a McDonald's in Iraq
By Herbert Docena
MADRID - In London on October 13, an investors' conference entitled "Doing
Business in Iraq: Kickstarting the Private Sector" was agog with reports that
McDonald's, among other corporations, may begin selling burgers and fries in
Iraq by next year. Attracting up to 145 multinational prospectors, the London
conference was held less than a month after the United States announced its
economic masterplan for Iraq, a blueprint which The Economist heralded as a
"capitalist dream" that fulfills the "wish list of international investors".
Whether Ronald McDonald cuts the ribbon in time and makes the dream come true,
however, will depend to a large extent on the outcome of a US-convened donor's
conference that was scheduled to open in Madrid on Thursday.
As the US struggles against popular resistance in Baghdad, it battles its
cash-flow woes in the balmy Spanish capital. Behind closed doors at the Campo
de las Naciones, representatives of creditor countries and multilateral
financial institutions will meet for two days to determine how and when
McDonald's and other multinational corporations will finally be able to open
their doors in Iraq.
In exchange for allowing the entry of their corporations to Iraq, rich creditor
nations will be pledging hundreds of millions of dollars to finance the
occupation in order to make sure that it goes on unhampered - long enough for
the Golden Arches to rise by the Tigris and the Euphrates.
Those who will pay the price for the burgers and fries, however, will have no
seat at the table.
What's at stake?
In this donors' conference, the US will be asking the "international community"
to finance an occupation it can no longer afford on its own.
At first, the US hoped that Iraqi oil revenues and assets, as well as its own
taxpayers' money, would be enough. "We are dealing with a country that can
really finance its own reconstruction and relatively soon," Defense
Undersecretary Paul Wolfowitz confidently told the US Congress before the war,
assured that Iraq's oil would be able to rake in as much US$50 billion to $100
billion in the next two years.
Regular sabotage of oil pipelines by the Iraqi resistance as well as the
reluctance of a cautious oil industry to start their operations has all but
shattered these initial plans by causing severe cash-flow problems and a
palpable budget crisis. Edward Chow, a former international executive with
Chevron and now an analyst with the Carnegie endowment, predicts: "Costs will
far exceed what oil revenues will reap in the short term and the long term."
This has forced the Bush administration to reluctantly turn to US taxpayers
with an $87 billion budget request that had to surmount unexpected resistance
from the Bush-controlled Congress. When it was finally approved, the funding
came out with an embarrassing twist: that the money to be spent will have to be
exchanged with IOUs, and not just sweet thank-yous.
Taking all the money from the pockets of the Iraqis and the American taxpayers
would have allowed the US to unilaterally determine which corporations would
get all the contracts for what. At more than $100 billion and counting, this
has been deemed the largest post-war rebuilding business opportunity since
World War II. With the disappointing oil revenues dashing expectations and with
US taxpayers reluctant to part with their money, however, the US has been
forced to give up its exclusive claim over the post-war reconstruction bonanza.
A way to get in on the ground floor
Armed with the latest 15-0 United Nations resolution legitimizing the
occupation, the US will be turning to the other rich creditor nations and
multilateral lending agencies with one enticement in exchange for their cash: a
piece of the action.
"We're telling them that this is not just about writing checks or sending
troops, but about having a stake in Iraq so their government agencies and
humanitarian groups are involved in a sector when a new government is in power
in Iraq," a high ranking US official recently disclosed. "It's a way to get in
on the ground floor. That's the selling point."
Indeed, the well-heeled representatives with fat pockets and blank checks who
will gather at the Campo will not be pledging their money for nothing. As a
recent Financial Times editorial put it, "Washington is in a mess in Iraq, and
needs help from its friends. The friends are prepared to assist, but they will
demand a price."
The price comes in the form of a long sought-for guarantee giving the donor
countries a crack at the multi-billion dollar business opportunities in Iraq -
an access to the ground floor where the action is. With the recent announcement
of plans to sell all but a few of Iraq's crown jewels for dirt-cheap prices,
other countries can't afford to miss the post-war garage sale. If they don't
want to be locked out, they better pay the entrance fee to be collected
personally by Coalition Provisional Authority head L Paul Bremer and US
Secretary of State Colin Powell, who are both in Madrid. Also present is US
Treasury Secretary John Snow.
Opponents of the war - in particular, France, Germany and Russia - have made it
clear they are not ready to forgive and forget and contribute so readily to
Iraqi reconstruction. Delegations from those three nations, as well as many
other countries, will be headed by lower-level officials. Only Spain, Italy and
Japan - all supporters of the US policy on Iraq - will be represented by their
foreign ministers. United Nations Secretary-General Kofi Annan and World Bank
President James Wolfensohn will also be in Madrid.
So who pays?
The amounts to be pledged at this conference could, therefore, be seen as an
investment with expected returns. How big or small that investment will depend
on what each donor thinks the prospects for profits will be. This in turn
depends on how big a piece of the pie the US is willing to give up. Those in
Madrid will need to report back to their capitals with an answer to the
question: was the donation worth every cent?
What they won't be eager to tell the folks back home, however, is where the
money they just donated came from and to whom it is being given.
Representatives will beat their chests and package their donations as acts of
charity towards those poor and war-ravaged Iraqis.
The rhetoric about helping Iraqis rebuild their country will hopefully drown
out the fact that the people who will be paying for the occupation will not be
the same people who will be profiting from it. The money that participants to
this donor's conference will be bringing to the table is not theirs to give
Hence, as the conference opens, it will be important to come up with a simple -
though perhaps not exhaustive - list of those who will pay for the
reconstruction of Iraq, as opposed to those who will gain from it. Those who
will be made to pay are often not aware what their money is being used for and
- as the opposition to the war by majorities in almost all countries indicate -
will most likely object if they only knew. Those who will profit, however, will
have the most to gain from keeping the transactions in the dark.
Iraqis: Paying with their future
First, the Iraqis. All of the past and future revenues from the sale of their
oil as well as all of their former government's assets deposited anywhere in
the world have been turned over to the UN Security Council-created but
US-controlled Development Fund for Iraq.
What will be paid to US-chosen contractors such as Halliburton and Bechtel - at
a price set by these contractors themselves - will be paid out of this fund.
Not only that, the fund will also be used by the US Export and Import Bank for
extending credit to any US company that hopes to start business in Iraq or that
wishes to buy any of the formerly Iraqi-owned corporations that will be sold
off by the US as part of Iraq's massive privatization scheme.
The Iraqis will, therefore, be paying American corporations for rebuilding the
bridges, the hospitals, the schools, the irrigation systems, the power grids
and almost everything else which the US - as prodded on by these corporations -
destroyed. They will also be paying US investors to take over the corporations
that the Iraqi people previously collectively owned, but which will now be sold
off without their authorization.
Just as they had no say over the bombing of their country, however, so will
they have no say over how their money will be spent for bringing the pieces
together. When some members of the US-installed Iraqi Governing Council (IGC)
tried to make a fuss over what they think were unreasonably priced purchases
two weeks ago, for instance, they were promptly reminded about their place in
the occupation's pecking order.
"If we had voted [on the spending decisions], we would have rejected it," one
IGC member was quoted as saying. He was all too aware, of course, that the IGC
members would never have been allowed to vote against those who put them in
Those who are hoping for at least a little prudence in the way that the fund
will be used can take comfort from what a lawyer for companies hoping to strike
gold in Iraq recently said. According to Washington lawyer Robert Kyle, the
fund will be "subject to a less formal approach in their allocation than those
from USAID [US Agency for International Development] which used [US] taxpayers'
By "less formal", the lawyer must have meant spending $6,000 for a mobile phone
that normally costs $495 only per set, $33,000 for a pickup truck that normally
costs half that, and $55,000 for a prison bed that usually costs only $14,000 -
as current details provided in Bush's budget request for Iraq shows when
compared with actual market prices of these items.
And it's not just their present income with which the Iraqis are paying the
Americans to occupy and reconstruct their country. Even their future is being
mortgaged. Just last week, the US Senate voted to convert the $10 billion that
will be used on Iraq from grants to loans. Should the World Bank and the
International Monetary Fund decide to lend money to Iraq, they will also come
with strings attached in the form of the economic conditionalities to be
imposed by these banks.
In other words, the Iraqis will be forced to borrow money from the US and
international banks without their consent - and at interest rates and with
conditions that they did not agree with - in order to spend on things over
which they have no say whatsoever.
It's a small price to pay for being liberated.
The taxpayers: Paying with their work
But since the Iraqis' oil and assets are currently insufficient, the US
Congress has also just reluctantly passed Bush's request for $87 billion,
around 78 percent of which will be spent for military costs alone. Senator Tom
Daschle came out of the session stressing that US taxpayers could not "go on
shouldering this burden virtually alone".
Meanwhile, each American will now be giving away $300 for the continued control
of Iraq. According to independent estimates, this total amount is more than
enough to wipe all of the budget deficits now plaguing a number of state
governments; enough to pay for all of the country's unemployment benefits for
two years; seven times what the US federal government spends for low-income
schools and 10 times the total spent for environmental protection.
The donors' conference, however, is really an attempt to shift the burden from
American taxpayers to say, Japanese, British, Spanish, French, German,
Canadian, Kuwaiti and other rich nations' taxpayers. Japan is said to be
donating up to $5 billion to the pot, Britain $835 million, Spain $300 million,
the European Union $230 million and Canada about $200 million.
These amounts will not come out of nowhere. Giving these millions to the
occupation means squeezing off some health care expenditures there, bumping off
some educational items here, maybe cutting away some housing funds there,
eliminating some unemployment benefits a little here, etc.
Every cent spent for corporations to do business in Iraq is a cent not spent
somewhere else. It's a small price to pay for being protected from terrorists
and their weapons of mass destruction.
Soldiers and civilians: Paying with their lives
But while the American and the rich countries' taxpayers are contributing cash,
others are paying with their lives. According to various estimates, as many as
10,000 up to 30,000 Iraqi civilians have died; more than 100 American soldiers
and scores of allied troops have been killed during the war and pacification.
With no less than the chairman of the US joint chiefs of staff admitting that
the US military is now overstretched, the US has been pleading with other
countries to pledge non-monetary contributions to Iraq in the form of warm
bodies that will attempt to stabilize the occupied country and make it safe for
corporations like McDonald's. Once in Iraq, these soldiers and neo-Gurkhas will
be moving targets for Iraqis who - for some incomprehensible reason - are mad
enough to resent being colonized and mad enough to fight back.
Interestingly, with a few notable exceptions, most of those who are being asked
to pack their bags and go to Iraq are those who'd give anything and go anywhere
for a job. Over the past few weeks, the US has been courting mostly countries
from the south, such as India, Pakistan, Bangladesh, Fiji, the Philippines,
Thailand, El Salvador, Honduras, Nicaragua, etc to deploy more troops to Iraq
so that their weary soldiers can go home and fight another day - in a different
part of the world.
These soldiers are happy to go to Iraq because the per diem there would be so
much more than what they'd get staying at home. Domestically, one of the
strongest arguments for fielding them in Iraq is the promise of
dollar-denominated remittances to be sent home. These gun-strapped and
cash-strapped governments are happy to send their boys away in exchange for
more military aid from and stronger military ties with the US.
Senator Edward Kennedy has asserted that the US has been bribing foreign
governments to induce them to go against domestic popular opinion against the
war. He says that up to half of the $4 billion that the US spends monthly on
Iraq could not be accounted for by the Congressional Budget Office.
In this occupation, what the US is asking for from different countries
interestingly reflects international realities as well: capital from the north,
cheap labor from the south. The ultimate price per hour is apparently cheaper
in developing countries than in the developed ones.
Smiling McDonald's attendants may start ushering in customers to their branch
in Iraq next year - but only after Bechtel had switched back the lights,
Halliburton had rebuilt the bridges, Flour had paved the roads, MCI had set up
the mobile network system, Research Triangle Institute had trained the managers
and bureaucrats, Abt Associates had restored the hospitals, the
military-industrial complex and the private armies had restored security, and
the multinational force had pacified the resistance.
The Iraqis and the taxpayers who are bankrolling the occupation better not know
to whom they're being made to give their checks. Bechtel sold chemical weapons
to Saddam Hussein back in the 1980s and had been accused of gross overpricing
in Massachusetts and Bolivia. MCI was involved in history's biggest accounting
scandal and has totally no experience building cell networks. Halliburton had
been accused of inflating costs and had even settled a number of fraud charges.
Dyncorp had been accused of covering up sex trafficking. Flour faces a
multibillion dollar lawsuit for exploiting black workers and making security
guards wear Ku Klux Klan robes to attack their workers.
The business records of the recipients are less than flattering. According to
well-documented reports summarizing the histories of those that had been
awarded contracts, they are variously riddled with "cost overruns, accounting
irregularities, financial dereliction, fraud, bankruptcy, overcharging, price
gouging, profiteering, wage-cheating, deception, corruption, health and safety
violations, worker and community exploitation, human and labor rights abuses,
union-busting, strike-breaking, environmental contamination, ecological
irresponsibility, malpractice, criminal prosecutions, civil law suits,
privatization of public resources, collusion with dictators, trading with
regimes in violation of international sanctions, drug-running, prostitution,
excessive executive compensation, and breach of fiduciary duty to shareholders
and the public".
Lest those donor countries angling for deals on behalf of their own
corporations be misled: This is not the list of requirements for interested
contractors and subcontractors hoping to do business in Iraq.
To be discussed in Madrid is the direction that the occupation takes. At stake
is the future of the "capitalist dream" of multinational corporations like
McDonald's in Iraq. If the money's not enough, the occupation forces might
simply pack up in a few months. If the lending nations cough up enough cash,
they could only have ensured that they'd get a bang for their buck.
If this happens, then those financing the continued occupation - the Iraqis,
the taxpayers, the soldiers, and the civilians - must at least be treated to a
complimentary combo meal of Big Mac, cola and fries when the Baghdad franchise
opens. They must be dying for a taste of freedom.
(Copyright Herbert Docena)