The imposition of major structural economic reforms would not be authorized by international law.
– Lord Goldsmith, British Attorney General, leaked memo to Tony Blair87
Occupation law mandates that the Occupying Power act as temporary custodian and therefore prohibits the imposition of major legal, political or economic restructuring. Yet U.S. policy has explicitly sought to privatize Iraq’s economy with little consideration for the welfare and rights of the Iraqi people. The reconstruction process has been run as a form of thinly-disguised pillage of the spoils of war. Deputy Secretary of Defense Paul Wolfowitz declared that only companies from countries that supported the unlawful invasion of Iraq88 were eligible to bid on reconstruction contracts.89 Even before the war began, U.S. government agencies were awarding lucrative contracts to American corporations in secret deals lacking any transparent bidding process. The largest contracts were handed to corporations with close connections to the Bush Administration.90
Moreover, the Bush Administration and CPA have openly declared a policy of radically restructuring Iraq’s economy along free market lines through a series of new legal orders.91 CPA Order 39 permitted privatization of state enterprises, 100% foreign ownership of Iraqi firms, tax-free repatriation of all investment profits, and 40 year leases on contracts.92 Order 40 transformed the banking sector from state-run to market-driven overnight, under the direction of JP Morgan. Order 37 imposed a flat tax rate of 15%, drastically reducing the tax burden on corporations and wealthy individuals. Order 12 abolished all tariffs and prohibited protective trade measures. These structural reforms violate the laws of occupation, and have not resulted in measurable economic gains for the population – although Halliburton and Bechtel have recorded enormous profits.93
Legal Principles related to Fundamental Changes
- “The authority of the legitimate power having in fact passed into the hands of the occupant, the latter shall take all the measures in his power to restore, and ensure, as far as possible, public order and safety, while respecting, unless absolutely prevented, the laws in force in the country” Hague Regulations, Art. 43
- “… the occupying authority was to be considered as merely being a de facto administrator” ICRC Commentary, Geneva IV Art. 47
- “Protected persons… shall not be deprived, in any case or in any manner whatsoever, of the benefits of the present Convention by … any agreement concluded between the authorities of the occupied territories and the Occupying Power” Geneva Convention IV, Art. 47
87 Thomas Catán, “Iraq Business Deals May Be Invalid, Law Experts Warn,” Financial Times (UK), October 30, 2003. Available at http://www.commondreams.org/headlines03/1030-02.htm.
88 Center for Economic and Social Rights, Tearing up the Rules: The Illegality of Invading Iraq, March 18, 2003. Available at http://www.cesr.org.
89 Paul Richter, “Antiwar Nations Barred from Bids,” The Los Angeles Times, December 10, 2003. Available at http://www.commondreams.org/headlines03/1210-04.htm.
90 Ibrahim Warde, “Iraq: A license to loot the land,” May 2004, Le Monde Diplomatique. http://mondediplo.com/2004/05/02iraq.
91 Antonia Juhasz, “Ambitions of Empire: The Bush Economic Plan for Iraq (and Beyond),” Left Turn Magazine, January 20, 2004. Available at http://www.globalpolicy.org/security/issues/iraq/after/2004/0120ambitions.htm.
92 All CPA Orders and Regulations can be found on the CPA website at http://www.cpa-iraq.org/regulations/.
93 David R. Baker, “Bechtel’s 2003 revenue breaks company record: Iraq rebuilding contracts help S.F. firm reverse a 3-year slump,” San Francisco Chronicle, April 20, 2004. http://www.occupationwatch.org/article.php?id=4361.