Iraq:
Business Becomes
A Big Casualty
By Dahr Jamail &
Ali al-Fadhily
02 December, 2006
Inter
Press Service
BAGHDAD, Nov 29 (IPS)
- "Iraq got the foreign investment rules long sought by U.S. corporations,"
Antonia Juhasz, a visiting scholar at the Institute for Policy Studies
in Washington, and author of 'The Bush Agenda: Invading the World, One
Economy at a Time' told IPS earlier.
Juhasz said the new laws,
which were a part of the 100 'Bremer Orders' instituted by former U.S.
administrator Paul Bremer when he headed the Coalition Provisional Authority
during the first year of the occupation, provided a flood of benefits
for U.S. companies.
These included "100
percent repatriation of profits earned in Iraq by foreign companies;
100 percent foreign ownership of Iraqi businesses, including banks;
privatisation of Iraq's state owned enterprises; 100 percent immunity
for U.S. contractors and soldiers from Iraq's laws; and 'national treatment'
which allowed for Iraqis to be all but excluded from the reconstruction
for years while the U.S. government paid 50 billion dollars to some
150 U.S. corporations for work in Iraq."
What followed was "a
U.S. corporate invasion of Iraq," Juhasz said. "Many companies
had their sights set on privatisation in Iraq, also made possible by
Bremer, which helps explain their interest in 'major overhauls' rather
than getting the systems up and running."
In contrast, there was much
state support for businesses under the previous regime, which followed
a socialist system under which the government allowed Iraqis to establish
their own factories and workshops, and supported them in many ways.
Businesses were granted low
interest loans and permission to transfer foreign currency. They could
get state-owned land to build on. Administrative laws facilitated enterprise,
and so small industry business bloomed during the 1970s and 1980s.
Major industries in Iraq
for oil products, phosphates and cement, along with the military industry,
were mostly state-run under the previous regime. Foreign companies were
allowed, under state supervision, to build factories as Iraq moved towards
increasing industrialisation.
This growth was reversed
during the 1990's under the U.S-backed UN economic sanctions. The sanctions
crippled the Iraqi dinar and people's ability to purchase goods and
services.
The business situation worsened
further during the U.S.-led invasion when most factories ceased to function.
Many were bombed, and for other factories employees stayed at home.
Following the invasion several were looted, and were never able to start
again.
Some private businesses held
out, but eventually security problems, lack of electricity and fuel,
a staggering inflation rate (70 percent) and lack of safe transportation
led many of these too to close down. Unemployment now stands at more
than 50 percent û but most people believe the real situation is
far worse.
Thousands of business and
factory owners sold what they could and fled to neighbouring countries.
Those who did not now wish they had.
"I used to employ more
than 30 workers in my plastic products factory, and business was good
before the occupation," Abbas Ali told IPS in Baghdad. "It
is impossible to work now, and I had to go back to my old job as school
teacher. I was offered 200,000 dollars for the business, but now it
is not worth anything. I blame myself for not selling it to flee, like
some of my colleagues who live safely in Syria now."
And still, there are steel,
textile, and other factories that continue to produce what they can.
Kais al-Nazzal built a set
of steel factories about 60km west of Baghdad near Fallujah, and is
fighting to keep them going. "We imported the best quality steel
manufacturing equipment and spent millions of dollars on modern buildings
to meet international standards," Kais al-Nazzal told IPS.
"We have been able to
work through the occupation period, but we must admit there are hardships
under the recent domestic disturbances that are causing us considerable
losses."
Local studies have found
85 percent unemployment in the industry sector. Many of the 15 percent
who remain employed are registered at a few state factories that pay
their employees even if they produce nothing.
"We are trying to do
some work here, but the whole situation is not encouraging, so it seems
that we will wait until a miracle takes place," a manager at a
state-owned cement factory on the outskirts of Baghdad told IPS.
The business and economic
morass Iraq finds itself in today is evident in the market places across
the capital city.
About 80 percent of domestically
manufactured goods were distributed prior to the invasion and occupation
through the Shorja market in the centre of Baghdad. The wholesale market
is a bazaar along narrow roads where hundreds of small shop-owners display
their merchandise.
"There is no Iraqi brand
any more," plastic products distributor Johar Aziz told IPS. "Iraqi
products flourished during the quarter century before occupation, but
now we only sell imported products of the lowest quality, and people
have to buy them because there is no alternative."
Other markets in Baghdad
are suffering a similar crisis, like the Samarraii compound where tyres
are sold, the Jamila market for fruits and vegetables, and the Sinaa
market for computers.
The main shopping centres
like Saadoon Street and Rasheed Street, and the once upmarket Mansour
area and the Karrada district are now like ghosts of what they once
were.
"We used to open our
shops for at least 16 hours a day, but now we only open for a few hours
because of the security threats," Duraid Abdullah, an electrical
appliances shop owner in Karrada told IPS. "We are facing all kinds
of threats starting from being abducted for money or sectarian reasons,
as well as being evicted from our shops by gangs supported by government
forces."
A businessman who once owned
a small textile factory that has gone bankrupt said he had not expected
the coming in of a U.S. administration to be bad for business.
"The picture of Japan
after World War II dominated the minds of businessmen in Iraq after
occupation," he said. "Most of us thought the American invasion
of Iraq was bad for many things, but it must be good for business in
general and industry in particular. We were terribly wrong. The Iraqi
economy was meant to be destroyed for political reasons."
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