Iraq’s Missing Millions


Ibrahim Jaafari, the prime-minister-to-be in Iraq, is unlikely to hand over the nation’s valuable oil assets to foreign companies, but he won’t be able to do much about the rest of the Iraqi economy, which was strangled by Coalition Provisional Authority chief L. Paul Bremer in rules and regulations benefiting Western business.

A few of these rules, left over from the Bremer occupation period, as collected last year by Foreign Policy in Focus, the independent Washington research outfit:

Order #39: Privatize the country’s 200 state-owned enterprises, permit 100 percent foreign ownership of Iraqi businesses, allow for complete repatriation of profits without tax. No requirements for reinvestment, hiring local labor, or provisioning public services. Labor rights non-existent.

Order #40: Foreign banks can enter the Iraqi market and take a 50 percent interest in formerly state-owned banks.

Order #49: Drop the corporate tax rate from 40 percent to a flat 15 percent. The income tax is capped at 15 percent.

Order #12: Suspension of “all tariffs, customs duties, import taxes, licensing fees and similar surcharges for goods entering or leaving Iraq, and all other trade restrictions that may apply to such goods.” Result: A tidal wave of cheap imports wipes out locally made goods.

Order #17: Security firms get full immunity from Iraq’s laws.

Bremer created a Board of Supreme Audit, and named a pro-American president and assistants to oversee inspectors in all ministries who in turn oversee government contracts and classified programs.

Having done all this to assure continued American, i.e., Western, control over the Iraqis whom everyone knows are just plain greedy and corrupt by nature, Bremer’s crew somehow managed to lose $9 billion in oil revenues meant for humanitarian needs and for rebuilding the country.

Veteran journalist Helen Thomas reported last week that the $9 billion had been transferred to Iraqi ministries, where it disappeared. Stuart W. Bowen, the special inspector general appointed by the U.S. occupation authority, reported the disappearance in January.

The Democratic Policy Committee in Congress held hearings a couple of weeks ago and discovered that there are “a lot of dinars and American dollars” floating around. The money was stashed in the basement of CPA headquarters and released from time to time to contractors. The Dems want Alberto Gonzales, the new attorney general, to launch a grand-jury investigation, which as one might imagine, will happen when hell freezes over.

The loss occurred during the period the U.S. controlled Iraqi oil profits, from May 2003 until June 2004. Democratic congressman Dennis Kucinich of Cleveland said that Bowen’s audit could not account for “a single penny of the $9 billion.” Bremer attacked the Bowen audit, saying it “does not meet the standards Americans have come to expect of the inspector general,” and claimed that it was rife with “factual errors.”

And Bremer, who set up the procedures which assured U.S.-style regulations, now says the audit doesn’t acknowledge how difficult it is to set up Western-style control during wartime. He and officials at the Defense Department shrugged off the loss, noting the Iraqis are used to corruption anyhow.