Thursday, November 02, 2006

Economic warfare in Iraq: Neoliberalism and the IMF

Jeff Leys has an important article in Common Dreams that exposes the other side of the continued occupation of Iraq beyond the slaughter of thousands of US soldiers and Iraqi civilians. Much as the US and Western industrialized nations continue to "negotiate" so-called free trade deals with Third World nations in Latin America and Southeast Asia, the Middle East is very much on the radar of the IMF and Washington as the newest frontier for increased corporate profits.

Leys discusses something the mainstream media has refused to touch, the "Standby Agreement" with the IMF of December 2005 (I wrote about it at the time here). As a condition of forgiving the debt owed to it by the Saddam Hussein regime (which in itself is simply unconscionable), the Paris Club has, through the IMF, imposed a number of punative conditions on Iraq during their reconstruction that are making life even more miserable for the country's poor. Included among these measures, as Leys meticulously documents, are declining fuel prices (which are leading to increasing inflation), slashing the country's "social protection program" that provides food and other necessities for Iraqis living on less than $2 a day and working to cancel the country's proposed pension laws.

As Leys notes: "The I.M.F. strictures are that Iraq must exercise "fiscal discipline" at all costs. Imagine the tremendous difficulty, if not impossibility, of breaking out of recessions and depressions in the U.S. if the government was forced to exercise "fiscal discipline" at all costs—never being permitted to spend on the Civilian Conservation Corps, the Works Progress Administration, the Tennessee Valley Authority or the Boulder / Hoover Dam project during the Great Depression.

Despite the fact that Iraq operated with a surplus in 2005 (mainly due to a lower than anticipated level of government investment), the I.M.F. is requiring Iraq to operate strictly within its budget for 2006. As noted by the I.M.F., "The determination to contain recurrent spending, and particularly wages and pensions, to the original budget allocations, is an important signal of the government's respect for fiscal discipline."

It all comes down to this: "In other words: cut pensions of retirees; limit the wages of public employees; take no action to combat unemployment through public works and other projects; "liberalize" the law to drop all barriers to the private import of gasoline (an already accomplished action); and exercise "fiscal discipline" at all costs." All to punish the Iraqi people for the profligate spending of the Hussein dictatorship - at the behest of the world's wealthiest countries.

Does this make any sense? Of course not, it is odious and just as much a form of warfare against the people of Iraq as the continued military occupation that allows such plunder to occur. The economic restructuring of Iraq is being done by the Paris Club on their terms to benefit the world's wealthiest countries. And as sure as fiscal discipline is being pushed, privatization of key natural resources will follow suit to allow multinational corporations to reap unimaginable profits. This is the face of neoliberalism allowed to run rampant by neoconservative foreign polcy, courtesy of the US and its coalition of the willing.

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