US sell-off orders in Iraq were unlawful

Submitted by Anon on 6 December, 2004 - 9:31

The British state has effectively admitted that the US/UK occupation's programme of forced privatisation in Iraq has been unlawful.

In April 2004 Ewa Jasiewicz and Pennie Quinton were arrested and charged with “aggravated trespass” for entering and disrupting the Iraq Procurement conference in London. It was a business conference where representatives of the occupation authority came to discuss deals and contracts with bosses from big multinational corporations.

On 23 November Ewa’s and Pennie’s case was due to come to trial. A few days before that the Crown Prosecution Service told their lawyer that it was dropping the case for “lack of evidence”.

But there was no lack of evidence. There were plenty of witnesses that Ewa and Pennie did enter the conference uninvited, and did disrupt it. Ewa and Pennie did not deny it. Their defence rested solely on the claim that “aggravated trespass” means disrupting a lawful event, and the conference was not lawful.

Ewa and Pennie used a little-known legal clause to insist on their right to be prosecuted, once charged, even if the Crown Prosecution Service wanted to forget it. The case came to court; the prosecutors announced that they were offering no evidence, and the charges were dismissed.

In fact the conference organisers — Windrush Communications — and the company bosses at the conference did not want to be questioned in open court about the lawfulness of the conference.

United Nations resolution 1483 recognised the US and the UK as the occupying powers in Iraq. That made them subject to the Geneva Convention of 1949 and the Hague Regulations of 1907, which forbid pillage and forbid changing the constitution of a country.

The Iraqi constitution forbids privatisation. Its reasons for doing so were not socialist. As Ewa Jasiewicz stressed at the press conference which she and Pennie held on 24 November, Saddam’s regime was a totalitarian tyranny. Nevertheless, the constitution bans privatisation; the Iraqi people have every right to change that, but under international law the occupying powers do not. Occupation order no.39, signed by Paul Bremer, provides for 100% privatisation and foreign ownership of everything above ground level in Iraq, and 100% repatriation of profits.

If the US and UK could claim overriding imperatives which give them no choice but to privatise, their position might be defensible in international law. But they cannot.

Naomi Klein, who spoke with Ewa and Pennie at the press conference, said that back in early 2003 US administration officials whom she had spoken to genuinely expected a McDonalds on every main street in Iraq, and world-market factories producing for Nike or IBM in every city, within months of the invasion.

Far from it: there has been no foreign direct investment at all in Iraq since April 2003. Any multinational investing there would need to insure its assets; and insurance for direct investment in Iraq is not available at any price...

Another occupation order (19 September 2003) decreed a flat-rate tax of 15% on all income and profits — a measure which, as Naomi Klein pointed out, the free-market right has long dreamed of for the USA, but never been able to implement there.

The social and political problem with these decrees is not that lots of the economy has been privatised, or that any tax, flat-rate or other, is being collected, but twofold.

Reconstruction has been hugely delayed. As of September 2004, only $1 billion of the $18 billion the US government was due to spend so far on Iraqi reconstruction had actually gone out. The US government’s response to that problem, in September, was to give up for the time being and divert money earmarked for reconstructing water and electricity supplies to more security guards.

Some money has been spent, mostly from Iraq’s own oil revenue. The best estimate is that about 30% vanishes through corruption. (On 24 November, the US government decided to withhold 15% of its payments to Halliburton, the corporation which Vice-President Dick Cheney used to head, on suspicion that Halliburton is padding its bills for the relatively easily-checked services it provides to the US troops in Iraq). And another 30% is spent on security guards for the contractors.

The US contractors send some people to sit in offices in the US-controlled Green Zone in Baghdad, and a little cash filters down to Iraqi subcontractors who do a little work.

The US government’s doctrinaire insistence on contracting out reconstruction to foreign (mostly US) corporations means that it gets done very slowly. Baghdad still has electricity only 12 hours a day. Basra still has no drinkable running water.

The slowness of reconstruction — and the very fact of the highly unpopular decision to privatise — increases Iraqi discontent. It helps the Islamist militias recruit, worsens the violence, and so makes reconstruction even slower.

The other side of it is that the occupation authorities’ privatisation decrees have been managed in such a way as to bind a future independent elected Iraqi government, if and when it emerges.

In October 2003 the Iraqi Interim Governing Council appointed by the USA voted unanimously not to proceed with privatisation. But now the USA has theoretically handed over to an (also US-appointed) Interim Government. It did so under a transitional constitution which binds the Interim Government to upholding all the occupation authorities’ decrees. That may make the privatisation decrees technically legal.

A future elected Iraqi government can change the occupation authority decrees. But the transitional constitution makes it very difficult, saying that any decision to rescind needs a two-thirds majority and, even with a two-thirds majority, can be vetoed by any three of Iraq’s 18 provinces.

Besides, any future government will also be tied by the deal which the Paris Club of top financial powers agreed on 21 November. The deal writes off 80% of Iraq’s gargantuan foreign debt.

But, in the first place, that debt was almost entirely built up by Saddam Hussein to finance his wars and repression. The Iraqi people were the victims, not the beneficiaries. They should not pay.

In the second place, the remaining 20% is still a huge debt. Assuming all non-Paris Club creditors agree to the 80% reduction, which is far from certain, Iraq will still be shackled with over $25bn of debt. This compares with an Iraqi education budget this year of $544m and a health budget of $947m. (Acute malnutrition among Iraqi children under five has doubled since 2002).

And, finally, the write-off is to be in stages, and conditional on Iraq’s compliance with an IMF economic programme — which will including sweeping privatisations.

As Naomi Klein put it: “The occupation of Iraq has been an ideological experiment. The economic decisions have vastly increased the security risks in Iraq” — and vastly diminished the chances of any workable democracy emerging in Iraq.

The British labour movement should take up these issues, in solidarity with the new Iraqi labour movement.

by chris reynolds

On 25 November the Federation of Workers’ Councils and Unions in Iraq held a conference for workers in the south of Iraq. The conference in Basra included delegates from around 25 organisations. A report will be posted on the No Sweat site shortly.
See also
More detail of soldarity with Iraqi workers on the Iraqi Workers Solidarity site

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