“Before the invasion of Kuwait, Iraq was one of the most prosperous countries in the region, with a sound economic, industrial, medical and health, educational, and scientific infrastructure — probably the best in the Arab world. Most of this has been destroyed or severely damaged.”
LONDON, 17 March 2003 — Imagine a post-war Iraq. Saddam Hussein is ousted by the US and its so-called coalition allies. He is either killed in action, exiled, or captured to stand trial on charges of genocide and crimes against the Iraqi people. The task of rebuilding the country beckons. Regardless of whether the roots of democracy sprout or a pro-Western regime is installed, the economic priorities of reconstruction will indeed be a daunting task. Will the US and its Western allies do an ‘Afghanistan’ or a ‘Kuwait’ in Iraq? An Afghanistan in this context means liberation; short-term consolidation; and then de-prioritization. A Kuwait on the other hand means liberation; consolidation through a permanent military presence; and urgent reconstruction with US companies getting pole position in key contracts.
It would be economic folly for the US to do an ‘Afghanistan.’
In fact, the Pentagon has already short-listed a favored list of American companies for lucrative contracts in a post-Saddam Iraq. For instance, a multi-million contract to oversee Iraq’s oil fields has already been awarded to Kellog, Brown & Root (KBR), a subsidiary of Halliburton Company. Never mind any suggestions of conflict of interest and corruption. The CEO of Halliburton until 2000 was none other than US Vice-President Dick Cheney. Halliburton also has a current contract for extensive logistic support work for the US military. It is not clear whether Cheney has sold his stocks in Halliburton or whether they are held in a blind trust.
That Iraq under Saddam is a highly dysfunctional state is not in dispute. This applies whether in politics, economic management, security, and society. One only has to look at the Iraq entries in International Financial Statistics Yearbooks of the International Monetary Fund (IMF) of the last decade or so. They are simply non-existent. Yes, Iraq has an OPEC country quota, which, together with its imports and exports, is supervised by the United Nations as part of Iraq’s sanctions regime. Geopolitically, the country too is different. It has effectively been cantonized into a Kurdish-controlled north, a Shia-dominated South, and a main old-Iraq rump. Herein lies the roots of the future challenge of Iraq’s economic reconstruction.
This will be further underpinned by the very nature and conduct of the war to oust Saddam. To what extent will the industrial and oil infrastructure be targeted? Will a cornered Saddam resort to eco-terrorism destroying oil wells by setting fire to them as his retreating troops did in Kuwait in 1991?
Iraq is potentially a very rich country. It has proven oil reserves second only to Saudi Arabia of over a 100 years at current rates of consumption, and potentially more estimated reserves than the Kingdom. Its oil reserve is one of the best collateral that any country could have. That is why Iraqi debt has been actively traded in international financial markets, and some banks have still held on to them. The United States recently agreed to buy $1.7 billion of Iraqi debts to Bulgaria, as a carrot for Sofia’s support for any US action in Iraq.
Iraq’s population in 1999 was estimated at 22.45 million. Before the invasion of Kuwait, Iraq was one of the most prosperous countries in the region, with a sound economic, industrial, medical and health, educational, and scientific infrastructure — probably the best in the Arab world. It had a large and affluent middle class which formed the backbone of the economy. Most of this has been destroyed or severely damaged.
The victors of a second Gulf War have to be careful that they are not perceived as new colonial masters with their relentless capitalism. It may be perfectly legitimate that contracts awarded, say under an American aid program such as USAID, should go to US companies. But then if the US is the leader of the coalition forces, it is inevitable that they will dominate and control proceedings — war strategy, conduct, and post-war reconstruction.
This might lead to resentment especially among companies already operating in Iraq on contract to the previous regime, and from neighboring countries who have also suffered economically as a result of the decade or so of sanctions imposed on Iraq and therefore of loss of trade. Here Turkey has been one of the largest losers. Before the invasion of Kuwait, Turkish bilateral trade with Iraq touched almost $10 billion a year. Turkish ports were the export hub of the two Turco-Iraqi oil pipelines near Iskenderun. Turkish contractors held their own against the likes of Bechtel and others. Turkey was a staunch supporter of President Bush (senior) in the Gulf War but it never received the aid promised and was not compensated for the loss of earnings it clearly suffered, nor any major investment.
Another point of friction could be with Russian companies such as Lukoil who have existing contracts in running the Iraqi oil fields. Similarly, French companies are also heavily involved in Iraq. Will these companies have recourse under international law, when they suddenly find themselves sidelined and substituted by American firms in a post-Saddam Iraq?
The first phase of a post-war scenario will be crucial. The priorities will be repair of the oil and gas industry and basic infrastructure, provision of food staples to the population, and the urgent setting up of and rehabilitation of political and social institutions. A reverse brain drain of Iraqi professionals from the diaspora and those exiled because of the Saddam regime, would be vital to sustain a home-grown reconstruction. Estimates of the economic loss to Iraq because of a second war vary between $20 billion to $30 billion. However, reconstruction that would benefit the Iraqi people as opposed to the coffers of the corporates associated with the victors, must be a priority.
