Iraq: Five years later

By PETER KADZIS  |  March 12, 2008

When did things start to go wrong?
Some critical decisions — really bad decisions — were made in the very first year. Some of these are well known: disarming the military and the failure to protect caches of arms, to name just two. But in our book, we talk about other problems that have not gotten the attention they deserve. Key is the way reconstruction of Iraq was managed with the use of a privatized kind of shock therapy that hasn’t worked anywhere else in the world and didn’t work in Iraq. The economic-policy machine that we imposed on Iraq was doomed to failure. The use of contractors to build Iraq meant that, at a time when there was 60 percent unemployment in that country, the contractors were focusing on saving costs. So, in effect, we’re importing Filipino state police and calling it progress. It was a mess. Rather than winning the hearts and minds of the Iraqi people, we won their enmity. The Iraqi people knew that we were not putting their country first.

You identify an even more fundamental problem.
We tell a story that I don’t think has been told before. President Bush went to the mat and said that $18 billion was needed for reconstruction. That’s an amount per capita that exceeded the Marshall Plan. Congress demanded that there be competitive bidding. It understood that the kind of sole-source, Halliburton-style contracting process was too amenable to corruption, that it set a bad precedent, and was a bad example for other countries. Congress said no. It insisted on competitive bidding. Although Congress did say it would drop the bidding requirements if the administration would certify that this was the only way reconstruction could be accomplished. Rumsfeld refused. Congress refused to back off. The result was a stand-off that lasted for months. No contracts were given for reconstruction and things deteriorated very quickly. It was a pivotal point in time and the president insisted on single-source contracting. You might say it was a form of corruption — I don’t know what else to call it.

The United States seems addicted to living beyond its means, living on borrowed money. We tried to fight this war on the cheap. We didn’t commit enough military muscle and we gambled that we could get away with spending less money than the job required. Now the economy appears to be in a downturn, a recession triggered by the subprime-mortgage scandal. Are war spending, the subprime scandal, and the deteriorating state of the economy in any way interconnected?
Yes. It’s a little bit complicated, but it’s not that hard to draw the lines between the dots.

The war has not been good for the economy, and probably the most obvious effect has been the price of oil. Americans are spending money not to help their own economy, but to help Saudi Arabia’s. The high price of oil is draining the American economy of hundreds of billions of dollars. Iraq isn’t responsible for all of the increase in oil, but it’s responsible for part of it, and that part is important.

Money spent on Nepalese contractors working in Iraq doesn’t stimulate the economy the way an American worker building a road in America does.

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