Bernhard Zand, "Iraq: Slaves of the Foreigners," Der Spiegel, 6 October 2003


By radically opening up the Iraqi economy, America wants to attract international corporations to the banks of the Tigris. Iraqis are concerned that their country is being sold out.

The early onset of darkness makes walking home from his office a dangerous undertaking, but the Iraqi fall also brings the prospect of excitement into Feisal al-Chudeiri's daily routine. The duck hunt begins in the meadows along the Tigris in late October, and in November al-Chudeiri and his friends plan to hunt buzzards in the desert. The 38-year-old millionaire from Baghdad is not worried about his personal future.

His family, one of the oldest in the land of two rivers, has seen the Ottomans, the British and Saddam Hussein come and go. Since 1772, the family has traded in dates, tea and spices, and in 1881 it founded the first steamship company on the Euphrates River. "Things don't throw us off track that easily," says the junior head of the Karady Group, "but I doubt that this applies to the rest of the Iraqis."

Four sheets of paper bearing the sober heading "Law on the Regulation of Foreign Investment" sit on Chudeiri's desk. "The Americans have already made quite a few mistakes in Iraq," he says gloomily, "but this law is their biggest mistake so far. It has the effect of dynamite."

Minister of Finance Kamil al-Kilani has promised that the law, only recently put into force by US Administrator Paul Bremer, will liberate Iraq from a planned economy, open the country to the global market, bring technology to the Tigris, and create jobs.

In truth, the package of reforms promises foreign interests virtually unlimited access to the country's most profitable industries. Beginning next year, foreign nationals will be able to acquire full ownership of local firms, and even a few banks, and it will be possible to siphon off profits to other countries without restrictions. Hundreds of former state-owned business will be open to privatization, leaving only the oil and gas industry under government control. Scrutiny of potential investors to assess their reliability and capabilities, an absolute necessity during such changes to a system, will not be required.

Foreign companies are permitted to establish factories and local subsidiaries, the taxes they pay are capped at 15 percent, and a 5 percent duty is charged on imports. In fact, they will not be liable for payment of any taxes or duties until the end of the year. The British business publication, The Economist, praised the new law for fulfilling the "wish list of international investors," and called Bremer's creation a "capitalist dream."

Iraqis, however, are incensed at what they fear is a sell-off of their country. Powerful interest groups, previously at odds over the country's future course, suddenly find themselves joining forces in a common front opposing the economic reforms.

Foreign capital is welcome, concedes moderate Sheikh Sadr al-Din al-Qubanji of the Supreme Council for Islamic Revolution in Iraq, but he is also concerned about Iraq's loss of control over investors. Radical Shiite leader Muqtada al-Sadr demands that the law be repealed, "otherwise we will act."

The guidelines could eliminate thousands of jobs, warns the Communist Party of Iraq, a point with which capitalists like Walid Hafis, 51, who owns one of the country's largest import and export companies, wholeheartedly agree. Hafis warns that Iraqis could become "guest workers in their own country," and "slaves of the foreigners."

It is already apparent that those who stand to benefit most from the new regulations will be major American firms, corporations such as oil industry outfitter Halliburton and construction conglomerate Bechtel. These are firms that have already been awarded lucrative contracts, in some cases without competitive bidding, because of their close relationships with the Republicans currently in power in Washington.

The obscure practices involved in the awarding of huge contracts have also angered the Europeans, which explains their lukewarm reception of Bremer's "great vision." The US administrator had asked for a remake of the Marshall Plan, which America used to further the reconstruction of a destroyed Europe after World War II. However, there has been little international interest to date in helping what is still a US-controlled Iraq get back on its feet.

Bremer has complained that commitments so far have barely amounted to 1.5 billion dollars, while claiming that reconstruction will cost between 50 and 75 billion. In contrast, the New York Times commented that other countries' skepticism of the Bush administration's conduct is not surprising: "The administration's practice of awarding contracts to its friends as if they were gifts will only delay Iraq's recovery, and with possibly catastrophic consequences."

Since early June, hand-picked businessmen such as Chudeiri and Hafis had hurried to weekly economic meetings with Bremer in the former Saddam Palace, and had even presented their own proposals for a more gradual transition from the Baathists' planned economy to a liberal system with Western characteristics. Models were discussed from the European post-war years and from other Gulf states, where local partners must hold at least a 51-percent share in all joint ventures.

But their efforts were in vain. The new law, says Hafis, came as a shock to Baghdad's business elite. His fellow businessmen are worried about the prospect of being flooded with funds flowing from Kuwait and Saudi Arabia, and possibly even Israeli capital.

According to one European diplomat in Baghdad, these concerns are exaggerated. In his view, the security situation remains so precarious that even expatriate Iraqis hesitate to invest in their home country. Instead, he believes that trade in cheap imported goods will continue to flourish, to the detriment of the Iraqi private economy.

All of this affects chicken farmer Mohammed Hussein. In March, the 39-year-old still employed a work force of about 70 people. Now only four men pass the time of day in his shut-down slaughterhouse, where hundreds of thousands of chickens were once processed. Hussein says he has nothing against the market economy, but that he cannot hope to compete against foreigners. He says that today it costs about a thousand dollars to produce a ton of chicken meat in Iraq, while frozen imported chicken from overseas can be had for only $480. "I always believed that the only victims in this business were the chickens," complains the poultry baron, "but now it's my turn to be slaughtered."


Translated from the German by Christopher Sultan

Copyright 2003 The New York Times Company


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