After the War
The US 'Marshall Plan' for Iraq Would Keep It Impoverished
by Michael Doliner
December 18, 2002

"Today, we are in the early days of the most severe energy crisis the world has ever known," said Mathew R. Simmons, on November 16, 2000, at a symposium jointly hosted by his investment bank, Mathew R. Simmons, International, and Baker Botts, James K. Baker III's law firm. Mr. Baker could not be present because he was leading George W. Bush's post-election legal battle against Al Gore. Mr. Simmons also stated that "conventional non-OPEC oil supplies might have already peaked, regardless of future oil prices." The conclusion concurs in substance with the predictions of several prominent geologists and others that world conventional oil production will peak sometime in the present decade.

When the peak arrives, prices will soar, and shortages will appear. There is no real substitute for oil; without it, economies will crumble. Because of our oil dependency, the United States is more vulnerable than many other countries to this coming oil shortage.

Whatever the motives in the imminent war with Iraq, soon after its end the oil shortage will spur the United States to take advantage of its position there to exploit Iraqi oil. Exploitation of this oil will first require the reconstruction of Iraq's oil industry infrastructure, which has decayed under the UN-imposed sanctions. To rebuild this infrastructure to exploit this resource will require billions of dollars in investment from the oil companies, but they will not be willing to make this investment without guarantees of political stability. Because of what Iraq is and where it is, such stability will be all but impossible to achieve after a war that removes Iraq's regime.

American statements, the text of the American-drafted Security Council resolution just passed, and the express wishes of Turkey, an ally the United States would not want to undermine, have all declared a commitment to a unified Iraq. To hold Iraq together, either an Iraqi government created out of the present Iraqi opposition or an American military government will be needed.

The present Iraqi opposition to the government of Saddam Hussein is highly fragmented. In the north, two organizations, The Patriotic Union of Kurdistan and the Kurdistan Democratic Party, fight for the loyalty of the Kurds. Many of the Shi'i in the south have no political allegiances, but two political organizations operate: the al-Da'wa (the Call) and the Supreme Council for the Islamic Revolution in Iraq. Some of the Shi'i, especially those in al-Da'wa, are interested in alliance with Iran. Others are not. The Sunnis in the middle of the country (who have supplied the present ruling organization with its members) would not want a government controlled by the Shi'i , who are the majority group in Iraq. According to Said Aburish, a well-known Iraqi journalist and a biographer of Saddam Hussein, there are over 70 other opposition parties.

Since the United States has committed itself to a unified Iraq, it can ally itself with none of these. Instead it favors an umbrella organization, the Iraqi National Congress (INC). Ahmad Chalabi leads the INC. Although the Kurdistan Democratic Party originally allied itself with Chalabi, it betrayed the INC in 1996 and allowed Saddam Hussein to destroy elements of the INC operating in northern Iraq. The INC does not now have an effective fighting force, and their unity is questionable. Aburish describes the old exiles who make up the INC as spending their time quarreling over how to divide the 96 million dollars the United States has given them. The INC is supposed to hold a meeting in London on December 10. Here is a description of their organization as of now:

The former banker Ahmed Chalabi, of the INC, is favoured by the defence department but distrusted by the state department and the CIA, his former backer. Mr Chalabi threatened to boycott the conference, complaining that it was being dominated by the so-called "group of four" (the KDP, PUK, Sciri and INA), and that Iraqi liberals and independents in exile were being shut out.

The INC has also pressed for the conference to set up a provisional government in exile, which Kurdish and Shia groups say is premature.

The INC can control a postwar Iraq, if at all, only with the extensive support of both American arms and money. It will need to form a fighting force. The war will decimate the present Iraqi military. Its commanders, most of whom are in Saddam Hussein's circle of homeboys from Tikret, will be eliminated in the aftermath of the war. Forces that desert to save their skins will desert again if their skins are again in danger and will not be reliable. To keep the factions that want to pull Iraq apart from doing so, the INC will need a strong military made up of members of these factions, but only the INC's ability to supply money and arms will provide even a hope of gaining their loyalty. For this the INC will rely on Western aid.

Of necessity Western aid to postwar Iraq will be extremely limited. With the oil shortage looming, exploitation of Iraqi oil will be the primary Western motive, but a rebuilt Iraq would be an oil-hungry Iraq. The better Iraq's situation, the more of its own oil it would need to use. Thus, the American goal will be an impoverished but docile Iraq, and it will not provide enough aid for real economic recovery, but only enough to pay and supply the military force. In such a situation the military commanders will use their positions to enrich themselves. They will be mercenaries.

As long as the INC can dole out arms and money, this army of mercenaries will remain loyal to the extent that that loyalty does not conflict with their self-interest. For these commanders will still set up fiefdoms wherever they can to extract further wealth. Oil companies, trying to build pipelines, refineries, and the like, will need to pay what will amount to protection money to these warlords. Turf wars are bound to break out, and a fight over the Iraqi oil infrastructure will be likely to destroy it. The oil companies, which have had plenty of experience with political instability, will not take these chances, and they will not build the infrastructure.

This inevitable dynamic is easy to see in Afghanistan, where Hamid Karzai, the hoped-for new leader of the country, has had to appoint warlords as commanders in his army, funnel American and other Western aid to them, and turn over large sections of the country to their care. Mr. Karzai has so little influence that he cannot even find a loyal Afghan bodyguard, but must rely on Americans. In a recent Washington Post article an Afghani government spokesman described the situation:

"After 23 years of war and hard living, a lot of people view government positions as a chance to get wealthy and take advantage," said Ishrak Hussaini, spokesman for the Interior Ministry.

Use of government positions to get wealthy and take advantage is a problem anywhere that central authority has broken down and life is very hard. And there is no doubt that Iraq, after a war, will be such a place.

Reconstructing Iraq's oil industry infrastructure will require an investment of billions of dollars, an investment no one will make without a guarantee of political stability. Since the INC will not be able to supply such a guarantee, the United States cannot afford to allow them to rule the country.

On October 10, the United States government announced that a military government under General Tommy Franks would most likely take over the administration of postwar Iraq rather than a government under the INC. As a model for this occupation, they gave the military government of Japan right after World War II.

The situation in Japan at the end of the war was quite different from what is likely to appear in Iraq. Reconstruction in Japan was no picnic. Black markets flourished, people starved, and the country languished at least until 1949. The United States military government of Japan continued for seven years and employed 250,000 people. To Americans it might seem that Japan just bounced back. However, it was only the economic stimulus of American "special procurements" for the Korean War five years into the occupation that allowed Japan to dig out of the war's devastation.

But there was more to this recovery than just money. Japan is, for all intents and purposes, a monoculture. There were no competing tribes, no Kurds, Sunnis, and Shiites, threatening to pull Japan apart. Nor was there a single act of terrorism against the American forces in Japan during this time. In postwar Japan, the emperor was allowed to stay, even though stripped of his power. This provided a respected central figure retained from the past around which national unity could coalesce. In the case of Iraq, obviously, no such figure will remain, and several competing figures are likely to emerge and vie for power. In Japan the government—especially the bureaucracy—was largely left intact. This provided a ready means for distributing food to a starving population and for organizing the reconstruction of industry and infrastructure. Iraq's current leaders, largely Saddam Hussein's loyal retainers from Tikrit, will almost certainly be killed in the war or its aftermath, in revenge for his brutal policies. Certainly they will lose power. No functioning government will be left in the wake of this bloodbath. Further, Japan was already a highly industrialized country before the occupation and could realistically set out upon an ambitious course of high-tech development as early as 1946, even in the face of very different American plans to keep Japan a fourth-rate country. Iraq is not an industrialized country with a technologically sophisticated workforce.

Most important, it was U.S. policy during the Cold War to reconstruct Japan as a bulwark against communism. Iraqi reconstruction is not in America's interest, for Iraqi reconstruction would drain oil out of the total supply.

Iraq would be a state impoverished by more than 20 years of war and UN-imposed sanctions without a head of state or a functioning bureaucracy. America will not offer either a Marshall Plan or the economic boost of a Korea-like War, for its interest in Iraq, unlike in Japan or Germany, will be to extract material wealth, not to protect against a communist uprising. And Iraq will have no large industrial base or engineering class to draw upon. With competing tribal factions that want to pull the country apart, but with no recognized leader, no administering bureaucracy, no injection of money, no American motive for reconstruction, and no history of industrialization, Iraq will not revive as Japan did. On October 29, in a discussion at MIT, John W. Dower, an authority on postwar Japan, was asked his opinion of an American invasion of Iraq. He replied that the Bush administration is "now heading for war followed by chaos."

An American military government sitting upon an unreconstructed Iraq will not be able to provide the political stability necessary for the huge investment the oil industry will need. In Japan the United States set up a supragovernment: it did not and could not handle day-to-day affairs. But the old government, essentially intact, was there to do so. Similarly, in Iraq, the United States could not take control at street level, but instead of a central government, hydra-headed organizations will arise. These organizations will become shadow governments; the United States, unable to eliminate this amoebic political nonstructure, will learn to accommodate it, just as it has learned to accommodate the warlords who have partitioned an ostensibly united Afghanistan. However, this will mean a fragmented Iraq with the Kurds constituting a shadow state in the north and the Shiites one in the south. That in turn would alarm Turkey and Israel, both of whom are American allies in the region. Although Turkey has insisted that it would invade northern Iraq if a Kurdish state formed, it will not be able to do so if the United States military government is there. If an oil-rich Kurdish state takes root, Turkey might be destabilized.

From Israel's point of view, Iraq is a toothless tiger— but Iran is not. Hezbollah, a Lebanese organization sponsored by Iran, has caused Israel a lot of trouble, and has actually driven Israel out of Lebanon. Israel would fear that Shiite political control in the oil-rich south of Iraq would strengthen Iran and threaten them. They would want to find a way to destroy whatever Shiite political structure developed, but again, would not be able to do so with the United States military government in the way.

Neither an attempt to create a government through the INC nor an attempt to rule Iraq under a military governor has any chance of keeping Iraq intact. On the contrary, either plan will likely end with the partition of Iraq into at least three uncontrollable areas, a result everyone agrees is not in the interest of the United States. Such instability will prevent Iraq's oil from being developed. There is every chance that a postwar Iraq will produce less oil than Iraq does now and this, along with the expense of the war and military occupation, will hasten the day when the oil squeeze becomes acute.

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Michael Doliner studied with Hannah Arendt at the University of Chicago 1964-1970. He has taught at Valparaiso University and Ithaca College, but is now a businessman in Ithaca.

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