SPOILS OF WAR

[AYOUB]

Spoils of war

 

US plans to sell off Iraqi businesses are simply the modern equivalent of pillage, says Brian Whitaker

 

Monday October 13, 2003

 

For centuries, pillage by invading armies was a normal part of warfare: a way in which to reward badly-paid or unpaid troops for risking their lives in battle.

Nowadays, at least in more civilised countries, we do not let armies rampage for booty. We leave the pillaging to men in suits, and we don't call it pillaging any more. We call it economic development.

 

Today, the men in suits are gathering at Olympia, in London, for a two-day conference and exhibition entitled Doing Business in Iraq. Protesters will be gathering outside.

 

The event, which is sponsored by the US-Iraq business council, is one of a series being held in different parts of the world over the coming 12 months (another will take place in Moscow in December), culminating in a grand spoils of war exhibition in Baghdad towards the end of next year.

 

According to the organisers, speakers at the London conference will include several US government officials as well as a representative from Trade Partners UK, the British government's export promotion department.

 

This fits in neatly with plans announced in June by Paul Bremer, the head of Iraq's provisional authority, to sell off the country's state-owned industries (excluding, for the time being, oil, gas and minerals) and turn it into a US-style capitalist wonderland.

 

Last month, Mr Bremer issued CPA order number 39, giving foreign investors unrestricted rights to establish businesses in Iraq and/or buy up Iraqi companies.

 

The order also allows foreign investors to repatriate profits, dividends, interest and royalties immediately and in full. In other words, they can make a fast buck if they want to, without putting anything back.

 

While few would disagree that Iraq's industry needs modernisation and restructuring, two questions arise: has Mr Bremer the legal powers to do this, and is he going about it in the right way?

 

He has already acknowledged that his plans will create large-scale unemployment, at least in the short term. His earlier decision to disband the Iraqi army exacerbated the country's fragile security situation by leaving several hundred thousand disgruntled ex-soldiers with nothing better to do than cause trouble.

 

That is now widely regarded as a major blunder, and Mr Bremer now seems intent on repeating the exercise with the civilian population. According to the UN, the current level of unemployment in Iraq is around 50-60%: the last thing the country needs is more job losses.

 

Mr Bremer shows little interest in drawing lessons from the problems caused by economic "shock therapy" reforms in the former Soviet Union, and in Iraq - with the added factor of military occupation - this can only fuel hostility towards the US.

 

His order number 39 is also, almost certainly, illegal. The Hague regulations of 1907 spell out the obligations of an occupying power under international law.

 

Article 43 says that, when occupying forces take over a country, they must "ensure, as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the country".

 

This means that Mr Bremer is not allowed to change Iraq's existing laws, including those that govern investment, unless it is "absolutely" essential to do so.

 

Article 55 says that an occupying power is only the "administrator and usufructuary" of state property. "It must safeguard the capital of these properties, and administer them in accordance with the rules of usufruct," it adds.

 

Mr Bremer, therefore, appears to have no right to sell off nationalised industries.

 

In the House of Lords last week, Baroness Williams of Crosby tried to ascertain the British government's view of Mr Bremer's approach. She asked whether the government "regard current policies in Iraq to be consistent with the legal advice the prime minister received from the attorney general".

 

She received the unilluminating reply that "it has been the practice of successive governments not to publish advice from the attorney general".

 

Fortunately, however, we already have a good idea of what the attorney general, Lord Goldsmith, thinks about the matter. A memo that he wrote to the prime minister, Tony Blair, on March 26, a week after the invasion of Iraq began, was leaked to the press some time ago.

 

"My view," the attorney general wrote, "is that a further security council resolution is needed to authorise imposing reform and restructuring of Iraq and its government.

 

"In the absence of a further resolution, the UK (and US) would be bound by the provisions of international law governing belligerent occupation, notably the fourth Geneva gonvention and the 1907 Hague regulations."

 

He went on to note that the Hague regulations impose an obligation to respect the laws in force in the occupied territory "unless absolutely prevented".

 

"Thus, while some changes to the legislative and administrative structures of Iraq may be permissible if they are necessary for security or public order reasons, or in order to further humanitarian objectives," he said, "more wide-ranging reforms of governmental and administrative structures would not be lawful."

 

The restrictions imposed by the Hague regulations, as the attorney general suggested, can only be over-ridden by a UN security council resolution.

 

Interestingly, the preamble of Mr Bremer's Order No 39 claims just such backing. It states that the order is "consistent" with security council resolution 1483, approved last May, which lifted sanctions against Iraq.

 

But although the resolution talks vaguely (in paragraph 8e) about "promoting economic reconstruction and the conditions for sustainable development", there is nothing in it that can sensibly be construed as giving Mr Bremer permission to make sweeping changes to the investment law. Indeed, paragraph five calls upon "all concerned to comply fully" with the Hague Regulations.

 

The legality - or otherwise - of Mr Bremer's order is unlikely to trouble the Bush administration, although future US administrations may have to grapple with the consequences arising from it.

 

The prevailing view in Washington was set out with astonishing bluntness four years ago by John Bolton, now chief hawk at the state department, when he said: "It is a big mistake for us to grant any validity to international law, even when it may seem in our short-term interest to do so - because, over the long term, the goal of those who think that international law really means anything are those who want to constrict the US."

 

Whether the British government, which tends to be more squeamish about such matters, agrees with this is still unclear, though the presence of its official from Trade Partners UK at the investment conference in London suggests that it does.

 

The US, however, has made no bones about its intentions, regardless of what the Hague regulations say, to make as many structural changes as possible in Iraq while it has the chance.

 

Its hope, of course, is that these will have gone too far to be undone once a proper Iraqi government takes over. On the other hand, the changes may go so far that a future Iraqi government feels obliged to overturn them in order to establish its popular credentials.

 

In that case, the invasion - with its phoney goals of removing Saddam Hussein and disarming him of weapons that he didn't possess - may be just a prelude to the real battle for Iraq yet to come.

 

Email

brian.whitaker@guardian.co.uk

 

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