[corp-focus] The Benchmarks Iraq Is Meeting -- And One It Thankfully Is Not

[robert weissman]

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The Benchmarks Iraq Is Meeting -- And One It Thankfully Is Not
By Robert Weissman
August 31, 2007

The Government Accountability Office has confirmed the obvious: the 
"benchmarks" the U.S. Congress set out to assess progress in the Iraq 
war will not be met by a September deadline.

Unfortunately, it turns out that Iraq is making major strides in meeting 
another set of benchmarks: those imposed by the International Monetary 
Fund (IMF).

At the end of 2005, the IMF entered into a stand-by agreement with Iraq. 
The deal makes IMF funding available to Iraq in exchange for the country 
adhering to certain IMF policy dictates. More important than the IMF 
monies, however, adherence to the agreement was a condition for Iraq 
receiving major reductions in its obligations to repay the enormous 
debts acquired under Saddam's regime.

The IMF has just released Iraq's most recent Letter of Intent, 
Memorandum of Economic and Financial Policies, and Technical Memorandum 
of Understanding, dated July 17. The conceit of these documents is that 
they are "country-owned" and constitute a report on a country's own 
decision to pursue the policies to which it has committed with the IMF. 
Everyone understands, however, that the policies are imposed by the IMF, 
and the reports are the supplicant country's attempt to stay in the good 
graces of its financial master.  Combined, the documents just released 
report on Iraq's progress in meeting IMF-demanded policies.

With one crucial exception -- privatization of the oil sector -- Iraq 
reports it is making concrete progress in satisfying IMF demands that it 
turn its economy over to private corporations, cut back on government 
size and the government's role in the economy, and withdraw labor 
protections.

The Iraqi government reports that:

* "We will continue resisting undue wage and pension increases and bonuses."

* It is strictly limiting hiring in the public sector "in order to keep 
the wage bill within the budgeted amount."

* It is cutting back on public pension expenditures, including by 
eliminating inflation indexation -- a huge effective reduction in 
pension payments in a country where the inflation rate is 19 percent.

* Those public enterprises that have not been sold off or given away to 
private corporations -- a top priority of former Coalition Provisional 
Authority head Paul Bremer -- will be forced to operate like for-profit 
businesses, an almost certain prelude to subsequent privatization.

* It has undertaken measures to ensure foreign investors receive the 
same treatment as Iraqi firms.

* Tariff rates will be maintained at extremely low levels (5 percent), 
imposing enormous challenges for Iraqi firms that obviously must seek to 
operate in the most trying of economic circumstances.

But the news is not entirely bleak.

Apart from some non-trivial accounting issues, the one key area where 
the Iraqi government is not meeting IMF targets is privatization of the 
oil sector. (Presumably because this is also a key Congressional 
benchmark, the government does not acknowledge its growing troubles in 
this area. Instead, it states, "The GoI [Government of Iraq] will 
continue its efforts towards developing a competitive and transparent 
hydrocarbon sector. Draft hydrocarbon legislation will be submitted to 
the CoR [Council of Representatives] when final agreement between all 
concerned parties has been reached, possibly in the next few months. The 
envisaged legislative package includes a draft oil and gas law to 
regulate the sector, a draft law to reestablish the Iraq National Oil 
Company, a draft law reorganizing the MoO [Ministry of Oil], and a draft 
financial management law on the sharing of oil revenues.")

This remarkable -- and welcome -- failure reflects massive Iraqi 
opposition to Big Oil's designs to gain control of Iraq's oil resources, 
and the success of an international campaign to shine a spotlight on Big 
Oil's planned oil grab. Every ethnic and geographic grouping in Iraq 
believes Iraq's oil should be developed under the control of Iraqi 
state-owned companies rather than multinationals. Overall, Iraqis hold 
this position by a two-to-one margin, according to a July poll.

Says Antonia Juhasz of Oil Change International, "everyone thought this 
law was going to pass because no one knew what it was. Now that people 
know what it is, it seems far less likely that it will actually pass."

It is far too simple to say that popular mobilization can defeat the 
IMF's extraordinary power, because there are countless examples of 
governments imposing draconian IMF policies despite popular uprisings, 
riots and insurrections. And Iraq appears to be acceding to most of what 
the IMF has demanded, outside of the crucial oil sector.

But especially because the IMF is now in a weakened state, a mobilized 
public in borrower countries now has a chance at resisting the IMF's Big 
Business-friendly, anti-labor, anti-public health, anti-development 
policies. Iraq has far more resources than the poor African countries 
still most subject to IMF authoritarianism, but Iraq is also beleaguered 
by chaos and division exceeding that in all but a few nations. If the 
Iraqis can push back against the IMF -- and the other powerful actors 
seeking to transfer control of Iraq's oil to multinational corporate 
control -- then there should be hope for resistance everywhere.


Robert Weissman is editor of the Washington, D.C.-based Multinational 
Monitor, <http://www.multinationalmonitor.org> and director of Essential 
Action <http://www.essentialaction.org>.

(c) Robert Weissman

This article is posted at: 
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