Part 10 (1/2)

While the pickup trucks stuffed with loot were still being driven to buyers in Jordan, Syria and Iran, pa.s.sing them in the opposite direction were convoys of flatbeds piled high with Chinese TVs, Hollywood DVDs and Jordanian satellite dishes, ready to be unloaded on the sidewalks of Baghdad's Karada district. Just as one culture was being burned and stripped for parts, another was pouring in, prepackaged, to replace it.

One of the U.S. businesses ready and waiting to be the gateway to this experiment in frontier capitalism was New Bridge Strategies, started by Joe Allbaugh, Bush's ex-head of FEMA. It promised to use its top-level political connections to help U.S. multinationals land a piece of the action in Iraq. ”Getting the rights to distribute Procter Gamble products would be a gold mine,” one of the company's partners enthused. ”One well-stocked 7-Eleven could knock out 30 Iraqi stores; a Wal-Mart could take over the country.”36 Like the prisoners in Guantanamo's love shack, all of Iraq was going to be bought off with Pringles and pop culture-that, at least, was the Bush administration's idea of a postwar plan.

CHAPTER 17.

IDEOLOGICAL BLOWBACK.

A VERY CAPITALIST DISASTER.

The world is a messy place, and someone has to clean it up.

-Condoleezza Rice, September 2002, on the need to invade Iraq1.

Bush's capacity to imagine a different Middle East may actually be related to his relative ignorance of the region. Had he traveled to the Middle East and seen its many dysfunctions, he might have been disheartened. Freed from looking at the day-to-day realities, Bush maintained a vision of what the region could look like. -Fareed Zakaria, -Fareed Zakaria, Newsweek Newsweek columnist columnist2 And the one who was seated on the throne said, ”See, I am making all things new.” Also he said, ”Write this, for these words are trustworthy and true.”

-Revelation 21:5 (NRSV).

The war in Iraq has been in damage control mode for so long that it's easy to forget the original vision for the way it was supposed to work out. But there was a vision, one neatly encapsulated at a conference held by the U.S. State Department in Baghdad in the early months of the occupation. The gathering featured fourteen high-level politicians and bureaucrats from Russia and Eastern Europe-an a.s.sortment of finance ministers, central bank chiefs and former deputy prime ministers. They were flown to the Baghdad International Airport in September 2003, kitted out in combat helmets and body armor, then raced to the Green Zone, the walled city within a city that housed the U.S.-run government of Iraq, the Coalition Provisional Authority (CPA), and now houses the U.S. emba.s.sy. Inside Saddam's former conference center, the VIP guests gave a small group of influential Iraqis lessons in capitalist transformation.

One of the main speakers was Marek Belka, Poland's former right-wing finance minister who worked under Bremer in Iraq for several months. According to an official State Department report on the gathering, Belka pounded the Iraqis with the message that they had to seize this moment of chaos to be ”forceful” in pus.h.i.+ng through policies that ”would throw many people out of work.” The first lesson from Poland, Belka said, was that ”unproductive state-owned enterprises should be sold off immediately without efforts to salvage them with public funds.” (He failed to mention that popular pressure had forced Solidarity to abandon its plans for rapid privatization, saving Poland from a Russian-style meltdown.) His second lesson was even bolder. It was five months after the fall of Baghdad, and Iraq was in the midst of a humanitarian emergency. Unemployment was at 67 percent, malnutrition was rampant and the only thing holding off ma.s.s starvation was the fact that Iraqi households still received government-subsidized food and other essentials, just as they had under the UN-administered oil-for-food program during the sanctions period. They were also able to fill their gas tanks for pennies, when gas was available. Belka told the Iraqis that these market-distorting giveaways had to be sc.r.a.pped immediately. ”Develop the private sector, starting with the elimination of subsidies.” He stressed that these measures were ”much more important and divisive than privatization.”3 Next up was none other than Yegor Gaidar, Yeltsin's former deputy prime minister, regarded as the architect of Russia's shock therapy program. In inviting Gaidar to come to Baghdad, the State Department seems to have a.s.sumed that the Iraqis would not know that he was regarded as a pariah back in Moscow, tainted by his close a.s.sociation with the oligarchs and by policies that had impoverished tens of millions of Russians.* While it was true that under Saddam the Iraqis had only limited access to outside news, the people at the Green Zone conference were mostly recently returned exiles; in the * Many of the key players in Iraq's invasion and occupation were veterans of the original team in Was.h.i.+ngton that had demanded shock therapy in Russia: d.i.c.k Cheney was defense secretary when George Bush Sr. crafted his post-Soviet Russia policy, and Paul Wolfowitz was Cheney's deputy, while Condoleezza Rice served as Bush Sr.'s chief adviser on Russia's transition. For all these top players, and dozens of lesser ones, Russia's experience in the nineties, despite its abysmal results for ordinary people, was often invoked, without irony, as the model for Iraq to emulate in its transition.

nineties, while Russia was imploding, they were reading The International Herald Tribune. The International Herald Tribune.

It was Mohamad Tofiq, Iraq's interim industry minister, who told me about this strange conference, which wasn't covered in the press at the time. Months later, when we met in his temporary office in Baghdad (the old ministry was a charred sh.e.l.l), Tofiq was still laughing about it. He said the Iraqis had blasted the flak-jacket-wearing visitors, informing them that Paul Bremer's decision to fling open the borders to unrestricted imports had already dramatically worsened the lives of a war-ravaged people-if it was pushed further by cutting gas subsidies and eliminating food aid, the occupation would have a revolution on its hands. As for the star speaker, Tofiq said, ”I told some of the people who organized the conference that if I was to encourage privatization in Iraq, I'd bring Gaidar to tell them, 'Do exactly the opposite of what we did.'”

When Bremer started issuing legal decrees in Baghdad, Joseph Stiglitz, the former World Bank chief economist, warned that Iraq was getting ”an even more radical form of shock therapy than pursued in the former Soviet world.” That was quite true. In the original Was.h.i.+ngton plan, Iraq was going to become a frontier just as Russia had been in the early nineties, but this time it would be U.S. firms-not local ones or European, Russian or Chinese compet.i.tors-that would be first in line for the easy billions. And nothing would deter even the most painful economic changes because, in contrast to the former Soviet Union, or Latin America and Africa, the transformation would not involve a mannered dance between IMF officials and quixotic local politicians while the U.S. Treasury called the shots from the suite down the hall. In Iraq, Was.h.i.+ngton cut out the middlemen: the IMF and the World Bank were relegated to supporting roles, and the U.S. was front and center. Paul Bremer was the government; as a top U.S. military official told the a.s.sociated Press, there was no point in negotiating with the local government because ”at this point, we'd be negotiating with ourselves.”4 This dynamic was what set the economic transformation of Iraq apart from earlier laboratories. All the careful efforts during the nineties to present ”free trade” as something other than an imperial project were abandoned. Elsewhere, there would still be free trade lite, with its hothouse negotiations, but now there would also be free trade heavy, without proxies or puppets, seizing new markets directly for Western multinationals on the battlefields of preemptive wars.

The proponents of the ”model theory” now claim that this was where their war went horribly wrong-as Richard Perle said in late 2006, ”the seminal mistake” was ”bringing Bremer in.” David Frum concurred, saying they should have had ”any kind of an Iraqi face” on the remaking of Iraq right away.5 Instead they had Paul Bremer, ensconced in Saddam's turquoise-domed Republican Palace, receiving trade and investment laws by e-mail from the Department of Defense, printing them out, signing them and imposing them by fiat on the Iraqi people. Bremer was no quiet American, maneuvering and manipulating behind the scenes. With his movie-of-the-week looks and his fondness for news crews, he seemed intent on flaunting his absolute power over Iraqis, crisscrossing the country in a flashy Blackhawk helicopter flanked by GI Joe private security guards from Blackwater and always in his trademark uniform: immaculately pressed Brooks Brothers suits and beige Timberland boots. The boots were a going-to-Baghdad present from his son; ”Go kick some b.u.t.t, Dad,” the card had said. Instead they had Paul Bremer, ensconced in Saddam's turquoise-domed Republican Palace, receiving trade and investment laws by e-mail from the Department of Defense, printing them out, signing them and imposing them by fiat on the Iraqi people. Bremer was no quiet American, maneuvering and manipulating behind the scenes. With his movie-of-the-week looks and his fondness for news crews, he seemed intent on flaunting his absolute power over Iraqis, crisscrossing the country in a flashy Blackhawk helicopter flanked by GI Joe private security guards from Blackwater and always in his trademark uniform: immaculately pressed Brooks Brothers suits and beige Timberland boots. The boots were a going-to-Baghdad present from his son; ”Go kick some b.u.t.t, Dad,” the card had said.6 By his own admission, Bremer knew little of Iraq (”I had lived in Afghanistan,” he told one interviewer). That ignorance hardly mattered, however, because if there was one thing Bremer knew a great deal about, it was the central mission in Iraq: disaster capitalism.7 On September 11, 2001, he had been working as managing director and ”senior political adviser” at the insurance giant Marsh McLennan. The company had its offices in the North Tower of the World Trade Center and was devastated by the attacks. In the first few days, 700 of its workers were unaccounted for; in the end, 295 were confirmed dead. Exactly one month later, on October 11, 2001, Paul Bremer launched Crisis Consulting Practice, a new division of Marsh specializing in helping multinational corporations prepare for possible terrorist attacks and other crises. Advertising his experience as amba.s.sador-at-large for counterterrorism under the Reagan administration, Bremer and his company offered clients comprehensive counterterrorism services, from political risk insurance to public relations and even advice on what to stockpile.8 Bremer's vanguard partic.i.p.ation in the homeland security industry was ideal preparation for Iraq. That's because the Bush administration used the same formula to rebuild Iraq that it had pioneered to respond to 9/11: it treated postwar Iraq as if it was an exciting IPO, br.i.m.m.i.n.g with freewheeling, quick-profit potential. So while Bremer may have stepped on plenty of toes, his mission never was to win Iraqi hearts and minds. Rather, it was to get the country ready for the launch of Iraq Inc. Seen in that light, his early, much-maligned decisions have an unmistakable logical coherence.

After replacing the cautious general Jay Garner as the top U.S. envoy, Bremer spent his first four months in Iraq almost exclusively focused on economic transformation, pa.s.sing a series of laws that together make up a cla.s.sic Chicago School shock therapy program. Before the invasion, Iraq's economy had been anch.o.r.ed by its national oil company and by two hundred state-owned companies, which produced the staples of the Iraqi diet and the raw materials of its industry, everything from cement to paper and cooking oil. The month after he arrived in his new job, Bremer announced that the two hundred firms were going to be privatized immediately. ”Getting inefficient state enterprises into private hands,” Bremer said, ”is essential for Iraq's economic recovery.”9 Next came the new economic laws. To entice foreign investors to take part in the privatization auction and to build new factories and retail outlets in Iraq, Bremer enacted a radical set of laws described by The Economist The Economist in glowing terms as the ”wish-list that foreign investors and donor agencies dream of for developing markets.” in glowing terms as the ”wish-list that foreign investors and donor agencies dream of for developing markets.”10 One law lowered Iraq's corporate tax rate from roughly 45 percent to a flat 15 percent (straight out of the Milton Friedman playbook). Another allowed foreign companies to own 100 percent of Iraqi a.s.sets-preventing a repeat of Russia, where the prizes went to the local oligarchs. 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. The decree also stipulated that investors could sign leases and contracts that would last for forty years and then be eligible for renewal, which meant that future elected governments would be saddled with deals signed by their occupiers. The one area on which Was.h.i.+ngton held back was oil: its Iraqi advisers warned that any move to privatize the state oil company or to lay claim to untapped reserves before an Iraqi government was in place would be seen as an act of war. But the occupation authority did take possession of $20 billion worth of revenues from Iraq's national oil company, to spend as it wished. One law lowered Iraq's corporate tax rate from roughly 45 percent to a flat 15 percent (straight out of the Milton Friedman playbook). Another allowed foreign companies to own 100 percent of Iraqi a.s.sets-preventing a repeat of Russia, where the prizes went to the local oligarchs. 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. The decree also stipulated that investors could sign leases and contracts that would last for forty years and then be eligible for renewal, which meant that future elected governments would be saddled with deals signed by their occupiers. The one area on which Was.h.i.+ngton held back was oil: its Iraqi advisers warned that any move to privatize the state oil company or to lay claim to untapped reserves before an Iraqi government was in place would be seen as an act of war. But the occupation authority did take possession of $20 billion worth of revenues from Iraq's national oil company, to spend as it wished.4911 The White House was so focused on unveiling a s.h.i.+ny new Iraqi economy that it decided, in the early days of the occupation, to launch a brand-new currency, a ma.s.sive logistical undertaking. The U.K. firm De La Rue did the printing, and bills were delivered in fleets of planes and distributed in armored vehicles and trucks that ran at least a thousand missions throughout the country-at a time when 50 percent of the people still lacked drinking water, the traffic lights weren't working and crime was rampant.12 Although it was Bremer who implemented these plans, the priorities were coming straight from the top. Testifying before a Senate committee, Rumsfeld described Bremer's ”sweeping reforms” as creating ”some of the most enlightened-and inviting-tax and investment laws in the free world.” At first, investors seemed to appreciate the effort. Within a few months, there was talk of a McDonald's opening in downtown Baghdad-the ultimate symbol of Iraq joining the global economy-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, the international bank headquartered in London, was awarded a contract to open branches all over Iraq, while Citigroup announced plans to offer substantial loans guaranteed against future sales of Iraqi oil. The oil majors-Sh.e.l.l, BP, ExxonMobil, Chevron and Russia's Lukoil -made tentative approaches, signing agreements to train Iraqi civil servants in the latest extraction technologies and management models, confident that their time would soon arrive.13 Bremer's laws, designed to create the conditions for an investor frenzy, were not exactly original-they were merely an accelerated version of what had been implemented in previous shock therapy experiments. But Bush's disaster capitalism cabinet was not content to wait for the laws to take effect. Where the Iraq experiment entered bold new terrain was that it transformed the invasion, occupation and reconstruction into an exciting, fully privatized new market. This market was created, just as the homeland security complex was, with a huge pot of public money. For reconstruction alone, the boom was kicked off with $38 billion from the U.S. Congress, $15 billion from other countries and $20 billion of Iraq's own oil money.14 When the initial billions were announced, there were, inevitably, laudatory comparisons with the Marshall Plan. Bush invited the parallels, declaring the reconstruction ”the greatest financial commitment of its kind since the Marshall Plan,” and stating in a televised address in the early months of the occupation that ”America has done this kind of work before. Following World War II, we lifted up the defeated nations of j.a.pan and Germany, and stood with them as they built representative governments.”15 What happened to the billions earmarked for Iraq's reconstruction, however, bore no relations.h.i.+p to the history Bush invoked. Under the original Marshall Plan, American firms benefited by sending equipment and food to Europe, but the explicit goal was to help war-torn economies recover as self-sufficient markets, creating local jobs and developing tax bases capable of funding domestic social services-the results of which are in evidence in Germany's and j.a.pan's mixed economies today.

The Bush cabinet had in fact launched an anti-Marshall Plan, its mirror opposite in nearly every conceivable way. It was a plan guaranteed from the start to further undermine Iraq's badly weakened industrial sector and to send Iraqi unemployment soaring. Where the post-Second World War plan had barred foreign firms from investing, to avoid the perception that they were taking advantage of countries in a weakened state, this scheme did everything possible to entice corporate America (with a few bones tossed to corporations based in countries that joined the ”Coalition of the Willing”). It was this theft of Iraq's reconstruction funds from Iraqis, justified by unquestioned, racist a.s.sumptions about U.S. superiority and Iraqi inferiority-and not merely the generic demons of ”corruption” and ”inefficiency” -that doomed the project from the start.

None of the money went to Iraqi factories so they could reopen and form the foundation of a sustainable economy, create local jobs and fund a social safety net. Iraqis had virtually no role in this plan at all. Instead, the U.S. federal government contracts, most of them issued by USAID, commissioned a kind of country-in-a-box, designed in Virginia and Texas, to be a.s.sembled in Iraq. It was, as the occupation authorities repeatedly said, ”a gift from the people of the United States to the people of Iraq”-all Iraqis needed to do was unwrap it.16 Even Iraqis' low-wage labor wasn't required for the a.s.sembly process because the major U.S. contractors such as Halliburton, Bechtel and the California-based engineering giant Parsons preferred to import foreign workers whom they felt confident they could control. Once again Iraqis were cast in the role of awed spectators-first awed by U.S. military technology and then by its engineering and management prowess. Even Iraqis' low-wage labor wasn't required for the a.s.sembly process because the major U.S. contractors such as Halliburton, Bechtel and the California-based engineering giant Parsons preferred to import foreign workers whom they felt confident they could control. Once again Iraqis were cast in the role of awed spectators-first awed by U.S. military technology and then by its engineering and management prowess.

As in the homeland security industry, the role for government employees- even U.S. government employees-was cut to the bone. Bremer's staff was a mere fifteen hundred people to govern a sprawling country of 25 million. By contrast, Halliburton had fifty thousand workers in the region, many of them lifelong public servants lured into the private sector by offers of better salaries.17 The weak public presence and the robust corporate one reflected the fact that the Bush cabinet was using Iraq's reconstruction (over which it had complete control, in contrast to the federal bureaucracy back home) to implement its vision of a fully outsourced, hollow government. In Iraq, there was not a single governmental function that was considered so ”core” that it could not be handed to a contractor, preferably one who provided the Republican Party with financial contributions or Christian foot soldiers during election campaigns. The usual Bush motto governed all aspects of the foreign forces' involvement in Iraq: if a task could be performed by a private ent.i.ty, it must be.

So while Bremer may have signed the laws, it was private accountants who designed and managed the economy. (BearingPoint, an offshoot of the major international accounting and consulting firm KPMG, was paid $240 million to build a ”market-driven system” in Iraq-the 107-page contract mentions the word ”privatization” fifty-one times; much of the original contract was written by BearingPoint.) Think tanks were paid to think (Britain's Adam Smith Inst.i.tute was contracted to help privatize Iraq's companies). Private security firms and defense contractors trained Iraq's new army and police (Dyn-Corp, Vinnell and the Carlyle Group's USIS, among others). And education companies drafted the post-Saddam curriculum and printed the new textbooks. (Creative a.s.sociates, a management-and-education-consulting firm based in Was.h.i.+ngton, D.C., was given contracts worth more than $100 million for these tasks.)*18 Meanwhile, the model pioneered by Cheney for Halliburton in the Balkans, where bases were transformed into mini Halliburton towns, was adopted on a vastly larger scale. In addition to Halliburton's construction and management of military bases across the country, the Green Zone was, from the start, a Halliburton-run city-state, with the company in charge of everything from road maintenance to pest control to movie and disco nights.

The CPA was far too understaffed to monitor all the contractors, and besides, the Bush administration saw oversight as a noncore function to be outsourced. The Colorado-based engineering and construction company CH2M Hill was paid $28.5 million in a joint venture with Parsons to oversee four other major contractors. Even the job of building ”local democracy” was privatized, given to the North Carolina-based Research Triangle Inst.i.tute in a contract worth up to $466 million, though it's not at all clear what qualified RTI to bring democracy to a Muslim country. The leaders.h.i.+p of the company's Iraq operation was dominated by high-level Mormons-people like James Mayfield, who told his mission back in Houston that he thought Muslims could be persuaded to embrace the Book of Mormon as compatible with the teachings of the prophet Muhammad. In an e-mail home, he imagined that Iraqis would erect a statue to him as their ”founder of democracy.”5019 As these foreign corporations descended on the country, the machinery in Iraq's two hundred state firms stood still, frozen by chronic power blackouts. Iraq once had one of the most sophisticated industrial economies in the region; now its largest firms couldn't even get a subsubsubcontract in their own country's reconstruction. To partic.i.p.ate in the gold rush at all, Iraqi firms would have needed emergency generators and some basic repairs-which should not have been insurmountable, given Halliburton's speed in building military bases that look like Midwestern suburbs.

Mohamad Tofiq at the Industry Ministry told me he had made repeated requests for generators, pointing out that Iraq's seventeen state-owned cement factories were perfectly positioned both to supply the reconstruction effort with building materials and to put tens of thousands of Iraqis to work. The factories received nothing-no contracts, no generators, no help. American companies preferred to import their cement, like their workforce, from abroad, at up to ten times the price. One of Bremer's economic edicts specifically prohibited Iraq's central bank from offering financing to state-owned enterprises (a fact not reported until years later).20 The reason for this effective boycott of Iraqi industry was not practical, Tofiq told me, but ideological. Among those making the decisions, he said, ”no one believes in the public sector.” The reason for this effective boycott of Iraqi industry was not practical, Tofiq told me, but ideological. Among those making the decisions, he said, ”no one believes in the public sector.”

While private Iraqi firms closed in droves, unable to compete with imports streaming across the open borders, Bremer's staff had few comforting words to offer. Addressing a gathering of Iraqi businessmen, Michael Fleischer, one of Bremer's deputies, confirmed that many of their businesses would indeed fail in the face of foreign compet.i.tion, but that was the beauty of the free market. ”Will you be overwhelmed by foreign businesses?” he asked rhetorically. ”The answer depends on you. Only the best of you will survive.” He sounded like Yegor Gaidar, who reportedly said of small Russian businesses going under as a result of shock therapy, ”So what? One who is dying deserves to die.”21 As is now well known, nothing about Bush's anti-Marshall Plan went as intended. Iraqis did not see the corporate reconstruction as ”a gift”; most saw it as a modernized form of pillage, and U.S. corporations didn't wow anyone with their speed and efficiency; instead they have managed to turn the word ”reconstruction” into, as one Iraqi engineer put it, ”a joke that n.o.body laughs at.”22 Each miscalculation provoked escalating levels of resistance, answered with counterrepression by foreign troops, ultimately sending the country spiraling into an inferno of violence. As of July 2006, according to the most credible study, the war in Iraq had taken the lives of 655,000 Iraqis who would not have died had there been no invasion or occupation. Each miscalculation provoked escalating levels of resistance, answered with counterrepression by foreign troops, ultimately sending the country spiraling into an inferno of violence. As of July 2006, according to the most credible study, the war in Iraq had taken the lives of 655,000 Iraqis who would not have died had there been no invasion or occupation.23 In November 2006, Ralph Peters, a retired U.S. Army officer, wrote in USAToday that ”we did give the Iraqis a unique chance to build a rule-of-law democracy,” but Iraqis ”preferred to indulge in old hatreds, confessional violence, ethnic bigotry and a culture of corruption. It appears that the cynics were right: Arab societies can't support democracy as we know it. And people get the government they deserve. . . . The violence staining Baghdad's streets with gore isn't only a symptom of the Iraqi government's incompetence, but of the comprehensive inability of the Arab world to progress in any sphere of organized human endeavor. We are witnessing the collapse of a civilization.” that ”we did give the Iraqis a unique chance to build a rule-of-law democracy,” but Iraqis ”preferred to indulge in old hatreds, confessional violence, ethnic bigotry and a culture of corruption. It appears that the cynics were right: Arab societies can't support democracy as we know it. And people get the government they deserve. . . . The violence staining Baghdad's streets with gore isn't only a symptom of the Iraqi government's incompetence, but of the comprehensive inability of the Arab world to progress in any sphere of organized human endeavor. We are witnessing the collapse of a civilization.”24 Though Peters was particularly blunt, many Western observers have arrived at the same verdict: blame the Iraqis. Though Peters was particularly blunt, many Western observers have arrived at the same verdict: blame the Iraqis.

But the sectarian divisions and religious extremism engulfing Iraq cannot be neatly detached from the invasion and the occupation. Although these forces were certainly present in advance of the war, they were far weaker before Iraq was turned into a U.S. shock lab. It's worth remembering that in February 2004, eleven months after the invasion, an Oxford Research International poll found that a majority of Iraqis wanted a secular government: only 21 percent of respondents said their favored political system was ”an Islamic state,” and only 14 percent ranked ”religious politicians” as their preferred political actors. Six months later, with the occupation in a new and more violent phase, another poll found that 70 percent of Iraqis wanted Islamic law as the basis of the state.25 As for sectarian violence, it was virtually unknown for the first year of the occupation. The first major incident, the bombing of s.h.i.+a mosques during the holiday of Ashoura, was in March 2004, a full year after the invasion. There can be no doubt that the occupation deepened and ignited these hatreds. As for sectarian violence, it was virtually unknown for the first year of the occupation. The first major incident, the bombing of s.h.i.+a mosques during the holiday of Ashoura, was in March 2004, a full year after the invasion. There can be no doubt that the occupation deepened and ignited these hatreds.

In fact, all the forces tearing Iraq apart today-rampant corruption, ferocious sectarianism, the surge in religious fundamentalism and the tyranny of death squads-escalated in lockstep with the implementation of Bush's anti-Marshall Plan. After the toppling of Saddam Hussein, Iraq badly needed and deserved to be repaired and reunited, a process that could only have been led by Iraqis. Instead, at precisely that precarious moment, the country was transformed into a cutthroat capitalist laboratory-a system that pitted individuals and communities against each other, that eliminated hundreds of thousands of jobs and livelihoods and that replaced the quest for justice with rampant impunity for foreign occupiers.

Iraq's current state of disaster cannot be reduced either to the incompetence and cronyism of the Bush White House or to the sectarianism or tribalism of Iraqis. It is a very capitalist disaster, a nightmare of unfettered greed unleashed in the wake of war. The ”fiasco” of Iraq is one created by a careful and faithful application of unrestrained Chicago School ideology. What follows is an initial (and not exhaustive) account of the links between the ”civil war” and the corporatist project at the heart of the invasion. It is a process of ideology boomeranging on the people who unleashed it-ideological blowback.

The most widely recognized case of blowback was provoked by Bremer's first major act, the firing of approximately 500,000 state workers, most of them soldiers, but also doctors, nurses, teachers and engineers. ”De-Baathification,” as it was called, was supposedly driven by a desire to clean out the government of Saddam loyalists. No doubt that was part of the motivation, but it does not explain the scale of the layoffs or how deeply they savaged the public sector as a whole, punis.h.i.+ng workers who were not high-level officials.

The purge resembled similar attacks on the public sector that have accompanied shock therapy programs ever since Milton Friedman advised Pinochet to slash government spending by 25 percent. Bremer made no secret of his antipathy for Iraq's ”Stalinist economy,” as he described the country's state-run companies and large ministries, and he had no appreciation for the specialized skills and the years of acc.u.mulated knowledge possessed by Iraq's engineers, doctors, electricians and road builders.26 Bremer knew people would be upset about losing their jobs, but as his memoir makes clear, he did not consider how the sudden amputation of Iraq's professional cla.s.s would make it impossible for the Iraqi state to function and therefore hinder his own work. That blindness had little to do with anti-Saddamism and everything to do with free-market fervor. Only someone deeply inclined to see government purely as a burden and public sector workers as dead wood could have made the choices Bremer did. Bremer knew people would be upset about losing their jobs, but as his memoir makes clear, he did not consider how the sudden amputation of Iraq's professional cla.s.s would make it impossible for the Iraqi state to function and therefore hinder his own work. That blindness had little to do with anti-Saddamism and everything to do with free-market fervor. Only someone deeply inclined to see government purely as a burden and public sector workers as dead wood could have made the choices Bremer did.

That ideological blindness had three concrete effects: it damaged the possibility of reconstruction by removing skilled people from their posts, it weakened the voice of secular Iraqis, and it fed the resistance with angry people. Dozens of senior U.S. military and intelligence officers have acknowledged that many of the 400,000 soldiers Bremer laid off went straight to the emerging resistance. As Marine Colonel Thomas Hammes put it, ”Now you have a couple hundred thousand people who are armed- because they took their weapons home with them-who know how to use the weapons, who have no future, who have a reason to be angry at you.”27 At the same time, Bremer's cla.s.sic Chicago School decision to fling open the borders to unrestricted imports while allowing foreign companies to own 100 percent of Iraqi a.s.sets infuriated Iraq's business cla.s.s. Many responded by funding the resistance with what little revenue they had left. After covering the first year of the Iraqi resistance in the Sunni Triangle, the investigative reporter Patrick Graham wrote in Harpers Harpers that Iraqi businessmen ”are outraged by the new foreign-investment laws, which allow foreign companies to buy up factories for very little. Their revenues have collapsed, because the country has been flooded with foreign goods. . . . The violence, these businessmen realize, is their only compet.i.tive edge. It is simple business logic: the more problems there are in Iraq, the harder it is for outsiders to get involved.” that Iraqi businessmen ”are outraged by the new foreign-investment laws, which allow foreign companies to buy up factories for very little. Their revenues have collapsed, because the country has been flooded with foreign goods. . . . The violence, these businessmen realize, is their only compet.i.tive edge. It is simple business logic: the more problems there are in Iraq, the harder it is for outsiders to get involved.”28 More ideological blowback came from the White House's determination to prevent future Iraqi governments from changing Bremer's economic laws-the same drive to ”lock in” changes made in the wake of a crisis has been in effect since the first IMF-issued ”structural adjustment” program. From Was.h.i.+ngton's perspective, there was no point in having the most enlightened investment rules in the world if a sovereign Iraqi government could take power in a few months and rewrite them. Because most of Bremer's decrees were in a legal gray zone, the Bush administration solution was to draft a new const.i.tution for Iraq, a goal it pursued with b.l.o.o.d.y-minded determination -first with an interim const.i.tution that locked in Bremer's laws, and then with a permanent const.i.tution that attempted (but failed) to do the same.

Many legal experts were baffled by Was.h.i.+ngton's const.i.tutional obsession. On the surface, there was no pressing need to write a new doc.u.ment from scratch -Iraq's 1970 const.i.tution, ignored by Saddam, was perfectly serviceable, and the country had far more urgent needs. More important, the process of writing a const.i.tution is among the most wrenching any nation can go through, even a nation at peace. It brings every tension, rivalry, prejudice and latent grievance to the surface. To foist that process-twice - on a country as divided and shattered as Iraq after Saddam greatly exacerbated the possibility of civil strife. The social cleavages cracked open by the negotiations have in no way healed, and may yet result in the part.i.tion of the country.

Like the lifting of all trade restrictions, Bremer's plan to privatize Iraq's two hundred state companies was regarded by many Iraqis as yet another U.S. act of war. Workers learned that in order to make the companies attractive to foreign investors, as many as two-thirds of them would have to lose their jobs. At one of Iraq's large state firms -a compound of seven factories that produced cooking oil, soap, dishwas.h.i.+ng liquid and other basics-I heard a story that brought into sharp relief how many new enemies had been created by the privatization announcement.