Iraq
January 04, 2005
Iraq Can Help Stabilize the Middle East
By Sam Wilkin, Editor in Chief
[printer-friendly version]
This month, Countryrisk.com’s Editor returns to his desk after a brief absence to finish a new book. In the new year, hope springs eternal: while Iraq seems a looming disaster, there is at least the potential that US efforts there could help stabilize the Middle East. The key is to apply lessons learned in the reconstruction of Japan.
All eyes are on Iraq’s upcoming elections as the test case for America’s plan to bring to democracy to the Middle East. But elections alone do not build stable democracies. The US is failing to learn from history – and missing an opportunity to put the stability of the Middle East on a firmer foundation.
In politics, it always matters who has the money, and in the Middle East, the wrong people have it. For decades the region’s political agenda has been set by oil-rich princes, tithe-rich ayatollahs, and aid-rich generals – to the detriment of both political openness and economic development.
It is not easy for outsiders to change this kind of politics, but it is possible. Consider the lessons learned in Japan. Recent books by Aaron Forsberg and Sayuri Shimizu have shown that it was not just Japanese industriousness and ingenuity that made post-war Japan such a success. It was the unusual form of US aid.
In Japan, as in Iraq, the early days were dark and difficult. Japan was economically devastated, politically authoritarian, and hopelessly exotic to its American occupiers. Two years into the occupation, Japan’s economy was stagnant and inflation was rising.
But then the Americans made an abrupt change of strategy. In 1948, National Security Council policy statement NSC 13/2 abandoned attempts to reform Japan’s politics and economy along US lines and made reviving Japan as a stable and prosperous anti-Communist ally the “primary goal” of US policy.
US funds poured into Japan, but not in the form of aid. During the decade surrounding the Korean War, the US military showered Japanese firms with supply and service contracts – in excess of $500 million each year; in some years close to $1 billion. In aggregate, this vastly exceeded the $2 billion in aid the US gave Japan’s government during the occupation. In 1952, a whopping 70 percent of Japan’s commercial exports were US military procurement orders.
The result was that in Japan, private businesses – not soldiers, politicians or priests – had all the money. And these businesses started to set the political agenda. In the 1950s, Japan’s firms lobbied their government for good infrastructure, a well-educated workforce – the things Japanese businesses needed to export to America’s newly opened, unimaginably wealthy, but highly competitive markets.
It is a political dynamic that is all too rare in the developing world. Japan’s elites lobbied for policies that would make not just them, but also their country, rich. In 1958, Japan’s three largest Japanese business associations colluded to pressure their government. But this was good pressure: their chief demand was an ongoing trade dialogue with America. In 1959 alone, Japan’s exports to the US grew by 52 percent. The country’s meteoric rise was under way.
To be sure, applying these lessons to the Middle East will be far from easy. But in the long term, it is this kind of politics – the politics of institutions and interest groups – that makes a country a success or a failure. Great leaders are both rare and temporary. Constitutions are mere pieces of paper until imbued with the weight of history.
A central goal of US policy in the Middle East should be to put money in the hands of the region’s private businesses. Efforts thus far have amounted to political window dressing. Halliburton, Bechtel, and other US contractors were instructed to farm out work to Iraqi and Middle Eastern subcontractors. But US firms, understandably, specialize in rebuilding power grids, not nurturing foreign industry. A watchdog group funded by George Soros found that, for 39 reconstruction contracts awarded in the past year, each with a value in excess of $5 million, only two percent of the revenues actually went to Iraqi companies.
No matter what, billions of US dollars have been spent in Iraq, and billions more will likely be required. The way to achieve the maximum policy impact with these funds is to distribute the benefits in the region. Reconstruction funds, including, as much as possible, military procurement, should go, first and foremost, to Middle Eastern firms. That will mean providing generous capital and technical assistance and relaxing standards and requirements. But that is the way to change who has the money in the Middle East, and create an interest group – outward-looking private businesses – that could at long last change the dynamics of the region for the better.
[In 2005, this column will appear every other Tuesday. -Ed.]
[printer-friendly version]
This month, Countryrisk.com’s Editor returns to his desk after a brief absence to finish a new book. In the new year, hope springs eternal: while Iraq seems a looming disaster, there is at least the potential that US efforts there could help stabilize the Middle East. The key is to apply lessons learned in the reconstruction of Japan.
All eyes are on Iraq’s upcoming elections as the test case for America’s plan to bring to democracy to the Middle East. But elections alone do not build stable democracies. The US is failing to learn from history – and missing an opportunity to put the stability of the Middle East on a firmer foundation.
In politics, it always matters who has the money, and in the Middle East, the wrong people have it. For decades the region’s political agenda has been set by oil-rich princes, tithe-rich ayatollahs, and aid-rich generals – to the detriment of both political openness and economic development.
It is not easy for outsiders to change this kind of politics, but it is possible. Consider the lessons learned in Japan. Recent books by Aaron Forsberg and Sayuri Shimizu have shown that it was not just Japanese industriousness and ingenuity that made post-war Japan such a success. It was the unusual form of US aid.
In Japan, as in Iraq, the early days were dark and difficult. Japan was economically devastated, politically authoritarian, and hopelessly exotic to its American occupiers. Two years into the occupation, Japan’s economy was stagnant and inflation was rising.
But then the Americans made an abrupt change of strategy. In 1948, National Security Council policy statement NSC 13/2 abandoned attempts to reform Japan’s politics and economy along US lines and made reviving Japan as a stable and prosperous anti-Communist ally the “primary goal” of US policy.
US funds poured into Japan, but not in the form of aid. During the decade surrounding the Korean War, the US military showered Japanese firms with supply and service contracts – in excess of $500 million each year; in some years close to $1 billion. In aggregate, this vastly exceeded the $2 billion in aid the US gave Japan’s government during the occupation. In 1952, a whopping 70 percent of Japan’s commercial exports were US military procurement orders.
The result was that in Japan, private businesses – not soldiers, politicians or priests – had all the money. And these businesses started to set the political agenda. In the 1950s, Japan’s firms lobbied their government for good infrastructure, a well-educated workforce – the things Japanese businesses needed to export to America’s newly opened, unimaginably wealthy, but highly competitive markets.
It is a political dynamic that is all too rare in the developing world. Japan’s elites lobbied for policies that would make not just them, but also their country, rich. In 1958, Japan’s three largest Japanese business associations colluded to pressure their government. But this was good pressure: their chief demand was an ongoing trade dialogue with America. In 1959 alone, Japan’s exports to the US grew by 52 percent. The country’s meteoric rise was under way.
To be sure, applying these lessons to the Middle East will be far from easy. But in the long term, it is this kind of politics – the politics of institutions and interest groups – that makes a country a success or a failure. Great leaders are both rare and temporary. Constitutions are mere pieces of paper until imbued with the weight of history.
A central goal of US policy in the Middle East should be to put money in the hands of the region’s private businesses. Efforts thus far have amounted to political window dressing. Halliburton, Bechtel, and other US contractors were instructed to farm out work to Iraqi and Middle Eastern subcontractors. But US firms, understandably, specialize in rebuilding power grids, not nurturing foreign industry. A watchdog group funded by George Soros found that, for 39 reconstruction contracts awarded in the past year, each with a value in excess of $5 million, only two percent of the revenues actually went to Iraqi companies.
No matter what, billions of US dollars have been spent in Iraq, and billions more will likely be required. The way to achieve the maximum policy impact with these funds is to distribute the benefits in the region. Reconstruction funds, including, as much as possible, military procurement, should go, first and foremost, to Middle Eastern firms. That will mean providing generous capital and technical assistance and relaxing standards and requirements. But that is the way to change who has the money in the Middle East, and create an interest group – outward-looking private businesses – that could at long last change the dynamics of the region for the better.
[In 2005, this column will appear every other Tuesday. -Ed.]
May 11, 2004
The Long Shadow of Iraq’s Future
By Sam Wilkin, Editor in Chief
[printer-friendly version]
Experts frequently point to Iraq’s past – colonial history, Saddam’s brutality, ethnic rivalries – to explain the current violence. But evidence from similar regimes indicates the causes may lie not in the echoes of the past, but in the long shadow cast by Iraq’s uncertain future.
“It is hard to fight and kill other people” – so said an Iraqi insurgent, struggling to explain to The Nation’s Christian Parenti why he had hung up his guns. Not to mention, US troops have overwhelmingly superior training, technology and firepower. Against this, planting roadside bombs is one thing, but attempting to take and hold towns – as Sunni and Shia militias have done in recent weeks – is quite another. For the Americans, it is frightening. It looks like a widening rebellion. But for the Iraqis, it is suicidal, and the militiamen have perished in the hundreds.
So why do it? No doubt many are motivated by religious zeal or rage at US troops. But it is no coincidence that the most violent groups have been those which expect to be excluded from power after the June 30th handover. The Sunnis in Fallujah have done the math and realize democracy will mean rule by the Shias. And rebellious Shia cleric Moqtada al-Sadr, whose militia seized Najaf, has been excluded from the political process in favor of more moderate figures.
This matters because in country after country, regardless of history, culture or geography, the presence of natural resource wealth has long fostered violence by politically excluded groups. The circumstances are varied, of course. The World Bank, in a famous study, tracked 161 countries between 1965 and 1999, looking at 47 civil conflicts. The insurgents ranged from disgruntled army factions to religious zealots to oppressed ethnic minorities. The one commonality was that countries which exported large amounts of primary commodities (such as oil and minerals) were “radically more at risk” of suffering civil wars.
The root of the problem for oil-rich countries will come as no surprise: the concentration of wealth and power in too few hands. To this, add: irrespective of stability. In most countries wealth is generated by society at large – for instance, via farming or private business – and any political violence jeopardizes this wealth by causing economic collapse. (Consider, for instance, the economic devastation wrought by the US civil war.) In resource-rich countries the wealth is generated by a tiny minority – e.g., oil workers; it is controlled by the government; and it diminishes hardly at all in the face of instability. (Africa’s oilfields have profitably pumped their way through more civil wars than one cares to remember.) In short, in countries like Iraq, political power is the most precious commodity, and violence does not destroy its value. So excluded groups will fight and die for it. And sitting governments will usually fight back.
This analysis may seem a bit bloodless. Moqtada al-Sadr’s militants do not seem that rational. Or that greedy. But for them, the concentration of power and wealth is reality, not theory. It is writ large in the absence of democracy in the Middle East. Governments that are richer than the people they rule rarely feel the need to share power. That is the history of Iraq, Iran, Saudi Arabia, Qatar, Libya. Excluded groups in such places soon realize the political game is always played for the highest possible stakes.
One would hope the US pledge to establish democracy in Iraq would make a difference. And there are, to be sure, a handful of resource-rich countries that have achieved long-term stability – the US, Norway and even Botswana, for example. But in each such case the key to success has been the establishment of functioning political and economic systems prior to the discovery of natural resource wealth. These functioning systems then distributed the resulting wealth and power widely and productively, defusing potential conflicts and producing stability.
Unfortunately, once the wealth has arrived, establishing democracy and markets becomes fiendishly difficult. The oil riches are the 800-pound gorilla lurking in the corner at any constitutional convention. Before the new systems can spread wealth and power around something usually goes wrong. The losers at the first election return to fighting, for instance. Almost inevitably, the gorilla gets loose and trashes the new system in its infancy.
If the US could convince Iraqis of their democratic, power-sharing, wealth-sharing future, it could defuse the violence that results from politics played for absolute stakes. Unfortunately, the example of other countries gives little help in this. There are few, perhaps no, successful cases of stable democracy introduced to people whose sole experience has been of oil despotism.
Undoubtedly, the suggestion by U.N. representative Lakhdar Brahimi, that Iraqi’s first, transition government be of apolitical bureaucrats committed to resigning from politics is a good one. An attempt to reduce the stakes. But convincing Iraq’s current, very political Governing Council to walk away from power will not be easy. Nor will convincing current and future insurgents to lay down their arms. As always, the oil wealth, the 800-pound gorilla, lurks in the shadows.
[printer-friendly version]
Experts frequently point to Iraq’s past – colonial history, Saddam’s brutality, ethnic rivalries – to explain the current violence. But evidence from similar regimes indicates the causes may lie not in the echoes of the past, but in the long shadow cast by Iraq’s uncertain future.
“It is hard to fight and kill other people” – so said an Iraqi insurgent, struggling to explain to The Nation’s Christian Parenti why he had hung up his guns. Not to mention, US troops have overwhelmingly superior training, technology and firepower. Against this, planting roadside bombs is one thing, but attempting to take and hold towns – as Sunni and Shia militias have done in recent weeks – is quite another. For the Americans, it is frightening. It looks like a widening rebellion. But for the Iraqis, it is suicidal, and the militiamen have perished in the hundreds.
So why do it? No doubt many are motivated by religious zeal or rage at US troops. But it is no coincidence that the most violent groups have been those which expect to be excluded from power after the June 30th handover. The Sunnis in Fallujah have done the math and realize democracy will mean rule by the Shias. And rebellious Shia cleric Moqtada al-Sadr, whose militia seized Najaf, has been excluded from the political process in favor of more moderate figures.
This matters because in country after country, regardless of history, culture or geography, the presence of natural resource wealth has long fostered violence by politically excluded groups. The circumstances are varied, of course. The World Bank, in a famous study, tracked 161 countries between 1965 and 1999, looking at 47 civil conflicts. The insurgents ranged from disgruntled army factions to religious zealots to oppressed ethnic minorities. The one commonality was that countries which exported large amounts of primary commodities (such as oil and minerals) were “radically more at risk” of suffering civil wars.
The root of the problem for oil-rich countries will come as no surprise: the concentration of wealth and power in too few hands. To this, add: irrespective of stability. In most countries wealth is generated by society at large – for instance, via farming or private business – and any political violence jeopardizes this wealth by causing economic collapse. (Consider, for instance, the economic devastation wrought by the US civil war.) In resource-rich countries the wealth is generated by a tiny minority – e.g., oil workers; it is controlled by the government; and it diminishes hardly at all in the face of instability. (Africa’s oilfields have profitably pumped their way through more civil wars than one cares to remember.) In short, in countries like Iraq, political power is the most precious commodity, and violence does not destroy its value. So excluded groups will fight and die for it. And sitting governments will usually fight back.
This analysis may seem a bit bloodless. Moqtada al-Sadr’s militants do not seem that rational. Or that greedy. But for them, the concentration of power and wealth is reality, not theory. It is writ large in the absence of democracy in the Middle East. Governments that are richer than the people they rule rarely feel the need to share power. That is the history of Iraq, Iran, Saudi Arabia, Qatar, Libya. Excluded groups in such places soon realize the political game is always played for the highest possible stakes.
One would hope the US pledge to establish democracy in Iraq would make a difference. And there are, to be sure, a handful of resource-rich countries that have achieved long-term stability – the US, Norway and even Botswana, for example. But in each such case the key to success has been the establishment of functioning political and economic systems prior to the discovery of natural resource wealth. These functioning systems then distributed the resulting wealth and power widely and productively, defusing potential conflicts and producing stability.
Unfortunately, once the wealth has arrived, establishing democracy and markets becomes fiendishly difficult. The oil riches are the 800-pound gorilla lurking in the corner at any constitutional convention. Before the new systems can spread wealth and power around something usually goes wrong. The losers at the first election return to fighting, for instance. Almost inevitably, the gorilla gets loose and trashes the new system in its infancy.
If the US could convince Iraqis of their democratic, power-sharing, wealth-sharing future, it could defuse the violence that results from politics played for absolute stakes. Unfortunately, the example of other countries gives little help in this. There are few, perhaps no, successful cases of stable democracy introduced to people whose sole experience has been of oil despotism.
Undoubtedly, the suggestion by U.N. representative Lakhdar Brahimi, that Iraqi’s first, transition government be of apolitical bureaucrats committed to resigning from politics is a good one. An attempt to reduce the stakes. But convincing Iraq’s current, very political Governing Council to walk away from power will not be easy. Nor will convincing current and future insurgents to lay down their arms. As always, the oil wealth, the 800-pound gorilla, lurks in the shadows.