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Iraq to be 'opened to the
world'
SHUNEH, Jordan - Arab
business and political leaders have challenged United
States plans to transform Iraq's economy into a free
market and make the country "open for business" to the
world's multinational companies.
Washington's
leading official in the occupied land, Paul Bremer, told
the globe's business and political elite gathered at a
meeting of the World Economic Forum that the changes
will include introducing property rights and anti-trust
laws, cutting subsidies, opening up the country to trade
and foreign investment and privatizing government
businesses.
"I want to say to them [businessmen]
that I am optimistic that the coalition will succeed in
transforming the Iraqi economy from a closed, dead-end
system to an open vibrant place to do business," said
Bremer. "Without the discipline of the market,
state-owned enterprises not only failed to create value,
they destroyed it," he added.
Former president
Saddam Hussein's regime collapsed in April after three
weeks of a US-led attack. Adnan Pachachi, Iraq's former
foreign minister and a veteran member of the opposition
to Saddam, said he agreed only in part with Bremer,
adding that privatization should not expand to important
sectors like education and oil. "We had some wasteful
projects [under Saddam] that should be eliminated
through privatization, I think. But there are certain
things which should be kept in the public sector, like
oil," said Pachachi, who now heads the Independent
Iraqis for Democracy in Iraq.
Bremer, who was a
businessman for 14 years before he joined the US
administration to rule Iraq, said privatizing
state-owned firms would help provide employment and fuel
economic recovery. "Iraq will find that opening its
borders to trade and investment will increase
competitive pressure on its domestic firms and thereby
raise productivity," he said.
He promised better
standards of life for Iraqis under the new free market
economy. "But for this to happen, Iraq's private sector
needs a clear commercial code, honest courts, low
barriers to entry and transparent corporate governance
arrangements," said Bremer. "Countries around the world
are rediscovering these prerequisites to growth and a
burgeoning academic literature confirms their importance
in empirical data." The negative impact of the
transition on workers and pensioners, who may be
affected by the closure of certain state-owned firms,
will be cushioned by Iraq's oil revenues, he added.
But an Iraqi in the audience who introduced
himself as a businessman challenged the US plans, saying
Bremer has no legitimacy in the country. "You don't
represent Iraq," he said. "There are many Iraqis here
who cannot talk like you." What Iraqis need most, said
the man, is security, not economic privatization.
Donors are due to meet later this week at the
United Nations to pledge money to Iraq's reconstruction,
and they have been warned that they must make security a
priority. "Lesson number one from Afghanistan is that,
without security, there will be no reconstruction," said
Rory Mungoven, Human Rights Watch global advocacy
director. "Lesson number two is that without protecting
human rights, there will be no genuine security either,"
he added.
Bremer said the US's immediate
priorities are reforming Iraq's financial sector in
order to provide liquidity and credit for the economy,
followed by simplifying regulations to lower barriers
for new firms, "domestic and foreign". In the next
phase, officials will change Iraq's commercial laws,
lift restrictions on property rights and develop
anti-trust and competition laws. Washington is devising
a system that would cushion the effects of the
transition from a state-owned to a private sector,
financed by oil revenues, which are expected to reach
$5.5 billion by the end of the year, he said.
Iraqi is expected to begin selling oil via its
system of pipelines in July, although a series of
explosions and fires have delayed the project to date.
The country was due to start exporting oil stored in
tanks in Turkey on Sunday. One option to create a safety
net, Bremer said, was to distribute some oil revenues to
Iraqis as "dividends", similar to the system used by the
US state of Alaska. Or, revenues could be deposited in a
national "trust fund" used to finance public pensions or
other elements of a social safety net during the
transition period, he said.
Arab League
Secretary General Amr Moussa suggested that implementing
the long-term course of free market decisions described
by Bremer without the approval of some sort of Iraqi
government risked being questioned and overturned by
local representatives in the future. Moussa said Iraq's
Arab neighbors would be much more comfortable and
willing to help if those decisions were reached through
consultations with Iraqis and within a broader framework
of political reform.
Washington now says it
plans to set up an "Iraqi political council" in July.
Members of the council will represent "the major strands
of Iraqi society" and their job will be "to assist in
the management of the Iraqi management".
But
that is not enough, said Moussa. "What we want to see is
an Iraqi government, call it provisional, call it
temporary. We want to deal with an Iraqi government," he
said. "This is not criticism of the US. Please listen to
us - we want to help, Iraq is an Arab state and we are
concerned."
(Inter Press Service)
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