Wednesday, September 27, 2006

Iraq: Worse Than You Think

I've read Cobra II, The Assassin's Gate, One Percent Doctrine, State of War and Fiasco, These books have documented in one form or another the political and military misdecisions of the Bush Administration's invasion of Iraq. Some of the mistakes that have led to the carnage in Iraq bear the marks of simple incompetence. Others bear the marks of purposeful dis-strategery.

A new book, Imperial Life in the Emerald City: Inside Iraq's Green Zone by Washington Post staff writer, Rajiv Chandrasekaran, adds further fuel to the fire just when you thought it couldn't get any worse.

Excerpts of the book in the Washington Post have highlighted the Bush Administration's staffing of Iraq with political flunkies and other Republican hangers-on, rather than the foreign policy specialists one would assume might be up to the job of rebuilding Iraq.

But the most disturbing revelation of the book so far (I'm about one-third of the way through) concerns the subject that I think has gotten relatively little attention during our country's three-year occupation: Iraq's economy.

According to the Brookings Institution, which has been tracking various economic, military and political barometers in Iraq since the invasion, unemployment ranges from between 25% and 40%. Some of this is due, no doubt, to the fact that Paul Bremer's Coalitional Provisional Authority dismissed both the Iraqi military as well as any Baath Party members of the government, a not insignificant number of people given Iraq's mostly socialist, government-job-for-life style economic structure. Unfortunately, Iraq's government didn't just consist of teachers and program analysts. Iraq's Ministry of Industry owned 48 companies and ran 148 factories. These state-owned and operated companies were heavily subsidized by the central government, and its oil revenues (and generated largely shoddy products to boot). Naturally, the free marketers among the Bush Administration's ambassadors to Baghdad wanted to uproot all of this and put Iraq on the track to modernization and capitalism. But even here, where the administration's personnel probably had their heads, if not their hearts, in the right place in the long run, in the short run, radically altering Iraq's economy in the midst of de-Baathification measures that have left almost half the country unemployed is a recipe for further insurrection and violence. And businesses weren't the only beneficiaries of the Iraqi government's largesse. Gas sold for less than a nickel a gallon before the war and most consumer good were drastically marked down. Severe import duties--soon removed by the CPA--spared Iraq's inefficient state-run company's competition and helped protect jobs (while of course denying Iraqi cheaper, better made goods and more modern amenities). A significant debacle, according to Chandrasekaran, was the CPA's decision to terminate all debt obligations between state-run companies. This sounds sensible enough given the absence of the regular and transparent accounting prevalent in Iraq's industries and government offices. Unfortunately, the policy has the negative effect of eliminating assets for the country's few well-run companies while letting its most lagard ones off the hook for any prior debts.

How does all this sound? Factor in the religious conflicts and the general security dangers, the economic turmoil occuring in Iraq makes it all the more difficult to put the country back together before it self-destructs. While a peaceful transition of free market democracy was probably always a long shot in Iraq under the best of circumstances, it's likelihood of success now seems caught between slim and none. And slim just left town.

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