Operation Iraqi Liberation

http://www.independent-media.tv/item.cfm?fmedia_id=9468&fcategory_desc=Under


Why Are We In Iraq -- Bush Family $$$ Signs
By: Evelyn Pringle

After Dick Cheney's tenure at the Pentagon ended, in 1993, he spent
much of the next two years deciding whether to run for President. He
formed a political-action committee, and crossed the country making
speeches and raising money, according to Contact Sport, 2/16/04 New
Yorker.

Records from the FEC show that Cheney's PAC contributors included
executives of the companies that have since won the largest contracts
in Iraq. Among them were Thomas Cruikshank, Halliburton's CEO at the
time; Stephen Bechtel, whose family's firm now has a contract in Iraq
worth as much as $2.8 billion; and Duane Andrews, then senior VP of
Science Applications International Corporation, which has won seven
contracts in Iraq.

However, while Cheney and his pals may well be the most blatant
profiteers in Iraq, they are by no means the only ones involved in
this grand war profiteering scheme commonly referred to as the "War on
Terror." The #1 spot on the list belongs to the First Family.

War Is Family Business

Here's where the web of deceit really gets complicated. There are so
many ties between the Bush family, the defense industry and the global
arms trade, that its almost impossible to keep track of them all. But
yet the wide-spread ties are hardly ever even mentioned in the
mainstream media. Or a revelation might show up for a day or two and
then its like oh well, what's new.

Lets Start At The Top - The First President Bush

When Jr took office, Bush (Sr) was a member of the Carlyle Group. The
firm is almost entirely made up of ex-government officials and it is
said to be the world's most politically connected private equity firm.

The complaints about the Bush family connections with the Carlyle
Group began long before 9/11. As early as March 3, 2001, shortly after
Bush Jr's inauguration, Judicial Watch issued a press release that said:

"Judicial Watch, the public interest law firm that investigates and
prosecutes government abuse and corruption, called on former President
George Herbert Walker Bush to resign immediately from the Carlyle
Group, a private investment firm, while his son President George W.
Bush is in office. Today's New York Times reported that the elder Bush
is an "ambassador" for the $12 billion private investment firm and
last year traveled to the Middle East on its behalf. The former
president also helped the firm in South Korea."

"The New York Times reported that as compensation, the elder Bush is
allowed to buy a stake in the Carlyle Group's investments, which
include ownership in at least 164 companies throughout the world
(thereby by giving the current president an indirect benefit). James
Baker, the former Secretary of State who served as President George W.
Bush's point man in Florida's election dispute, is a partner in the
firm. The firm also gave George W. Bush help in the early 1990's when
it placed him on one of its subsidiary's board of directors.

"This is simply inappropriate. Former President Bush should
immediately resign from the Carlyle Group because it is an obvious
conflict of interest. Any foreign government or foreign investor
trying to curry favor with the current Bush Administration is sure to
throw business to the Carlyle Group. And with the former President
Bush promoting the firm's investments abroad, foreign nationals could
understandably confuse the Carlyle Group's interests with the
interests of the United States government," stated Larry Klayman,
Judicial Watch Chairman and General Counsel.

"Questions are now bound to be raised if the recent Bush
Administration change in policy towards Iraq has the fingerprints of
the Carlyle Group, which is trying to gain investments from other Arab
countries who [sic] would presumably benefit from the new policy,"
stated Judicial Watch President Tom Fitton."

As a rule, I'm not a major fan of Judicial Watch; however in this case
their comments are almost prophetic.

Shortly after the 9/11 attacks, it became known that Bush Sr was
financially linked to the bin Laden family. The Sept 28, 2001 Wall
Street Journal (WSJ) reported that, "George H.W. Bush, the father of
President Bush, works for the bin Laden family business in Saudi
Arabia through the Carlyle Group, an international consulting firm."

When Sr hooked up with the Carlyle Group, his special area of
influence was the Middle East, and especially Saudi Arabia investors.
One of the investors that he brought to Carlyle was the BinLaden
Group, a construction company owned by the family of none other than
future US #1 enemy Osama bin Laden. According to an investigation by
the WSJ, Sr convinced Osama's brother, Shafiq bin Laden, to invest $2
million of Bin Laden Group money with Carlyle.

According to the WSJ, "The senior Bush had met with the bin Laden
family at least twice in the last three years - 1998 and 2000 -- as a
representative of Carlyle, seeking to expand business dealings with
one of the wealthiest Saudi families, which some experts argue, has
never fully severed its ties with black sheep Osama in spite of
current reports in a mainstream press that is afraid of offending the
current administration."

I'm no expert, but I even knew that 6 months prior to 9/11, Osama
appeared in a video taken at his son's wedding, along with his mother,
his son and his son's new wife. I guess they family must have got into
a tiff after the wedding.

The WSJ went on to outline the details of the family's investment. The
bin Laden firm invested $2 million in Carlyle Partners II Fund, which
raised a total of $1.3 billion overall. The fund purchased several
aerospace companies among 29 deals. "So far, the family has received
$1.3 million back in completed investments and should ultimately
realize a 40% annualized rate of return," a Carlyle executive told the
WSJ.

On Sept 27, the WSJ said it confirmed that a meeting took place
between Sr and the bin Laden family through Sr's Chief of Staff Jean
Becker, but only after the WSJ showed Becker a personal thank you note
that Bush Sr sent to the bin Ladens after the meeting.

Here's a little know fact that may bring goose bumps to some. On 9/11,
Shafiq bin Laden was at a meeting in the office of the Carlyle Group,
and stood watching on TV as the WTC was destroyed under the
instruction of his brother

So in a nutshell, Osama's attacks on the WTC and Pentagon, which lead
to a massive increase in defense spending, most likely made the Bush
family a great deal of money. And the real kicker is that the attack
may have even enriched his own family.

How Does Carlyle Make Its Money?

Its been estimated that Carlyle has investments in over 300 companies,
and the majority of them derive revenues from military and security
contracts. In fact, Carlyle is the country's 11th largest defense
contractor. In 2002, it received $677 million in government contracts,
and in 2003, it was awarded contracts worth another $2.1 billion.

Business has definitely improved for the firm since Jr took office.
For example, one of its subsidiaries, Vought Aircraft, now holds over
$1 billion in defense contracts. Prior to 2001, the company's future
was iffy at best. Right before 9/11, it had actually laid off 20% of
its workforce. But low and behold, business picked right back up with
the air strikes on Afghanistan and the war in Iraq.

Carlyle's ties go directly into the Oval Office. In fact, a list of
past employees has Jr's name on it. He was actually employed by
Carlyle at on point in his life. According to a story in Harper's
Magazine, Jr held a position as a corporate director on the board of
the Carlyle subsidiary, Caterair. Until he was politely told to hit
the road because he didn't have anything to offer the company.

In addition, in March, 1995, while Jr was governor of Texas governor
and a senior Trustee of the University of Texas, the University of
Texas Endowment placed $10 million in investments with the Carlyle
Group. Who knows how much of that investment money benefited the bin
Ladens.

Side-Kick James Baker

Sr's top sidekick, James Baker, is also a player with the Carlyle
Group. He joined the firm immediately after his stint as Sr's
secretary of state ended, bringing a briefcase packed full of global
connections to the firm. Carlyle's revenues tripled after Baker came
on board.

Much like Bush Sr, Baker's main duty was to manage firm's
relationships with Saudi clients. He not only handled investment
deals, it was also his job to look after the key interests of Saudi
investors. For instance, when the Justice Department began an
investigation into the financial dealings of Saudi Prince Sultan bin
Abdul Aziz, guess who the prince turned to for help? You got it, Baker.

And get this, Baker is currently defending the prince in a trillion
dollar lawsuit brought by the families of the victims of the 9/11. The
suit accuses the prince of using Islamic charities to funnel millions
of dollars to known terrorist groups linked to al-Qaeda.

Carlyle is also cashing in on the Homeland Security front and the
enactment of the Patriot Act. Two Carlyle companies, Federal Data
Systems and US Investigations Services, hold multi-billion dollar
contracts to provide background checks for airlines, the Pentagon, the
CIA and the Department of Homeland Security. USIS used to be a federal
agency, until it was privatized in 1996 and snatched up by Carlyle.
Needless to say, it's now making money hand over fist.

Baker & Carlyle Hard At It

Baker and Carlyle have been hard at it behind the scenes, profiting in
ways so blatant that a secret deal revealed by Nation Magazine (and
since reported in most major newspapers) gives a whole new meaning to
the term war profiteering.

As most people know, Bush Jr appointed Baker to be his special envoy
on Iraq's debt. His mission was to meet with presidents and prime
ministers around the world and ask them to forgive Iraq's debt in the
name of the reparation needs of the country.

When Baker was appointed, questions about conflict of interest were
raised because of his ties to the Carlyle Group, which has extensive
business interests in the Middle East. His law firm, Baker Botts, was
also brought up because both firms have strong links to the Saudi
Royal Family, which happens to hold a great deal of Iraq's debt.

In fact, the New York Times published an editorial upon the
announcement of Baker being appointed special envoy that called for
Baker to resign from both Carlyle because he was a partner, and Baker
Botts.

In response to the editorial, Jr said he doesn't read editorials, but
assured the world that Baker was a man of high integrity. Carlyle
submitted a signed statement that said: "Carlyle does not engage in
lobbying or consulting." and "Carlyle does not have any investment in
Iraqi public or private debt."

Well that was then and this now. According to confidential documents
obtained by the Nation, including a 65 page proposal to the Kuwaiti
government, Carlyle has sought to secure a $1 billion investment from
Kuwait using Baker's influence as debt envoy. The secret deal involved
a plan to transfer ownership of up to $57 billion in unpaid Iraqi
debts owed to Kuwait. The debts would be assigned to a foundation
created by a consortium in which the key players are the Carlyle Group
and the Albright Group, headed by former secretary of state Madeline
Albright, along with several other well-connected firms.

So it boils down to this, the Carlyle Group was engaged in lobbying to
secure Iraq's debt at the same time that Baker was asking the world to
forgive those debts. Under the deal, Kuwait would give the consortium
$2 billion up front to invest in a private equity fund, with half of
it going to Carlyle.

The Nation showed the documents to Jerome Levinson, and international
lawyer and expert on political and corporate corruption at American
University. He called it "one of the greatest cons of all time. The
consortium is saying to the Kuwaiti government, 'Through us, you have
the only chance to realize a substantial part of the debt. Why?
Because of who we are and who we know.' It's influence peddling of the
crassest kind."

Kathleen Clark, a law professor at Washington University and a leading
expert on government ethics and regulations, told The Nation, that
this means Baker is in a "classic conflict of interest. Baker is on
two sides of this transaction: He is supposed to be representing the
interests of the United States, but he is also a senior counselor at
Carlyle, and Carlyle wants to get paid to help Kuwait recover its
debts from Iraq." She said, "Carlyle and the other companies are
exploiting Baker's current position to try to land a deal with Kuwait
that would undermine the interests of the US government."

Just listen how they described The Carlyle Group, "a private equity
team, has earned its reputation by successfully consummating deals at
the intersection of politics and finance, with its roster of political
stars, including, among others, former US Secretary of Defense Frank
Carlucci, former British Prime Minister John Major, and until
recently, former US President George Bush."

I like that "stars." Is that kind of like Hollywood stars except they
are from Washington?

The document goes on to state: "The extent to which these individuals
can plan an instrumental rule in fashioning strategies is now more
limited ... due to the recent appointment of Secretary Baker as the
President's envoy on international debt, and the need to avoid an
apparent conflict of interest." Yet it goes on to say that this will
soon change: "We believe that with Secretary Baker's retirement from
his temporary position, that Carlyle and those leading individuals
associated with Carlyle will then once again be free to play a more
decisive role..." according to The Nation.

I wonder if this means we're going to lose our special envoy. Retirement?

The proposal goes on to tell Kuwait that in the near future 40
state-owned Iraqi enterprises will be available for leasing and
management contracts. Is that kind of like privatizing public
utilities? 40 of them, huh? You mean we are going to do all that for
Iraq? Does that mean that the Iraqis might have clean water, and not
have raw sewage in their streets anytime soon? I suppose that would be
a good thing.

Now where in the world did the Iraqis ever get the idea that we wanted
to take over their country? I've never been able to figure out why
they would ever think that.

For those readers wondering about how much progress Baker has made in
the 10 months in his position as special envoy, I'd have to say not
much. The negotiations apparently are kind of stalled.

Senator Joe Biden recently asked Deputy Assistant Secretary of State
for Iraq, about the status of the international negotiations to get
other countries to forgive Iraq's debts. He asked, "Has a single
nation in the G8 ... formally said or requested of their parliaments
to forgive Iraqi debt?" "Not yet. No sir," Schlicher answered.

According to The Nation, "Not only has Baker failed to deliver any
firm commitmens for debt forgiveness; at the annual meeting of the
International Fund on October 2, it emerged that France had done an
end run around Washington and was pushing a debt-relief deal of its
own. ... a plan to cancel only 50% of Iraq's debts -- a far cry from
the 90-95 % cancellation Washington had been demanding. Yet Baker was
nowhere to be found."

By Evelyn Pringle e.pringle@sbcglobal.net
Original Link: http://www.independent-media.tv

One thing that Evelyn Pringle conveniently leaves out of her 'black helicopter' conspiracy theory about the Bush family and their connection to the Carlyle Group is that:

John Kerry and his family have ALSO have had considerable investments in the Carlyle Group.

Even though Evelyn and Michael Moore forget to mention that (because it doesn't help further their 'spookie' conspiracy theory)---it's true.

If anyone doesn't believe that--look it up.

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BTW--Just for fun I read a few articles from the 'under reported' section of the Independent Media TV web page.

It's a good thing I had a light lunch--How can anyone read that stuff and keep food down?

I imagine it will be a life long quest for you JLH.
Because you refuse to accept the answer and move on.

No Ellvis! I will not accept wrong answers and will VOTE Nov. 2nd, and move on.

Oh please.

GHW Bush works FOR Carlyle as the Senior Advisor to the Carlyle Asia Advisory Board.

He was at a Carlyle meeting in the same room with Osama's 1/2 brother Shafiq bin Laden on the morning of Sept. 11th. The Bush's plane was grounded later when he tried to fly home, but the Saudis (including the bin Laden's ) all caught flights out of the US over the next couple days when a no-fly order was in effect for EVERYONE else. Yeah......nothing to see here.

Your post is like somebody claiming I have as much to do with Microsoft as Paul Allen does because we're both shareholders.

Dan S,

Did you get your copy of Fahrenhiet 911 on DVD or are you still a fan of the VHS format?

Well, gee, Rory..........just because it was in F9/11 doesn't mean it isn't true.

Go read about it and then come on back and tell me you don't think our "marriage" with Saudi Arabia is a little strange.

Deny, deny, deny.........spin, spin, spin. You're a machine, man.

It's truley a wonderful world---Especially when you're thankfull for all the blessings that are bestowed upon you and don't go around thinking that everyone is out to get you.

Bush Has Kept His Eye on the Ball Wednesday, October 20, 2004 By John Gibson In this election year of spinning and counter spinning and spinning entirely out of control — and I must admit you have seen all three right here on my program — we all need someone we can rely on to tell us what's what on really important questions.

A month or two ago I went out to Colorado Springs to give a speech at a meeting of military people. At this meeting, I met General Tommy Franks, and I really liked him.

I think he's smart, clear-eyed and he tells it like it is.

If you don't believe me, go read his book.

But before you do that, read Tuesday's New York Times, where Franks published an op-ed piece on the war on terror.

Here's part of what the general said:

"President Bush never 'took his eye off the ball' when it came to Usama bin Laden. The war on terrorism has a global focus. It cannot be divided into separate and unrelated wars, one in Afghanistan and one in Iraq. Both are part of the same effort to capture and kill terrorists before they are able to strike America again."

For those of you who might feel susceptible to the argument that Bush turned away from the real war on terror to fight a diversionary war against Saddam Hussein, please re-read the general's words.

If President Kerry had been faced with Usama and Saddam... do you really think he would have kept America's military searching caves in the Hindu Kush, all the while leaving Saddam to plot in Baghdad?

I know Kerry says he would have done that, but I think president anybody — Kerry, Bush, Clinton, whoever — would have been forced to face the Saddam problem, and would have acted.

I find it hard to believe any American president, with the exception of one, would do different.

Who's that one? Hey, I've already been yelled at this week for kicking the old peanut farmer around... so please, just figure that one out for yourselves.

Letter about Fallen Marine

October 25, 2004


It is with the deepest sadness and most profound grief that I must report to you the loss of Daniel Wyatt, LCpl, Fox Co, 2nd Bn, 24th Marines, USMC. Daniel was killed in the line of duty, while conducting foot patrolling operations in Yusufiyah Iraq. Daniel was killed by a command detonated improvised explosive device. He died instantly, suffered no pain and was immediately recovered by his fellow Marines.

My command security element and I personally recovered Daniel's body and escorted him back to the forward operating base, and then onto the helicopter for the beginning of his final ride home. I cannot even begin to express to you the soul touching sight of combat hardened Marines, encrusted with weeks of sweat and dust, who have daily been engaged in combat, coming to complete and utter solemnity and respect in the handling of the body of one of their own. It puts on display a level of brotherly love you just cannot see anywhere else.

We conducted a memorial service for Daniel in the battle space owned by his fellow Marines, as well as one the following day at the battalion forward operating base. I have spoken with his fiance and expressed the sorrow and sympathy of the entire Battalion.

If I might for a moment, I hear and see some of the media coverage. I hear the accusations and charges. I hear what could almost be labeled as hysteria over the situation in Iraq. Let me tell you something from ground level. The town of Yusufiyah that Daniel and his fellow Marines seized, had not seen government structure or security forces for over 8 months. FOREIGN FIGHTERS, TERRORIST AND THUGS have had free reign and have routinely murdered people in the market for no reason other than one day they MIGHT support a democratic process and speak for themselves. For nothing more than they MIGHT choose a version of religion even slightly different than the terrorists and foreign fighters. They live in squalor and fear. The Marines of Daniel's unit have not had a shower since seizing the town. They have eaten MREs day in and day out. They live a Spartan existence that few can imagine. And, on all my trips to their position for planning, coordination and command visits, I ask them if they want to be relieved. To a man, they look me in the eye and tell me NO WAY. Why? Well, I am not going to soften it for anyone, the primary reason why is to kill terrorists. Please remember, that is what they are trained and paid to do. But, they also tell me, they want to help the people of Yusufiyah. They want to show all of Iraq that they can stand on their own feet, push back against extremism, and with our help live the life of freedom that all men yearn for. Yes, from the mouths of these young and hardened warriors, this is what they tell me. And then...and then...they ask me how I am doing! Un-freaking believable! They worry about everyone else but themselves.

So believe what you want. That is your right as Americans. But I am telling you, there are no heroes on any football fields, basketball courts or halls of government. There are honorable and decent people all over America. However, the heroes are on the battlefields of Iraq. Suffering, killing and DYING that others might live, and live in FREEDOM. Americans free from terror, Iraqis free from oppression and tyranny.

I am an under-educated gun toter from Indiana who is just lucky there is an organization like the USMC where a half-wit like myself with some rudimentary combat skills can succeed. But I do know heroes! I am surrounded by over a thousand of them. And I am not the least bit ashamed to tell you I have wept like a baby for Daniel Wyatt. Because when one of these heroes falls, it is if an Angel of God himself has fallen from heaven! I will not profess glory of battle or any other such hype. I will profess duty and sacrifice. Daniel showed us all true duty and ultimate sacrifice. I have no doubt that the instant he died, he was whisked to heaven on the wings of Angels and placed before the unapproachable light of Jesus, who himself said: "greater love hath no man, than a man lay down his life for his friends."

GOD BLESS AND KEEP DANIEL WYATT, HIS FAMILY AND FIANCEE AND GOD BLESS AND KEEP ALL THE FAMILIES OF 2/24.

Yours in profound sadness Mark A. Smith, LtCol

Just wish that Chicken Hawks had the character that Daniel has. It's the side line cheering Chicken Hawks, that refuse to serve in a war (Iraq) they love and advocate for that is the disgace.

If we hadn't gone back to Iraq in the first place, then Daniel Wyatt and all the rest of the fallen soldiers would probably still be with us. There wasn't any good reason to invade Iraq that doesn't apply to many other countries such as North Korea, Sudan, ect. I knew from the second that the Iraq portion of the war started that they weren't going to find any WMDs or links to Al-Qaida, and Bush was using it as an excuse to finish what his dad couldn't and 'get Saddam'. Saddam wasn't a threat. However, North Korea IS a threat. They have nukes, and missiles that are capable of hitting the west coast. AND the dictator is loony as a bedbug. But we're not doing anything about THEM.

The webcomic Bruno the Bandit is doing a story arc that's based off the current situation, and it is quite accurate, as well as funny.




http://www.brunothebandit.com

Subject:Article about What IS REALLY GOING ON IN IRAQ by Naomi Klein
in Harpers Magazine


Story by Naomi Klein that appeared in Harpers Magazine. Please
read it...it's a real eye opener!


Article about What IS REALLY GOING ON IN IRAQ by Naomi Klein in
Harpers Magazine

It was only after I had been in Baghdad for a month that I found
what I was looking for. I had traveled to Iraq a year after the war
began, at the height of what should have been a construction boom,
but after weeks of searching I had not seen a single piece of heavy
machinery apart from tanks and humvees. Then I saw it: a
construction crane. It was big and yellow and impressive, and when I
caught a glimpse of it around a corner in a busy shopping district I
thought that I was finally about to witness some of the
reconstruction I had heard so much about. But as I got closer I
noticed that the crane was not actually rebuilding anything—not one
of the bombed-out government buildings that still lay in rubble all
over the city, nor one of the many power lines that remained in
twisted heaps even as the heat of summer was starting to bear down.
No, the crane was hoisting a giant billboard to the top of a three-
story building. SUNBULAH: HONEY 100% NATURAL, made in Saudi Arabia.

Seeing the sign, I couldn't help but think about something Senator
John McCain had said back in October. Iraq, he said, is "a huge pot
of honey that's attracting a lot of flies." The flies McCain was
referring to were the Halliburtons and Bechtels, as well as the
venture capitalists, who flocked to Iraq in the path cleared by
Bradley Fighting Vehicles and laser-guided bombs. The honey that
drew them was not just no-bid contracts and Iraq's famed oil wealth
but the myriad investment opportunities offered by a country that
had just been cracked wide open after decades of being sealed off,
first by the nationalist economic policies of Saddam Hussein, then
by asphyxiating United Nations sanctions.

Looking at the honey billboard, I was also reminded of the most
common explanation for what has gone wrong in Iraq, a complaint
echoed by everyone from John Kerry to Pat Buchanan: Iraq is mired in
blood and deprivation because George W. Bush didn't have "a postwar
plan." The only problem with this theory is that it isn't true. The
Bush Administration did have a plan for what it would do after the
war; put simply, it was to lay out as much honey as possible, then
sit back and wait for the flies.

* * *

The honey theory of Iraqi reconstruction stems from the most
cherished belief of the war's ideological architects: that greed is
good. Not good just for them and their friends but good for
humanity, and certainly good for Iraqis. Greed creates profit, which
creates growth, which creates jobs and products and services and
everything else anyone could possibly need or want. The role of good
government, then, is to create the optimal conditions for
corporations to pursue their bottomless greed, so that they in turn
can meet the needs of the society. The problem is that governments,
even neoconservative governments, rarely get the chance to prove
their sacred theory right: despite their enormous ideological
advances, even George Bush's Republicans are, in their own minds,
perennially sabotaged by meddling Democrats, intractable unions, and
alarmist environmentalists.

Iraq was going to change all that. In one place on Earth, the theory
would finally be put into practice in its most perfect and
uncompromised form. A country of 25 million would not be rebuilt as
it was before the war; it would be erased, disappeared. In its place
would spring forth a gleaming showroom for laissez-faire economics,
a utopia such as the world had never seen. Every policy that
liberates multinational corporations to pursue their quest for
profit would be put into place: a shrunken state, a flexible
workforce, open borders, minimal taxes, no tariffs, no ownership
restrictions. The people of Iraq would, of course, have to endure
some short-term pain: assets, previously owned by the state, would
have to be given up to create new opportunities for growth and
investment. Jobs would have to be lost and, as foreign products
flooded across the border, local businesses and family farms would,
unfortunately, be unable to compete. But to the authors of this
plan, these would be small prices to pay for the economic boom that
would surely explode once the proper conditions were in place, a
boom so powerful the country would practically rebuild itself.

The fact that the boom never came and Iraq continues to tremble
under explosions of a very different sort should never be blamed on
the absence of a plan. Rather, the blame rests with the plan itself,
and the extraordinarily violent ideology upon which it is based.

* * *

Torturers believe that when electrical shocks are applied to various
parts of the body simultaneously subjects are rendered so confused
about where the pain is coming from that they become incapable of
resistance. A declassified CIA "Counterintelligence Interrogation"
manual from 1963 describes how a trauma inflicted on prisoners opens
up "an interval—which may be extremely brief—of suspended animation,
a kind of psychological shock or paralysis. . . . [A]t this moment
the source is far more open to suggestion, far likelier to comply."
A similar theory applies to economic shock therapy, or "shock
treatment," the ugly term used to describe the rapid implementation
of free-market reforms imposed on Chile in the wake of General
Augusto Pinochet's coup. The theory is that if painful
economic "adjustments" are brought in rapidly and in the aftermath
of a seismic social disruption like a war, a coup, or a government
collapse, the population will be so stunned, and so preoccupied with
the daily pressures of survival, that it too will go into suspended
animation, unable to resist. As Pinochet's finance minister, Admiral
Lorenzo Gotuzzo, declared, "The dog's tail must be cut off in one
chop."

That, in essence, was the working thesis in Iraq, and in keeping
with the belief that private companies are more suited than
governments for virtually every task, the White House decided to
privatize the task of privatizing Iraq's state-dominated economy.
Two months before the war began, USAID began drafting a work order,
to be handed out to a private company, to oversee Iraq's "transition
to a sustainable market-driven economic system." The document states
that the winning company (which turned out to be the KPMG offshoot
Bearing Point) will take "appropriate advantage of the unique
opportunity for rapid progress in this area presented by the current
configuration of political circumstances." Which is precisely what
happened.

L. Paul Bremer, who led the U.S. occupation of Iraq from May 2,
2003, until he caught an early flight out of Baghdad on June 28,
admits that when he arrived, "Baghdad was on fire, literally, as I
drove in from the airport." But before the fires from the "shock and
awe" military onslaught were even extinguished, Bremer unleashed his
shock therapy, pushing through more wrenching changes in one
sweltering summer than the International Monetary Fund has managed
to enact over three decades in Latin America. Joseph Stiglitz, Nobel
laureate and former chief economist at the World Bank, describes
Bremer's reforms as "an even more radical form of shock therapy than
pursued in the former Soviet world."

The tone of Bremer's tenure was set with his first major act on the
job: he fired 500,000 state workers, most of them soldiers, but also
doctors, nurses, teachers, publishers, and printers. Next, he flung
open the country's borders to absolutely unrestricted imports: no
tariffs, no duties, no inspections, no taxes. Iraq, Bremer declared
two weeks after he arrived, was "open for business."

One month later, Bremer unveiled the centerpiece of his reforms.
Before the invasion, Iraq's non-oil-related economy had been
dominated by 200 state-owned companies, which produced everything
from cement to paper to washing machines. In June, Bremer flew to an
economic summit in Jordan and announced that these firms would be
privatized immediately.
"Getting inefficient state enterprises into private hands," he
said, "is essential for Iraq's economic recovery." It would be the
largest state liquidation sale since the collapse of the Soviet
Union.

But Bremer's economic engineering had only just begun. In September,
to entice foreign investors to come to Iraq, he enacted a radical
set of laws unprecedented in their generosity to multinational
corporations.
There was Order 37, which lowered Iraq's corporate tax rate from
roughly 40 percent to a flat 15 percent. There was Order 39, which
allowed foreign companies to own 100 percent of Iraqi assets outside
of the natural-resource sector. Even better, investors could take
100 percent of the profits they made in Iraq out of the country;
they would not be required to reinvest and they would not be taxed.
Under Order 39, they could sign leases and contracts that would last
for forty years. Order 40 welcomed foreign banks to Iraq under the
same favorable terms. All that remained of Saddam Hussein's economic
policies was a law restricting trade unions and collective
bargaining.

If these policies sound familiar, it's because they are the same
ones multinationals around the world lobby for from national
governments and in international trade agreements. But while these
reforms are only ever enacted in part, or in fits and starts, Bremer
delivered them all, all at once. Overnight, Iraq went from being the
most isolated country in the world to being, on paper, its widest-
open market.

* * *

At first, the shock-therapy theory seemed to hold: Iraqis, reeling
from violence both military and economic, were far too busy staying
alive to mount a political response to Bremer's campaign. Worrying
about the privatization of the sewage system was an unimaginable
luxury with half the population lacking access to clean drinking
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 Washington, 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, started by Joe Allbaugh, former
Bush-Cheney campaign manager.
"Getting the rights to distribute Procter & Gamble products can be a
gold mine," one of the company's partners enthused. "One well-
stocked 7-Eleven could knock out thirty Iraqi stores; a Wal-Mart
could take over the country."

Soon there were rumors that a McDonald's would be opening up in
downtown Baghdad, funding was almost in place for a Starwood luxury
hotel, and General Motors was planning to build an auto plant. On
the financial side, HSBC would have branches all over the country,
Citigroup was preparing to offer substantial loans guaranteed
against future sales of Iraqi oil, and the bell was going to ring on
a New York-style stock exchange in Baghdad any day.

In only a few months, the postwar plan to turn Iraq into a
laboratory for the neocons had been realized. Leo Strauss may have
provided the intellectual framework for invading Iraq preemptively,
but it was that other University of Chicago professor, Milton
Friedman, author of the anti-government manifesto Capitalism and
Freedom, who supplied the manual for what to do once the country was
safely in America's hands. This represented an enormous victory for
the most ideological wing of the Bush Administration. But it was
also something more: the culmination of two interlinked power
struggles, one among Iraqi exiles advising the White House on its
postwar strategy, the other within the White House itself.

* * *

As the British historian Dilip Hiro has shown, in Secrets and Lies:
Operation `Iraqi Freedom' and After, the Iraqi exiles pushing for
the invasion were divided, broadly, into two camps. On one side
were "the pragmatists," who favored getting rid of Saddam and his
immediate entourage, securing access to oil, and slowly introducing
free-market reforms. Many of these exiles were part of the State
Department's Future of Iraq Project, which generated a thirteen-
volume report on how to restore basic services and transition to
democracy after the war. On the other side was the "Year Zero" camp,
those who believed that Iraq was so contaminated that it needed to
be rubbed out and remade from scratch. The prime advocate of the
pragmatic approach was Iyad Allawi, a former high-level Baathist who
fell out with Saddam and started working for the CIA. The prime
advocate of the Year Zero approach was Ahmad Chalabi, whose hatred
of the Iraqi state for expropriating his family's assets during the
1958 revolution ran so deep he longed to see the entire country
burned to the ground—everything, that is, but the Oil Ministry,
which would be the nucleus of the new Iraq, the cluster of cells
from which an entire nation would grow. He called this process "de-
Baathification."

A parallel battle between pragmatists and true believers was being
waged within the Bush Administration. The pragmatists were men like
Secretary of State Colin Powell and General Jay Garner, the first
U.S. envoy to postwar Iraq. General Garner's plan was
straightforward enough: fix the infrastructure, hold quick and dirty
elections, leave the shock therapy to the International Monetary
Fund, and concentrate on securing U.S. military bases on the model
of the Philippines. "I think we should look right now at Iraq as our
coaling station in the Middle East," he told the BBC. He also
paraphrased T. E. Lawrence, saying, "It's better for them to do it
imperfectly than for us to do it for them perfectly." On the other
side was the usual cast of neoconservatives: Vice President Dick
Cheney, Secretary of Defense Donald Rumsfeld (who lauded
Bremer's "sweeping reforms" as "some of the most enlightened and
inviting tax and investment laws in the free world"), Deputy
Secretary of Defense Paul
Wolfowitz, and, perhaps most centrally, Undersecretary of Defense
Douglas Feith. Whereas the State Department had its Future of Iraq
report, the neocons had USAID's contract with Bearing Point to
remake Iraq's economy: in 108 pages, "privatization" was mentioned
no fewer than fifty-one times. To the true believers in the White
House, General Garner's plans for postwar Iraq seemed hopelessly
unambitious. Why settle for a mere coaling station when you can have
a model free market? Why settle for the Philippines when you can
have a beacon unto the world?

The Iraqi Year Zeroists made natural allies for the White House
neoconservatives: Chalabi's seething hatred of the Baathist state
fit nicely with the neocons' hatred of the state in general, and the
two agendas effortlessly merged. Together, they came to imagine the
invasion of Iraq as a kind of Rapture: where the rest of the world
saw death, they saw birth—a country redeemed through violence,
cleansed by fire. Iraq wasn't being destroyed by cruise missiles,
cluster bombs, chaos, and looting; it was being born again. April 9,
2003, the day Baghdad fell, was Day One of Year Zero.

While the war was being waged, it still wasn't clear whether the
pragmatists or the Year Zeroists would be handed control over
occupied Iraq. But the speed with which the nation was conquered
dramatically increased the neocons' political capital, since they
had been predicting a "cakewalk" all along. Eight days after George
Bush landed on that aircraft carrier under a banner that said
MISSION ACCOMPLISHED, the President publicly signed on to the
neocons' vision for Iraq to become a model corporate state that
would open up the entire region. On May 9, Bush proposed
the "establishment of a U.S.-Middle East free trade area within a
decade"; three days later, Bush sent Paul Bremer to Baghdad to
replace Jay Garner, who had been on the job for only three weeks.
The message was unequivocal: the pragmatists had lost; Iraq would
belong to the believers.

A Reagan-era diplomat turned entrepreneur, Bremer had recently
proven his ability to transform rubble into gold by waiting exactly
one month after the September 11 attacks to launch Crisis Consulting
Practice, a security company selling "terrorism risk insurance" to
multinationals. Bremer had two lieutenants 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, Connecticut, 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. Neither man had any high-level diplomatic 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 houses the occupation headquarters
in Saddam's former palace, was filled with Young Republicans
straight out of the Heritage Foundation, all of them given
responsibility they could never have dreamed of receiving at home.
Jay Hallen, a twenty-four-year-old who had applied for a job at the
White House, was put in charge of launching Baghdad's new stock
exchange. Scott Erwin, a twenty-one-year-old former intern to Dick
Cheney, reported in an email home that "I am assisting Iraqis in the
management of finances and budgeting for the domestic security
forces." The college senior's favorite job before this one? "My time
as an ice-cream truck driver." In those early days, the Green Zone
felt a bit like the Peace Corps, for people who think the Peace
Corps is a communist plot. It was a chance to sleep on cots, wear
army boots, and cry "incoming"—all while being guarded around the
clock by real soldiers.

The teams of KPMG accountants, investment bankers, think-tank
lifers, and Young Republicans that populate the Green Zone have much
in common with the IMF missions that rearrange the economies of
developing countries from the presidential suites of Sheraton hotels
the world over. Except for one rather significant difference: in
Iraq they were not negotiating with the government to accept
their "structural adjustments" in exchange for a loan; they were the
government.

Some small steps were taken, however, to bring Iraq's U.S.-appointed
politicians inside. Yegor Gaidar, the mastermind of Russia's mid-
nineties privatization auction that gave away the country's assets
to the reigning oligarchs, was invited to share his wisdom at a
conference in Baghdad. Marek Belka, who as finance minister oversaw
the same process in Poland, was brought in as well. The Iraqis who
proved most gifted at mouthing the neocon lines were selected to act
as what USAID calls local "policy champions"—men like Ahmad al
Mukhtar, who told me of his countrymen, "They are lazy. The Iraqis
by nature, they are very dependent. . . . They will have to depend
on themselves, it is the only way to survive in the world today."
Although he has no economics background and his last job was reading
the English-language news on television, al Mukhtar was appointed
director of foreign relations in the Ministry of Trade and is
leading the charge for Iraq to join the World Trade Organization.

* * *

I had been following the economic front of the war for almost a year
before I decided to go to Iraq. I attended the "Rebuilding Iraq"
trade shows, studied Bremer's tax and investment laws, met with
contractors at their home offices in the United States, interviewed
the government officials in Washington who are making the policies.
But as I prepared to travel to Iraq in March to see this experiment
in free-market utopianism up close, it was becoming increasingly
clear that all was not going according to plan. Bremer had been
working on the theory that if you build a corporate utopia the
corporations will come—but where were they?
American multinationals were happy to accept U.S. taxpayer dollars
to reconstruct the phone or electricity systems, but they weren't
sinking their own money into Iraq. There was, as yet, no McDonald's
or Wal-Mart in Baghdad, and even the sales of state factories,
announced so confidently nine months earlier, had not materialized.

Some of the holdup had to do with the physical risks of doing
business in Iraq. But there were other more significant risks as
well. When Paul Bremer shredded Iraq's Baathist constitution and
replaced it with what The Economist greeted approvingly as "the wish
list of foreign investors," there was one small detail he failed to
mention: It was all completely illegal. The CPA derived its legal
authority from United Nations Security Council Resolution 1483,
passed in May 2003, which recognized the United States and Britain
as Iraq's legitimate occupiers. It was this resolution that
empowered Bremer to unilaterally make laws in Iraq. But the
resolution also stated that the U.S. and Britain must "comply fully
with their obligations under international law including in
particular the Geneva Conventions of 1949 and the Hague Regulations
of 1907." Both conventions were born as an attempt to curtail the
unfortunate historical tendency among occupying powers to rewrite
the rules so that they can economically strip the nations they
control. With this in mind, the conventions stipulate that an
occupier must abide by a country's existing laws unless "absolutely
prevented" from doing so. They also state that an occupier does not
own the "public buildings, real estate, forests and agricultural
assets" of the country it is occupying but is rather
their "administrator" and custodian, keeping them secure until
sovereignty is reestablished. This was the true threat to the Year
Zero plan: since America didn't own Iraq's assets, it could not
legally sell them, which meant that after the occupation ended, an
Iraqi government could come to power and decide that it wanted to
keep the state companies in public hands, or, as is the norm in the
Gulf region, to bar foreign firms from owning 100 percent of
national assets. If that happened, investments made under Bremer's
rules could be expropriated, leaving firms with no recourse because
their investments had violated international law from the outset.

By November, trade lawyers started to advise their corporate clients
not to go into Iraq just yet, that it would be better to wait until
after the transition. Insurance companies were so spooked that not a
single one of the big firms would insure investors for "political
risk," that high-stakes area of insurance law that protects
companies against foreign governments turning nationalist or
socialist and expropriating their investments.

Even the U.S.-appointed Iraqi politicians, up to now so obedient,
were getting nervous about their own political futures if they went
along with the privatization plans. Communications Minister Haider
al-Abadi told me about his first meeting with Bremer. "I
said, `Look, we don't have the mandate to sell any of this.
Privatization is a big thing. We have to wait until there is an
Iraqi government.'" Minister of Industry Mohamad Tofiq was even more
direct: "I am not going to do something that is not legal, so that's
it."

Both al-Abadi and Tofiq told me about a meeting—never reported in
the press—that took place in late October 2003. At that gathering
the twenty-five members of Iraq's Governing Council as well as the
twenty-five interim ministers decided unanimously that they would
not participate in the privatization of Iraq's state-owned companies
or of its publicly owned infrastructure.

But Bremer didn't give up. International law prohibits occupiers
from selling state assets themselves, but it doesn't say anything
about the puppet governments they appoint. Originally, Bremer had
pledged to hand over power to a directly elected Iraqi government,
but in early November he went to Washington for a private meeting
with President Bush and came back with a Plan B. On June 30 the
occupation would officially end—but not really. It would be replaced
by an appointed government, chosen by Washington. This government
would not be bound by the international laws preventing occupiers
from selling off state assets, but it would be bound by an "interim
constitution," a document that would protect Bremer's investment and
privatization laws.

The plan was risky. Bremer's June 30 deadline was awfully close, and
it was chosen for a less than ideal reason: so that President Bush
could trumpet the end of Iraq's occupation on the campaign trail. If
everything went according to plan, Bremer would succeed in forcing
a "sovereign" Iraqi government to carry out his illegal reforms. But
if something went wrong, he would have to go ahead with the June 30
handover anyway because by then Karl Rove, and not Dick Cheney or
Donald Rumsfeld, would be calling the shots. And if it came down to
a choice between ideology in Iraq and the electability of George W.
Bush, everyone knew which would win.

* * *

At first, Plan B seemed to be right on track. Bremer persuaded the
Iraqi Governing Council to agree to everything: the new timetable,
the interim government, and the interim constitution. He even
managed to slip into the constitution a completely overlooked
clause, Article 26. It stated that for the duration of the interim
government, "The laws, regulations, orders and directives issued by
the Coalition Provisional Authority . . . shall remain in force" and
could only be changed after general elections are held.

Bremer had found his legal loophole: There would be a window—seven
months—when the occupation was officially over but before general
elections were scheduled to take place. Within this window, the
Hague and Geneva Conventions' bans on privatization would no longer
apply, but Bremer's own laws, thanks to Article 26, would stand.
During these seven months, foreign investors could come to Iraq and
sign forty-year contracts to buy up Iraqi assets. If a future
elected Iraqi government decided to change the rules, investors
could sue for compensation.

But Bremer had a formidable opponent: Grand Ayatollah Ali al
Sistani, the most senior Shia cleric in Iraq. al Sistani tried to
block Bremer's plan at every turn, calling for immediate direct
elections and for the constitution to be written after those
elections, not before. Both demands, if met, would have closed
Bremer's privatization window. Then, on March 2, with the Shia
members of the Governing Council refusing to sign the interim
constitution, five bombs exploded in front of mosques in Karbala and
Baghdad, killing close to 200 worshipers. General John Abizaid, the
top U.S. commander in Iraq, warned that the country was on the verge
of civil war. Frightened by this prospect, al Sistani backed down
and the Shia politicians signed the interim constitution. It was a
familiar story: the shock of a violent attack paved the way for more
shock therapy.

When I arrived in Iraq a week later, the economic project seemed to
be back on track. All that remained for Bremer was to get his
interim constitution ratified by a Security Council resolution, then
the nervous lawyers and insurance brokers could relax and the sell-
off of Iraq could finally begin. The CPA, meanwhile, had launched a
major new P.R. offensive designed to reassure investors that Iraq
was still a safe and exciting place to do business. The centerpiece
of the campaign was Destination Baghdad Exposition, a massive trade
show for potential investors to be held in early April at the
Baghdad International Fairgrounds. It was the first such event
inside Iraq, and the organizers had branded the trade fair "DBX," as
if it were some sort of Mountain Dew-sponsored dirt-bike race. In
keeping with the extreme-sports theme, Thomas Foley traveled to
Washington to tell a gathering of executives that the risks in Iraq
are akin "to skydiving or riding a motorcycle, which are, to many,
very acceptable risks."

But three hours after my arrival in Baghdad, I was finding these
reassurances extremely hard to believe. I had not yet unpacked when
my hotel room was filled with debris and the windows in the lobby
were shattered. Down the street, the Mount Lebanon Hotel had just
been bombed, at that point the largest attack of its kind since the
official end of the war. The next day, another hotel was bombed in
Basra, then two Finnish businessmen were murdered on their way to a
meeting in Baghdad. Brigadier General Mark Kimmitt finally admitted
that there was a pattern at work: "the extremists have started
shifting away from the hard targets . . . [and] are now going out of
their way to specifically target softer targets." The next day, the
State Department updated its travel advisory: U.S. citizens
were "strongly warned against travel to Iraq."

The physical risks of doing business in Iraq seemed to be spiraling
out of control. This, once again, was not part of the original plan.
When Bremer first arrived in Baghdad, the armed resistance was so
low that he was able to walk the streets with a minimal security
entourage. During his first four months on the job, 109 U.S.
soldiers were killed and 570 were wounded. In the following four
months, when Bremer's shock therapy had taken effect, the number of
U.S. casualties almost doubled, with 195 soldiers killed and 1,633
wounded. There are many in Iraq who argue that these events are
connected—that Bremer's reforms were the single largest factor
leading to the rise of armed resistance.

Take, for instance, Bremer's first casualties. The soldiers and
workers he laid off without pensions or severance pay didn't all
disappear quietly. Many of them went straight into the mujahedeen,
forming the backbone of the armed resistance. "Half a million people
are now worse off, and there you have the water tap that keeps the
insurgency going. It's alternative employment," says Hussain Kubba,
head of the prominent Iraqi business group Kubba Consulting. Some of
Bremer's other economic casualties also have failed to go quietly.
It turns out that many of the businessmen whose companies are
threatened by Bremer's investment laws have decided to make
investments of their own—in the resistance. It is partly their money
that keeps fighters in Kalashnikovs and RPGs.

These developments present a challenge to the basic logic of shock
therapy: the neocons were convinced that if they brought in their
reforms quickly and ruthlessly, Iraqis would be too stunned to
resist. But the shock appears to have had the opposite effect;
rather than the predicted paralysis, it jolted many Iraqis into
action, much of it extreme. Haider al-Abadi, Iraq's minister of
communication, puts it this way: "We know that there are terrorists
in the country, but previously they were not successful, they were
isolated. Now because the whole country is unhappy, and a lot of
people don't have jobs . . . these terrorists are finding listening
ears."

Bremer was now at odds not only with the Iraqis who opposed his
plans but with U.S military commanders charged with putting down the
insurgency his policies were feeding. Heretical questions began to
be raised: instead of laying people off, what if the CPA actually
created jobs for Iraqis? And instead of rushing to sell off Iraq's
200 state-owned firms, how about putting them back to work?

* * *

From the start, the neocons running Iraq had shown nothing but
disdain for Iraq's state-owned companies. In keeping with their Year
Zero-apocalyptic glee, when looters descended on the factories
during the war, U.S. forces did nothing. Sabah Asaad, managing
director of a refrigerator factory outside Baghdad, told me that
while the looting was going on, he went to a nearby U.S. Army base
and begged for help. "I asked one of the officers to send two
soldiers and a vehicle to help me kick out the looters. I was
crying. The officer said, `Sorry, we can't do anything, we need an
order from President Bush.'" Back in Washington, Donald Rumsfeld
shrugged. "Free people are free to make mistakes and commit crimes
and do bad things."

To see the remains of Asaad's football-field-size warehouse is to
understand why Frank Gehry had an artistic crisis after September 11
and was briefly unable to design structures resembling the rubble of
modern buildings. Asaad's looted and burned factory looks remarkably
like a heavy-metal version of Gehry's Guggenheim in Bilbao, Spain,
with waves of steel, buckled by fire, lying in terrifyingly
beautiful golden heaps. Yet all was not lost. "The looters were good-
hearted," one of Asaad's painters told me, explaining that they left
the tools and machines behind, "so we could work again." Because the
machines are still there, many factory managers in Iraq say that it
would take little for them to return to full production. They need
emergency generators to cope with daily blackouts, and they need
capital for parts and raw materials. If that happened, it would have
tremendous implications for Iraq's stalled reconstruction, because
it would mean that many of the key materials needed to rebuild—
cement and steel, bricks and furniture—could be produced inside the
country.

But it hasn't happened. Immediately after the nominal end of the
war, Congress appropriated $2.5 billion for the reconstruction of
Iraq, followed by an additional $18.4 billion in October. Yet as of
July 2004, Iraq's state-owned factories had been pointedly excluded
from the reconstruction contracts. Instead, the billions have all
gone to Western companies, with most of the materials for the
reconstruction imported at great expense from abroad.

With unemployment as high as 67 percent, the imported products and
foreign workers flooding across the borders have become a source of
tremendous resentment in Iraq and yet another open tap fueling the
insurgency. And Iraqis don't have to look far for reminders of this
injustice; it's on display in the most ubiquitous symbol of the
occupation: the blast wall. The ten-foot-high slabs of reinforced
concrete are everywhere in Iraq, separating the protected—the people
in upscale hotels, luxury homes, military bases, and, of course, the
Green Zone—from the unprotected and exposed. If that wasn't injury
enough, all the blast walls are imported, from Kurdistan, Turkey, or
even farther afield, this despite the fact that Iraq was once a
major manufacturer of cement, and could easily be again. There are
seventeen state-owned cement factories across the country, but most
are idle or working at only half capacity. According to the Ministry
of Industry, not one of these factories has received a single
contract to help with the reconstruction, even though they could
produce the walls and meet other needs for cement at a greatly
reduced cost. The CPA pays up to $1,000 per imported blast wall;
local manufacturers say they could make them for $100. Minister
Tofiq says there is a simple reason why the Americans refuse to help
get Iraq's cement factories running again: among those making the
decisions, "no one believes in the public sector."[1]

This kind of ideological blindness has turned Iraq's occupiers into
prisoners of their own policies, hiding behind walls that, by their
very existence, fuel the rage at the U.S. presence, thereby feeding
the need for more walls. In Baghdad the concrete barriers have been
given a popular nickname: Bremer Walls.

As the insurgency grew, it soon became clear that if Bremer went
ahead with his plans to sell off the state companies, it could
worsen the violence. There was no question that privatization would
require layoffs: the Ministry of Industry estimates that roughly
145,000 workers would have to be fired to make the firms desirable
to investors, with each of those workers supporting, on average,
five family members. For Iraq's besieged occupiers the question was:
Would these shock-therapy casualties accept their fate or would they
rebel?

* * *

The answer arrived, in rather dramatic fashion, at one of the
largest state-owned companies, the General Company for Vegetable
Oils. The complex of six factories in a Baghdad industrial zone
produces cooking oil, hand soap, laundry detergent, shaving cream,
and shampoo. At least that is what I was told by a receptionist who
gave me glossy brochures and calendars boasting of "modern
instruments" and "the latest and most up to date developments in the
field of industry." But when I approached the soap factory, I
discovered a group of workers sleeping outside a darkened building.
Our guide rushed ahead, shouting something to a woman in a white lab
coat, and suddenly the factory scrambled into activity: lights
switched on, motors revved up, and workers—still blinking off sleep—
began filling two-liter plastic bottles with pale blue Zahi brand
dishwashing liquid.

I asked Nada Ahmed, the woman in the white coat, why the factory
wasn't working a few minutes before. She explained that they have
only enough electricity and materials to run the machines for a
couple of hours a day, but when guests arrive—would-be investors,
ministry officials, journalists—they get them going. "For show," she
explained. Behind us, a dozen bulky machines sat idle, covered in
sheets of dusty plastic and secured with duct tape.

In one dark corner of the plant, we came across an old man hunched
over a sack filled with white plastic caps. With a thin metal blade
lodged in a wedge of wax, he carefully whittled down the edges of
each cap, leaving a pile of shavings at his feet. "We don't have the
spare part for the proper mold, so we have to cut them by hand," his
supervisor explained apologetically. "We haven't received any parts
from Germany since the sanctions began." I noticed that even on the
assembly lines that were nominally working there was almost no
mechanization: bottles were held under spouts by hand because
conveyor belts don't convey, lids once snapped on by machines were
being hammered in place with wooden mallets.
Even the water for the factory was drawn from an outdoor well,
hoisted by hand, and carried inside.

The solution proposed by the U.S. occupiers was not to fix the plant
but to sell it, and so when Bremer announced the privatization
auction back in June 2003 this was among the first companies
mentioned. Yet when I visited the factory in March, nobody wanted to
talk about the privatization plan; the mere mention of the word
inside the plant inspired awkward silences and meaningful glances.
This seemed an unnatural amount of subtext for a soap factory, and I
tried to get to the bottom of it when I interviewed the assistant
manager. But the interview itself was equally odd: I had spent 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 conversation. "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 nearby
restaurant, "to find out what is really going on with
privatization." His name was Mahmud, and he was a twenty-five-year-
old with a neat beard and big black eyes. (For his safety, I have
omitted his last name.) His story began in July, a few weeks after
Bremer's privatization announcement. The company's manager, on his
way to work, was shot to death. Press reports speculated that the
manager was murdered because he was in favor of privatizing the
plant, but Mahmud was convinced that he was killed because he
opposed the plan. "He would never have sold the factories like the
Americans want. That's why they killed him."

The dead man was replaced by a new manager, Mudhfar Ja'far. Shortly
after taking over, Ja'far called a meeting with ministry officials
to discuss selling off the soap factory, which would involve laying
off two thirds of its employees. Guarding that meeting were several
security officers from the plant. They listened closely to Ja'far's
plans and promptly reported the alarming news to their
coworkers. "We were shocked," Mahmud recalled. "If the private
sector buys our company, the first thing they would do is reduce the
staff to make more money. And we will be forced into a very hard
destiny, because the factory is our only way of living."

Frightened by this prospect, a group of seventeen workers, including
Mahmud, marched into Ja'far's office to confront him on what they
had heard. "Unfortunately, he wasn't there, only the assistant
manager, the one you met," Mahmud told me. A fight broke out: one
worker struck the assistant manager, and a bodyguard fired three
shots at the workers. The crowd then attacked the bodyguard, took
his gun, and, Mahmud said, "stabbed him with a knife in the back
three times. He spent a month in the hospital." In January there was
even more violence. On their way to work, Ja'far, the manager, and
his son were shot and badly injured. Mahmud told me he had no idea
who was behind the attack, but I was starting to understand why
factory managers in Iraq try to keep a low profile.

At the end of our meeting, I asked Mahmud what would happen if the
plant was sold despite the workers' objections. "There are two
choices," he said, looking me in the eye and smiling kindly. "Either
we will set the factory on fire and let the flames devour it to the
ground, or we will blow ourselves up inside of it. But it will not
be privatized."

If there ever was a moment when Iraqis were too disoriented to
resist shock therapy, that moment has definitely passed. Labor
relations, like everything else in Iraq, has become a blood sport.
The violence on the streets howls at the gates of the factories,
threatening to engulf them. Workers fear job loss as a death
sentence, and managers, in turn, fear their workers, a fact that
makes privatization distinctly more complicated than the neocons
foresaw.[2]

* * *

As I left the meeting with Mahmud, I got word that there was a major
demonstration outside the CPA headquarters. Supporters of the
radical young cleric Moqtada al Sadr were protesting the closing of
their newspaper, al Hawza, by military police. The CPA accused al
Hawza of publishing "false articles" that could "pose the real
threat of violence." As an example, it cited an article that claimed
Bremer "is pursuing a policy of starving the Iraqi people to make
them preoccupied with procuring their daily bread so they do not
have the chance to demand their political and individual freedoms."
To me it sounded less like hate literature than a concise summary of
Milton Friedman's recipe for shock therapy.

A few days before the newspaper was shut down, I had gone to Kufa
during Friday prayers to listen to al Sadr at his mosque. He had
launched into a tirade against Bremer's newly signed interim
constitution, calling it "an unjust, terrorist document." The
message of the sermon was clear: Grand Ayatollah Ali al Sistani may
have backed down on the constitution, but al Sadr and his supporters
were still determined to fight it—and if they succeeded they would
sabotage the neocons' careful plan to saddle Iraq's next government
with their "wish list" of laws. With the closing of the newspaper,
Bremer was giving al Sadr his response: he wasn't negotiating with
this young upstart; he'd rather take him out with force.

When I arrived at the demonstration, the streets were filled with
men dressed in black, the soon-to-be legendary Mahdi Army. It struck
me that if Mahmud lost his security guard job at the soap factory,
he could be one of them. That's who al Sadr's foot soldiers are: the
young men who have been shut out of the neocons' grand plans for
Iraq, who see no possibilities for work, and whose neighborhoods
have seen none of the promised reconstruction. Bremer has failed
these young men, and everywhere that he has failed, Moqtada al Sadr
has cannily set out to succeed. In Shia slums from Baghdad to Basra,
a network of Sadr Centers coordinate a kind of shadow
reconstruction. Funded through donations, the centers dispatch
electricians to fix power and phone lines, organize local garbage
collection, set up emergency generators, run blood drives, direct
traffic where the streetlights don't work. And yes, they organize
militias too. Al Sadr took Bremer's economic casualties, dressed
them in black, and gave them rusty Kalashnikovs. His militiamen
protected the mosques and the state factories when the occupation
authorities did not, but in some areas they also went further,
zealously enforcing Islamic law by torching liquor stores and
terrorizing women without the veil.
Indeed, the astronomical rise of the brand of religious
fundamentalism that al Sadr represents is another kind of blowback
from Bremer's shock therapy: if the reconstruction had provided
jobs, security, and services to Iraqis, al Sadr would have been
deprived of both his mission and many of his newfound followers.

At the same time as al Sadr's followers were shouting "Down with
America" outside the Green Zone, something was happening in another
part of the country that would change everything. Four American
mercenary soldiers were killed in Fallujah, their charred and
dismembered bodies hung like trophies over the Euphrates. The
attacks would prove a devastating blow for the neocons, one from
which they would never recover. With these images, investing in Iraq
suddenly didn't look anything like a capitalist dream; it looked
like a macabre nightmare made real.

The day I left Baghdad was the worst yet. Fallujah was under siege
and Brig. Gen. Kimmitt was threatening to "destroy the al-Mahdi
Army." By the end, roughly 2,000 Iraqis were killed in these twin
campaigns. I was dropped off at a security checkpoint several miles
from the airport, then loaded onto a bus jammed with contractors
lugging hastily packed bags. Although no one was calling it one,
this was an evacuation: over the next week 1,500 contractors left
Iraq, and some governments began airlifting their citizens out of
the country. On the bus no one spoke; we all just listened to the
mortar fire, craning our necks to see the red glow. A guy carrying a
KPMG briefcase decided to lighten things up. "So is there business
class on this flight?" he asked the silent bus. From the back,
somebody called out, "Not yet."

Indeed, it may be quite a while before business class truly arrives
in Iraq. When we landed in Amman, we learned that we had gotten out
just in time. That morning three Japanese civilians were kidnapped
and their captors were threatening to burn them alive. Two days
later Nicholas Berg went missing and was not seen again until the
snuff film surfaced of his beheading, an even more terrifying
message for U.S. contractors than the charred bodies in Fallujah.
These were the start of a wave of kidnappings and killings of
foreigners, most of them businesspeople, from a rainbow of nations:
South Korea, Italy, China, Nepal, Pakistan, the Philippines, Turkey.
By the end of June more than ninety contractors were reported dead
in Iraq. When seven Turkish contractors were kidnapped in June,
their captors asked the "company to cancel all contracts and pull
out employees from Iraq." Many insurance companies stopped selling
life insurance to contractors, and others began to charge premiums
as high as $10,000 a week for a single Western executive—the same
price some insurgents reportedly pay for a dead American.

For their part, the organizers of DBX, the historic Baghdad trade
fair, decided to relocate to the lovely tourist city of Diyarbakir
in Turkey, "just 250 km from the Iraqi border." An Iraqi landscape,
only without those frightening Iraqis. Three weeks later just
fifteen people showed up for a Commerce Department conference in
Lansing, Michigan, on investing in Iraq. Its host, Republican
Congressman Mike Rogers, tried to reassure his skeptical audience by
saying that Iraq is "like a rough neighborhood anywhere in America."
The foreign investors, the ones who were offered every imaginable
free-market enticement, are clearly not convinced; there is still no
sign of them. Keith Crane, a senior economist at the Rand
Corporation who has worked for the CPA, put it bluntly: "I don't
believe the board of a multinational company could approve a major
investment in this environment. If people are shooting at each
other, it's just difficult to do business." Hamid Jassim Khamis, the
manager of the largest soft-drink bottling plant in the region, told
me he can't find any investors, even though he landed the exclusive
rights to produce Pepsi in central Iraq. "A lot of people have
approached us to invest in the factory, but people are really
hesitating now." Khamis said he couldn't blame them; in five months
he has survived an attempted assassination, a carjacking, two bombs
planted at the entrance of his factory, and the kidnapping of his
son.

Despite having been granted the first license for a foreign bank to
operate in Iraq in forty years, HSBC still hasn't opened any
branches, a decision that may mean losing the coveted license
altogether. Procter & Gamble has put its joint venture on hold, and
so has General Motors. The U.S. financial backers of the Starwood
luxury hotel and multiplex have gotten cold feet, and Siemens AG has
pulled most staff from Iraq. The bell hasn't rung yet at the Baghdad
Stock Exchange—in fact you can't even use credit cards in Iraq's
cash-only economy. New Bridge Strategies, the company that had
gushed back in October about how "a Wal-Mart could take over the
country," is sounding distinctly humbled. "McDonald's is not opening
anytime soon," company partner Ed Rogers told the Washington Post.
Neither is Wal-Mart. The Financial Times has declared Iraq "the most
dangerous place in the world in which to do business." It's quite an
accomplishment: in trying to design the best place in the world to
do business, the neocons have managed to create the worst, the most
eloquent indictment yet of the guiding logic behind deregulated free
markets.

The violence has not just kept investors out; it also forced Bremer,
before he left, to abandon many of his central economic policies.
Privatization of the state companies is off the table; instead,
several of the state companies have been offered up for lease, but
only if the investor agrees not to lay off a single employee.
Thousands of the state workers that Bremer fired have been rehired,
and significant raises have been handed out in the public sector as
a whole. Plans to do away with the food-ration program have also
been scrapped—it just doesn't seem like a good time to deny millions
of Iraqis the only nutrition on which they can depend.

* * *

The final blow to the neocon dream came in the weeks before the
handover. The White House and the CPA were rushing to get the U.N.
Security Council to pass a resolution endorsing their handover plan.
They had twisted arms to give the top job to former CIA agent Iyad
Allawi, a move that will ensure that Iraq becomes, at the very
least, the coaling station for U.S. troops that Jay Garner
originally envisioned. But if major corporate investors were going
to come to Iraq in the future, they would need a stronger guarantee
that Bremer's economic laws would stick.

There was only one way of doing that: the Security Council
resolution had to ratify the interim constitution, which locked in
Bremer's laws for the duration of the interim government. But al
Sistani once again objected, this time unequivocally, saying that
the constitution has been "rejected by the majority of the Iraqi
people." On June 8 the Security
Council unanimously passed a resolution that endorsed the handover
plan but made absolutely no reference to the constitution. In the
face of this far-reaching defeat, George W. Bush celebrated the
resolution as a historic victory, one that came just in time for an
election trail photo op at the G-8 Summit in Georgia.

With Bremer's laws in limbo, Iraqi ministers are already talking
openly about breaking contracts signed by the CPA. Citigroup's loan
scheme has been rejected as a misuse of Iraq's oil revenues. Iraq's
communication minister is threatening to renegotiate contracts with
the three communications firms providing the country with its
disastrously poor cell phone service. And the Lebanese and U.S.
companies hired to run the state television network have been
informed that they could lose their licenses because they are not
Iraqi. "We will see if we can change the contract," Hamid al-Kifaey,
spokesperson for the Governing Council, said in May. "They have no
idea about Iraq." For most investors, this complete lack of legal
certainty simply makes Iraq too great a risk.

But while the Iraqi resistance has managed to scare off the first
wave of corporate raiders, there's little doubt that they will
return. Whatever form the next Iraqi government takes—nationalist,
Islamist, or free market—it will inherit a shattered nation with a
crushing $120 billion debt. Then, as in all poor countries around
the world, men in dark blue suits from the IMF will appear at the
door, bearing loans and promises of economic boom, provided that
certain structural adjustments are made, which will, of course, be
rather painful at first but well worth the sacrifice in the end. In
fact, the process has already begun: the IMF is poised to approve
loans worth $2.5- $4.25 billion, pending agreement on the
conditions. After an endless succession of courageous last stands
and far too many lost lives, Iraq will become a poor nation like any
other, with politicians determined to introduce policies rejected by
the vast majority of the population, and all the imperfect
compromises that will entail. The free market will no doubt come to
Iraq, but the neoconservative dream of transforming the country into
a free-market utopia has already died, a casualty of a greater dream—
a second term for George W. Bush.

The great historical irony of the catastrophe unfolding in Iraq is
that the shock-therapy reforms that were supposed to create an
economic boom that would rebuild the country have instead fueled a
resistance that ultimately made reconstruction impossible. Bremer's
reforms unleashed forces that the neocons neither predicted nor
could hope to control, from armed insurrections inside factories to
tens of thousands of unemployed young men arming themselves. These
forces have transformed Year Zero in Iraq into the mirror opposite
of what the neocons envisioned: not a corporate utopia but a
ghoulish dystopia, where going to a simple business meeting can get
you lynched, burned alive, or beheaded. These dangers are so great
that in Iraq global capitalism has retreated, at least for now. For
the neocons, this must be a shocking development: their ideological
belief in greed turns out to be stronger than greed itself.

Iraq was to the neocons what Afghanistan was to the Taliban: the one
place on Earth where they could force everyone to live by the most
literal, unyielding interpretation of their sacred texts. One would
think that the bloody results of this experiment would inspire a
crisis of faith: in the country where they had absolute free reign,
where there was no local government to blame, where economic reforms
were introduced at their most shocking and most perfect, they
created, instead of a model free market, a failed state no right-
thinking investor would touch. And yet the Green Zone neocons and
their masters in Washington are no more likely to reexamine their
core beliefs than the Taliban mullahs were inclined to search their
souls when their Islamic state slid into a debauched Hades of opium
and sex slavery. When facts threaten true believers, they simply
close their eyes and pray harder.

Which is precisely what Thomas Foley has been doing. The former head
of "private sector development" has left Iraq, a country he had
described as "the mother of all turnarounds," and has accepted
another turnaround job, as co-chair of George Bush's reelection
committee in Connecticut. On April 30 in Washington he addressed a
crowd of entrepreneurs about business prospects in Baghdad. It was a
tough day to be giving an upbeat speech: that morning the first
photographs had appeared out of Abu Ghraib, including one of a
hooded prisoner with electrical wires attached to his hands. This
was another kind of shock therapy, far more literal than the one
Foley had helped to administer, but not entirely
unconnected. "Whatever you're seeing, it's not as bad as it
appears," Foley told the crowd. "You just need to accept that on
faith."

About the Author

Naomi Klein is the author of No Logo and writer/producer of The
Take, a new documentary on Argentina's occupied factories.

Notes

1. Tofiq did say that several U.S. companies had expressed strong
interest in buying the state-owned cement factories. This supports a
widely held belief in Iraq that there is a deliberate strategy to
neglect the state firms so that they can be sold more cheaply--a
practice known as "starve then sell." [Back]

2. It is in Basra where the connections between economic reforms and
the rise of the resistance was put in starkest terms. In December
the union representing oil workers was negotiating with the Oil
Ministry for a salary increase. Getting nowhere, the workers offered
the ministry a simple choice: increase their paltry salaries or they
would all join the armed resistance. They received a substantial
raise.