IRAQ: HOW WASHINGTON IMPOSED A NEO-CON CONSTITUTION DE-REGULATING THE ECONOMY (and strangled an Iraqi Welfare State)

Washington -- not content with god-fathering an Islamist Constitution for Iraq that establishes Islamic religious principles as the basis for all laws -- also succeeded in scrapping a constitution, drafted by the Iraqis, that was modeled on that of the social-democratic Scandinavian countries, and replacing it with one that fulfilled "the wish-list of international investors,” as The Economist described the objectives of America's proconsuls in Iraq. Yet this is a story that has never been coherently told in the U.S. press.

This remarkable tale is told in carefully documented detail in this morning's (Sept. 1) Asia Times -- the very respectable daily -- by Herbert Docena, a research associate at Focus on the Global South, a Bangkok-based policy research and advocacy center attached to the Chulalongkom University Social Research Institute. The article, How the U.S. Got Its Neo-Liberal Way in Iraq, points out that, when the original draft of the new Constitution for Iraq was published there in June, "The Iraqis - even those who were willing to cooperate with the United States - wanted, at least on paper, to build a Scandinavian-type welfare system in the Arabian desert, with Iraq’s vast oil wealth to be spent on upholding every Iraqi’s right to education, health care, housing, and other social services. 'Social justice is the basis of  building society,' the draft declared. All of Iraq’s natural resources would be owned collectively by the Iraqi people. Everyone would.

"In other words, the Iraqis wanted a country different from that for which the Americans had come to Iraq. They, or at least those w ho were involved in drafting the constitution, wanted nothing of the kind of economic and political system that [the U.S. pro-consul, Paul] Bremer (right) and other US officials had been attempting to create in Iraq ever since the occupation began. What the occupation authorities wanted was to fulfill 'the wish-list of international investors,' as The Economist magazine described the economic policies they began imposing in the country in 2003."

The article notes that, "As direct occupiers, the US enacted laws that give foreign investors equal rights with Iraqis in the domestic market; permit the full repatriation of profits; institute the flat tax system; abolish tariffs; enforce a strict intellectual property rights regime; sell off a whole-range of state-owned companies; reduce food and fuel subsidies; and privatize all kinds of social services such as health, education and water delivery.  By the time the next version was leaked in late July, the progressive provisions in the draft constitution had disappeared."

I've previously reported on how the U.S. Ambassador in Iraq, Zalmay Khalilzad (right, a  member of the neo-con Project for the New American Century, which had called for an invasion of Iraq since 1998), "brokered" a deal naming Islam as "the primary source of legislation in the new Iraqi Constitution... with the proviso that no legislation be permitted that conflicted with the 'universal principles' of the religion," as the New York Times put it.ten days ago.

Now, Docena's article demonstrates step by step, in documented detail, how the strong-arming by Ambassador Khalilzad and his helpmates from Washington turned the original Scandinavian-style Constitution the Iraqis wanted on its head, producing a Constitution that Khalilzad's neo-con patrons could gloat over. "Gone was the article proclaiming adherence to social justice as the basis of the economy. In its place was a provision binding the state to 'reforming the Iraqi economy according to modern economic bases, in a way that ensures complete investment of its resources, diversifying its sources and encouraging and developing the private sector.' By 'reforming' the framers of the constitution could only have meant the usual stock of neoliberal economic 'reforms' that have been prescribed or imposed on dozens of developing countries around the world. This includes privatizing state-owned enterprises, liberalizing trade, deregulating the market, and opening it up to foreign investors. Instead of revoking the so-called Bremer Laws, or the decrees enacted by the occupation authority implementing these neoliberal policies, the draft constitution would make Iraqis constitutionally bound to enforce them. Another provision reiterates, '[t]he country shall guarantee the encouragement of investments in different sectors.'

"Also gone was the provision affirming the Iraqi people’s collective ownership of Iraq  ’s oil and other natural resources and obliging the state to protect and safeguard them. Instead, a new article lays the legal ground for selling off Iraq ’s oil and putting it under the control of the big multinational oil companies. Article 110 goes so far as to spell out that 'the federal government and the governments of the producing regions and provinces together will draw up the necessary strategic policies to develop oil and gas wealth to bring the greatest benefit for the Iraqi people, relying on the most modern techniques of market principles and encouraging investment.'

"By 'modern techniques of market principles,' the draft is most likely referring to current plans - supported by the interim government’s top leadership - to privatize the Iraqi National Oil Company and to open up Iraq ’s oil reserves to the big oil companies. Referring to such plans, Adil Abdel Mahdi (left), a senior leader of the Supreme Council of the Islamic Revolution in Iraq and now Iraq’s vice president, told an audience in Washington , just before the elections: '[T]his is very promising to the American investors and to American enterprises, certainly to oil companies.'" in which the central state is empowered only to maintain a common market within the territory while the power to regulate the market is relegated to weakened sub-states. For neoliberals, [Note: Docena is using the term "liberal" in its European sense, meaning those who favor an unregulated free market -- D.I.] feeralism is alright as long as the regions don’t put up walls against free trade and so long as they don’t become powerful enough to implement labor, environmental, and other social policies.The constitution is also laying the ground for the eventual acquisition of Iraqi assets, in the form of equity, real estate or other capital, by foreigners or multinational corporations. While the June draft states that 'Iraqis have the complete and unconditional right of ownership in all areas without limitation”,' the final draft drops the words 'unconditional' and 'without limitation'and adds instead the qualification 'except what is exempted by law.'"

Docena's article is sharp-eyed in spotting the real driving principle behind the U.S.-favored Shi'ite imposition of a federal system. The federal system would establish a southern region in which the Shi'ites "determine oil policy in its territory, earn a substantial portion of revenues from existing oil fields, and rake up to 100% of revenues in oil fields that are yet to be developed. The US’s stance on the question of federalism may have a lot to do with the assurance that the ones who may end up ruling over Iraq’s oil reserves - the Kurds in the north and the Shi'ite parties in the south - are people who have gone on record as favoring their privatization." That's a boon to the Anglo-American oil companies.

Moreover, Docena points out that "While the constitution gives oil-producing regions the power to enact oil policy, it also goes out of its way to stipulate that the central state should 'guarantee the freedom of movement for workers, goods, and Iraqi capital between the regions and the provinces'. This distinction of roles between the central state and the regions follows the template for the kind of 'market-preserving federalism' advocated by neoliberal constitutionalists: that

By brokering a deal for an Islamist Constitution, the U.S. made a mockery of the endless mouthings by Bush and by support rs of the U.S. occupation that its principle goal was the institution of "democracy." Now, Docena's meticulously documented and cogent analysis of the economic and social aspects of the U.S.-written and -imposed Iraqi Constitution shows that those who have criticized the invasion of Iraq as motivated by a desire for control of oil and the country's other natural and human resources were more than right. )(And when Bush just yesterday advanced oil as a new reason for the Iraq war -- as the Boston Globe reported -- there really can no longer be any serious dispute about petroimperialism constituting a fundamental reason for the invasion of Iraq.)There's a lot more in Docena's important  Asia Times article, and you ought to read it in its entirety by clicking here.