will inherit a shat- The former head of "private tered nation with a crushing sector development" has left $120 billion debt. Then, as in Iraq, a country he had de- all poor countries around the scribed as "the mother of all world, men in dark blue suits turnarounds " and has accept- from the IMF will appear at the ed another turnaround job, as door, bearing loans and promis- co-chair of George Bush's re- es of economic boom, provid- election committee in Con- ed that certain structural ad- necticut. On April 30 in justments are made, which will, Washington he addressed a of course, be rather painful at crowd of entrepreneurs about first but well worth the sacrifice business prospects in Baghdad. in the end. In fact, the process SEWAGE FLOWS THROUGH THE STREETS OF BAGHDAD It was a tough day to be giving has already begun: the IMF is an upbeat speech: that morn- poised to approve loans worth $2.5- from armed insurrections inside fac- ing the first photographs had appeared $4.25 billion, pending agreement on tories to tens of thousands of unem- out of Abu Ghraib, including one of a the conditions. After an endless suc- ployed young men arming them- hooded prisoner with electrical wires cession of courageous last stands and far selves. These forces have transformed attached to his hands. This was an- . too many lost lives, Iraq will become a Year Zero in Iraq into the mirror op- other kind of shock therapy, far more poor nation like any other, with politi- posite of what the neocons envi- literal than the one Foley had helped cians determined to introduce policies sioned: not a corporate utopia but a to administer, but not entirely uncon- rejected by the vast majority of the ghoulish dystopia, where going to a nected. "Whatever you re seeing, it's population, and all the imperfect com- simple business meeting can get you not as bad as it appears," Foley told promises that will entail. The free mar- lynched, burned alive, or beheaded. the crowd. "You just need to accept ket will no doubt come to Iraq, but the These dangers are so great that in that on faith.

REPORT 53