[Peace-discuss] Naomi Klein: Baghdad Year Zero

[Lisa Chason]

A manual of how not to liberate countries

 


Baghdad Year Zero

 By Naomi Klein 

 

Harper's Magazine September 2004 Issue 


Pillaging Iraq in pursuit of a neocon utopia. 

 

It was only after I had been in Baghdad for a month that I found what I
was looking for. I had traveled 
to Iraq a year after the war began, at the height of what should have
been a 
construction boom, but after weeks of searching I had not seen a single 
piece of heavy machinery apart from tanks and humvees. Then I saw it: a 
construction crane. It was big and yellow and impressive, and when I
caught 
a glimpse of it around a corner in a busy shopping district I thought
that I 
was finally about to witness some of the reconstruction I had heard so
much 
about. But as I got closer I noticed that the crane was not actually 
rebuilding anything - not one of the bombed-out government buildings
that 
still lay in rubble all over the city, nor one of the many power lines
that 
remained in twisted heaps even as the heat of summer was starting to
bear 
down. No, the crane was hoisting a giant billboard to the top of a 
three-story building. SUNBULAH: HONEY 100% NATURAL, made in Saudi
Arabia. 
Seeing the sign, I couldn't help but think about something Senator John 
McCain had said back in October. Iraq, he said, is "a huge pot of honey 
that's attracting a lot of flies." The flies McCain was referring to
were 
the Halliburtons and Bechtels, as well as the venture capitalists who 
flocked to Iraq in the path cleared by Bradley Fighting Vehicles and 
laser-guided bombs. The honey that drew them was not just no-bid
contracts 
and Iraq's famed oil wealth but the myriad investment opportunities
offered 
by a country that had just been cracked wide open after decades of being

sealed off, first by the nationalist economic policies of Saddam
Hussein, 
then by asphyxiating United Nations sanctions. Looking at the honey 
billboard, I was also reminded of the most common explanation for what
has 
gone wrong in Iraq, a complaint echoed by everyone from John Kerry to
Pat 
Buchanan: Iraq is mired in blood and deprivation because George W. Bush 
didn't have "a postwar plan." The only problem with this theory is that
it 
isn't true. The Bush Administration did have a plan for what it would do

after the war; put simply, it was to lay out as much honey as possible,
then 
sit back and wait for the flies. The honey theory of Iraqi
reconstruction 
stems from the most cherished belief of the war's ideological
architects: 
that greed is good. Not good just for them and their friends but good
for 
humanity, and certainly good for Iraqis. Greed creates profit, which
creates 
growth, which creates jobs and products and services and everything else

anyone could possibly need or want. The role of good government, then,
is to 
create the optimal conditions for corporations to pursue their
bottomless 
greed, so that they in turn can meet the needs of the society. The
problem 
is that governments, even neoconservative governments, rarely get the
chance 
to prove their sacred theory right: despite their enormous ideological 
advances, even George Bush's Republicans are, in their own minds, 
perennially sabotaged by meddling Democrats, intractable unions, and 
alarmist environmentalists. Iraq was going to change all that. In one
place 
on Earth, the theory would finally be put into practice in its most
perfect 
and uncompromised form. A country of 25 million would not be rebuilt as
it 
was before the war; it would be erased, disappeared. In its place would 
spring forth a gleaming showroom for laissez-faire economics, a utopia
such 
as the world had never seen. Every policy that liberates multinational 
corporations to pursue their quest for profit would be put into place: a

shrunken state, a flexible workforce, open borders, minimal taxes, no 
tariffs, no ownership restrictions. The people of Iraq would, of course,

have to endure some short-term pain: assets, previously owned by the
state, 
would have to be given up to create new opportunities for growth and 
investment. Jobs would have to be lost and, as foreign products flooded 
across the border, local businesses and family farms would,
unfortunately, 
be unable to compete. But to the authors of this plan, these would be
small 
prices to pay for the economic boom that would surely explode once the 
proper conditions were in place, a boom so powerful the country would 
practically rebuild itself. The fact that the boom never came and Iraq 
continues to tremble under explosions of a very different sort should
never 
be blamed on the absence of a plan. Rather, the blame rests with the
plan 
itself, and the extraordinarily violent ideology upon which it is based.

Torturers believe that when electrical shocks are applied to various
parts 
of the body simultaneously subjects are rendered so confused about where
the 
pain is coming from that they become incapable of resistance. A
declassified 
CIA "Counterintelligence Interrogation" manual from 1963 describes how a

trauma inflicted on prisoners opens up "an interval - which may be
extremely 
brief - of suspended animation, a kind of psychological shock or
paralysis. 
. . . [A]t this moment the source is far more open to suggestion, far 
likelier to comply." A similar theory applies to economic shock therapy,
or 
"shock treatment," the ugly term used to describe the rapid
implementation 
of free-market reforms imposed on Chile in the wake of General Augusto 
Pinochet's coup. The theory is that if painful economic "adjustments"
are 
brought in rapidly and in the aftermath of a seismic social disruption
like 
a war, a coup, or a government collapse, the population will be so
stunned, 
and so preoccupied with the daily pressures of survival, that it too
will go 
into suspended animation, unable to resist. As Pinochet's finance
minister, 
Admiral Lorenzo Gotuzzo, declared, "The dog's tail must be cut off in
one 
chop." That, in essence, was the working thesis in Iraq, and in keeping
with 
the belief that private companies are more suited than governments for 
virtually every task, the White House decided to privatize the task of 
privatizing Iraq's state-dominated economy. Two months before the war
began, 
USAID began drafting a work order, to be handed out to a private
company, to 
oversee Iraq's "transition to a sustainable market-driven economic
system." 
The document states that the winning company (which turned out to be the

KPMG offshoot Bearing Point) will take "appropriate advantage of the
unique 
opportunity for rapid progress in this area presented by the current 
configuration of political circumstances." Which is precisely what
happened. 
L. Paul Bremer, who led the U.S. occupation of Iraq from May 2, 2003,
until 
he caught an early flight out of Baghdad on June 28, admits that when he

arrived, "Baghdad was on fire, literally, as I drove in from the
airport." 
But before the fires from the "shock and awe" military onslaught were
even 
extinguished, Bremer unleashed his shock therapy, pushing through more 
wrenching changes in one sweltering summer than the International
Monetary 
Fund has managed to enact over three decades in Latin America. Joseph 
Stiglitz, Nobel laureate and former chief economist at the World Bank, 
describes Bremer's reforms as "an even more radical form of shock
therapy 
than pursued in the former Soviet world." The tone of Bremer's tenure
was 
set with his first major act on the job: he fired 500,000 state workers,

most of them soldiers, but also doctors, nurses, teachers, publishers,
and 
printers. Next, he flung open the country's borders to absolutely 
unrestricted imports: no tariffs, no duties, no inspections, no taxes.
Iraq, 
Bremer declared two weeks after he arrived, was "open for business." One

month later, Bremer unveiled the centerpiece of his reforms. Before the 
invasion, Iraq's non-oil-related economy had been dominated by 200 
state-owned companies, which produced everything from cement to paper to

washing machines. In June, Bremer flew to an economic summit in Jordan
and 
announced that these firms would be privatized immediately. "Getting 
inefficient state enterprises into private hands," he said, "is
essential 
for Iraq's economic recovery." It would be the largest state liquidation

sale since the collapse of the Soviet Union. But Bremer's economic 
engineering had only just begun. In September, to entice foreign
investors 
to come to Iraq, he enacted a radical set of laws unprecedented in their

generosity to multinational corporations. There was Order
37, which lowered Iraq's corporate tax rate from roughly 40 percent to a

flat
15 percent. There was Order 39, which allowed foreign companies to own
100 
percent of Iraqi assets outside of the natural-resource sector. Even
better, 
investors could take 100 percent of the profits they made in Iraq out of
the 
country; they would not be required to reinvest and they would not be
taxed. 
Under Order 39, they could sign leases and contracts that would last for

forty years. Order 40 welcomed foreign banks to Iraq under the same 
favorable terms. All that remained of Saddam Hussein's economic policies
was 
a law restricting trade unions and collective bargaining. If these
policies 
sound familiar, it's because they are the same ones multinationals
around 
the world lobby for from national governments and in international trade

agreements. But while these reforms are only ever enacted in part, or in

fits and starts, Bremer delivered them all, all at once. Overnight, Iraq

went from being the most isolated country in the world to being, on
paper, 
its widest-open market. At first, the shock-therapy theory seemed to
hold: 
Iraqis, reeling from violence both military and economic, were far too
busy 
staying alive to mount a political response to Bremer's campaign.
Worrying 
about the privatization of the sewage system was an unimaginable luxury
with 
half the population lacking access to clean drinking water; the debate
over 
the flat tax would have to wait until the lights were back on. Even in
the 
international press, Bremer's new laws, though radical, were easily
upstaged 
by more dramatic news of political chaos and rising crime. Some people
were 
paying attention, of course. That autumn was awash in "rebuilding Iraq" 
trade shows, in Washington, London, Madrid, and Amman. The Economist 
described Iraq under Bremer as "a capitalist dream," and a flurry of new

consulting firms were launched promising to help companies get access to
the 
Iraqi market, their boards of directors stacked with well-connected 
Republicans. The most prominent was New Bridge Strategies, started by
Joe 
Allbaugh, former Bush-Cheney campaign manager. "Getting the rights to 
distribute Procter & Gamble products can be a gold mine," one of the 
company's partners enthused. "One well-stocked 7-Eleven could knock out 
thirty Iraqi stores; a Wal-Mart could take over the country." Soon there

were rumors that a McDonald's would be opening up in downtown Baghdad, 
funding was almost in place for a Starwood luxury hotel, and General
Motors 
was planning to build an auto plant. On the financial side, HSBC would
have 
branches all over the country, Citigroup was preparing to offer
substantial 
loans guaranteed against future sales of Iraqi oil, and the bell was
going 
to ring on a New York-style stock exchange in Baghdad any day. In only a
few 
months, the postwar plan to turn Iraq into a laboratory for the neocons
had 
been realized. Leo Strauss may have provided the intellectual framework
for 
invading Iraq preemptively, but it was that other University of Chicago 
professor, Milton Friedman, author of the anti-government manifesto 
Capitalism and Freedom, who supplied the manual for what to do once the 
country was safely in America's hands. This represented an enormous
victory 
for the most ideological wing of the Bush Administration. But it was
also 
something more: the culmination of two interlinked power struggles, one 
among Iraqi exiles advising the White House on its postwar strategy, the

other within the White House itself. As the British historian Dilip Hiro
has 
shown, in Secrets and Lies: Operation 'Iraqi Freedom' and After, the
Iraqi 
exiles pushing for the invasion were divided, broadly, into two camps.
On 
one side were "the pragmatists," who favored getting rid of Saddam and
his 
immediate entourage, securing access to oil, and slowly introducing 
free-market reforms. Many of these exiles were part of the State 
Department's Future of Iraq Project, which generated a thirteen-volume 
report on how to restore basic services and transition to democracy
after 
the war. On the other side was the "Year Zero" camp, those who believed
that 
Iraq was so contaminated that it needed to be rubbed out and remade from

scratch. The prime advocate of the pragmatic approach was Iyad Allawi, a

former high-level Baathist who fell out with Saddam and started working
for 
the CIA. The prime advocate of the Year Zero approach was Ahmad Chalabi,

whose hatred of the Iraqi state for expropriating his family's assets
during 
the 1958 revolution ran so deep he longed to see the entire country
burned 
to the ground - everything, that is, but the Oil Ministry, which would
be 
the nucleus of the new Iraq, the cluster of cells from which an entire 
nation would grow. He called this process "de-Baathification." A
parallel 
battle between pragmatists and true believers was being waged within the

Bush Administration. The pragmatists were men like Secretary of State
Colin 
Powell and General Jay Garner, the first U.S. envoy to postwar Iraq.
General 
Garner's plan was straightforward enough: fix the infrastructure, hold
quick 
and dirty elections, leave the shock therapy to the International
Monetary 
Fund, and concentrate on securing U.S. military bases on the model of
the 
Philippines. "I think we should look right now at Iraq as our coaling 
station in the Middle East," he told the BBC. He also paraphrased T. E. 
Lawrence, saying, "It's better for them to do it imperfectly than for us
to 
do it for them perfectly." On the other side was the usual cast of 
neoconservatives: Vice President Dick Cheney, Secretary of Defense
Donald 
Rumsfeld (who lauded Bremer's "sweeping reforms" as "some of the most 
enlightened and inviting tax and investment laws in the free world"),
Deputy 
Secretary of Defense Paul Wolfowitz, and, perhaps most centrally, 
Undersecretary of Defense Douglas Feith. Whereas the State Department
had 
its Future of Iraq report, the neocons had USAID's contract with Bearing

Point to remake Iraq's economy: in 108 pages, "privatization" was
mentioned 
no fewer than fifty-one times. To the true believers in the White House,

General Garner's plans for postwar Iraq seemed hopelessly unambitious.
Why 
settle for a mere coaling station when you can have a model free market?
Why 
settle for the Philippines when you can have a beacon unto the world?
The 
Iraqi Year Zeroists made natural allies for the White House 
neoconservatives: Chalabi's seething hatred of the Baathist state fit
nicely 
with the neocons' hatred of the state in general, and the two agendas 
effortlessly merged. Together, they came to imagine the invasion of Iraq
as 
a kind of Rapture: where the rest of the world saw death, they saw birth
- a 
country redeemed through violence, cleansed by fire. Iraq wasn't being 
destroyed by cruise missiles, cluster bombs, chaos, and looting; it was 
being born again. April 9, 2003, the day Baghdad fell, was Day One of
Year 
Zero. While the war was being waged, it still wasn't clear whether the 
pragmatists or the Year Zeroists would be handed control over occupied
Iraq. 
But the speed with which the nation was conquered dramatically increased
the 
neocons' political capital, since they had been predicting a "cakewalk"
all 
along. Eight days after George Bush landed on that aircraft carrier
under a 
banner that said MISSION ACCOMPLISHED, the President publicly signed on
to 
the neocons' vision for Iraq to become a model corporate state that
would 
open up the entire region. On May 9, Bush proposed the "establishment of
a 
U.S.-Middle East free trade area within a decade"; three days later,
Bush 
sent Paul Bremer to Baghdad to replace Jay Garner, who had been on the
job 
for only three weeks. The message was unequivocal: the pragmatists had
lost; 
Iraq would belong to the believers. A Reagan-era diplomat turned 
entrepreneur, Bremer had recently proven his ability to transform rubble

into gold by waiting exactly one month after the September 11 attacks to

launch Crisis Consulting Practice, a security company selling "terrorism

risk insurance" to multinationals. Bremer had two lieutenants on the 
economic front: Thomas Foley and Michael Fleischer, the heads of
"private 
sector development" for the Coalition Provisional Authority (CPA). Foley
is 
a Greenwich, Connecticut, multimillionaire, a longtime friend of the
Bush 
family and a Bush-Cheney campaign "pioneer" who has described Iraq as a 
modern California "gold rush." Fleischer, a venture capitalist, is the 
brother of former White House spokesman Ari Fleischer. Neither man had
any 
high-level diplomatic experience and both use the term corporate 
"turnaround" specialist to describe what they do. According to Foley,
this 
uniquely qualified them to manag e Iraq's economy because it was "the
mother 
of all turnarounds." Many of the other CPA postings were equally 
ideological. The Green Zone, the city within a city that houses the 
occupation headquarters in Saddam's former palace, was filled with Young

Republicans straight out of the Heritage Foundation, all of them given 
responsibility they could never have dreamed of receiving at home. Jay 
Hallen, a twenty-four-year-old who had applied for a job at the White
House, 
was put in charge of launching Baghdad's new stock exchange. Scott
Erwin, a 
twenty-one-year-old former intern to Dick Cheney, reported in an email
home 
that "I am assisting Iraqis in the management of finances and budgeting
for 
the domestic security forces." The college senior's favorite job before
this 
one? "My time as an ice-cream truck driver." In those early days, the
Green 
Zone felt a bit like the Peace Corps, for people who think the Peace
Corps 
is a communist plot. It was a chance to sleep on cots, wear army boots,
and 
cry "incoming" - all while being guarded around the clock by real
soldiers. 
The teams of KPMG accountants, investment bankers, think-tank lifers,
and 
Young Republicans that populate the Green Zone have much in common with
the 
IMF missions that rearrange the economies of developing countries from
the 
presidential suites of Sheraton hotels the world over. Except for one
rather 
significant difference: in Iraq they were not negotiating with the 
government to accept their "structural adjustments" in exchange for a
loan; 
they were the government. Some small steps were taken, however, to bring

Iraq's U.S.-appointed politicians inside. Yegor Gaidar, the mastermind
of 
Russia's mid-nineties privatization auction that gave away the country's

assets to the reigning oligarchs, was invited to share his wisdom at a 
conference in Baghdad. Marek Belka, who as finance minister oversaw the
same 
process in Poland, was brought in as well. The Iraqis who proved most
gifted 
at mouthing the neocon lines were selected to act as what USAID calls
local 
"policy champions" - men like Ahmad al Mukhtar, who told me of his 
countrymen, "They are lazy. The Iraqis by nature, they are very
dependent. . 
. . They will have to depend on themselves, it is the only way to
survive in 
the world today." Although he has no economics background and his last
job 
was reading the English-language news on television, al Mukhtar was 
appointed director of foreign relations in the Ministry of Trade and is 
leading the charge for Iraq to join the World Trade Organization. I had
been 
following the economic front of the war for almost a year before I
decided 
to go to Iraq. I attended the "Rebuilding Iraq" trade shows, studied 
Bremer's tax and investment laws, met with contractors at their home
offices 
in the United States, interviewed the government officials in Washington
who 
are making the policies. But as I prepared to travel to Iraq in March to
see 
this experiment in free-market utopianism up close, it was becoming 
increasingly clear that all was not going according to plan. Bremer had
been 
working on the theory that if you build a corporate utopia the
corporations 
will come - but where were they? American multinationals were happy to 
accept U.S. taxpayer dollars to reconstruct the phone or electricity 
systems, but they weren't sinking their own money into Iraq. There was,
as 
yet, no McDonald's or Wal-Mart in Baghdad, and even the sales of state 
factories, announced so confidently nine months earlier, had not 
materialized. Some of the holdup had to do with the physical risks of
doing 
business in Iraq. But there were other more significant risks as well.
When 
Paul Bremer shredded Iraq's Baathist constitution and replaced it with
what 
The Economist greeted approvingly as "the wish list of foreign
investors," 
there was one small detail he failed to mention: It was all completely 
illegal. The CPA derived its legal authority from United Nations
Security 
Council Resolution 1483, passed in May 2003, which recognized the United

States and Britain as Iraq's legitimate occupiers. It was this
resolution 
that empowered Bremer to unilaterally make laws in Iraq. But the
resolution 
also stated that the U.S. and Britain must "comply fully with their 
obligations under international law including in particular the Geneva 
Conventions of 1949 and the Hague Regulations of 1907." Both conventions

were born as an attempt to curtail the unfortunate historical tendency
among 
occupying powers to rewrite the rules so that they can economically
strip 
the nations they control. With this in mind, the conventions stipulate
that 
an occupier must abide by a country's existing laws unless "absolutely 
prevented" from doing so. They also state that an occupier does not own
the 
"public buildings, real estate, forests and agricultural assets" of the 
country it is occupying but is rather their "administrator" and
custodian, 
keeping them secure until sovereignty is reestablished. This was the
true 
threat to the Year Zero plan: since America didn't own Iraq's assets, it

could not legally sell them, which meant that after the occupation
ended, an 
Iraqi government could come to power and decide that it wanted to keep
the 
state companies in public hands, or, as is the norm in the Gulf region,
to 
bar foreign firms from owning 100 percent of national assets. If that 
happened, investments made under Bremer's rules could be expropriated, 
leaving firms with no recourse because their investments had violated 
international law from the outset. By November, trade lawyers started to

advise their corporate clients not to go into Iraq just yet, that it
would 
be better to wait until after the transition. Insurance companies were
so 
spooked that not a single one of the big firms would insure investors
for 
"political risk," that high-stakes area of insurance law that protects 
companies against foreign governments turning nationalist or socialist
and 
expropriating their investments. Even the U.S.-appointed Iraqi
politicians, 
up to now so obedient, were getting nervous about their own political 
futures if they went along with the privatization plans. Communications 
Minister Haider al-Abadi told me about his first meeting with Bremer. "I

said, 'Look, we don't have the mandate to sell any of this.
Privatization is 
a big thing. We have to wait until there is an Iraqi government.'"
Minister 
of Industry Mohamad Tofiq was even more direct: "I am not going to do 
something that is not legal, so that's it." Both al-Abadi and Tofiq told
me 
about a meeting - never reported in the press - that took place in late 
October 2003. At that gathering the twenty-five members of Iraq's
Governing 
Council as well as the twenty-five interim ministers decided unanimously

that they would not participate in the privatization of Iraq's
state-owned 
companies or of its publicly owned infrastructure. But Bremer didn't
give 
up. International law prohibits occupiers from selling state assets 
themselves, but it doesn't say anything about the puppet governments
they 
appoint. Originally, Bremer had pledged to hand over power to a directly

elected Iraqi government, but in early November he went to Washington
for a 
private meeting with President Bush and came back with a Plan B. On June
30 
the occupation would officially end - but not really. It would be
replaced 
by an appointed government, chosen by Washington. This government would
not 
be bound by the international laws preventing occupiers from selling off

state assets, but it would be bound by an "interim constitution," a
document 
that would protect Bremer's investment and privatization laws. The plan
was 
risky. Bremer's June 30 deadline was awfully close, and it was chosen
for a 
less than ideal reason: so that President Bush could trumpet the end of 
Iraq's occupation on the campaign trail. If everything went according to

plan, Bremer would succeed in forcing a "sovereign" Iraqi government to 
carry out his illegal reforms. But if something went wrong, he would
have to 
go ahead with the June 30 handover anyway because by then Karl Rove, and
not 
Dick Cheney or Donald Rumsfeld, would be calling the shots. And if it
came 
down to a choice between ideology in Iraq and the electability of George
W. 
Bush, everyone knew which would win. At first, Plan B seemed to be right
on 
track. Bremer persuaded the Iraqi Governing Council to agree to
everything: 
the new timetable, the interim government, and the interim constitution.
He 
even managed to slip into the constitution a completely overlooked
clause, 
Article 26. It stated that for the duration of the interim government,
"The 
laws, regulations, orders and directives issued by the Coalition
Provisional 
Authority . . . shall remain in force" and could only be changed after 
general elections are held. Bremer had found his legal loophole: There
would 
be a window - seven months - when the occupation was officially over but

before general elections were scheduled to take place. Within this
window, 
the Hague and Geneva Conventions' bans on privatization would no longer 
apply, but Bremer's own laws, thanks to Article 26, would stand. During 
these seven months, foreign investors could come to Iraq and sign
forty-year 
contracts to buy up Iraqi assets. If a future elected Iraqi government 
decided to change the rules, investors could sue for compensation. But 
Bremer had a formidable opponent: Grand Ayatollah Ali al Sistani, the
most 
senior Shia cleric in Iraq. al Sistani tried to block Bremer's plan at
every 
turn, calling for immediate direct elections and for the constitution to
be 
written after those elections, not before. Both demands, if met, would
have 
closed Bremer's privatization window. Then, on March 2, with the Shia 
members of the Governing Council refusing to sign the interim
constitution, 
five bombs exploded in front of mosques in Karbala and Baghdad, killing 
close to 200 worshipers. General John Abizaid, the top U.S. commander in

Iraq, warned that the country was on the verge of civil war. Frightened
by 
this prospect, al Sistani backed down and the Shia politicians signed
the 
interim constitution. It was a familiar story: the shock of a violent
attack 
paved the way for more shock therapy. When I arrived in Iraq a week
later, 
the economic project seemed to be back on track. All that remained for 
Bremer was to get his interim constitution ratified by a Security
Council 
resolution, then the nervous lawyers and insurance brokers could relax
and 
the sell-off of Iraq could finally begin. The CPA, meanwhile, had
launched a 
major new P.R. offensive designed to reassure investors that Iraq was
still 
a safe and exciting place to do business. The centerpiece of the
campaign 
was Destination Baghdad Exposition, a massive trade show for potential 
investors to be held in early April at the Baghdad International 
Fairgrounds. It was the first such event inside Iraq, and the organizers
had 
branded the trade fair "DBX," as if it were some sort of Mountain 
Dew-sponsored dirt-bike race. In keeping with the extreme-sports theme, 
Thomas Foley traveled to Washington to tell a gathering of executives
that 
the risks in Iraq are akin "to skydiving or riding a motorcycle, which
are, 
to many, very acceptable risks." But three hours after my arrival in 
Baghdad, I was finding these reassurances extremely hard to believe. I
had 
not yet unpacked when my hotel room was filled with debris and the
windows 
in the lobby were shattered. Down the street, the Mount Lebanon Hotel
had 
just been bombed, at that point the largest attack of its kind since the

official end of the war. The next day, another hotel was bombed in
Basra, 
then two Finnish businessmen were murdered on their way to a meeting in 
Baghdad. Brigadier General Mark Kimmitt finally admitted that there was
a 
pattern at work: "the extremists have started shifting away from the
hard 
targets . . . [and] are now going out of their way to specifically
target 
softer targets." The next day, the State Department updated its travel 
advisory: U.S. citizens were "strongly warned against travel to Iraq."
The 
physical risks of doing business in Iraq seemed to be spiraling out of 
control. This, once again, was not part of the original plan. When
Bremer 
first arrived in Baghdad, the armed resistance was so low that he was
able 
to walk the streets with a minimal security entourage. During his first
four 
months on the job, 109 U.S. soldiers were killed and 570 were wounded.
In 
the following four months, when Bremer's shock therapy had taken effect,
the 
number of U.S. casualties almost doubled, with 195 soldiers killed and
1,633 
wounded. There are many in Iraq who argue that these events are
connected - 
that Bremer's reforms were the single largest factor leading to the rise
of 
armed resistance. Take, for instance, Bremer's first casualties. The 
soldiers and workers he laid off without pensions or severance pay
didn't 
all disappear quietly. Many of them went straight into the mujahedeen, 
forming the backbone of the armed resistance. "Half a million people are
now 
worse off, and there you have the water tap that keeps the insurgency
going. 
It's alternative employment," says Hussain Kubba, head of the prominent 
Iraqi business group Kubba Consulting. Some of Bremer's other economic 
casualties also have failed to go quietly. It turns out that many of the

businessmen whose companies are threatened by Bremer's investment laws
have 
decided to make investments of their own - in the resistance. It is
partly 
their money that keeps fighters in Kalashnikovs and RPGs. These
developments 
present a challenge to the basic logic of shock therapy: the neocons
were 
convinced that if they brought in their reforms quickly and ruthlessly, 
Iraqis would be too stunned to resist. But the shock appears to have had
the 
opposite effect; rather than the predicted paralysis, it jolted many
Iraqis 
into action, much of it extreme. Haider al-Abadi, Iraq's minister of 
communication, puts it this way: "We know that there are terrorists in
the 
country, but previously they were not successful, they were isolated.
Now 
because the whole country is unhappy, and a lot of people don't have
jobs . 
. . these terrorists are finding listening ears." Bremer was now at odds
not 
only with the Iraqis who opposed his plans but with U.S military
commanders 
charged with putting down the insurgency his policies were feeding. 
Heretical questions began to be raised: instead of laying people off,
what 
if the CPA actually created jobs for Iraqis? And instead of rushing to
sell 
off Iraq's 200 state-owned firms, how about putting them back to work?
>From 
the start, the neocons running Iraq had shown nothing but disdain for
Iraq's 
state-owned companies. In keeping with their Year Zero-apocalyptic glee,

when looters descended on the factories during the war, U.S. forces did 
nothing. Sabah Asaad, managing director of a refrigerator factory
outside 
Baghdad, told me that while the looting was going on, he went to a
nearby 
U.S. Army base and begged for help. "I asked one of the officers to send
two 
soldiers and a vehicle to help me kick out the looters. I was crying.
The 
officer said, 'Sorry, we can't do anything, we need an order from
President 
Bush.'" Back in Washington, Donald Rumsfeld shrugged. "Free people are
free 
to make mistakes and commit crimes and do bad things." To see the
remains of 
Asaad's football-field-size warehouse is to understand why Frank Gehry
had 
an artistic crisis after September 11 and was briefly unable to design 
structures resembling the rubble of modern buildings. Asaad's looted and

burned factory looks remarkably like a heavy-metal version of Gehry's 
Guggenheim in Bilbao, Spain, with waves of steel, buckled by fire, lying
in 
terrifyingly beautiful golden heaps. Yet all was not lost. "The looters
were 
good-hearted," one of Asaad's painters told me, explaining that they
left 
the tools and machines behind, "so we could work again." Because the 
machines are still there, many factory managers in Iraq say that it
would 
take little for them to return to full production. They need emergency 
generators to cope with daily blackouts, and they need capital for parts
and 
raw materials. If that happened, it would have tremendous implications
for 
Iraq's stalled reconstruction, because it would mean that many of the
key 
materials needed to rebuild - cement and steel, bricks and furniture -
could 
be produced inside the country. But it hasn't happened. Immediately
after 
the nominal end of the war, Congress appropriated $2.5 billion for the 
reconstruction of Iraq, followed by an additional $18.4 billion in
October. 
Yet as of July 2004, Iraq's state-owned factories had been pointedly 
excluded from the reconstruction contracts. Instead, the billions have
all 
gone to Western companies, with most of the materials for the
reconstruction 
imported at great expense from abroad. With unemployment as high as 67 
percent, the imported products and foreign workers flooding across the 
borders have become a source of tremendous resentment in Iraq and yet 
another open tap fueling the insurgency. And Iraqis don't have to look
far 
for reminders of this injustice; it's on display in the most ubiquitous 
symbol of the occupation: the blast wall. The ten-foot-high slabs of 
reinforced concrete are everywhere in Iraq, separating the protected -
the 
people in upscale hotels, luxury homes, military bases, and, of course,
the 
Green Zone - from the unprotected and exposed. If that wasn't injury
enough, 
all the blast walls are imported, from Kurdistan, Turkey, or even
farther 
afield, this despite the fact that Iraq was once a major manufacturer of

cement, and could easily be again. There are seventeen state-owned
cement 
factories across the country, but most are idle or working at only half 
capacity. According to the Ministry of Industry, not one of these
factories 
has received a single contract to help with the reconstruction, even
though 
they could produce the walls and meet other needs for cement at a
greatly 
reduced cost. The CPA pays up to $1,000 per imported blast wall; local 
manufacturers say they could make them for $100. Minister Tofiq says
there 
is a simple reason why the Americans refuse to help get Iraq's cement 
factories running again: among those making the decisions, "no one
believes 
in the public sector."[1] This kind of ideological blindness has turned 
Iraq's occupiers into prisoners of their own policies, hiding behind
walls 
that, by their very existence, fuel the rage at the U.S. presence,
thereby 
feeding the need for more walls. In Baghdad the concrete barriers have
been 
given a popular nickname: Bremer Walls. As the insurgency grew, it soon 
became clear that if Bremer went ahead with his plans to sell off the
state 
companies, it could worsen the violence. There was no question that 
privatization would require layoffs: the Ministry of Industry estimates
that 
roughly 145,000 workers would have to be fired to make the firms
desirable 
to investors, with each of those workers supporting, on average, five
family 
members. For Iraq's besieged occupiers the question was: Would these 
shock-therapy casualties accept their fate or would they rebel? The
answer 
arrived, in rather dramatic fashion, at one of the largest state-owned 
companies, the General Company for Vegetable Oils. The complex of six 
factories in a Baghdad industrial zone produces cooking oil, hand soap, 
laundry detergent, shaving cream, and shampoo. At least that is what I
was 
told by a receptionist who gave me glossy brochures and calendars
boasting 
of "modern instruments" and "the latest and most up to date developments
in 
the field of industry." But when I approached the soap factory, I
discovered 
a group of workers sleeping outside a darkened building. Our guide
rushed 
ahead, shouting something to a woman in a white lab coat, and suddenly
the 
factory scrambled into activity: lights switched on, motors revved up,
and 
workers - still blinking off sleep - began filling two-liter plastic
bottles 
with pale blue Zahi brand dishwashing liquid. I asked Nada Ahmed, the
woman 
in the white coat, why the factory wasn't working a few minutes before.
She 
explained that they have only enough electricity and materials to run
the 
machines for a couple of hours a day, but when guests arrive - would-be 
investors, ministry officials, journalists - they get them going. "For 
show," she explained. Behind us, a dozen bulky machines sat idle,
covered in 
sheets of dusty plastic and secured with duct tape. In one dark corner
of 
the plant, we came across an old man hunched over a sack filled with
white 
plastic caps. With a thin metal blade lodged in a wedge of wax, he
carefully 
whittled down the edges of each cap, leaving a pile of shavings at his
feet. 
"We don't have the spare part for the proper mold, so we have to cut
them by 
hand," his supervisor explained apologetically. "We haven't received any

parts from Germany since the sanctions began." I noticed that even on
the 
assembly lines that were nominally working there was almost no 
mechanization: bottles were held under spouts by hand because conveyor
belts 
don't convey, lids once snapped on by machines were being hammered in
place 
with wooden mallets. Even the water for the factory was drawn from an 
outdoor well, hoisted by hand, and carried inside. The solution proposed
by 
the U.S. occupiers was not to fix the plant but to sell it, and so when 
Bremer announced the privatization auction back in June 2003 this was
among 
the first companies mentioned. Yet when I visited the factory in March, 
nobody wanted to talk about the privatization plan; the mere mention of
the 
word inside the plant inspired awkward silences and meaningful glances.
This 
seemed an unnatural amount of subtext for a soap factory, and I tried to
get 
to the bottom of it when I interviewed the assistant manager. But the 
interview itself was equally odd: I had spent half a week setting it up,

submitting written questions for approval, getting a signed letter of 
permission from the minister of industry, being questioned and searched 
several times. But when I finally began the interview, the assistant
manager 
refused to tell me his name or let me record the conversation. "Any
manager 
mentioned in the press is attacked afterwards," he said. And when I
asked 
whether the company was being sold, he gave this oblique response: "If
the 
decision was up to the workers, they are against privatization; but if
it's 
up to the high-ranking officials and government, then privatization is
an 
order and orders must be followed." I left the plant feeling that I knew

less than when I'd arrived. But on the way out of the gates, a young 
security guard handed my translator a note. He wanted us to meet him
after 
work at a nearby restaurant, "to find out what is really going on with 
privatization." His name was Mahmud, and he was a twenty-five-year-old
with 
a neat beard and big black eyes. (For his safety, I have omitted his
last 
name.) His story began in July, a few weeks after Bremer's privatization

announcement. The company's manager, on his way to work, was shot to
death. 
Press reports speculated that the manager was murdered because he was in

favor of privatizing the plant, but Mahmud was convinced that he was
killed 
because he opposed the plan. "He would never have sold the factories
like 
the Americans want. That's why they killed him." The dead man was
replaced 
by a new manager, Mudhfar Ja'far. Shortly after taking over, Ja'far
called a 
meeting with ministry officials to discuss selling off the soap factory,

which would involve laying off two thirds of its employees. Guarding
that 
meeting were several security officers from the plant. They listened
closely 
to Ja'far's plans and promptly reported the alarming news to their 
coworkers. "We were shocked," Mahmud recalled. "If the private sector
buys 
our company, the first thing they would do is reduce the staff to make
more 
money. And we will be forced into a very hard destiny, because the
factory 
is our only way of living." Frightened by this prospect, a group of 
seventeen workers, including Mahmud, marched into Ja'far's office to 
confront him on what they had heard. "Unfortunately, he wasn't there,
only 
the assistant manager, the one you met," Mahmud told me. A fight broke
out: 
one worker struck the assistant manager, and a bodyguard fired three
shots 
at the workers. The crowd then attacked the bodyguard, took his gun,
and, 
Mahmud said, "stabbed him with a knife in the back three times. He spent
a 
month in the hospital." In January there was even more violence. On
their 
way to work, Ja'far, the manager, and his son were shot and badly
injured. 
Mahmud told me he had no idea who was behind the attack, but I was
starting 
to understand why factory managers in Iraq try to keep a low profile. At
the 
end of our meeting, I asked Mahmud what would happen if the plant was
sold 
despite the workers' objections. "There are two choices," he said,
looking 
me in the eye and smiling kindly. "Either we will set the factory on
fire 
and let the flames devour it to the ground, or we will blow ourselves up

inside of it. But it will not be privatized." If there ever was a moment

when Iraqis were too disoriented to resist shock therapy, that moment
has 
definitely passed. Labor relations, like everything else in Iraq, has
become 
a blood sport. The violence on the streets howls at the gates of the 
factories, threatening to engulf them. Workers fear job loss as a death 
sentence, and managers, in turn, fear their workers, a fact that makes 
privatization distinctly more complicated than the neocons foresaw.[2]
As I 
left the meeting with Mahmud, I got word that there was a major 
demonstration outside the CPA headquarters. Supporters of the radical
young 
cleric Moqtada al Sadr were protesting the closing of their newspaper,
al 
Hawza, by military police. The CPA accused al Hawza of publishing "false

articles" that could "pose the real threat of violence." As an example,
it 
cited an article that claimed Bremer "is pursuing a policy of starving
the 
Iraqi people to make them preoccupied with procuring their daily bread
so 
they do not have the chance to demand their political and individual 
freedoms." To me it sounded less like hate literature than a concise
summary 
of Milton Friedman's recipe for shock therapy. A few days before the 
newspaper was shut down, I had gone to Kufa during Friday prayers to
listen 
to al Sadr at his mosque. He had launched into a tirade against Bremer's

newly signed interim constitution, calling it "an unjust, terrorist 
document." The message of the sermon was clear: Grand Ayatollah Ali al 
Sistani may have backed down on the constitution, but al Sadr and his 
supporters were still determined to fight it - and if they succeeded
they 
would sabotage the neocons' careful plan to saddle Iraq's next
government 
with their "wish list" of laws. With the closing of the newspaper,
Bremer 
was giving al Sadr his response: he wasn't negotiating with this young 
upstart; he'd rather take him out with force. When I arrived at the 
demonstration, the streets were filled with men dressed in black, the 
soon-to-be legendary Mahdi Army. It struck me that if Mahmud lost his 
security guard job at the soap factory, he could be one of them. That's
who 
al Sadr's foot soldiers are: the young men who have been shut out of the

neocons' grand plans for Iraq, who see no possibilities for work, and
whose 
neighborhoods have seen none of the promised reconstruction. Bremer has 
failed these young men, and everywhere that he has failed, Moqtada al
Sadr 
has cannily set out to succeed. In Shia slums from Baghdad to Basra, a 
network of Sadr Centers coordinate a kind of shadow reconstruction.
Funded 
through donations, the centers dispatch electricians to fix power and
phone 
lines, organize local garbage collection, set up emergency generators,
run 
blood drives, direct traffic where the streetlights don't work. And yes,

they organize militias too. Al Sadr took Bremer's economic casualties, 
dressed them in black, and gave them rusty Kalashnikovs. His militiamen 
protected the mosques and the state factories when the occupation 
authorities did not, but in some areas they also went further, zealously

enforcing Islamic law by torching liquor stores and terrorizing women 
without the veil. Indeed, the astronomical rise of the brand of
religious 
fundamentalism that al Sadr represents is another kind of blowback from 
Bremer's shock therapy: if the reconstruction had provided jobs,
security, 
and services to Iraqis, al Sadr would have been deprived of both his
mission 
and many of his newfound followers. At the same time as al Sadr's
followers 
were shouting "Down with America" outside the Green Zone, something was 
happening in another part of the country that would change everything.
Four 
American mercenary soldiers were killed in Fallujah, their charred and 
dismembered bodies hung like trophies over the Euphrates. The attacks
would 
prove a devastating blow for the neocons, one from which they would
never 
recover. With these images, investing in Iraq suddenly didn't look
anything 
like a capitalist dream; it looked like a macabre nightmare made real.
The 
day I left Baghdad was the worst yet. Fallujah was under siege and Brig.

Gen. Kimmitt was threatening to "destroy the al-Mahdi Army." By the end,

roughly 2,000 Iraqis were killed in these twin campaigns. I was dropped
off 
at a security checkpoint several miles from the airport, then loaded
onto a 
bus jammed with contractors lugging hastily packed bags. Although no one
was 
calling it one, this was an evacuation: over the next week 1,500
contractors 
left Iraq, and some governments began airlifting their citizens out of
the 
country. On the bus no one spoke; we all just listened to the mortar
fire, 
craning our necks to see the red glow. A guy carrying a KPMG briefcase 
decided to lighten things up. "So is there business class on this
flight?" 
he asked the silent bus. From the back, somebody called out, "Not yet." 
Indeed, it may be quite a while before business class truly arrives in
Iraq. 
When we landed in Amman, we learned that we had gotten out just in time.

That morning three Japanese civilians were kidnapped and their captors
were 
threatening to burn them alive. Two days later Nicholas Berg went
missing 
and was not seen again until the snuff film surfaced of his beheading,
an 
even more terrifying message for U.S. contractors than the charred
bodies in 
Fallujah. These were the start of a wave of kidnappings and killings of 
foreigners, most of them businesspeople, from a rainbow of nations:
South 
Korea, Italy, China, Nepal, Pakistan, the Philippines, Turkey. By the
end of 
June more than ninety contractors were reported dead in Iraq. When seven

Turkish contractors were kidnapped in June, their captors asked the
"company 
to cancel all contracts and pull out employees from Iraq." Many
insurance 
companies stopped selling life insurance to contractors, and others
began to 
charge premiums as high as $10,000 a week for a single Western executive
- 
the same price some insurgents reportedly pay for a dead American. For
their 
part, the organizers of DBX, the historic Baghdad trade fair, decided to

relocate to the lovely tourist city of Diyarbakir in Turkey, "just
250 km from the Iraqi border." An Iraqi landscape, only without those 
frightening Iraqis. Three weeks later just fifteen people showed up for
a 
Commerce Department conference in Lansing, Michigan, on investing in
Iraq. 
Its host, Republican Congressman Mike Rogers, tried to reassure his 
skeptical audience by saying that Iraq is "like a rough neighborhood 
anywhere in America." The foreign investors, the ones who were offered
every 
imaginable free-market enticement, are clearly not convinced; there is
still 
no sign of them. Keith Crane, a senior economist at the Rand Corporation
who 
has worked for the CPA, put it bluntly: "I don't believe the board of a 
multinational company could approve a major investment in this
environment. 
If people are shooting at each other, it's just difficult to do
business." 
Hamid Jassim Khamis, the manager of the largest soft-drink bottling
plant in 
the region, told me he can't find any investors, even though he landed
the 
exclusive rights to produce Pepsi in central Iraq. "A lot of people have

approached us to invest in the factory, but people are really hesitating

now." Khamis said he couldn't blame them; in five months he has survived
an 
attempted assassination, a carjacking, two bombs planted at the entrance
of 
his factory, and the kidnapping of his son. Despite having been granted
the 
first license for a foreign bank to operate in Iraq in forty years, HSBC

still hasn't opened any branches, a decision that may mean losing the 
coveted license altogether. Procter & Gamble has put its joint venture
on 
hold, and so has General Motors. The U.S. financial backers of the
Starwood 
luxury hotel and multiplex have gotten cold feet, and Siemens AG has
pulled 
most staff from Iraq. The bell hasn't rung yet at the Baghdad Stock 
Exchange - in fact you can't even use credit cards in Iraq's cash-only 
economy. New Bridge Strategies, the company that had gushed back in
October 
about how "a Wal-Mart could take over the country," is sounding
distinctly 
humbled. "McDonald's is not opening anytime soon," company partner Ed
Rogers 
told the Washington Post. Neither is Wal-Mart. The Financial Times has 
declared Iraq "the most dangerous place in the world in which to do 
business." It's quite an accomplishment: in trying to design the best
place 
in the world to do business, the neocons have managed to create the
worst, 
the most eloquent indictment yet of the guiding logic behind deregulated

free markets. The violence has not just kept investors out; it also
forced 
Bremer, before he left, to abandon many of his central economic
policies. 
Privatization of the state companies is off the table; instead, several
of 
the state companies have been offered up for lease, but only if the
investor 
agrees not to lay off a single employee. Thousands of the state workers
that 
Bremer fired have been rehired, and significant raises have been handed
out 
in the public sector as a whole. Plans to do away with the food-ration 
program have also been scrapped - it just doesn't seem like a good time
to 
deny millions of Iraqis the only nutrition on which they can depend. The

final blow to the neocon dream came in the weeks before the handover.
The 
White House and the CPA were rushing to get the U.N. Security Council to

pass a resolution endorsing their handover plan. They had twisted arms
to 
give the top job to former CIA agent Iyad Allawi, a move that will
ensure 
that Iraq becomes, at the very least, the coaling station for U.S.
troops 
that Jay Garner originally envisioned. But if major corporate investors
were 
going to come to Iraq in the future, they would need a stronger
guarantee 
that Bremer's economic laws would stick. There was only one way of doing

that: the Security Council resolution had to ratify the interim 
constitution, which locked in Bremer's laws for the duration of the
interim 
government. But al Sistani once again objected, this time unequivocally,

saying that the constitution has been "rejected by the majority of the
Iraqi 
people." On June 8 the Security Council unanimously passed a resolution
that 
endorsed the handover plan but made absolutely no reference to the 
constitution. In the face of this far-reaching defeat, George W. Bush 
celebrated the resolution as a historic victory, one that came just in
time 
for an election trail photo op at the G-8 Summit in Georgia. With
Bremer's 
laws in limbo, Iraqi ministers are already talking openly about breaking

contracts signed by the CPA. Citigroup's loan scheme has been rejected
as a 
misuse of Iraq's oil revenues. Iraq's communication minister is
threatening 
to renegotiate contracts with the three communications firms providing
the 
country with its disastrously poor cell phone service. And the Lebanese
and 
U.S. companies hired to run the state television network have been
informed 
that they could lose their licenses because they are not Iraqi. "We will
see 
if we can change the contract," Hamid al-Kifaey, spokesperson for the 
Governing Council, said in May. "They have no idea about Iraq." For most

investors, this complete lack of legal certainty simply makes Iraq too
great 
a risk. But while the Iraqi resistance has managed to scare off the
first 
wave of corporate raiders, there's little doubt that they will return. 
Whatever form the next Iraqi government takes - nationalist, Islamist,
or 
free market - it will inherit a shattered nation with a crushing $120 
billion debt. Then, as in all poor countries around the world, men in
dark 
blue suits from the IMF will appear at the door, bearing loans and
promises 
of economic boom, provided that certain structural adjustments are made,

which will, of course, be rather painful at first but well worth the 
sacrifice in the end. In fact, the process has already begun: the IMF is

poised to approve loans worth $2.5- $4.25 billion, pending agreement on
the 
conditions. After an endless succession of courageous last stands and
far 
too many lost lives, Iraq will become a poor nation like any other, with

politicians determined to introduce policies rejected by the vast
majority 
of the population, and all the imperfect compromises that will entail.
The 
free market will no doubt come to Iraq, but the neoconservative dream of

transforming the country into a free-market utopia has already died, a 
casualty of a greater dream - a second term for George W. Bush. The
great 
historical irony of the catastrophe unfolding in Iraq is that the 
shock-therapy reforms that were supposed to create an economic boom that

would rebuild the country have instead fueled a resistance that
ultimately 
made reconstruction impossible. Bremer's reforms unleashed forces that
the 
neocons neither predicted nor could hope to control, from armed 
insurrections inside factories to tens of thousands of unemployed young
men 
arming themselves. These forces have transformed Year Zero in Iraq into
the 
mirror opposite of what the neocons envisioned: not a corporate utopia
but a 
ghoulish dystopia, where going to a simple business meeting can get you 
lynched, burned alive, or beheaded. These dangers are so great that in
Iraq 
global capitalism has retreated, at least for now. For the neocons, this

must be a shocking development: their ideological belief in greed turns
out 
to be stronger than greed itself. Iraq was to the neocons what
Afghanistan 
was to the Taliban: the one place on Earth where they could force
everyone 
to live by the most literal, unyielding interpretation of their sacred 
texts. One would think that the bloody results of this experiment would 
inspire a crisis of faith: in the country where they had absolute free 
reign, where there was no local government to blame, where economic
reforms 
were introduced at their most shocking and most perfect, they created, 
instead of a model free market, a failed state no right-thinking
investor 
would touch. And yet the Green Zone neocons and their masters in
Washington 
are no more likely to reexamine their core beliefs than the Taliban
mullahs 
were inclined to search their souls when their Islamic state slid into a

debauched Hades of opium and sex slavery. When facts threaten true 
believers, they simply close their eyes and pray harder. Which is
precisely 
what Thomas Foley has been doing. The former head of "private sector 
development" has left Iraq, a country he had described as "the mother of
all 
turnarounds," and has accepted another turnaround job, as co-chair of
George 
Bush's reelection committee in Connecticut. On April 30 in Washington he

addressed a crowd of entrepreneurs about business prospects in Baghdad.
It 
was a tough day to be giving an upbeat speech: that morning the first 
photographs had appeared out of Abu Ghraib, including one of a hooded 
prisoner with electrical wires attached to his hands. This was another
kind 
of shock therapy, far more literal than the one Foley had helped to 
administer, but not entirely unconnected. "Whatever you're seeing, it's
not 
as bad as it appears," Foley told the crowd. "You just need to accept
that 
on faith." Notes
1. Tofiq did say that several U.S. companies had expressed strong
interest 
in buying the state-owned cement factories. This supports a widely held 
belief in Iraq that there is a deliberate strategy to neglect the state 
firms so that they can be sold more cheaply - a practice known as
"starve 
then sell." [Back]
2. It is in Basra where the connections between economic reforms and the

rise of the resistance was put in starkest terms. In December the union 
representing oil workers was negotiating with the Oil Ministry for a
salary 
increase. Getting nowhere, the workers offered the ministry a simple
choice: 
increase their paltry salaries or they would all join the armed
resistance. 
They received a substantial raise. [Back]

------------------------------------------------------------------------
Naomi Klein is the author of "No Logo" and writer/producer of "The
Take", a 
new documentary on Argentina's occupied factories.
-------
Jump to TO Features for Sunday September 26, 2004

(In accordance with Title 17 U.S.C. Section 107, this material is 
distributed without profit to those who have expressed a prior interest
in 
receiving the included information for research and educational
purposes. t 
r u t h o u t has no affiliation whatsoever with the originator of this 
article nor is t r u t h o u t endorsed or sponsored by the originator.)

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