Naomi Klein (The Nation): Risky Business

[Jack Rabbit]

From The Nation
Posted online December 18

Risky Busines
By Naomi Klein

It's 8:40 am and the Sheraton Hotel ballroom thunders with the sound of plastic explosives pounding against metal. No, this is not the Sheraton in Baghdad, it's the one in Arlington, Virginia. And it's not a real terrorist attack, it's a hypothetical one. The screen at the front of the room is playing an advertisement for "bomb resistant waste receptacles": This trash can is so strong, we're told, it can contain a C4 blast. And its manufacturer is convinced that given half a chance, these babies would sell like hotcakes in Baghdad--at bus stations, Army barracks and, yes, upscale hotels. Available in Hunter Green, Fortuneberry Purple and Windswept Copper.
This is ReBuilding Iraq 2, a gathering of 400 businesspeople itching to get a piece of the Iraqi reconstruction action. They are here to meet the people doling out the cash, in particular the $18.6 billion in contracts to be awarded in the next two months to companies from "coalition partner" countries. The people to meet are from the Coalition Provisional Authority (CPA), its new Program Management Office, the Army Corps of Engineers, the US Agency for International Development, Halliburton, Bechtel and members of Iraq's interim Governing Council. All these players are on the conference program, and delegates have been promised that they'll get a chance to corner them at regularly scheduled "networking breaks" . . . .
At ReBuilding Iraq 2, held on December 3-4, it seems finally to have dawned on the investment community that Iraq is not only an "exciting emerging market"; it's also a country on the verge of civil war. As Iraqis protest layoffs at state agencies and make increasingly vocal demands for general elections, it's becoming clear that the White House's prewar conviction that Iraqis would welcome the transformation of their country into a free-market dream state may have been just as off-target as its prediction that US soldiers would be greeted with flowers and candy . . . .
It turns out that there is a rather significant hitch in Paul Bremer's bold plan to auction off Iraq while it is still under occupation: The insurance companies aren't going for it. Until recently, the question of who would insure multinationals in Iraq has not been pressing. The major reconstruction contractors like Bechtel are covered by USAID for "unusually hazardous risks" encountered in the field. And Halliburton's pipeline work is covered under a law passed by Bush on May 22 that indemnifies the entire oil industry from "any attachment, judgment, decree, lien, execution, garnishment, or other judicial process" . . . .
Normally, multinationals protect themselves against this sort of thing by purchasing "political risk" insurance. Before he got the top job in Iraq this was Bremer's business--selling political risk, expropriation and terrorism insurance at Marsh & McLennan Companies, the largest insurance brokerage firm in the world. Yet in Iraq, Bremer has overseen the creation of a business climate so volatile that private insurers--including his old colleagues at Marsh & McLennan--are simply unwilling to take the risk. Bremer's Iraq is, by all accounts, uninsurable.

Read more.

[MattNC]

1. i enjoyed her book

"No Logo"

[muriel_volestrangler]

2. Can you spell 'conflict of interest'?

Microsoft and the Pentagon obviously can't:
"Robert Dees, freshly hired out of the military to head Microsoft's "defense strategies" division. Dees tells the crowd that rebuilding Iraq has special meaning for him because, well, he was one of the people who broke it. "My heart and soul is in this because I was one of the primary planners of the invasion," he says with pride. Microsoft is helping develop "e-government" in Iraq, which Dees admits is a little ahead of the curve, since there is no g-government in Iraq--not to mention functioning phones lines."

"At the Microsoft-sponsored cocktail reception in the Galaxy Ballroom that evening, Robert Dees urges us "to network on behalf of the people of Iraq." I follow orders and ask Lempres what happens if "the people of Iraq" decide to seize back their economy from the US firms he has so generously insured. Who bails out OPIC? "In theory," he says, "the US Treasury stands behind us." That means the US taxpayer. Yes, them again: The same people who have already paid Halliburton, Bechtel et al. to make a killing on Iraq's reconstruction would have to pay these companies again, this time in compensation for their losses. While the enormous profits being made in Iraq are strictly private, it turns out that the entire risk is being shouldered by the public.

For the non-US firms in the room, OPIC's announcement is anything but reassuring: Since only US companies are eligible for its insurance, and the private insurers are sitting it out, how can they compete? The answer is that they likely cannot. Some countries may decide to match OPIC's Iraq program. But in the short term, not only has the US government barred companies from non-"coalition partners" from competing for contracts against US firms, it has made sure that the foreign firms that are allowed to compete will do so at a serious disadvantage."

So, you lucky US taxpayers could end up paying yet again, if Iraq falls apart. And, as a UK taxpayer, so could I, if my government does the same thing - which, since the Iraqi debts they're talking about forgiving stem largely from government loan guarantees for dubious military-related exports to Iraq, seems quite likely.

So know you know what the US troops are defending in Iraq - the US federal defecit.