The War Economy in Iraq

When the invasion troops entered Baghdad in the Spring of 2003, the Ministry of Oil and its content was rapidly secured, while the Ministry of Agriculture was aflame.

The economic imperatives that conducted the US and several vassal states to invade Iraq have been the object of numerous analyses, most of which are wrong or incomplete. The neo-conservatives tried hard to refute the claims that the war had no other goal than the pillage of Iraqi oil. They pushed forward the idea that the oil is sold on the international market at the going price, respecting the rules of competition. Moreover, anyone can see that the Coalition has not been able to exploit Iraqi oil as they wished and that, nevertheless, it persists and is getting bogged down in a costly occupation. The reality is therefore more complex and a close examination of the macro-economic processes at work is necessary.

For certain aspects the invasion of Iraq is a classic predatorial war. The administration of a conquered country by a private provisional Authority, based upon the model of the East Indian Company, is firmly within the Anglo-Saxon tradition. [1] The allocation of contracts for the rebuilding of the country to companies like Halliburton, paid for by the profits from the exportation of Iraqi oil, permits the reintroduction into a dying United Statesian economic system of a source of real value, and not simply speculative profit. Washington’s foreign debt has reached abysmal proportions: twenty years ago household debt in the US was equivalent to half of the economy of the country. Today, it has reached 85%, debt for which the Treasury must compensate by importing $2.6 billion of liquidities each day, principally thanks to the system of recycling petro-dollars [2]. From this we can better understand why states like Iraq, Iran, and North Korea, that had envisaged transferring their dollar reserves into euros, were accused by president Bush of forming an “Axis of Evil”. [3]

However, the resistance is hindering this predatorial activity, and, in any case, the riches open to pillage cannot suffice to compensate for the instability of the US economy. As well, the Bush Administration must maintain an influx of foreign capital to its soil by rendering investment attractive. To do this, the administration first lowered the cost of labour, guaranteeing a high level of profit. For this, it must lower the salary base and social charges. The balance sheet for the first term of the Bush Administration reflects this: the number of unemployed increased prompting the population as a whole to give up a part of its social coverage, which led to a clear reduction in the cost of labour.

That is why the candidate Bush was supported by big industry. To the contrary, the premature announcement, November 2, 2004, of a possible Kerry victory, the candidate favourable to an increase in social protection for more modest electors, translated into a general lowering of prices on Wall Street. The Democratic candidate was supported by large speculators, like Warren Buffet and George Soros, who get their revenue from the growing inequalities in the world and who are not interested in the internal economic health of the US.

Secondly, in order to preserve the confidence of foreign investors, the Bush Administration deployed its military force [4]. Capital doesn’t like risk, and there is no better sanctuary than the country that wishes to rule the world by force. Permanent war confers an all-mighty image that acts as a veritable magnet for capital.

But contrary to the Gulf War, where the costs were repaid by the financial contributions of the member States of the Coalition, the rest of the world is paying indirectly for the invasion of Iraq: attracted by US power, foreign investors place their extra dollars in US Treasury Bonds, thus transferring a large part of the cost of the war to foreign countries, including those who opposed the war!

Most “liberals” [Economic liberals, neo-liberals - translator’s note] in the world supported the invasion because it was motivated by a world-wide profit crisis. They had realized several years earlier that the “dot com” economy produced only artificial profits, and that the future lowering of net energy production globally around 2010 (the beginning of the decline of world oil production) would have as its consequence an unprecedented contraction in the world economy [5] . From which came the simple calculation: if we can’t increase global wealth, we must lower the number of people who benefit. It is the same reasoning that led the proponents of zero growth, and before them the neo-malthusians, to propose different, humanist and, of necessity, collectivist solutions. But one thing is certain, that the agenda for “sustainable development” failed long ago, precisely when the world’s population growth surpassed that of available resources, that is, in the early 80s.

To avoid the collapse of their economy, the United States has no other choice than to prepare itself to repress a generalized insurrection against the capitalist interests of an ever-shrinking minority. It is a situation that Samuel Huntington anticipated, in 1957, in his work Soldier and the State: The Theory and Politics of Civil-Military Relations. At that date, he was already affirming that the US Army had as its vocation not the defence of its population or its territory, but the defence of the economic interests of the multinationals.

Just as the militarization of the Hitler regime permitted Germany to brutally rebound from a profound economic crisis by attracting capital, principally from the US, in the same way the militarization of the US guarantees to foreign capital that it will be safe as long as it remains on United Statesian soil. In parallel, the army is placed in the service of capital by opening markets that were formerly nationalised, and then, eventually, by maintaining chaos and terror - when its power is not accepted.

If we return to the example of the 1930s, Hitler’s Germany had attracted US capital based upon the promise of a military response to the Bolshevik peril. In the same way, in 1999, large industrial groups invested in the war in Kosovo in the hope that NATO would subdue and open the final socialist economy in Europe. And it was again in the perspective of the privatization of another vast public sector that the Anglo-Saxon employers invested in the invasion of Iraq in 2003; a privatization that was led by the Pied Piper, L. Paul Bremer III, assisted by East European experts who had participated in the liquidation of the socialist economies, such as the ex-Bulgarian president, Peter Stoyanov or the ex-Russian Prime Minister Yegor Gaidar [6].

The question that torments the strategists in the war rooms in Washington today is that of knowing by what means they can most efficiently control the populations of the new strategic colonies. The neo-conservatives consider the invasion of Afghanistan a success in terms of return on investment: control of the country was had with little cost by subcontracting the fighting out to low-paid local war lords rather than by deploying high price GIs with large transportation costs. On the other hand, in Iraq, Saddam Hussein prepared his country for guerrilla war, putting into place beforehand the necessary structures for an insurrection, forming, according to the US Army’s own jargon, a “counterstate” [7]. Believing that they could avoid the error of Vietnam, where the CIA alone waged counter-insurgency operations through most of the war, the Pentagon thus decided, given the size of the task, to confide the mission of counter-insurrection to the regular army [8]. According to a very military and bureaucratic logic, all means possible must be put at the service of a clear objective. Several failures forced the Pentagon to take up this solution: in the first place, it was up to the intelligence services to neutralize the political leaders. The files listing Bathist leaders, carefully compiled by Ahmed Chalabi, came to nothing because the Bath Party, foreseeing the insurrection, had doubled its structure. This explains the political fall from grace of Chalabi after the searching of his house by Coalition forces that doubted his good faith.

Next, the strategists watched on as the insurrection achieved its first strategic victory in its first phase [9] : because the essential elements of the political and military structure of the resistance had been left intact after the invasion, they were able to infiltrate the collaborating Iraqi security forces and rally the population by provoking murderous actions by the occupation forces. Today, after the “Guernica” of Fallujah, there is no possibility that the majority of Iraqis will ever accept the occupation or the puppet regime.

It is therefore an initiative saturated with contradictions that was recently approved behind the walls of the Pentagon: hand out to the conventional military forces a manual that is supposed to aid them in conducting the counter-insurrection [10]. The manual recuperates diverse theoretical elements accumulated during the course of the last decades’ conflicts, in particular those from Vietnam, trying to adapt them urgently to the Iraqi context. This redefinition of the role of the US Army, now being forced to make up for the absence of a real Iraqi collaboration force, is a contradiction in itself because the soldiers that bombard a country can hardly win the confidence of its population themselves. Nevertheless, given the size and organization of the resistance, it must above all limit the damage brought on by the manu militari control of the population, and explain to the strong arms of the army in what way this type of mission differs from those to which they are used. It isn’t a simple thing because the Iraqi resistance is active throughout the entire country, in different phases according to the region and the population. The resistance wages a war of position (Phase III) in Fallujah or Mossul while waging one of strategic defence (Phase I, which includes sporadic actions, principally against collaboration forces) in Baghdad. Mao’s original theory of guerrilla warfare implies that even if the guerrillas don’t evolve from one phase to another in clear ways and may be active in different phases at the same time, the simultaneous activity of the resistance in different phases signals an evolution of the conflict in its favour.

As efficient work of political intelligence gathering, supported by targeted actions by special forces, is the only way to wage a victorious counter-insurrection, we are forced to conclude that the guerrilla war is lost for the United States. From this sombre balance sheet, we are forced to conclude that the Pentagon has chosen to terrorise the Iraqis by military force in order to maintain, at whatever the cost, its control over the second largest oil reserves in the world and to keep its economy afloat. All the apologies of the Democratic electorate of the US will change nothing: we are watching the pure and simple destruction of a people and a country in the name of capital and fossil fuels.