Tuesday, October 17, 2006

The U.S. Takeover of Iraqi Oil


By Joshua Holland, AlterNet

(Part 2 of 2)

"With 140,000 U.S. troops on the ground, the largest U.S. embassy in the world sequestered in Baghdad's fortified "Green Zone" and an economy designed by a consulting firm in McLean, Virginia, post-invasion Iraq was well on its way to being a bonanza for foreign investors.

The occupation authorities would have to steer an ostensibly sovereign government to the outcome they desired and they'd have to overcome any resistance they encountered from the fiercely independent and understandably wary Iraqis along the way. Finally, they'd have to make sure that the Anglo-American firms were well positioned to win the lion's share of the choicest contracts.

While the Oil Ministry, famously, was one of the few structures the invading forces protected from looters in the first days of the war, the bureaucracy's human assets weren't so lucky. With a stroke of the pen, Coalition Provisional Authority boss L. Paul Bremer fired hundreds of ministry personnel, ostensibly as part of the program of "de-Baathification." But, as Antonia Juhasz, author of The Bush Agenda, told me, "it wasn't an indication that they were a party to Saddam Hussein's crimes … they were fired because they could have stood in the way of the economic transformation."

An emerging, although still fragile, civil society was another source of potential trouble. Iraqi trade unions were a thorn in the side of the CPA -- shutting down the port of Khor az-Zubayr in protest of a rip-off deal with the Danish shipping giant Maersk, halting oil production in the South to demand the re-hire of laid-off Iraqi workers and kicking Halliburton subsidiary Kellogg Brown and Root out of their refineries. Perhaps it's not a coincidence, then, that the only significant law that Paul Bremer left on the books from the Hussein era was a prohibition against organizing public-sector workers; Raed Jarrar, an Iraqi analyst with the NGO Global Exchange told me "the unions are basically illegal -- they're having a lot of legal problems."

That's where the most common -- almost ubiquitous -- tool of neocolonialism, debt, came into play. In this case, massive, crushing debt run up by a dictator who treated himself and his cronies to palaces and imported luxuries, spent lavishly on weapons for Iraq's war with Iran -- fought in part on behalf of the U.S. -- and owed billions of dollars in reparations for invading Kuwait in 1990.

The debt would be written off in stages; 30 percent would be cancelled outright, another 30 percent when an elected Iraqi government accepted an IMF structural reform agreement and a final 20 percent after the IMF had monitored its implementation for three years. This made the IMF a powerful watchdog over the country's new economy, despite the fact that the institution's own share of the country's outstanding debt was less than 1 percent of the total.

Among a number of provisions in the IMF agreement, along with privatizing state-run companies (which resulted in the lay-offs of an estimated 145,000 Iraqis), slashing government pensions and phasing out the subsidies on food and fuel that many Iraqis depended on, was a commitment to develop Iraq's oil in partnership with the private sector. Then-Finance Minister Adel Abdul Mehdi said, none too happily, that the deal would be "very promising to the American investors and to American enterprise, certainly to oil companies." The Iraqi National Assembly released a statement saying, "the Paris Club has no right to make decisions and impose IMF conditions on Iraq," and called it "a new crime committed by the creditors who financed Saddam's oppression." And Zaid Al-Ali, an international lawyer who works with the NGO Jubilee Iraq, said it was "a perfect illustration of how the industrialized world has used debt as a tool to force developing nations to surrender sovereignty over their economies.""

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