I think it’s worth noting that once the Revolutionary War was over, it was six years before the first presidential elections were held in the United States.
Even allowing for speed increases due to technology, getting a stable representative government in place anywhere should not be approached as something that can be done in a few weeks.
On this I entirely agree with Sam.
And here I agree and disagree.
The US absolutely needs to make a long term commitment to Iraq including stabilizing forces presence.
At the same time there is a significant down side to having a pure US presence. Or Anglo-American presence: it is frightfully easy to sell it as occupation. And it is.
Internationalizing the security forces in my mind is the sole way to help broaden the risk, help other nations buy into the results (reduce incentives to act as spoilers) and take away the charges of occupation.
The war did not have legitimacy in the international arena, reconstruction needs to claw that back, and as should now be evident, the challanges are rather nastier than many thought.
Precisely, which is why one has to neutralize that, and not just through threats – a stick is an appropriate thing, but for there not to be incentives to act as the spoiler – and it is fairly easy to play that role with plausible deniability – one needs carrots. Turkey, Iran can be gotten in on the deal with proper respect. Syria… opaque, hard to know.
I disagree: occupation forces as proxy legal system are unhealthy and given the past in Iraq and the differences in culture, this usage is not good at all.
It is too early to say if he is doing a good job or not. He’s done a decent job of playing down the Praetor image in the media, however the next three months are the test for other matters.
I have to chuckle – well the reality is the US forces are the authority, and have removed Iraqis from authority. So far judiciously, but waving the word ‘facilitator’ around (a) doesn’t really translate well in Arabic (b) only partly denies the reality.
Now that reality is necessary to an extent at present, but I do not think it is sustainable long term, and it seems we agree longer term is where the key is.
Otherwise my good friend Major D may end up splattered over a building, and that would make me sad, very sad indeed. He owes me a lot of beer.
Well, Sam, it would be more accurate to phrase it as alleviate anti-US sentiment, create pro-US sentiment insofar as there is not much depth to the latter.
Well, that is the problem in the end. It should be addressed.
Good point, again a rush to elections is not a good idea.
However, establishing interim legitimacy is absolutely necessary. The interim government, if it is not patently pro-American but includes all major tendencies should help. Including anti-American inclined folks will make life a litle harder, but sacrificing short term expediency is necessary. Let the other guy prove he’s a spoiler rather than simply asserting it.
I should clarify. I didn’t mean a proxy legal system in the sense that U.S. courts would be trying Iraqis or interpreting Iraqi law. I meant more along the lines of maintaining order after elections if there are uprisings, providing secure facilities, and in general, just keeping everything calm and stable. If the Iraqi leadership agrees on a constitution, and elements from outside Iraqi society try to undermine it, the U.S. can step in and protect the Iraq government.
Kind of like the role the U.S. is playing in Afghanistan. Karzai runs the government, but the U.S. military protects Karzai. If there are uprisings or breakouts of violence in outer regions, the U.S. can suppress them.
Another way the U.S. can act as facilitator for Iraq is to do what it’s doing now - negotiate on its behalf on the world stage, and become a strong ally in supporting the Iraqi people. That means pressuring Syria and Iran (and using carrots too), it means working to get the sanctions lifted, etc. Be an advocate for the Iranian people.
Another way the U.S. could stabilize things would be to make sure the currency is stable - perhaps even by using U.S. dollars in payment. Actually, from what I understand this won’t be that tough - apparently, the Iraqi financial industry came through the war relatively unscathed, and the U.S. is already working with Iraqi bankers in getting things up and running again. It’s a lot of tedious work - going through pay stubs to figure out what people should earn, figuring out how to get companies running again that were controlled by Ba’athists before the war, etc.
And it goes without saying that now is the time for the U.S. to be absolutely beyond reproach in behaviour. Any hint of scandal, and sign of improper expropriation of Iraqi assets, and the backlash will be severe. Everyone that deals with Iraq had damned well better show up with everything above board and open. Trust has to be earned, and the only way to do it is to be trustworthy. The U.S. government should be vetting these deals, and should make sure that any company that violates codes of conduct gets hauled out to the woodshed, pronto. And publically.
I reiterate, having the occupation forces do this in the longer run is a bad idea. Internationalize as quickly as possible, while keeping a core US troop committment is better to remove the occupation taint.
Well, insofar as Karzai appears more and more the US puppet, this is not a good model at all. Use of foreign forces in this role in this region in this particular context is not ideal, and it will be even worse in the case of things that look like or can be cast as popular insurrections.
The first part is utter and complete bullshit. Supporting the Iraqi people by pressuring Iran and Syria? That’s US interests, not Iraqi people and no amount of spin is going to make it otherwise. Not that the US interests there are illegit, but don’t make some ludicrous agitprop argument this is being an advocate for the Iraqi people.
The second part is within the realm of reason, and would be helpful, but if we are going to do this in Iraqi interests, that means not being an “advocate” with serious conflicts of interest. That is, if getting things up and running mean rational compromises with legitmate French, Russian, Gulf interests on issues of a proper conference on debt, on issues of introducing non-Americans into the process, then do so.
If the “advocacy” is nothing but our own interests, well that is not “advocacy” – abstracting utterly away from the issue of whether it is well considered or not – it is merely agitprop for control.
I am not sure where you get that understanding from, insofar as the banks were largely looted and much of the governmental offices destroyed, including their records.
Iraq’s financial system was almost entirely state owned or parastatal.
As for the currency issue, dollarization is not a good long term solution, although may be a short term necessity. It should be avoided.
I agree with this entirely, althouhg I allow that this will not be easy and some slack should be cut for honest errors. The problem Sam is that people like me, who have a handle on the language and culture are not in great supply in North America, and given the example of Chalabi, I have a very low opinion of Defence’s savoir-faire in dealing with non-military issues. The Mil Intel folks are nice community, I know a number of the Arabists there, but they are not intellectually in the position to run this show.
The odd damned thing here, though, is that we’re looking at two obvious different agendas from the US. The State Department, which seems to be supporting these political One Trick Ponies, and the Army, which seems to, from where I’m standing, be heading towards a McArthur-like slow and steady rebuild.
Is it wrong when you have better hopes for what the Army is doing than the State Department? Seriously, is anyone else catching this apparent struggle?
I have no idea where you are standing but it is evidently not on the same planet as myself.
I am unaware that State is supporting any particular faction per se, they and CIA are clearly against INC, for reasons outlined in the Chalabi thread, while Defense is unaccountably supporting INC to the extent INC militias have quasi-official roles. INC has had clear preferential access through Defense channels.
It is, as of yet, unclear what is happening in re Gardner, so declarations to this strike me as wildly premature.
What is wrong is to have such a seriously distorted understanding of the present dynamics.
I’m standing over here, reading CNN, trying to figure out why this person appears to be supported, no, wait, he’s not supported, wait, who paid for him to go over? Hey, they arrested this guy… no, wait…
I’m confused, Col. Can we get one of those cards so we can see who the players are again?
I believe BBC’s quick overview is helpful.
http://news.bbc.co.uk/1/shared/spl/hi/middle_east/03/post_saddam_iraq/html/default.stm
The Baghdad “mayor” seems to have crossed the Americans too many times and was disowned. His loyalties also seem to have been obscure in the end.
Of general interest: Jordanian business man on his take on Iraq
http://news.bbc.co.uk/2/hi/middle_east/2982873.stm
Before I leave for a long weekend, I wanted to direct readers with access to the Financial Times col. by Martin Wolf,
Martin Wolf: The long road ahead in Iraq. It is available online but via subscription service only. Those who read FT or can access are encouraged to do so. Very good analysis.
Reviving this to direct readers who asked for English lang. access to Arabic news reporting to this little gem:
Dar al-Hayat
http://english.daralhayat.com/
An English version of the respected and vernable international Arab daily, al-Hayat and yours truly’s favored newspaper.
I just ran accross this by accident just now, so I can’t characterize in detial, however it seems to be partly a translation of the prior day’s Arabic edition.
Regardless, it should be an excellent window for all interested. Those who read Arabic, by the way, can access the Arabic edition, which is much improved from its prior incarnation although the character spacing is a bit funky.
Col, I’d like to thank you for pointing me to the BBC link. Basically, I just had the military and State positions exactly backwards. I’m not sure how.
Not at all, the situation in any case is fluid and confusing at present. I obviously have reasons to track it but if one is not…
Disturbing trends in reconstruction efforts:
Washington Post and NY Times both reported on this, NY Times going further:
Opposition Groups to Help to Create Assembly in Iraq
So our Man in Baghdad is resorting to blackmailing his way out of the sticky wicket.
There are a number of issues here:
(a) Defense’s collusion with a crook. (It is likely – no it is certain other leaders are crooks –although I think Abdullah is clean, but we should be breaking with that, no colluding)
(b) Reliability of Iraqi intel files (the issues that arose in re the Stasi [East German Secret Police] files – inaccuracies and apparent fabrications related to internal Stasi politics and job competition)
(c) Handling of the ‘interim’ council and degree to which we are locking in influence of bad characters.
Overdue and brief, some observations and thoughts on Iraq based on first hand communications with the Provisional Authorities and a bunch of new research and opinions.
First, the new economic team seems quite solid and skilled, as well as active. Given the utter silence during Gardner’s brief interim administration, this is encouraging. Mssrs Greco, Jabba and Ortiz, some of the senior staff on this, are known to me in part as skilled guys with solid real experience. However, regional experience is slightly lacking. For example, attending both public and private meetings on this, I observed Greco has a tendency to quote his patron, Sec. Rumsfeld rather freely, as for example in comparing Iraq now to the US in 1783. Regardless of what one makes of this comparison, this is not the sort of rhetoric that goes over well in the region. As a good friend of mine, an Arab international lawyer who was and is pro-war said to me during a public meeting, “Where is this guy from, Mars?” Fit your rhetoric to the audience, several thousand foreign and Arab businessmen do not particularly want to hear Rumsfeld’s inept historical analogies.
That aside, speaking with Greco on his thinking on approaching reworking the present situation, I was impressed – although it is quite clear the situation is far worse than many had expected in terms of looting and state of infrastructure.
First to the state of the infrastructure and capital required to rebuild. Estimates are not pretty, although they are first best estimates. It appears clear Iraqi infrastructure across the board is in worse shape than expected. First, on a human level present estimates on literacy rates show a drop from roughly 70 percent in 1980 to roughly 55 percent, where by comparison Iran next door has a roughly 75 percent literacy rate. Real GDP estimates reflect a similar magnitude of decrease, dropping from roughly $50-60 billion to $25-35 billion. Per capita GDP that had been in the range of $4,500 in 1980 is now around $1,000-1,200 or about the same level as Iran. With debt estimated at $60-130 billion or much higher depending on what liabilities or claims on Iraq are included in debt calculations, debt as percent of GDP may be between 230 to 485 percent. While London and Paris Club negotiations are likely to reschedule and write down significant portions of claims on Iraq, it is not yet clear what mechanisms and standards will be agreed on, which presents large uncertainties. Given a large but unknown stock of letters of credit, and no clear mechanism for financing trade or other economic activity, we have a serious problem. At present I can report all economic activity is “cash and carry” but that without clear convertibility or status on Iraqi currency, there are significant premiums being charged.
At present we are looking at several possible scenarios for economic recovery in Iraq over a ten year period: (1) a “Good” scenario with an average 3-5 percent real growth in the non-oil sector and a 9-11 percent average overall growth including the oil sector; (2) “Better”: 7-9 percent real non-oil growth; (3) “Super”: 12-15 percent average real non-oil growth, 13-15 percent total average growth. Key assumptions in defining these scenarios were that oil production would reach 4-5 million barrels per day (mbpd) by 2008 and 6-7 mbpd by 2013. I would frankly add in my own analysis a “Danger” scenario under the “Good” scenario, of less than 5 percent real growth, including the hydrocarbons sector. Under the “Good” growth scenario, Iraqi per capita income was seen reaching $2,500 by 2013, roughly doubling with overall GDP reaching $73-86 billion. Under the “Better” scenario per capita income was seen reaching almost $3,000 by 2013, and a $85-100 billion GDP. I consider their super scenario to be too ludicrously optimistic even to go into. I would estimate that given risks and constraints it may be expected that the “Good” scenario is the most likely with “Better” being achievable under fairly, indeed highly favorable circumstances. “Super” is a pipe dream.
The hardest question is finding means and methods of proceeding. With a present (pre-war) GDP standing at roughly $30 billion the estimates on the amount of capital required to reach each of the scenarios, “Good”; “Better” and “Super” are formidable. Required investment overall is substantial regardless of the scenario. In order to achieve a “Good” growth scenario an estimate of $200-300 billion in inflows over ten years to achieve a GDP of $70-90 billion by 2013 was advanced. The “Better” growth scenario requires attracting $250-350 billion over ten years to achieve a GDP of $80-100 million. Reasonable estimates for reconstruction requirements for various sectors to rebuild to 1980 levels alone ran as follows, $10-15 billion for electrical and telecom reconstruction, $35-40 billion for oil and gas reconstruction, $10-20 billion for health care, $6-12 billion for educational reconstruction and reform, $6-12 billion for transportation reconstruction, perhaps similar figures for reconstruction of the industrial infrastructure. An estimate of more than $20 billion a year in inflows needed to achieve reconstruction ex-oil sector, was advanced which clearly may be difficult to achieve. Note, these figures are in exclusion of monies needed for basic governmental operations, or for sustaining present activity. Oil revenues are likely to be largely soaked up in repairing the hydrocarbon sector and associated infrastructure.
It should be recalled that at present roughly half the population does not have the income to supplement food rations and that agricultural production had collapsed, as had other economic activity. Further, with around 70 percent of Iraqi economic activity had been state owned, with only a small light industry sector in private hands, the collapse of the government and looting and destruction of government industrial or work facilities has crippled the economy, in fact there is barely an economy to speak of now and looting continues. Further, industrial firms had been heavily subsidized and it is unclear, as in the Former Soviet Union, if they were in fact economically viable ex-the looting. Now with much equipment looted and sold as scrap or melted down for sale cross border, we’re looking at something potentially rather worse.
The CPA-I economic team is provisionally planning an Iraq business conference in the Fall of this year in Baghdad, security and other developments permitting which should help clarify the situation. Obviously yours truly will be participating. At present the economic authorities are looking to act as a kind of ‘investment bank’ for Iraqi industry and treating Iraqi industrial facilities / companies as part of a portfolio to bring to market. Of particular note was Greco’s personal opinion that Iraqi companies would need at least three years to be ready to privatize to maximize value, given their poor state at present. However, recent published comments in Washington suggest the process of privatizations and disposals may be moved forward.
On security concerns the CPA-I folks were very clear in noting that the environment is very challenging and dangerous. Jabba, the chief USAID man, advised that every time he has been out and about as part of his economic inspection process he has been fired upon with at least light weaponry. He further advised that moving goods or personnel from Jordan to Baghdad is not yet secure, and that shipments should move only in daylight, in convoy of at least four vehicles and in the region to the north and west of Baghdad, preferably in military convoy as bandits are now using military tactics (taking out lead and end vehicles) to attempt to stop convoys. Note, areas defined as “permissive” are not “safe” per se, but rather that armed gangs are not larger than eight in number and the area is largely secure, but not safe.
However, the largest problem I took away from my contacts is that the Administration still wants to own the whole pie, but they want others to chip in for free for the ingredients.
By the way, for the general interest (and the more clever on the board will recall a recent OP by our own december which went to the security and health issues, I expect he will admit his little journo was flat out wrong and untrustworthy.)
http://export.gov/iraq/pdf/iraq_business_guide_current.pdf
Security: The security situation in Iraq remains unstable, and the
possibility of terrorist attacks against U.S. citizens and facilities remains
high. Lawlessness continues in many parts of the country. Indigenous
police forces are emerging under the supervision of coalition forces. …
Physical Infrastructure: Currently, infrastructure is a major barrier to
normal business. Electricity, water and sewer function on an ad hoc basis
in Iraq. Both the ports and airports are currently closed to civilian traffic.
Public government offices to assist with business functions do not exist
yet. Amenities, such as hotels and restaurants, have not yet begun to
operate. Roads, while functional, remain dangerous.
Legal and Financial Barriers
Insurance: Currently, many companies will not insure business
activities in Iraq. OPIC is exploring the provision of political risk and
expropriation coverage to exporters and contractors participating in
Iraqi reconstruction. Ex-Im Bank is also exploring options for
providing financial support for U.S. exports to Iraq.
Financial Infrastructure: The current financial and banking
infrastructure of Iraq is undetermined. In addition, the currency to
be used by Iraq is also under discussion. Iraq’s large international
debt may also negatively effect future funding of reconstruction
projects by international lenders.
Prohibition of Investment: Currently, non-Arab foreign investment
in Iraqi companies is prohibited by statute. The Iraqi Constitution
also prohibits private ownership of natural resources and the basic
means of production, as well as foreign ownership of real estate.
Enforcement: While Iraq has civil remedies for domestic business
disputes, there is no current provision for the recognition or
enforcement of non-Arab foreign civil judgments or arbitral awards.
Commercial Agents: Foreigners cannot be commercial agents
under current law.
Import/Export licensing: Historically, all exports and imports from
Iraq have been subject to Iraqi government licensing.
Joint Ventures: Currently, non-Arab foreign nationals may
only form joint ventures with Iraqi companies on a
contractual basis in connection with a specific project, and
only so long as there is no capital sharing between foreign
and Iraqi companies.
Business Registration: The registration process has been
bureaucratic and lengthy.
Intellectual Property Rights: The United States and Iraq
currently provide access to each other’s patent and
trademark laws and application procedures under the terms
of the Paris Convention for the Protection of Industrial
Property. On the other hand, U.S. copyright owners have no
access to Iraqi copyright protection, as the United States and
Iraq are not members of any of the same copyright treaties.
Arab Boycott of Israel: Iraq’s current law strictly adheres to
the Arab Boycott. The law requires any company wishing to
do business in Iraq to answer an eight-point questionnaire,
assuring the Iraqi Government that it will not do business in
Israel. U.S. law prohibits U.S. persons from answering such
questions (see Commerce/BIS Anti-boycott Compliance
Office -
http://www.bis.doc.gov/antiboycottcompliance/default.htm.)
…
Oil: Iraq’s vast oil reserves (est. 112 billion barrels) will act as the
country’s primary engine of economic recovery. Oil dominates the
country’s economy, accounting for more than 95 percent of foreign
exchange earnings and possibly as much as 75 percent of GDP.
Iraq’s enormous hydrocarbon resources are expected to earn the
country $13-15 billion annually over the short-term. Iraq’s major oil
fields are the Rumalia field complex in the south and Kirkuk in the
north. Iraq is also endowed with the world’s 10th largest natural gas
reserves at around 110 trillion cubic feet.
Major repair and upgrade work is required to restore Iraq’s
deteriorated oil sector infrastructure to pre-1991 production levels
and to attain world-class safety standards. For over 20 years, Iraqi
oil sector equipment has been poorly maintained. Rusted, outdated
facilities have been operated through various improvised means.
On the bright side, potentially crippling damage and sabotage to the
sector during the war was avoided and the nine oil well fires in
southern Iraq have been extinguished. The Army Corps of
Engineers has been assigned by the Defense Department to
undertake oil sector rehabilitation. Thus far, the Corps has
contracted with Kellogg, Brown, and Root as well as Washington
Group International, Fluor Intercontinental, and Perini Corporation.
The Corps’ stated objective is to “have fires suppressed,
environmental cleanup accomplished, oil production levels
restored, if required, and our personnel safely redeployed back
home.” The Coalition has reaffirmed its commitment to protect
Iraq’s natural resources as the patrimony of the people of Iraq,
which should be used only for their benefit.
Airports: There are two international airports, at Baghdad and
Basra. Smaller airfields exist at Hadithah, Kirkuk, and Mosul. The
condition of Iraqi commercial passenger aircraft is almost certainly
poor, though details are currently lacking. Sales of airport
communications, aircraft parts, airline services, transport,
construction, and security equipment also represent future
opportunities for companies. USAID has contracted with SkyLink
Air and Logistic Support (USA) to support humanitarian and
transshipment operations, while airport rehabilitation is incorporated
in the scope of Bechtel’s Capital Construction contract.
Water: Iraq’s water and sanitation infrastructure is in dire need of
repair. Water and sewage treatment plants have deteriorated as a
result of lack of maintenance, spare parts, war, and dwindling
numbers of professional operating personnel. Over 90 percent of
the urban population is thought to have access to water, but
quantities per capita are insufficient. Moreover, in many
neighborhoods, leaking pipes has contaminated potable water
networks. Less than half the rural population has direct access to
piped potable water. Only half of the country’s sewage treatment
plants are operational. In Baghdad, deteriorating sewage treatment
installations are unable to handle an increased flow caused by
population growth. As a consequence, nearly 500,000 tons of raw
or partially treated sewage are discharged daily into the rivers. This
has resulted in a dramatic increase in the incidence of water-borne
diseases, such as cholera, typhoid, amoebic dysentery, and
diarrhea. Projects aimed at improving Iraq’s irrigation systems and
potable water and wastewater treatment facilities are included
within the potential scope of USAID’s Capital Construction contract.
As I leave for the weekend, I share this security update from the international coordination office:
ISM 10/06/03 Security up-date
General:
The general security situation in the country remains as previously reported – tension in the
central regions around Baghdad and between Baghdad and the Northern border. The attacks
being mounted by anti-CF forces remain focussed upon CF patrols and CF bases during the hours
of darkness. Since 09 April there have been 39 US soldiers killed by Iraqi attackers. The US
defence secretary stated on 10 June that he expects Iraqi forces to “continue attacking US troops
for months”. The trend of an increase in armed attacks upon Police stations continues. Authority
for humanitarian and non-military flights to Iraq was suddenly withdrawn on 10 June, with no
clear reason being given.
Baghdad Region
The threat warning of the possibility of serious terrorist attacks in Baghdad remains valid. The
past 24 hours has seen an increase in the tempo of activity of CF forces engaged in patrolling,
defensive and surveillance activities and a decrease in the number of reported security incidents.
CF forces seized 40 maritime anti ship missiles in a Baghdad suburb. The RAMADI-FALLUJAH
area to the West of Baghdad remains very tense with a high level of CF activity in the urban and
rural regions close to the two cities. Further incidents are expected in this region.
Northern Region:
The city of Mosul has experienced a resurgence of armed activity with reports of 3 incidents of
attacks upon CF forces.
Central Region:
Despite extensive raids conducted by CF (384 Iraqis reported as being detained in Balad and
Baquaba), the current rate of attacks against C.F remains high. All attacks are reported occurring
by night.
Upper South Region:
There have been 2 incidents reported in the region.
Lower South region:
No significant change reported.
Thanks, Col. Do the capital investment estimates from your first post above include the costs of rebuilding basic infrastructue, e.g., water treatment, power plants, bridges? And what are the P.A.'s saying about how long the occupation is expected to last, and in what levels of force?
Great information, Collounsbury. Thanks a lot.
And to be honest, it doesn’t sound that bad. I honestly expected it could be worse. What’s important is not how quickly Iraq gets back to 1991 levels, but how quickly the average citizen starts seeing a measurable, consistent increase in their standard of living. From that standpoint, it sounds like things might be okay. Even the ‘good’ scenario shows huge growth rates. I would have thought that growth much greater than that would be very difficult to achieve anyway, because it would stress the infrastructure.
Question: Given what you said about the rickety infrastructure and the collapse of agriculture, how far away from economic collapse and/or a humanitarian disaster would Iraq have been if Saddam stayed in power? Obviously, a collapse in per capita GDP to $1,000 was hard enough, but it seems it could have gotten much worse.
Anyone interested in the situation in Iraq should read [url=]this blog by professor Juan Cole.