Looting the Iraqi Economy


14 has been Iraq’s National Day since 1958. This year, under
the occupation, it was declared a “Saddam-era holiday”
and its celebration banned. Instead, occupation authorities declared,
the people of Iraq should celebrate the fall of the Saddam regime.
While most Iraqis were glad to see Saddam go, prohibiting the day’s
celebration is not just an insult, but a sign of the occupation’s
true intentions. 

progressive Iraqis, June 14 is a celebration of the history of their
anti-imperialist struggle. In 1958, Iraqi nationalists and radicals
threw out the king imposed on them by the British after World War
I. Over the next five years of relative freedom and democracy, Iraq
began putting together a nationalized, planned economy, based on
its oil wealth. Hundreds of factories were eventually built, making
it the most industrialized country in the Middle East. A new deepwater
port was constructed on the Persian Gulf, Umm Qasr, which became
a lynchpin in that plan. From its piers, Iraq began to ship goods
from those factories to buyers in other countries throughout the
region. The port became a symbol of progress and independence, an
achievement of the Iraqi revolution. 

the revolution of 1958, a thousand longshore workers labored on
Umm Qasr’s docks. Even in the heady days of Arab nationalism,
however, they still had no guarantees for their rights and jobs.
At first, subcontracting companies were allowed to hire dockers
in a daily shapeup. Finally, workers rebelled. After winning recognition
for their union, they demanded and won a hiring system under their
control and a daily guaranteed wage, whether or not there was a
boat at the dock to load or unload. 

achievements now seem like a distant dream. Life in Umm Qasr has
changed completely for the people on the piers. A decade-long war
with Iran, then the first Gulf War followed by 12 years of sanctions,
and finally a new invasion and occupation have all taken their toll.
Much of the port lies in a shambles, although the basic infrastructure
is still in place. As a result, the status of the people whose living
depends on the jobs the port provides hangs in the balance. Even
before U.S. troops had reached Baghdad, the Bush administration
gave the concession for operating the port to Stevedoring Services
of America, a politically connected firm handling cargo around the

free trade ideologues of the Bush administration see the occupation
of Iraq as a beachhead into the Middle East and South Asia. Their
first objective is the transformation of the state-dominated economy
of what was once one of the region’s wealthiest and most industrialized

Services of America, now SSA Marine, is poised to take advantage
of both aspects of the growth of the private sector. The company,
which has a history of tight political connections with the White
House, received a $4.8 million no-bid contract to operate the port
of Umm Qasr on March 24, 2003. According to the USAID website, the
contract may reach as high as $14.3 million by its completion. It
covers the assessment of the port’s needs, assistance in making
it operational, and also the ongoing management of dockside operations.

Francisco’s Bechtel Corp. began dredging the harbor in May.
Then, on July 16, SSA began accepting commercial cargo, including
container, break- bulk, and rollon-rolloff shipments. Despite its
dilapidated state, Umm Qasr is still a highly developed facility,
with 23 berths for ships, 4 modern container cranes, and a grain
and cement dock. (Oil exports are handled through another, unrelated
port.) The possibilities for the profitable employment of these
facilities weren’t lost on other port operators, who would
have liked the plum themselves. The British shipping giant, Peninsular
and Oriental Steam Navigation (the famous “P&O”),
thought it was entitled to run Umm Qasr, inasmuch as the British
were given responsibility for occupying and administering the south
of Iraq. The firm complained bitterly that only U.S. companies were
getting the profitable concessions created by the occupation. Alan
Larson, U.S. undersecretary of state, responded that giving SSA
the port was “the responsible thing to do.” Even other
U.S. firms complained that the company seemed to have the inside
track, since it didn’t have the usual security clearance. Instead
of rejecting SSA, however, USAID dropped the security requirement. 

shippers have since complained of “gross profiteering”
via the high tariffs charged for handling cargo in the port. SSA
denies that it profits from the tariffs and says they’re set
by USAID. But in a privatized port, the tariffs will eventually
flow into the pockets of whatever private operator holds the concession
and SSA advises USAID on the rates required to make the port “self-sustaining.”
When USAID was slow in taking SSA’s “advice” in July,
the agency got a call from Congressperson Norm Dicks (D-WA) telling
them to pay more attention to the company’s recommendations.
SSA’s home office is in Seattle, Washington. 

process by which SSA became Iraq’s port operator says a lot
about the company’s relationship with the Bush White House.
SSA Marine is a $1 billion-a-year family-owned business, with over
10,000 employees worldwide. It has profited from its political connections
for years—between 1990 and 2002, for instance, its government
contracts were worth $86,117,000. 

the shipping industry as a whole has been a heavy political contributor,
giving 68 percent of its $4.3 million in campaign contributions
to Republicans in the 2000 election cycle, SSA has not spread the
same big bucks. In 2003 the company paid $40,000 to Denny Miller
Associates for lobbying services. According to the Center for the
Study of Responsive Politics, SSA contributed $24,825 (77 percent
to Republicans) between 1999 and 2002, of which President Bush received
a mere $1,000. 

these (relatively) small expenditures don’t give an accurate
picture of the real relations between SSA and the White House. Those
were revealed in 2002, during the negotiations of the labor agreement
between the Pacific Maritime Association and the International Longshore
and Warehouse Union. SSA was widely viewed, especially by the union,
as the most anti-union employer in the association. PMA’s director,
Joseph Miniace, who came on board promising to bring the union to
heel, was SSA’s man, according to industry insiders. 

before the contract expired on July 31, the Administration began
to intervene directly. Homeland Secretary Tom Ridge, and then Labor
Secretary Elaine Chao, both told the union’s bargaining committee
that the Administration would prevent any strike. They made clear
that Bush would begin by invoking the Taft-Hartley Act, under which
striking longshore workers would be prevented from stopping work
for 80 days. They then threatened that Bush would call on Congress
to place the union under the Railway Labor Act, instead of the National
Labor Relations Act, which would effectively make future strikes
impossible. In addition, they said, the union’s coastwise bargaining
structure might be declared an illegal monopoly, meaning that if
the union struck one port, shippers could simply load and unload
their cargo in another, making strikes pointless. 

the Bush officials said, the government would replace striking longshoremen
with Navy personnel in the huge cargo cranes that load and offload
the giant shipping containers. These threats were the end product
of a months-long process in which administration officials met secretly
with the PMA, along with the large corporations dependent on trans-Pacific
shipping, like The Gap, Mattel, and Home Depot. The government then
set up a task force, headed by White House advisor Carlos Bonilla,
which produced the strategy for massive federal intervention. 

the Bush proposals had the same immediate intent—removing the
union’s bargaining leverage by making a waterfront strike impossible.
But their long-term strategy extended far beyond the docks. They
began defining threats to national security in economic terms, rather
than as interruptions in vital life-dependent services. Using their
new definition, any halt in the operation of an industry or large
profitable enterprise could be defined as a national security threat
and made illegal. The Administration’s legal brief voicing
this startling new philosophy was elaborated by Defense Secretary
Donald Rumsfeld. 

the ILWU avoided being provoked into a strike, the PMA locked workers
out of the terminals in late September 2002. The employers then
demanded Bush invoke the Taft-Hartley Act and, after 10 days, got
what they wanted. Despite the fact that they had closed the gates
of their own terminals, the Bush administration got a federal judge
to order the union to work under its old contract with no interruption,
for 80 days. The union, which then had to negotiate under the federal
no-strike order, compared it to having to bargain in a “barbed-wire

close relationship between SSA and the Bush administration developed
a life of its own. In Bangladesh, the company proposed building
a new, private container terminal to compete with government-operated
docks. When longshore workers and popular organizations protested
the $500 billion deal, U.S. Ambassador Mary Ann Peters threatened
that U.S. investors would boycott the country if the contract didn’t
go through. 

started rubbing shoulders with the Bush national security apparatus
in other areas as well. In May 2003, the company was a founding
member of the Marine Terminal Discussion Agreement, a forum in which
shippers talk with U.S. government authorities about “security
issues.” The group was ostensibly created to make shipping
containers more secure from tampering by terrorists or narcotics
smugglers, but the initiative gives SSA an even closer relationship
with the government in an area with a great impact on the jobs of
longshore workers. 

the McCarthyite hysteria of the early 1950s, dockworkers were required
to hold security clearances in order to get on the piers and work.
Communists and other left-wingers, especially the ILWU’s most
active members, were denied clearances and couldn’t do their
jobs. Although that procedure was eventually ruled unconstitutional,
after 9/11 it came back from the dead. Proposals have been floated
in Washington to create a new set of security requirements for longshore
workers. Putting the drafting of those requirements into the hands
of companies like SSA allows the union’s worst enemies to determine
which of its members can hold a job. 

battles over the ILWU longshore contract finally ended with a new
agreement in December 2002. By then the Administration was already
ramping up its preparations for the invasion of Iraq. The relationship
established between SSA and the Administration during the longshore
labor war was undoubtedly a key element in winning the company the
contract to reopen the port of Umm Qasr, once troops seized it just
a few months later. 

Iraq, the occupation authorities (known as the Coalition Provisional
Authority) have taken other important steps to benefit foreign operators
like SSA. In an October 8 2003 phone press conference, Tom Foley,
who now directs private sector development for the CPA, announced
a list of the first state enterprises to be sold off, including
cement and fertilizer plants, phosphate and sulfur mines, pharmaceutical
factories, and the country’s airline. In preparation, on September
19, the CPA published Order No. 39, which permits 100 percent foreign
ownership of businesses, except for the oil industry, and allows
repatriation of profits. 

No. 37, also issued on September 19, suspends income and property
taxes for the year and imposes a flat tax on individuals and corporations
in the future of 15 percent. Right-wing ideologues haven’t
been able to get the U.S. Congress to pass a flat tax proposal despite
years of advocacy, but Iraq has become the free-marketeers’

conferences take place once or twice a week in Washington and London
in which Iraqi enterprises and contracts are put on display and
transnational corporations come to examine profitmaking opportunities.
One such conference scheduled for December 10 at Washington’s
National Press Club by Equity International, a business consulting
service, featured the attendence of executives from Lockheed Martin,
Raytheon, Rockwell Automation, Foster Wheeler, The Livingston Group,
Nissan Motor Co, M/A-COM, Federal Security Systems, Danimex Communications,
Global Transportation Systems, Applied Industrial Technologies,
Comprehensive Health Services, Washington Group International, International
Truck and Engine Corporation, and diplomats from countries participating
in the occupation coalition. 

International meetings to showcase Iraqi concessions began as early
as May 5 and featured speakers included U.S. Assistant Secretary
of State Lincoln Bloomfield; U.S. Treasury Under Secretary John
Taylor; Congressperson Curt Weldon, vice chair, House Armed Services
Committee; Christopher Shays, chairperson, House Subcommittee on
National Security, Emerging Threats and International Relations;
as well as executives from Kellogg Brown & Root, BearingPoint,
Creative Associates and USProtect; and top officials from the Coalition
Provisional Authority, U.S. Army Corps of Engineers, U.S. State
Department, U.S. Treasury Department, U.S. Export-Import Bank, U.S.
Commerce Department, U.S. Small Business Administration, and the
United Nations. 

Iraqi workers look at the prospect of privatization with dread.
Dathar Al-Kashab, manager of Baghdad’s Al Daura oil refinery,
predicted that privatization would have an enormous effect. “A
worker starting here today has a job for life, under the old system,”
he explains, “and there’s no law which permits me to lay
him off. But if I put on the hat of privatization, I’ll have
to fire 1,500 [of the refinery’s 3,000] workers. In America
when a company lays people off, there’s unemployment insurance,
and they won’t die from hunger. If I dismiss employees now,
I’m killing them and their families.” The privatization
of the Umm Qasr docks would undoubtedly have the same effect on
the port’s longtime workforce. 

workers, however, haven’t waited for the axe to fall. In June,
400 labor activists held a conference in Baghdad and laid plans
for organizing unions in 12 of the country’s principal industries,
including longshore and transportation. They set up an umbrella
labor group, the Workers Democratic Trade Union Federation. 

reorganization of Iraq’s unions continues a long tradition
of labor activity. When the king was overthrown in the revolution
of 1958, unions became legal in Iraq for the first time, although
workers had organized strikes and underground protests since the
British occupation in the 1920s. In 1963, however, the CIA organized
a coup that overthrew the government of Karim Kassem and installed
the Baath Party in power. Saddam Hussein took control of the party
and government in 1968 and in 1977 purged unions of his political
opponents and drove radical political parties underground or into
exile. Left-wing leaders of the unions organized after 1958 were
fired, driven into exile, and even executed. 

Saddam, Iraq eventually became a client state of the U.S., especially
after the Shah was overthrown in Iran in 1978. Both Saddam and the
U.S. feared that Iran’s Islamic Revolution would spread, and
threaten their interests. The U.S. gave Saddam arms and money to
fight Iran. By the conflict’s end, over 400,000 Iraqis, including
some of its most skilled and educated workers, were dead. During
that decade-long war, Umm Qasr proved its strategic value. Loading
and unloading ships at the docks in Basra, on the Chatt-al-Arab
waterway just a few miles from Iran’s border, was practically
impossible. Umm Qasr became Iraq’s only usable port. 

1987, Saddam issued a law declaring that the class struggle was
over. Workers in state-owned enterprises were no longer to be considered
workers at all, but civil servants. As such, Saddam said, they had
no right to organize unions or bargain. On the Umm Qasr docks and
in factories and refineries throughout the country, unions were
effectively banned. 

1987 law is still being enforced by the U.S. occupation authority.
The law affects workers employed in the enterprises set to be privatized
and that is why it hasn’t been repealed as hundreds of other
Saddam-era laws have been. If those workers have no legal union,
no right to bargain, and no contracts, then privatization and the
huge job losses that will come with it, will face much less organized

June 5, CPA head Paul Bremer issued a decree called Public Notice
Number One, prohibiting “pronouncements and material that incite
civil disorder, rioting or damage to property.” The phrase
can easily be interpreted to mean strikes or other organized labor
protest. Those who violate the decree “will be subject to immediate
detention by Coalition security forces and held as a security internee
under the Fourth Geneva Convention of 1949” (in other words,
as a prisoner of war). 

occupation forces in Iraq escalated their efforts to paralyze Iraq’s
new labor unions on December 6, when soldiers arrested eight members
of the Federation’s executive board and took them into detention.
Although the eight were released the following day, there was no
explanation from the Coalition Provisional Authority. 

the Federation has set up an organization for dockers and other
transport workers, there is still no union on the docks in Umm Qasr,
according to one retired longshore union organizer, Muhsen Mull
Ali. In nearby Basra, however, there is already a trade union council
and two general strikes have taken place since the beginning of
the occupation. “In Basra, 70 percent of the people are unemployed,”
Muhsen says. “American companies hire Iraqis at $70 and foreigners
at $300. There’s so much unemployment in Iraq that people will
take jobs at any wage and the Americans took advantage of this.” 

spent two long stints in prison for organizing unions in Basra (first
under the king and then under Saddam), but says he intends to return
to the area nevertheless to begin reorganizing workers on the docks.
“They will reimpose capitalism on us, so our responsibility
is to oppose privatization as much as possible and fight for the
welfare of our workers,” he explains. Jassim Mashkoul, the
new Federation’s director for internal communications, adds,
“At the beginning, we thought our situation might be better
afterwards, since we got rid of Saddam Hussein. But it hasn’t
been.” The Federation calls for an end to the occupation and
for a democratic government of Iraqis to replace it. 

trade unionists are even more critical of the occupation’s
effect on workers. According to Hacene Djemam, general secretary
of the International Confederation of Arab Trade Unions, “war
makes privatization easy: first you destroy the society and then
you let the corporations rebuild it.” 

Against the War, a national group of unions which opposed the Bush
intervention before it took place, prepared a research paper after
the occupation started, profiling U.S. corporations like SSA that
were given reconstruction contracts. Clarence Thomas, former secretary-treasurer
of San Francisco’s longshore union, Local 10 of the International
Longshore and Warehouse Union, was a member of a USLAW delegation
that went to Iraq in October. He took copies of the report and offered
to assist unions there if and when they confront the kind of union-busting
activity the ILWU faced in 2002. At the Labor Assembly for Peace
in Chicago in late October, USLAW resolved to make Iraqi labor rights
under the occupation an issue in the 2004 election. 

told the leadership of the WDTUF, “The Bush administration
doesn’t like unions in the U.S., so how can it like them in
Iraq? Capital has international unity and mobility, so it’s
obvious that workers have to have the same thing if we’re all
to survive.”

David Bacon is
a freelance writer and photographer living in California.