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Operation Enduring Free Trade


While US forces bombed, murdered and maimed their way to “freedom” and “democracy” in Falluja and across Iraq, George Bush reiterated his vision for the Middle East to the US public on April 13th, 2004:

“So long as I’m the President, I will press for freedom. I believe so strongly in the power of freedom….I also have this belief, strong belief, that freedom is not this country’s gift to the world; freedom is the Almighty’s gift to every man and woman in this world. And as the greatest power on the face of the Earth, we have an obligation to help the spread of freedom”.

In the Middle East, as elsewhere, for the US regime, “freedom” means free markets, free trade and investment, and freedom for US capital to do what it likes, where it likes, whenever it likes. While its armed forces wage a brutal colonial war of occupation, reshaping Iraq into a neoliberal playground for US corporations, a living hell for Iraqis, and a model market showcase state for other Middle Eastern countries to imitate, its trade policies march militaristically throughout the region.

In May 2003, Bush announced plans for a US-Middle East Free Trade Area (MEFTA) by 2013. The US trade agenda for the Middle East is supposedly a “step-by-step pathway” to “deeper trade and economic partnerships” with the US. The US plans to integrate a series of bilateral free trade agreements (FTAs) into a regionwide free trade area.

Newly self-ordained Middle East expert, US Trade Representative Bob Zoellick told a special World Economic Forum meeting in Jordan in June 2003, that Islam and the histories and cultures of the Middle East are totally congruent with neoliberal economics, but the region has lost its way.

Now – praise the Lord (and pass the ammunition) – the US cavalry has come to the rescue, “reawakening a vibrant past”. Zoellick claimed: “The reconstruction and reopening of Iraq presents an opportunity for change – an opening for the people of the Arab world to ask why their region, once a nucleus of trade, has been largely excluded from the gains of this modern era of globalization.”

So remember, as more Iraqis are murdered, maimed, tortured and abused by the US-led forces, and their homes, mosques and neighborhoods reduced to rubble, this is part of “an opportunity for change”.

The US trade agenda for the region includes:

– supporting WTO membership for “peaceful” countries in the region that seek it;

– offering to negotiate Trade and Investment Framework Agreements (TIFAs) that establish a framework for expanding trade and resolving outstanding issues. TIFAs lay the foundation for more complex FTAs. These will “encourage private sector participation through business councils that drive trade agendas and help us address the specific concerns of business”;

– offering to negotiate Bilateral Investment Treaties (BITs);

– offering to negotiate comprehensive FTAs. These will “remove all barriers to trade across all sectors – with the aim of expanding the bilateral FTAs into “sub- regional” FTAs by mooring other interested and qualified countries in the safe harbors of existing free trade agreements”. Morocco would be the hub for the Maghreb, Bahrain for the Gulf;

– melding these into the MEFTA;

– increasing financial and technical aid linked to countries’ commitments to economic and trade reforms.

“By pursuing multiple free trade initiatives, the US is creating a “competition for liberalization” that provides leverage for openness in all negotiations, establishes models of success that can be used on many fronts, and develops a fresh political dynamic that puts free trade on the offensive,” claimed Zoellick this March.

The US bilateral trade and investment strategy in the Middle East certainly resembles an offensive. This February, Washington concluded TIFAs with the governments of Yemen and Kuwait. In March, the US signed TIFAs with the United Arab Emirates (UAE) and Qatar, as well as concluding negotiations with Morocco on an FTA, and holding the second round of FTA negotiations with Bahrain.

Washington already has TIFAs with Algeria (July 2001), Bahrain (June 2002), Egypt (July 1999), Saudi Arabia (July 2003), and Tunisia (October 2002). It has BITs with Egypt, Morocco and Tunisia which entered into force in the early 1990s, and a BIT with Bahrain since 2001.

The US signed an FTA with Israel in 1985 (when Ariel Sharon was Minister of Industry and Trade), and it also has an FTA and BIT with Jordan.

In the bilateral trade arena, there is some competition within the region to attract US favours. Kuwait is jockeying for the position of regional investment hub over Bahrain and Dubai. Kuwaiti Minister for Commerce and Industry Abdullah Abdul Rahman Al-Taweel made a pitch to US business representatives in February selling Kuwait as an ideal base for US involvement in Iraq. Kuwait has also become the USA’s proxy in OPEC, opposing the recent decision to cut oil production, and recently passed a foreign investment law allowing overseas investors to own 100% of their own businesses in Kuwait.

Other countries in the region have opened up to foreign investment, and privatized state-owned enterprises to varying degrees, but not without opposition or controversy. Recently re-elected Algerian President AbdelAziz Bouteflika has promised more privatizations and joint venture partnerships, saying that Algeria must “start to prepare the “after oil” economy in the context of accelerated globalization.” Algerian trade unions have opposed these policies and the secrecy that surrounds them, including a two-day general strike which virtually shut the country down in February 2003.

US corporations want deals which open up markets and commit governments to deregulate, and privatize. And, yes, they want NAFTA-plus guarantees – including investor-state dispute mechanisms for use against governments for any actions or omissions which they claim impact on their investments.

They seek the opening up of services sectors, government procurement, and tighter intellectual property provisions than in the WTO. The US-Bahrain FTA Coalition is co-chaired by Lionel Johnson of Citigroup and William Rice of ALCOA, while the US-Morocco FTA Coalition co-chairs are George Pickart of CMS Energy and Laura Lane of Time Warner Inc. CMS is a major investor in Morocco’s electricity market, while ALCOA has a sizeable stake in the Aluminum Bahrain Company (ALBA).

Yet the US trade agenda in the Middle East is predominantly driven by geopolitical interests, not just trade and economic ones. The numbers certainly don’t add up to much. For example, in 2002 the US exported US $366 million of goods to Yemen, while importing $246 million worth of goods from Yemen.

That year, US goods exports to Bahrain totalled $419.2 million, while Bahraini exports of goods to the US stood at $395.1 million.

A TIFA, BIT, or FTA with the US is most certainly a signifier that Washington deems its government to be an ally.

In 2002, after the Algerian government’s pledge of support for the “war on terror” the US announced that it would be increasing military aid and selling weapons to Algeria for its domestic fight against terrorism. Since 1981, Egypt has hosted the biennial Operation Bright Star – which has become the largest multilateral military exercise in the world, involving US and other armed forces.

Kuwait, recently awarded major non-NATO ally status by Washington, was the launchpad for the invasion of Iraq. The US Navy Fifth Fleet is headquartered in Bahrain. Qatar played host to the Doha WTO Ministerial Meeting in November 2001, and is home to the US Armed Forces Central Command.

A precondition of negotiations towards an FTA with the US is non-participation in the economic boycott of Israel. The US has raised objections to WTO membership of those countries which continue to boycott Israel.

Timothy Deal, senior Vice President of the US Council for International Business (USCIB) told a Senate Finance Committee in March 2001, that the principal attraction of the US-Jordan FTA was “the contribution it could make to the Middle East peace process”.

In a glaring example of its double standards in the global trade arena, at a February WTO General Council meeting in Geneva, the US backed a bid to grant Iraq observer status at the WTO, while opposing – for the fifteenth time – Iran’s application in the same session. Under WTO rules, any state of customs territory “possessing full autonomy of its external economic relations” can apply to join. Iraq clearly does not conform to this test, because of the US control over its economy and body politic – but that seems of little concern at the WTO.

Then there’s Egypt. Zoellick waxed lyrical in May 2003, saying “Egypt is obviously the heart of the Arab world…It won’t be easy but we’ll use the incentive of a free trade agreement to try to promote their reforms.” Weeks later – after Egypt’s withdrawal from the US-led WTO complaint against the EU de facto moratorium on genetically modified organisms – Zoellick poutily proclaimed that the US would not be negotiating an FTA with an Egypt that “had some work to do”.

While denying that Egypt’s WTO/GMO about-face was the reason, the US clearly made an example of the largest country in the region – a warning to others not to displease Washington. Ahmed Ghoneim, a University of Cairo academic has warned that an “ant” like Egypt should try to avoid a US/EU “struggle between elephants from the outset. Both elephants got mad.” An Egyptian official told a reporter that with the EU constituting 40% of Egypt’s trade, Egypt could not go to “war” with it over the GMO ban.

European government and corporate economic, trade and political interests in the region remain strong, and the EU has been pressuring governments to restructure and open up their economies. But many feel that the achievements of the EU’s “Barcelona process” through which it seeks to engage Mediterranean countries on economic and political reforms and build bilateral and regional trade and aid relations has been lacklustre.

In a region heavily reliant on oil and gas, privatization in this sector – especially of upstream production – has been slow and contentious, even among those governments apparently committed to market reforms.

The US hopes that the violent remolding of Iraq into a neoliberal playground for US corporations will create an example of the kind of policy environment it wants to prevail in the region. The forced privatization of Iraq’s oil sector, refining capacity, and pipeline infrastructure, could serve as a model for privatizations by other OPEC members, thereby weakening the cartel’s domination of the energy markets. It would also add to the pressure on Middle Eastern governments to open up this sector to foreign corporations.

Meanwhile, describing Morocco as a “good friend”, the recently concluded US-Morocco FTA, says Zoellick, shows that Washington is “firmly committed to supporting tolerant, open and more prosperous Muslim societies.” Moreover, this deal serves as a model for negotiations with other countries in the Middle East and North Africa, and to prod domestic free market reforms.

Morocco’s farm sector had been largely excluded from a free trade agreement with the EU. But under the FTA with Washington, US corporate agribusiness will get tariff-free access, threatening the livelihoods of Moroccan farmers, 40 % of whom survive from subsistence agriculture. US corn and soybeans have already made inroads into Morocco.

The US-Morocco FTA throws open Morocco’s service sector to US investors. These include telecommunications, computer and related services, tourism, energy, transport, financial services, insurance, and entertainment.

With stricter-than-WTO intellectual property standards, the US-Morocco FTA could threaten access to medicines. The agreement increases the duration of patent protection from 20 to 30 years. The FTA threatens the survival of Morocco’s generic industry which provides thousands of jobs and helps to save its Health Ministry millions of dirhams each year.

Moroccan AIDS advocacy organization, Association de Lutte contre le SIDA (ALCS) warned that the FTA sets “a serious precedent for which the countries of the south will blame Morocco, but these countries will continue to battle for access to generic medicines.”

The US Administration’s Industry Functional Advisory Committee on Intellectual Property Rights for Trade Policy Matters (comprising representatives from US biotech, pharmaceutical and infotainment corporations), exultantly stated that the US-Morocco FTA contains “the most advanced [intellectual property] chapter in any FTA negotiated so far.”

Chadwane Bensalmia, writing in the Casablanca magazine Tel Quel, worries that besides the impacts on Morocco’s agriculture and pharmaceutical industry, Americans will wipe out Morocco’s cultural industry. Accepting the agreement, he believes, means “giving up our identity.”

Bush’s Middle East trade agenda is meant to sweeten the invasion and occupation of Iraq and continued US support for Israel – which remains the region’s sole nuclear power, and illegal occupier of Palestinian lands. Regardless of whether any of the deals get past Congress before November, Bush will tell American voters that war and free trade will make the world a safer place. Yet his with-us-or-against-us world offers recolonization by US capital for all – by armed aggression against “enemies” or through radical trade and investment agreements with “good friends”.

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