The Handover That Wasn't

Before his departure, CPA chief Paul Bremer issued 100 Orders to dramatically restructure Iraq's economy to fit free-market ideals. And no Iraqi, including future elected officials, can undo them

In Foreign Policy in Focus, Antonia Juhasz writes:

The U.S. occupation of Iraq officially ended on June 28, 2004 , in a secret ceremony in Baghdad. Officially, "full sovereignty" was handed from the Americans to the Iraqi Interim Government. But it was clear from the start that this was sovereignty in name, not in deed. First, there is the continued military occupation: 138,000 U.S. soldiers and Marines, plus 20,000 troops from other countries and an estimated 20,000 contractors, all fully under U.S. control and immune to Iraqi laws. Equally debilitating, however significantly less well reported upon, is the continued political and economic occupation by the Bush administration and its corporate allies.

The most important tools being used by the Bush administration to maintain varying degrees of economic and political control in Iraq are the 100 Orders enacted by L. Paul Bremer, III, head of the now defunct Coalition Provisional Authority (CPA) before his departure. It was thought that the "end" of the occupation would also mean the end of the Orders. Instead, in his final Order enacted on his last day in the country, Bremer simply transferred authority for the Orders over to the new Prime Minister, Iyad Allawi. For his part, Allawi – a thirty-year exile of Iraq with close ties to both the CIA and British Intelligence Services – is considered America 's new man in charge of Iraq .

Bremer also ensured the implementation of the Orders by stacking every Ministry with U.S.-appointed authorities with five-year terms – well into the period of the new, elected government, which is to take office by the end of this year.

The Orders are exercised pursuant to the Iraqi interim constitution, the Transitional Administration Law (TAL). The Annex to the TAL states that the Orders can only be overturned with the approval of the president, the two vice presidents and a majority of the ministers.

But the Annex also denies the interim government from taking "any actions affecting Iraq 's destiny" beyond the election of an Iraqi government. The identical sentence appears in UN Security Council Resolution 1546, which outlines Iraq's transition to "sovereignty." Thus, while Allawi may succeed in overturning a few less far-reaching Orders if for no other reason than to demonstrate his independence from the Americans, it is beyond his authority to change any fundamental laws.

And, as Bremer said about the Orders, "You set up these things and they begin to develop a certain life and momentum on their own – and it's harder to reverse course."

It is difficult to over-state how far-reaching the Orders are. As described in Order #39 on Foreign Investment, the Orders are intended to do no less than "transition [ Iraq ] from a ... centrally planned economy to a market economy." This goal is explained in greater detail by BearingPoint, Inc., the Virginia based corporation that received the $250 million contract to facilitate this transition. The contract states:

"It should be clearly understood that the efforts undertaken will be designed to establish the basic legal framework for a functioning market economy; taking appropriate advantage of the unique opportunity for rapid progress in this area presented by the current configuration of political circumstances... Reforms are envisioned in the areas of fiscal reform, financial sector reform, trade, legal and regulatory, and privatization."

The (New and Improved) Bremer Orders

A sampling of the most important Orders demonstrates the economic imprint left behind by Bremer:

Order #39 allows for the following: (1) privatization of Iraq's 200 state-owned enterprises; (2) 100 percent foreign ownership of Iraqi businesses; (3) "national treatment" of foreign firms; (4) unrestricted, tax-free remittance of all profits and other funds; and (5) 40-year ownership licenses. Thus, it allows the U.S. corporations operating in Iraq to own every business, do all of the work, and send all of their money home. Nothing needs to be reinvested locally to service the Iraqi economy, no Iraqi need be hired, no public services need be guaranteed, and workers' rights can easily be ignored. And corporations can take out their investments at any time.

Order #40 turns the banking sector from a state-run to a market-driven system overnight by allowing foreign banks to enter the Iraqi market and to purchase up to 50 percent of Iraqi banks.

Order #49 drops the tax rate on corporations from a high of 40 percent to a flat rate of 15 percent. The income tax rate is also capped at 15 percent.

Order #12 enacted on June 7, 2003 and renewed on February 24, 2004, suspends "all tariffs, customs duties, import taxes, licensing fees and similar surcharges for goods entering or leaving Iraq, and all other trade restrictions that may apply to such goods." This led to an immediate and dramatic inflow of cheap consumer products, which has essentially wiped out all local providers of the same products. This could have significant long-term implications for domestic production as well.

Order #17 grants foreign contractors, including private security firms, full immunity from Iraq 's laws. Even if they do injure a third party by killing someone or causing environmental damage such as dumping toxic chemicals or poisoning drinking water, the injured third party can not turn to the Iraqi legal system, rather, the charges must be brought to U.S. courts under U.S. laws.

Order #77 established the Board of Supreme Audit and named its president and his two deputies. The Board oversees inspectors in every Ministry with wide-ranging authority to review government contracts, audit classified programs, and prescribe regulations and procedures.

Order #57 created and appointed an inspector within every Iraqi Ministry with five-year terms who can perform audits, write policies, and have full access to all offices, materials, and employees of the Ministries.

Then there are the approximately 200 mostly U.S. and other international advisers who will remain embedded as consultants in every Iraqi Ministry well after the official occupation has ended.

Clearly, the Bremer Orders fundamentally altered Iraq's existing laws. For this reason, the Bremer Orders are also illegal. Transformation of an occupied country's laws violates the Hague regulations of 1907 (the companion to the 1949 Geneva conventions, both ratified by the United States), and the U.S. Army's Law of Land Warfare. Indeed, in a leaked memo, British attorney general, Lord Goldsmith, warned Tony Blair that "the imposition of major structural economic reforms would not be authorized by international law."

Following the Money

The U.S. will also exert significant control over Iraq by holding the strings to the largest purse in the country for the foreseeable future.

In June 2004, the U.S. General Accounting Office reported that the CPA had spent virtually all of Iraq's money but relatively little of its own since the end of "active engagement."

There are two primary pots of money earmarked for Iraq's reconstruction. The largest is the approximately $24 billion of U.S. taxpayer money appropriated by Congress last year. The second is known as the Development Fund for Iraq (DFI) worth about $18 billion. This is primarily money from Iraq's oil revenues and was controlled by the CPA until authority for the fund was handed over to the new Interim Government on June 28.

While the CPA controlled the DFI, it spent approximately $13 billion from the fund. On the other hand, it only spent about $8.2 billion of the U.S. appropriation. Thus, the DFI is almost out of money, while the U.S. appropriation has hardly been touched. Control of this money now shifts to John Negroponte, the new U.S. Ambassador to Iraq . In addition to the largest pot of money in Iraq , Negroponte will exercise control over one of the largest embassies in the entire world with some 1,500 employees with offices throughout Iraq .

Pay for the Reconstruction

Reconstruction is the one thing that the U.S. is obligated under international law to do in Iraq . U.S. taxpayers have pledged billions of dollars toward this effort. However, the New York Times reported on June 30, 2004 , that fewer than 140 of 2,300 promised construction projects are even under way in Iraq and there have been widespread reports about waste, fraud, and abuse in the projects that have started.

Supplies of electricity and water are no better for most Iraqis, and in some cases are far worse than they were before the invasion. In fact, UN special envoy Brahimi said upon leaving Iraq that after security, the lack of reliable electricity is the number one problem facing Iraq today. Drinking water throughout the country is in a crisis state, with some villages having no access to water while larger cities receive water approximately 50 percent of the time – leading to vast outbreaks of cholera, diarrhea, nausea, kidney stones, and death. Destroyed bridges continue to create monstrous bottlenecks in many parts of the country. Iraq 's horribly overburdened hospitals need electricity, water, and sewage to function. Hospitals also need the medicines and medical supplies that are in woefully inadequate supply.

With few reconstruction projects underway, and with Bremer's rules favoring U.S. corporations, there has been little opportunity for Iraqis to go back to work, leaving nearly two million unemployed one and a half years after the invasion. Attempts by the Bush administration to reverse this have been minimal, at best. Only three months after Bremer pledged that 50,000 Iraqis would find jobs at construction sites before the formal transfer of sovereignty, fewer than 20,000 local workers are employed.

Compounding these problems is the ongoing security situation, which has slowed reconstruction and vastly increased the costs. Even Iraqis who may have initially welcomed the ouster of Hussein have become enemies of an occupation that increasingly reveals its true objectives: U.S. political and economic exploitation and dominance. This is one reason why U.S. contractors report that as much as one out of every three reconstruction dollars is going toward security costs rather than rebuilding.

End the Occupation

The Bremer Orders are both immoral and illegal and must be repealed to allow Iraqis to govern their own economic and political future. Given the Bush administration's failure to quickly, fairly, or transparently allocate U.S. reconstruction funds, and the complete lack of oversight of the CPA's depletion of nearly all of the DFI, the remainder of U.S. reconstruction funds should be turned over to full UN authority until free and democratic elections are held in Iraq, at which time the money should be turned over to the Iraqis themselves.

Reconstruction of Iraq should be based on rebuilding the economy to maximize fulfilling the long-term needs of Iraqis. All contract processes should be completely transparent and accessible to Iraqis. The awarding of contracts should be done with preference given first to Iraqi companies, experts, and workers. If no Iraqi company is capable of performing necessary work, preference should be given to international humanitarian organizations. If non-Iraqi companies are necessary, contracts must be open to global competition and profit margins held as low as possible by using fixed fees. Oversight must be immediate, independent, transparent, and thorough.

The U.S. needs to extricate itself from Iraq in every way other than the provision of money to pay for the reconstruction – done by and for Iraqis – and to pay for a truly multinational (non-U.S.) peacekeeping force to bring the stability required both for reconstruction and for truly free and democratic elections. The occupation must end.

The CIA & Iraq: An Intelligence Debaucle . . . .

. . . . And worse

In Counterpunch, former CIA analyst and co-founder of Veteran Intelligence Professionals for Sanity Ray McGovern writes:
In our various oral and written presentations on Iraq my veteran intelligence officer colleagues and I took no delight in sharply criticizing what we perceived to be the corruption of intelligence analysis at CIA. Nothing would have pleased us more than to have been proven wrong. It turns out we did not know the half of it.

Several of us have just spent a painful weekend digesting the report of the Senate Intelligence Committee on prewar intelligence assessments on Iraq. The corruption is far deeper than we suspected. The only silver lining is that the corrupter-in-chief, George Tenet, is now gone.

When the former CIA Director departed Sunday, he left behind an agency on life support-an institution staffed by sycophant managers and thoroughly demoralized analysts. The analysts are embarrassed at their own naiveté in believing that the passage carved into the marble at the entrance to CIA Headquarters-"You will know the truth, and the truth will set you free"-held real meaning for their work.

The Senate Committee report is meticulous. Its findings are a sharp blow to those of us who took pride in working in an agency where we could speak truth to power-with career protection from retribution from the powerful, and with leaders who would face down those policymakers who tried to exert undue influence over our analysis.

Enter "Joe Centrifuge"

Although it was clear to us that much of the intelligence on Iraq had been cooked to the recipe of policy, not until the Senate report did we know that the skewing included outright lies. We had heard of "Joe," the nuclear weapons analyst in CIA's Center for Weapons Intelligence and Arms Control, and it was abundantly clear that his agenda was to "prove" that the infamous aluminum tubes sought by Iraq were to be used for developing a nuclear weapon. We did not know that he and his CIA associates falsified the data-including rotor testing ironically called "spin tests."

The Senate committee determined that "Joe" deliberately skewed data to fit preconceptions regarding an Iraqi nuclear threat. "Who could have believed that about our intelligence community, that the system could be so dishonest?" wondered the normally soft-spoken David Albright, a widely respected veteran expert on Iraq's work toward developing a nuclear weapon.

I share his wonderment. I too am appalled-and angry. You give 27 years of your professional life to an institution whose main mission-to get at the truth-is essential for orderly policy making, and then you find it has been prostituted. You realize that your former colleagues have lacked the moral courage needed to stave off the effort to enlist them as accomplices in deceiving our elected representatives into giving their blessing to an ill-conceived, unnecessary war. Even Republican stalwart Sen. Pat Roberts, chairman of the Senate Intelligence Committee, has conceded that, had Congress known before the vote for war what his committee has now discovered, "I doubt if the votes would have been there."

Pandering to the "Powers That Be"

It turns out that only one US analyst had met with the now-infamous Iraqi defector appropriately codenamed "Curveball," the source of the scarytale about mobile biological weapons factories. This analyst, in an e-mail to the deputy director of CIA's task force on weapons of mass destruction, raised strong doubt regarding Curveball's reliability before Colin Powell highlighted his claims at the UN on Feb. 5, 2003. I almost became physically ill reading the cynical response from the deputy director of the task force:

"As I said last night, let's keep in mind the fact that this war's going to happen regardless of what Curveball said or didn't say, and the powers that be probably aren't terribly interested in whether Curveball knows what he's talking about."

(Reading this brought to consciousness a painful flashback to early August 1964. We CIA analysts knew that reports of a second attack on US destroyers in the Tonkin Gulf were spurious but were prevented from reporting that to policymakers and to Congress. The then-Director of Current Intelligence explained to us condescendingly that President Johnson had decided to use the non-incident as a pretext to escalate the war and that "we do not want to wear out our welcome at the White House." So this kind of politicization, though rare in the past, is not without precedent-and not without similarly woeful consequences.)

With respect to Iraq, George Tenet's rhetoric about "truth" and "honesty" in his valedictory last week has a distinctly Orwellian ring. Worse still, apparently "Joe Centrifuge," the abovementioned deputy director, and other co-conspirators will get off scot-free. Sen. Roberts says he thinks "It is very important that we quit looking in the rearview mirror and affixing blame and, you know, pointing fingers." And Acting Director John McLaughlin has told the press that he sees no need to dismiss anyone as a result of what he portrayed as honest, limited mistakes.

Tell It To The Families

I would like to hear Roberts and McLaughlin explain all this to the families of the almost 900 US servicemen and women already killed and the many thousand seriously wounded in Iraq.

Roberts seemed at pains to lay the blame on a "flawed system," but a close reading of the committee report yields the unavoidable conclusion that CIA analysis can no longer be assumed to be honest-to be aimed at getting as close to the truth as one can humanly get. For those of you cynics about to smirk, I can only tell you-believe it or not-that truth was in fact the currency of analysis in the CIA in which I was proud to serve.

Aberrations like the Tonkin Gulf cave-in by CIA management notwithstanding, the analysis directorate was widely known as the unique place in Washington where one could normally go and expect a straight answer unencumbered by any political agenda. And we were hard into some very controversial-often critical-national security issues. It boggles my mind how any president, and particularly one whose father headed the CIA, could expect to be able, without that capability, to make intelligent judgments based on unbiased fact.

It is said that truth is the first casualty of war. Sadly, in the case of Iraq, even before the war truth took a back seat to a felt need to snuggle up to power-to stay in good odor with a president and his advisers, all well known to be hell-bent on war on Iraq.

Caution: Don't Be Fooled

The Washington Times lead story on July 10 began: "Flawed intelligence that led the United States to invade Iraq was the fault of the US intelligence communitya report by the Senate Select Committee on Intelligence concluded yesterday." From the other end of the political spectrum, David Corn of The Nation led his own report with, "The United States went to war on the basis of false claims."

Not so. This is precisely the spin that the Bush administration wants to give to the Senate report; i. e., that the president was misled; that his decision for war was based on spurious intelligence about non-existent weapons of mass destruction.

But the president's decision for war had little to do with intelligence on Iraqi weapons of mass destruction. It had everything to do with the administration's determination to gain control of strategic, oil-rich Iraq, implant an enduring military presence there, and-not incidentally--eliminate any possible threat from Iraq to Israel's security.

These, of course, were not the reasons given to justify placing US troops in harms way, but even the most circumspect senior officials have had unguarded moments of candor. For example, when asked in May 2003 why North Korea was being treated differently from Iraq, Deputy Defense Secretary Paul Wolfowitz responded, "Let's look at it simplyThe country (Iraq) swims on a sea of oil."

And basking in the glory of "Mission Accomplished" shortly after Baghdad had fallen, Wolfowitz admitted that the focus on weapons of mass destruction to justify the attack on Iraq was "for bureaucratic reasons." It was, he added, "the one reason everyone could agree on"-meaning, of course, the one that could successfully sell the war to Congress and the American people.

The Israel factor? In another moment of unusual candor-this one before the war-Philip Zelikow, a member of the President's Foreign Intelligence Advisory Board from 2001 to 2003 (and now executive director of the 9/11 commission), pointed to the danger that Iraq posed to Israel as "the unstated threat-a threat that dare not speak its namebecause it is not a popular sell."

Last, but hardly least. It was not until several months after the Bush White House decided to make war on Iraq that the weapons-of-mass-destruction-laden National Intelligence Estimate was commissioned, and then only because Congress needed to be persuaded that the threat was so immediate that war was necessary. Vice President Dick Cheney set the main parameters in a major speech on August 26, 2002, in which he declared, "We know that Saddam has resumed his efforts to acquire nuclear weapons." The estimate Tenet signed dutifully endorsed that spurious judgment-with "high confidence," no less.

Is There Hope?

If hope is what is found at the bottom of Pandora's box, it can be found here too. That there are still honest, perceptive analysts at CIA is clear from the analysis that Anonymous sets forth in his excellent book, Imperial Hubris: Why the West is Losing the War on Terror. (Note to Condoleezza Rice: Anonymous' name is Michael Scheuer; he is an overt employee; you can get his extension from the CIA operator-just call 703 482 1100.)

As long as analysts of Scheuer's caliber hang in there, there can be hope that, once the CIA is given the adult supervision it has lacked for the last two dozen years, it can get back on track in performing its critical job for our country.

Senate Intelligence Committee Report On Pre-Iraq War Intelligence

Report on the U.S. intelligence community's pre-war intelligence assessments on Iraq here.