The Benchmarks Iraq *Is* Meeting -- and One it Thankfully is Not

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 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.

Comments

[Thorn]

"The benchmarks Iraq are meeting"? Is that a Bushism or something?

[Thorn]

(Good fix. Thanks.)

[Mercedes]

The Media in the US of A have treated the Iraq Hydrocarbon Law like it's a sweet, positive sign that all Iraqis will share the wealth of their oil. But the Media won't tell the TRUTH--that the Iraqis are only going to share the 20% of their oil that has already been found and is being processed. The other 80% will go to foreign companies (Exxon-Mobil, Shell, Chevron, British Petroleum, etc...) who will have access to the oil by way of Production Sharing Agreements (PSAs), which will legally allow them to steal the Iraqi oil!

There will be a HUGE meeting next month (September) in Dubai, where the oil companies and Iraqi oil ministers will be meeting and supposedly will sign a bunch of PSAs to allow the foreign companies to enter Iraq and start working on drilling the 80% of untapped reserves; and there are already COMPLETED US military bases right near the oil fields, in the North, Northeast and Southeast of Iraq, so that Bush can say that the soldiers have to be moved there to "protect" the oil fields from the "terrorist IRANIANS"). Bush has no intention of leaving Iraq without getting those PSAs signed, no matter how long it will take.

I dread to think what will happen to our beloved US troops in Iraq if and when those PSAs are approved--you don't think that the Iraqi people are just going to stand by and watch foreign oil companies come to steal their national resource, do you? What's happening now will look like a day at the park, compared to what will happen when the Iraqis get together and try to stop the foreigners from taking complete control of their country! And, I can't really blame them for wanting to defend their country, their resources and themselves. I pray that Bush gets Impeached for lying to start this invasion, and he is too busy defending himself and forgetting about that damn Hydrocarbon Law, so that our military in Iraq can FINALLY declare VICTORY and GO HOME...

[demockracy]

Greg Palast ("Armed Madhouse") suggests that the chaos in Iraq still serves big oil because it keeps prices high, even if Iraq is not producing.

Saddam incurred the wrath of OPEC because he threatened to break with their quotas (lowering the price of oil), and started demanding payment in euros--also a no-no.

In other words, we went to war to defend OPEC's profits...!

(In fairness, the big oil execs were not eager to invade Iraq...just the little guys who sold Harken Energy to the Saudis...You know, Bush.)

Glad to see the "privatize the oil" story has legs.

One final dimension: It's apparently against U.S. law to abrogate existing contracts, even ones previously made by Saddam with French and Russian oilfield service firms.

Should be an interesting lawsuit if Iraq ever capitulates to the demand to privatize its oil, because we're breaking our own law if we toss out those Saddam-agreed contracts...!

[researcher]

war for oil and the media trys to intellectualize this war.

impreialism demands an intellectual approach to explaining this war.

[researcher]

whoops imperialism sorry late here: good night.

[unitron]

I'd like to see the Iraqi government repudiate all of those debts and tell the creditors to sue Saddam's estate for re-payment. That's a precedent that needs to be set.

With all that oil under the country they'll still be able to get credit from somebody.

[Herrington]

Sufficient forces at the outset of the Iraq adventure might have actually effectively countered the insurgency and ensuing civil war. The original plan being to install a U.S. puppet government that would be too ignorant and pliable to resist American dictates, get control of the oil and create military bases to protect that interest. It went bad with the unexpected power of the insurgency which has now blossomed into a civil war over sharing oil revenues. Still, we did nothing but keep the pot boiling with our presence and the Iraqi government did nothing. Why?

Given resistance by the fledgling government over giving away the oil, Cheney and big oil decided to hold a recalcitrant Iraqi government hostage to the precipitous power void on our withdrawal, demonstrated daily by burgeoning, violent civil unrest.

So it is two intersecting political miscalculations. The Iraqis are not the morons that the Bush assumed, having easily duped the American people. Iraqis quickly understood the political reality. Give away the oil to U.S. business interest and get security guarantees consolidated with a giant embassy and permanent U.S. military bases or keep it and fight a civil war for it among themselves. In the mean time, the longer they can string out the resolution of this issue, the more likely it is that Bush and Co. will no longer be who they are dealing with and the likelihood is to get better conditions on a security/oil agreement.

This is among the most terrible of political calculations imaginable. Iraqis sacrifice their citizens and we sacrifice our soldiers in a protracted extortion scheme by U.S. oil interests. The Iraqis can"t resolve their ethnic divide over oil revenue short of civil war, and to the U.S. oil interests, the civil war and insurgency strengthen their negotiating hand. Bush seems only to care that none of this is resolved before he is safely history.

Bush, history has already found you.

[peterg76]

I still don't get why the US would abuse and terrorize an entire country for 4 years in order to steal the oil, and then forget to actually get the oil. If the Iraqis haven't capitulated to the petro heist extorsion by now, they never will.

[seawolf77]

We are getting the oil. It's coming in as Saudi crude to mask the fact Ghawar is dead and Peak Oil is here.