MADRID, OCTOBER 23: In London last October 13, an investorâ€™s conference entitled â€œDoing Business in Iraq: Kickstarting the Private Sectorâ€ was agog with reports that McDonalds, among other corporations, may begin selling BigMacs and fries in Iraq by next year. Attracting up to 145 multinational prospectors, the London conference was held less than a month after the US announced its economic masterplan for Iraq, a blueprint which The Economist heralded as a â€œcapitalist dreamâ€ that fulfills the â€œwish list of international investors.â€
Whether Ronald McDonald cuts the ribbon in time and makes the dream come true, however, will depend to a large extent on the outcome of a US-convened donorâ€™s conference that opens here today.
As the US struggles against the popular resistance in Baghdad, the US battles its cash-flow woes in this balmy Spanish capital. Behind closed doors at the Campo de las Naciones, representatives of creditor countries and the multilateral financial institutions will be meeting for the next two days to determine how and when McDonaldsâ€™ and other multinational corporations will finally be able to open their doors in Iraq.
In exchange for allowing the entry of their corporations to Iraq, rich creditor nations will be pledging hundreds of millions of dollars to finance the occupation in order to make sure that it goes on unhampered â€“ long enough for the Golden Arches to rise by the Tigris and the Euphrates.
Those who will pay the price for the burger and fries, however will have no seat at the table.
WHATâ€™S AT STAKE?
In this donorâ€™s conference, the US will be asking the â€œinternational communityâ€ to finance an occupation it could no longer afford on its own.
At first, the US was hoping that Iraqi oil revenues and assets as well as its own taxpayersâ€™ money would be enough. â€œWe are dealing with a country that can really finance its own reconstruction and relatively soon,â€ Defense Undersecretary Wolfowitz confidently told the US Congress before the war, assured that Iraqâ€™s oil would be able to rake in as much $50 billion to $100 billion in the next two years.
Regular sabotage of oil pipelines by the Iraqi resistance as well as the reluctance of a cautious oil industry to start their operations has all but shattered these initial plans by causing severe cash-flow problems and a palpable budget crisis. Edward Chow, a former international executive with Chevron and now an analyst with the Carnegie endowment, predicts: â€œCosts will far exceed what oil revenues will reap in the short-term and the long-term. â€
This has forced the Bush administration to reluctantly turn to US taxpayers with an $87 billion budget request that had to surmount unexpected resistance from the Bush-controlled Congress. When it was finally approved, the funding came out with an embarrassing twist: that the money to be spent will have to be exchanged with IOUs and not just sweet thank-yous.
Taking all the money from the Iraqisâ€™ and the American taxpayersâ€™ pockets would have allowed the US to unilaterally determine which corporations would get all the contracts for what â€“ at more than $100 billion and counting â€“ has been deemed the largest post-war rebuilding business opportunity since World War II. With the disappointing oil revenues dashing expectations and with US taxpayers reluctant to part with their money, however, the US has been forced to give up its exclusive claim over the post-war reconstruction bonanza.
â€˜A WAY TO GET IN ON THE GROUND FLOORâ€™
Armed with the latest 15-0 UN resolution legitimizing the occupation, the US will be turning to the other rich creditor nations and the multilateral lending agencies with one enticement in exchange for their cash: a piece of the action.
â€œWeâ€™re telling them that that this is not just about writing checks or sending troops, but about having a stake in Iraq so their government agencies and humanitarian groups are involved in a sector when a new government is in power in Iraq,â€ a high ranking US official recently disclosed. â€œItâ€™s a way to get in on the ground floor. Thatâ€™s the selling point. â€
Indeed, the well-heeled representatives with fat pockets and blank checks who will be trooping to the Campo today will not be pledging their money for nothing. As a recent Financial Times editorial put it, â€œWashington is in a mess in Iraq, and needs help from its friends. The friends are prepared to assist but they will demand a price. â€
The price comes in the form of a long sought-for guarantee giving the donor countries a crack at the multi-billion dollar business opportunities in Iraq â€“ an access to the ground floor where the action is. With the recent announcement of plans to sell all but a few of Iraqâ€™s crown jewels for dirt- cheap prices, other countries canâ€™t afford to miss the post-war garage sale. If they donâ€™t want to be locked out, they better pay the entrance fee to be collected personally by Coalition Provisiaonal Authority head Paul Bremer and US Secretary of State Colin Powell here in Madrid.
SO WHO PAYS?
The amounts to be pledged at this donorsâ€™ conference could therefore be seen as an investment with expected returns. How big or small that investment will be depends on what each donor thinks the prospects for profits will be. This in turn depends on how big a piece of the pie the US is willing to give up. Those who came to Madrid will need to report back to their capitals with an answer to the question: was the donation worth every cent?
What they wonâ€™t be eager to tell the folks back home, however, is where the money they just donated came from and to whom it is being given. In the next two days, representatives to this meeting will beat their chests and package their donations as acts of charity towards those poor and war-ravaged Iraqis.
The rhetoric about helping Iraqis rebuild their country will hopefully drown out the fact that the people who will be paying for the occupation will not be the same people who will be profiting from it. The money that participants to this donorâ€™s conference will be bringing to the table are not theirs to give away.
Hence, as the conference opens, it will be important to come up with a simple â€“ though perhaps not exhaustive â€“ list of those who will pay for the reconstruction of Iraq as opposed to those who will gain from it. Those who will be made to pay are often not aware what their money is being used for and â€“ as the opposition to the war by majorities in almost all countries indicate â€“ will most likely object if they only knew. Those who will profit, however, will have the most to gain from keeping the transactions in the dark.
THE IRAQIS: PAYING WITH THEIR FUTURE
First, the Iraqis. All of the past and future revenues from the sale of their oil as well as all of their former governmentâ€™s assets deposited anywhere in the world have been turned over to the UN Security Council-created but US- controlled Development Fund for Iraq.
What will be paid to US-chosen contractors such as Halliburton and Bechtel â€“ at a price set by these contractors themselves â€“ will be paid out of this Fund. Not only that, the Fund will also be used by the US Export and Import Bank for extending credit to any US company that hopes to start business in Iraq or that wishes to buy any of the formerly Iraqi-owned corporations that will be sold off by the US as part of Iraqâ€™s massive privatization scheme.
The Iraqis will therefore be paying American corporations for rebuilding the bridges, the hospitals, the schools, the irrigation systems, the power grids and almost everything else which the US â€“ as prodded on by these corporations â€“ destroyed. They will also be paying US investors to take over the corporations that the Iraqi people previously collectively owned but which will now be sold off without their authorization.
Just as they had no say over the bombing of their country, however, so will they have no say over how their money will be spent for bringing the pieces together. When some members of the US-installed Iraqi Governing Council (IGC) tried to make a fuss over what they think were unreasonably priced purchases two weeks ago, for instance, they were promptly reminded about their place in the occupationâ€™s pecking order.
â€œIf we had voted [on the spending decisions], we would have rejected it,â€ one IGC member was quoted. He was all too aware, of course, that the IGC members would never have been allowed to vote against those who put them in power.
Those who are hoping for at least a little prudence in the way that the Fund will be used can take comfort from what a lawyer for companies hoping to strike gold in Iraq recently said. According to Washington lawyer Robert Kyle, the Fund will be â€œsubject to a less formal approach in their allocation than those from USAID which used [US] taxpayersâ€™ money. â€
By â€œless formal,â€ the lawyer must have meant spending $6,000 for a mobile phone that normally costs $495 only per set, $33,000 for a pickup truck that normally costs half that, and $55,000 for a prison bed that usually costs only $14,000 â€“ as current details provided in Bushâ€™s budget request for Iraq shows when compared with actual market prices of these items.
And itâ€™s not just their present income with which the Iraqis are paying the Americans to occupy and reconstruct their country. Even their future is being mortgaged. Just last week, the US Senate voted to convert the $10 billion that will be used on Iraq from grants to loans. Should the World Bank and the International Monetary Fund decide to lend money to Iraq, they will also come with strings attached in the form of the economic conditionalities to be imposed by these banks.
In other words, the Iraqis will be forced to borrow money from the US and the international banks without their consentâ€“ and at interest rates and with conditions that they did not agree with â€“ in order to spend on things over which they have no say whatsoever.
Itâ€™s a small price to pay for being liberated.
THE TAXPAYERS: PAYING WITH THEIR DAYSâ€™ WORK
But since the Iraqisâ€™ oil and assets are currently insufficient, the US Congress had also just reluctantly passed Bushâ€™s request for $87 billion, around 78% of which will be spent for military costs alone. Senator Tom Daschle came out of the session stressing that US taxpayers could not â€œgo on shouldering this burden virtually alone. â€
Meanwhile, every American will now be giving away $300 each for the continued control of Iraq. According to independent estimates, this total amount is more than enough to wipe all of the budget deficits now plaguing a number of state governments; enough to pay for all of the countryâ€™s unemployment benefits for two year; seven times what the US federal government spends for low-income schools and ten times the total spent for environmental protection.
The donorâ€™s conference here, however, is really an attempt to shift the burden from American taxpayers to say, Japanese, British, Spanish, French, German, Canadian, Kuwaiti, and other rich nationâ€™s taxpayers. Japan is said to be donating up to $5 billion to the pot, Britain, $835 million, Spain $300 million, the European Union $230 million, and Canada about $200 million.
These amounts will not come out of nowhere. Giving these millions to the occupation means squeezing off some health care expenditures there, bumping off some educational items here, maybe cutting away some housing funds there, eliminating some unemployment benefits a little here, etc.
Every cent spent for corporations to do business in Iraq is a cent not spent somewhere else. Itâ€™s a small price to pay for being protected from terrorists and their weapons of mass destruction.
THE SOLDIERS AND THE CIVILIANS: PAYING WITH THEIR LIVES
But while the American and the rich countriesâ€™ taxpayers are contributing cash, others are paying with their lives. According to various estimates, as many as 10,000 up to 30,000 Iraqi civilians have died; 106 American soldiers and scores of allied troops have been killed during the war and pacification.
With no less than the chairman of the US joint chiefs of staff admitting that the US military is now overstretched, the US has been pleading with other countries to pledge non-monetary contributions to Iraq in the form of warm bodies that will attempt to stabilize the occupied country and make it safe for corporations like McDonaldsâ€™. Once in Iraq, these soldiers and neo- Gurkhas will be moving targets for Iraqis who â€“ for some incomprehensible reason â€“ are mad enough to resent being colonized and mad enough to fight back.
Interestingly, with a few notable exceptions, most of those who are being asked to pack their bags and go to Iraq are those whoâ€™d give anything and go anywhere for a job. Over the last few weeks, the US has been courting mostly countries from the South such as India, Pakistan, Bangladesh, Fiji, the Philippines, Thailand, El Salvador, Honduras, Nicaragua, etc to deploy more troops to Iraq so that their weary soldiers can go home and fight another day â€“ in a different part of the world.
These soldiers are happy to go to Iraq because the per diem there would be so much more than what theyâ€™d get staying at home. Domestically, one of the strongest arguments for fielding them to Iraq is the promise of dollar- denominated remittances to be sent home. These gun-strapped and cash-strapped governments are happy to send their boys away in exchange for more military aid from and stronger military ties with the United States.
Senator Edward Kennedy has asserted that the US has been bribing foreign governments to induce them to go against domestic popular opinion against the war. He says that up to half of the $4 billion that the US spends monthly on Iraq could not be accounted for by the Congressional Budget Office.
In this occupation, what the US is asking for from different countries interestingly reflects international realities as well: capital from the North, cheap labor from the South. The ultimate price per hour is apparently cheaper in developing countries than in the developed ones.
Smiling McDonalds attendants may start ushering in customers to their branch in Iraq next year â€“ but only after Bechtel had switched back the lights, Halliburton had rebuilt the bridges, Flour had paved the roads, MCI had set up the mobile network system, Research Triangle Institute had trained the managers and bureaucrats, Abt Associates had restored the hospitals, the military-industrial complex and the private armies had restored security, and the multinational Gurkha force had pacified the resistance.
The Iraqis and the taxpayers who are bankrolling the occupation better not know to whom theyâ€™re being made to give their checks. Bechtel sold chemical weapons to Saddam Hussein back in the 80s and had been accused of gross overpricing in Massachusetts and Bolivia. MCI was involved in historyâ€™s biggest accounting scandal and has totally no experience building cell networks. Halliburton had been accused of inflating costs and had even settled a number of fraud charge. Dyncorp had been accused of covering up sex trafficking. Flour faces a multibillion dollar lawsuit for exploiting black workers and making security guards wear Ku Klux Klan robes to attack their workers.
The business records of the recipients are less than flattering. According to well-documented report summarizing the histories of those that had been awarded contracts, they are riddled with â€œcost overruns, accounting irregularities, financial dereliction, fraud, bankruptcy, overcharging, price gouging, profiteering, wage-cheating, deception, corruption, health and safety violations, worker and community exploitation, human and labor rights abuses, union-busting, strike-breaking, environmental contamination, ecological irresponsibility, malpractice, criminal prosecutions, civil law suits, privatization of public resources, collusion with dictators, trading with regimes in violation of international sanctions, drug-running, prostitution, excessive executive compensation, and breach of fiduciary duty to shareholders and the public. â€
Lest those donor countries angling for deals on behalf of their own corporations be misled: This is not the list of requirements for interested contractors and subcontractors hoping to do business in Iraq.
To be discussed here in Madrid today and tomorrow is the direction that the occupation takes. At stake is the future of the â€œcapitalist dreamâ€ of multinational corporations like McDonalds in Iraq. If the moneyâ€™s not enough, the occupation forces might simply pack up in a few months. If the lending nations cough up enough cash, they could only have ensured that theyâ€™d get a bang for their buck.
If this happens, then those financing the continued occupation â€“ the Iraqis, the taxpayers, the soldiers, and the civilians â€“ must at least be treated to a complimentary combo meal of Big Mac, Coke, and fries when the Baghdad franchise opens. They must be dying for a taste of freedom.