Business schools like to analyze the reasons for famous flops, such as Ford’s Edsel or the merger of AT&T and NCR. Perhaps in the future, foreign service schools will study the Bush administration’s flop in Iraq. What they’ll find is an administration utterly blinded by ideological illusions. To find precedents, one has to look at the Soviet Union after the revolution or perhaps China of the Great Leap Forward or Cultural Revolution, where, as in Iraq, many people were killed on behalf of bizarre theories of historical change.
In a week, chief administrator Paul Bremer will leave his post in Baghdad. In his appearances before Congress, Bremer projects an air of rational purpose. He was, it seemed, faced with an impossible task in Baghdad. But it is becoming increasingly clear that Bremer, who worked under the supervision of Deputy Secretary of Defense Paul Wolfowitz, was living in a kind of neoconservative dream world and had no understanding of the obstacles he faced.
Bremer arrived in Baghdad in May after the Pentagon fired General Jay Garner. According to Garner, the Pentagon objected to his plan to hold early elections before Iraq’s economy had been privatized. Bremer’s mandate was, above all, to privatize. In June, as Bremer returned to Baghdad aboard a U.S. military transport plane after speaking at an international economic conference, he discussed his plans for Iraq with Washington Post reporter Rajiv Chandrasekaran. According to Chandrasekaran, Bremer spoke of privatization “with such fervor that his voice cut through the din of the cargo hold.” “We have to move forward quickly with this effort,” he said.
Bremer’s economic program wasn’t confined to selling off state enterprises. Bremer saw privatization as part of the broader conservative economic agenda that Reagan had endorsed in the 1980s. It would include supply-side tax cuts and elimination of import duties. And he proceeded to get his way. In September 2003–against the provisions of the Fourth Geneva Convention that require occupying powers to respect existing laws–Bremer got the Iraqi Governing Council to issue an order privatizing state companies and abrogating Iraqi laws that prohibited private ownership of “national” resources and the “basic means of production.” Later, he also got his way on taxes and import duties.
You might think that in the face of the continued insurgency, the absence of electrical power, and of elementary safety on city streets, Bremer would have seen these measures, in the words of the poet Blake, as “sand thrown up against the wind.” But this month, as he was about to leave his post, Bremer told Chandrasekaran that “Iraq has been fundamentally changed for the better” by the occupation. He said that “among his biggest accomplishments … were the lowering of Iraq’s tax rate, the liberalization of foreign-investment laws and the reduction of import duties.”
Is this daffy? Set aside for a moment the actual condition of the country. If Iraq’s streets were safe and lighted, and its pipelines pumping oil to Western Europe, it would still be better off with the kind of managed economic approach that worked in East Asia rather than the kind of economics that Reagan recommended for post-Carter America. But Bremer’s schemes weren’t even relevant, let alone appropriate, to the country he was supposed to be administering. What does reducing tax rates do in a country that lacks income and profits and is entirely dependent on foreign aid to run its basic institutions? What good does it do to offer up businesses for sale when no foreign company would dream of investing capital in the current Iraq? The only businesses that have profited in Iraq are those like Haliburton that are funded by American taxpayers. Reading Bremer’s reflections on his tenure makes one wonder whether, even in the face of chaos and possible civil war, post-Saddam Iraq wouldn’t have been better off without the Bush administration’s bureaucrats and the Pentagon’s military in charge.
