World Bank brings market fundamentalism to Iraq.

• Author: Hoang, Kathy
• Position: Economics Reconsidered

[Since this article was written, the plan to practice market fundamentalism using the Iraqi economy as a guinea pig hit some snags. Reportedly, there is widespread opposition to privatization by both labor and management, and the Iraqi election results hardly seems a mandate for the free market approach. However, Kathy Hoang's tale about the forces relentlessly pushing privatization remains on target.--Editor]

The World Bank has forced dozens of countries to put their economies in the hands of the "free market"--achieved by eliminating regulations and taxes and granting maximum flexibility to businesses and investors. Its insistence on limiting the reach of government, and creating new ways to apply free-market principles to economies unaccustomed to unbridled competition, has moved many observers to label it a leading advocate of "market fundamentalism"--the ideological belief that all economic problems can, and should, be solved with free-market solutions.

Now the World Bank is bringing its doctrines to Iraq. The US government has acknowledged its concern that religious fundamentalists might gain power in Iraq, but it has no problem with the introduction of market fundamentalism.

Indeed, the US government has actively encouraged, even pressured, the Bank to enter the fray and enforce its orthodoxy. If the Bank succeeds, it will be reinforcing the unpopular rules established by the Coalition Provisional Authority and its head, Paul Bremer--rules that give the United States extraordinary advantages in the future Iraqi economy.

The World Bank's plan for Iraq

The Bank's first significant work on post-war Iraq was the "Joint Iraq Needs Assessment," carried out jointly with the United Nations. It also helped facilitate a few small-scale development initiatives such as the Emergency Textbook Provision Project and the Capacity-Building Program for Iraqi Civil Servants, and has recently announced plans to begin infrastructure projects focusing on rehabilitation of infrastructure, water and sanitation, and schools.

Despite the Bank rhetoric citing improved Iraqi welfare as the goal of the reconstruction plans, foreign investors, particularly those from the US and other wealthy G8 nations, are set to be the greatest beneficiaries of the Bank's recommended policies.

The World Bank's recommendations are distinctly in line with US economic interests at the expense of Iraqi citizens. Under the Bank's recommendations, Iraq is poised to become the most economically neo-liberal (i.e. "free market") country in the Middle East. The Bank especially prioritizes the development of new markets in Iraq, but fails to promote Iraqi participation in the economy and Iraqi ownership of capital, while offering incentives to foreign investors. Thus far, the opportunities have been going chiefly to US investors, since the US exercised near-total control over the awarding of contracts until the June 28, 2004 handover of sovereignty. It is no exaggeration to say that the segments of the Iraqi economy doled out to US interests represent a potential goldmine.

The undemocratic process by which the Bank operates in Iraq lends context to the imperialistic nature of the policies and the interests they promote.

Throughout World Bank documents detailing economic plans for Iraq, including the Joint Needs Assessment and the Interim Strategy Note of the World Bank for Iraq, it claims to be purely interested in bettering the lives of the Iraqi people and promoting Iraqi economic growth. In practice, however, the Bank's economic policy blueprints for the sovereign Iraqi government have outlined a framework that only promotes the interests of foreign investors and foreign profit.

The Coalition Provisional Authority (CPA)

The World Bank supports the completely undemocratic decision of the Coalition Provisional Authority (CPA), the occupation force led by the US to govern Iraq until the June 28 handover, to reform legislation on foreign direct...