Collounsbury should get a blog by the way.
You wouldn’t have to deal with dumb people to the sae extent, you could still interact with people, you’d maybe reach important pundits and journalists, and wouldn’t have to worry about being banned.
I don’t know if it’s attracrtive for Col but it is for me, esp. considering the last point. 
And the Blogosphere needs someone to debunk these people, who apparently is taken seriously by some liberal bloggers. (?)
Missing link. I suspect that you mean Juan Cole’s [URL=http://www.juancole.com/]Informed Content](]this blog[/url).
Sorry, didn’t mean to derail the thread.
Yes indeed, thank you.
I’ve added it to my blog list. This has been a great thread !
Collounsbury - something is just crying out for you in The Pit.
Basic Questions First:
Minty
Figures above I believe presume basic restoration, that is they exclude the initial Bechtel work, although now that I think of it the briefer was somewhat vague on this. Bechtel’s contract is to restore only most basic conditions, but we’re looking at nearly $700 million in work. (Capped at $650 something but I expect actual contract and assoc. costs will run $700. Mind you some 90 percent of this will be locally outsourced per recent representations by Elkins).
As to the subsidiary questions of numbers of troops and the like, very obviously the CPA-I people were not going to give me and others an inside scoop – well not very substantial ones. Gave some hints about near term developments, which were a bit technical to be of interest to you all – I will say however that I am hoping some recommendations on insurance offerings are taken up.
As to Sam’s question in regards to collapse of the Iraqi economy under Saddam, well that is clearly impossible to answer. Iraqi engineers had very clearly, according to what we were told, gotten very good at improvisation. With oil revenues at prewar levels, it is hard to say, but probably the economy could have limped on for a decent amount of time. Truly a difficult question to answer as the level of looting and now it appears organized sabotage has done non-trivial damage. Per my conversations with CPA-I folks, some of this is clearly survival of the fittest type behaviour, pure short-termism. Some is something rather more sinister. I do not believe it is possible to know the percentages – but there it is.
Finally in re the suggestion I do a blog. Sorry, not my cup of tea. Further to that, besides imposing technical burdens I don’t feel like handling, it really wouldn’t be a good idea. Look, here I can pretty much speak my mind – true if someone connected to me here read the board it would be fucking easy to see who I am – not like I hid my ID very much. At the same time, I can count that this board ain’t well known. I would have never run into had not an extent member asked me over to comment some three years ago. I like it that way. A blog has visibility that could be uncomfortable for me professionally. And the journos, I know the key people already. Should I want a point to be made, I should just have a dinner or something like that.
Now Sam’s optimism. Well, I can’t quite support it. Doesn’t sound too bad, eh? Kick the bloody tires.
Well, let’s think of things in context. First, let me reiterate the CPA-I consultants estimates – which I may add I consider to be rather optimistic and looking to attract investment, as well as present what is necessary to achieve the scenarios, not to claim these scenarios actually are likely. Recall same that net private flows to MENA and Africa was only around $6 billion, most of which went to MENA it should be noted. In 2003 it was expected maybe $7 billion would reach MENA.These scenarios call for Iraq to capture net private capital inflows that are more than 100 percent of current MENA inflows. Perhaps you can be sanguine about this, I can’t because history suggests it is quite a bloody hurdle. The other alternative is massive official financing. The amounts of money we’re talking about here are not trivial nor will they be easily raised. Further to that,
As for the scenarios: First recall our pre-war base is around $30 billion, but that since March there is almost no real economic activity. Economic activity has largely ground to halt with the implied collapse in living standards. Remember this because what Iraqis are judging the US by is before versus after. The US gets no pass on “sanctions” or the like – so the US starts with a reservoir of mixed ill-will and grudging gratitude for ridding one of Saddam – ex the Sunnis who seem to be more and more in Saddam nostalgia.
Recapping the scenarios over a ten year period with 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. Recall that
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. 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. 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. That implies $20-30 billion a year simply to fund a rebound to 1990 levels, and excludes the cost of funding anything but infrastructural reconstruction and expansion. Projected oil revenues might just cover half of this, excluding consideration of funding debt and current expenditures. [This is emphatically not the lowest growth one could expect, it is the lowest growth scenario that the CPA-I is aiming for. Given total average growth in the region is more around 3 percent, hitting a 9-11 percent growth rate off of negative rates prior is astounding. Further recall this scenario only just gets us back to 1990 and half of 1980 levels.]
“Better”: 7-9 percent real non-oil growth; Under the “Better” scenario per capita income was seen reaching almost $3,000 by 2013, and a $85-100 billion GDP. Here we just about get back to the Iraqi golden age. The “Better” growth scenario requires attracting $250-350 billion over ten years to achieve a GDP of $80-100 million.
“Super”: 12-15 percent average real non-oil growth, 13-15 percent total average growth.
As I stated above, 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. This should be the default assumption of what is realistic without attracting what will be in the end unprecedented capital inflows to the Middle East. Obviously, taking into account population growth and other pressures, this is merely treading water.
Now on a non-timeline basis, to reiterate more clearly, reasonable, but let me stress highly preliminary estimates for reconstruction requirements for various sectors to rebuild to 1980 levels alone ran as follows (and given continued sabotage and looting, may very well rise:
$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 $6-12 billion for reconstruction of the industrial infrastructure.
So, we have around $100 billion for basic reconstruction, which is my “danger” scenario really. $100 billion. At $10 billion a year, presuming for the moment 100 percent private financing, that’s more than 100 percent of net private inflows to the entire region. Of course some portion of this over ten years is covered by oil revenues and direct aid. But don’t forget this is all excluding debt service and non-infrastructural needs.
If we aim for the good scenario, which is the CPA-I’s realistic goal, we need between $20-30 billion a year in inflows needed to achieve reconstruction ex-oil sector, which will with say $10-20 billion in revenues, fund its own reconstruction in part and in part debt service.
Now one of our problems, and I refer you to my April hypotheses, is that one needs to buy social peace. These figures are in exclusion of monies needed for basic governmental operations, or for sustaining present non-hydrocarbon activity and the various hydrocarbon revenues are likely to be largely soaked up in repairing the hydrocarbon sector and associated infrastructure.
Let me refer to a 6 March 2003 article in the Economist that has turned out to be prescient, because if we forget about “other” costs, the reconstruction looks … if not cheap then almost modest. Of course, I note that the flows have to take into account historical norms. While in North America attracting such flows is a little daunting perhaps on a regional basis, it is doable, but this ain’t fucking Kansas and it is more than daunting.
So the Economist, “Rebuilding Iraq: After the war is over” 6 March 2003:
As it appears the CBO estimate c. early 2003 looks lowish given present infrastructure only estimates hit $100 billion, so do recall that the troops – which are clearly going to have to be a substantial presence for a significant period of time – are costly, even excluding the security issue.
Now the same article of 6 March noted in regards to the hydrocarbons sector:
Also from January 2003, Economist
Iraq’s oil: All about oil? 23 Jan 23 2003
Compare to the assumptions above in regards to assumptions and you begin to see how aggressive the three main growth assumptions are, and further in the context of historical capital flows, how much has to change.
Due to looting and sabotage, present capacity may be ½ that of pre-war capacity, although it is unclear how hard it would be to get up to 2.5 mbpd and achieve the $15 billion in revenues.
The article adds, by the way
That is a serious goddamned problem insofar as at present the occupation has very, very little legitimacy with Iraqis and faces massive expectations. Disappointed and angry people and foreign occupation is not a recipe for stability nor achieving the massive capital flows noted above.
Now as to positioning:
First, I would not consider those growth rates as genuinely achievable, I quote them to give you a picture of the internal thinking of the CPA-I. Semi-public information. I would be surprised if in the first five years we can hit 7% total growth.
Second, you’re wrong on the benchmarking. The collapse in living standards since the occupation has done serious, and I mean fucking serious damage to US image. Already we are seeing the emergence of a kind of guerilla action, something that I thought would not crop up until the fall or early spring next year. Insofar as guerrilla actions are difficult to fight and insofar as American forces generally lack the skills to do so in a manner that does not further alienate the population, there are some serious bloody problems.
To give a picture, I refer to the Economist** again:
“Humanitarian assistance: The other battle” 3 Apr 2003
The capital flows required for this will not start while there is a serious security problem – and of note, none of the CPA-I people, even those who I know personally were willing to try to guess on a timeline on the security status. None of them, even my friends, were particularly sanguine about security.
I recall a few months ago Scylla asserted to me that he felt that the risk for this invasion and occupation had been ‘properly priced in’ to use finance speak, with a country more or less intact. I suggested at the time it had not been, that the Administration had badly misunderstood the Iraqis and the regional situation. I do believe I was right, the risk was not priced very well at all.
Now returning to present policy, I see worrying signs that short term expediency and a desire to shift the costs to private sector and Iraqis is coloring the process.
Taking this report:
Expedient but unwise. Cost shifting.
Unwise insofar as it is highly unlikely that any Iraqi assets in the next year would be able to be privatized at anything like a fair value to the Iraqis. First, the political risk of privatization before a clear Iraqi regime is up and running is non-trivial. Even presuming a degree of stability in a year that would allow sales, you look at the potential, as a foreign acquirer, of having your title repudiated by a subsequent government that challenges on good legal basis the authority of the CPA to undertake such disposals. Combined with other risks and the likelihood conditions will be poor in a year as they are now, that implies that Iraqi assets being disposed of at a steep discount.
The article continues:
I haven’t met Carney but he’s fucking wrong headed. Privatization is a good thing. Doing so without a clear popular mandate harkens back to old images of 19th century imperialism and doing what’s right for the ignorant natives. It’s not only bad politics, it’s bad business insofar as treating the Iraqi assets like a good portfolio, they should be looking to maximize value. I do not see a sell-off in a year as coming anywhere close to that. There is but one real rational for this, cost cutting to the American tax payer.
How very American. This fucker has no fucking idea what he is dealing with. Discussions held under the auspices of the CPA-I – all free and fair for those who play ball – and without a real Iraqi administration in place, and he thinks this will have street legitimacy? Why not just play in traffic, got better goddamned odds. Clumsy American-centric policy making. If this is going to be the driving force, there are more problems.
Yeah, sure, and I know exactly which corrupt bastards are doing so. I met the motherfuckers. I dearly hope somebody besides this fuck is trying to learn some lessons from the FSU.
Empty fucking posturing.
This fucker has his head up his ass. Not that privatization is not the way to go, but I know precisely the people he’s talking to, the sweet talking con artists I met last week.
The average Iraqi, and I include the ‘Middle Class’ in this, is deeply attached to old socialist ideals. They do not understand, per se, that the command economy doesn’t work and have all the expectations that went along with the Soviet system. The folks who are selling privatization fast right now are fast buck artists.
The article further notes:
This rather matches my impression of popular economic ideas – and frankly given the shitty state of Iraqi industry at present, quick privatizations is not likely to be effective. At least not for Iraqis, although for short term American budget constraints it might be. Certainly I agree with Greco quoted above on his personal view that to get Iraqi firms in shape to dispose of them with best value for all concerned, a three year timeline is best.
Now he does go on in other comments to try to delineate between firms ready to be privatized, glass and ceramics sector, and those not. There may very well be a case to prepare for early privatization of certain companies, but not under CPA-I auspices. Not if you want the process to maintain legitimacy and not if you do not want to poison the well. Setting up the firms in quasi-private holdings for future privatization, sure, I think something like that would be a fabulous idea, but a fire sale is horrible idea economically in terms of value to Iraq and politically in terms of keeping privatization as free as possible from the taint of imperialism.
Further to the subject, I share an analysis from Llyods List
“Pitfalls of business in Iraq in aftermath of war”
Lloyds List 6 Jun 2003
An excellent question given the recent evolution of affaires.
A further important point:
In other words, over a ten year period, one has to look at some very, very serious potential for disruption if things do not go swimmingly.
And as everyone knows, this region is not particularly noted for things going swimmingly.
So, those who want to lap up optimism, caveat emptor, the ten year forecast should price in risk.
Coup d’etat, revolution, etc.
Also of note, and something I raised personally, as did others, with CPA-I:
That means the USG and related agencies are going to have to step in and should some real large amounts of risk if they want to attract even 1/4 of the required flows.
Of the above items, I would note that I do not think that in terms of the financial sector or largely elsewhere sharia complaince is a real risk. This angle is one item I feel is badly exagerated in commentary.
A good warning:
Now further to this, and the issue of oil that emphasizes my own warnings over the past several months is their subsequent analysis of the oil issue
I believe that per recent information, Mr Drollas’ estimates are in fact low.
Further to the cost issue, to illustrate my analysis:
“US to press EU for money to rebuild Iraq” Financial Times 5 Jun 2003
Financial Times covers, now a week old, the beginning of squeeling on the cost, and the realization that oil solves not all.
Amusing this. We give few if any climb-downs on control, etc. but want the free money.
Well, let’s see.
We can look forward to an initial meeting 24 June at the United Nations in New York on negotiations for contributions with “officials of the Coalition Provisional Authority in Iraq, who will bring preliminary estimates of future costs.” I look forward to these figures.
Also of note “The World Bank and the UN have begun a more comprehensive assessment of the long-term costs of reconstructing Iraq’s infrastructure and rebuilding its economy, which is due to be completed before the September conference.” – I believe this is seperate from the Baghdad conference which I mention.
Now the funny part, to me at least:
Well no shit.
Now guess what the enthusiasm is for subsidizing an effort that most of the world thought was wrong-headed is?
As to figures:
Of course note, of the billions pledged for Afghanistan, not much has shown up yet.
As the article notes: the upcoming conference will be modelled on a January 2002 meeting on Afghanistan in which countries pledged nearly $5bn for reconstruction. “But the effort promises to be more difficult because the costs will be higher and the war in Iraq received less international support than the invasion of Afghanistan.” To understand things enormously.
On the creditor front:
Insofar as the US holds little Iraqi debt, and given a past history of being stingy on writing down debt we do hold in other arenas, the pious admonishments ring rather hollow.
Expendiency.
More data to flesh out the picture, with convenient citing:
“Iraq Is Ill-Equipped to Exploit Huge Oil Reserves”
By Peter S. Goodman
Washington Post Foreign Service
Wednesday, June 4, 2003; Page A01
http://www.washingtonpost.com/wp-dyn/articles/A10348-2003Jun3.html
**Collounsbury, ** a question based on a discussion with a friend last night: attacks on U.S. forces are still pretty much a daily occurrence in Iraq. What is your sense of the degree to which the attackers are Ba’ath loyalists, vs. regular people who are just pissed off and want the Americans to leave?
(My friend was under the impression that they are primarily Ba’ath loyalists, because they apparently know their way around an RPG and have been successful in carrying out attacks even while under fire. But at this point, between conscription and the vets of the Iran/Iraq war, I imagine there are large numbers of people with military experience running around, as has been the case in Chechnya. But lord knows I’m no military expert.)
Moderator’s Note: Thread title changed at OP’s request.
I have no idea how one would judge such a thing. There is something of a definitional issue here insofar in CentCom language those who attack the CPA forces are ipso facto Baathists and ‘bad actors’ – however the mere usage of quasi military tactics and items like RPGs is fairly meaningless as a benchmark. Iraq ran a mass conscription army along quasi Soviet lines, meaning about every able bodied man had some meager military training, and further to that Iraq has a real gun culture, so the mere possession of cheap ass AK and RPG armaments is not indicative. Chechnya is a good comparison, insofar as the underlying systems are vaguely similar.
Of import is the tradition of blood feud in the region, meaning that those of the clan of someone who was killed, regardless of reason, are honor bound to avenge the death – eye for eye. This is likely to be of growing significance if the US is not paying blood payments.
Transcript of an interview with Robert Fisk, reporter from British newspaper Independent, regarding his impressions of the current Iraqi situation:
http://www.democracynow.org/transcripts/fisk2.shtml
Comments/reactions welcomed.
Fisk is so anti-American, anti-Israel, anti-west and so inaccurate that his name has become a verb. Fisking and article is going through phrase by phrase and pointing out the flaws, usually in an entertaining manner.
I won’t give Fisk’s article a full Fisking here. Here’s one misstatement. He wrote
Fisk thinks he doesn’t need sources and facts. The cause of what’s occurring is simply obvious to him.
Fisk says the Iraq situation is going badly. That’s a good reason to believe it’s going well.
Fisk is so anti-American, anti-Israel, anti-west and so inaccurate that his name has become a verb. Fisking and article is going through phrase by phrase and pointing out the flaws, usually in an entertaining manner.
I won’t give Fisk’s article a full Fisking here. Here’s one misstatement. He wrote
Fisk thinks he doesn’t need sources and facts. The cause of what’s occurring is simply obvious to him.
Fisk says the Iraq situation is going badly. That’s a good reason to believe it’s going well.
God help me for agreeing with december on a press question, but he’s quite right: Robert Fisk is an ideologue with little or no credibility when it comes to reporting on America’s foreign policy.
If only december were capable of recognizing and appropriately discounting credibility-challenged ideologues whose biases support his own positions.