Lounsbury: Iraq & Reconstruction: local views

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August 28, 2003

Iraq & Reconstruction: local views

Another article I believe rather interesting and deeply illustrative of the issues and problems - and why money needs to be poured into the effort.

Beyond Oil, Iraqi Industry Struggles Despite Freedom
Factories Working Far Below Capacity
By Pamela Constable
Washington Post Foreign Service
Thursday, August 28, 2003; Page A14
http://www.washingtonpost.com/wp-dyn/articles/A56034-2003Aug27.html

Overall the article paints a picture of the free fall in the Iraqi economy post US invasion.

First, the constant electricity cuts disrupt production, which besides being wasteful of course is hard on machinery and increases costs. I note in my own reporting on CPA-I executive briefing on investing plans in Iraq that they themselves indicate that investors should plan for two years of unstable electrical service and plan for self generation for "the foreseeable future" with all that implies for the economy. Higher costs, etc.

I also draw your collective attention to this key quote: "The employees, some of them 20- to 30-year veterans, have had their wages cut in half by American officials, to $60 per month.

"We have democracy now, but we have no electricity and no salaries," complained Ali Talib, a company engineer, as workers with disgusted looks on their faces gathered around him on the factory floor one recent afternoon. "We lived with Saddam's oppression, and we protected this plant with our lives during the war, but now we are helpless.""

Now, I invite you to reflect on the impact in your own country if a foreign occupier cut your salaries and at the same time, did a worse job than the prior government in keeping basic services running. I submit that public opinion would begin to run, regardless of other politics, strongly against the occupier. Hope remains, but how long?

A further quote: " This year's U.S.-led invasion and its aftermath took a further toll on economic activity. Widespread looting and vandalism added to combat damage. Power plants faltered and pipelines were sabotaged. Unemployment in the heavily centralized economy soared to about 60 percent, while U.S. occupation officials idled large groups of public employees -- such as army soldiers and senior members of Hussein's Baath Party -- although they continued to pay some salaries. "It is difficult to overstate the disastrous condition of the Iraqi economy in the immediate aftermath of the recent war," stated a report published in June by Quest Economics Database, which compiles research from leading banks and financial institutions. "The majority of Iraqis are . . . jobless, penniless and dependent on U.N. food handouts," some of which they sell to buy other necessities such as medicine."

What we have a picture of here is an economy in collapse and an occupation force without a clue (see my prior commentaries) on how to get things running again, and without the means to do so.

A further article from the NYT:
THE OCCUPATION
U.S. Seeking Foreign Investment for Iraq
By RICHARD A. OPPEL Jr.
http://www.nytimes.com/2003/08/28/international/worldspecial/28INVE.html?pagewanted=all&position=

Not a terribly informative article, if you read my CPA commentaries, but there it is.

August 28, 2003

Iraq & Reconstruction: local views

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