PROBLEMS, PROBLEMS
From The Economist Global Agenda 03.07.2003
Patchy public services, continuing guerrilla attacks on coalition troops, widespread criminality, confusion over oil revenues and the financing of reconstruction, and still no sign of a home-grown government—just some of the problems facing Iraq’s interim leaders. Did the Bush administration spend too much time thinking about how to secure military victory, and too little working out what to do with the country once Saddam Hussein had been removed?
EXPECTATIONS ran high in the immediate aftermath of the coalition forces’ quick military victory over Saddam Hussein’s regime in April. But the Americans have proved once again that they are better at winning wars than they are at the nation-building that is necessary once the old guard has been booted out. The first, widely derided, post-Saddam administration, led by Jay Garner, a retired American general, has already been wound up and replaced by one headed by Paul Bremer, another Pentagon appointee. Some of the issues that he and his advisers face are less of a problem than had been feared: the humanitarian crisis that many predicted has failed to materialise, for instance. But, more often than not, the opposite is true. The breakdown in law and order; the difficulty in bringing the various Iraqi factions together to form a representative government; the lack of money for rebuilding the country’s smashed infrastructure; multiple currencies. All these things are giving Mr Bremer a bigger headache than he might have expected when he took the job. Here, we provide a checklist of the main challenges with which he must grapple, and the progress (or lack of it) made to date.
To what extent has America achieved its war aims?
The removal of Saddam—an American foreign-policy goal since the late 1990s—took barely a month of fighting. The Iraqi forces put up little resistance and were not ordered to use chemical or biological weapons. Many Iraqi troops melted away into the general population before engaging coalition forces.
Iraq’s weapons of mass destruction (WMD), the chief justification for war, have yet to be found. A British government dossier claiming that Saddam could launch a devastating strike within 45 minutes has been widely ridiculed. Suspected WMD sites and mobile germ-production laboratories have so far failed to yield any firm evidence of banned weapons. Moreover, pre-war talk of a link between Saddam and al-Qaeda, encouraged by Washington and (to a lesser extent) London, looks no more plausible now than it did then.
To the intense frustration of coalition commanders, many of the leading figures in Saddam’s regime remain at large. Despite several attempts to kill them, coalition forces do not know whether Saddam and his sons, Uday and Qusay, are alive. Of the 55 “most wanted” officials from Saddam’s regime, around half have been captured or turned themselves in. On June 18th, Abid Hamid Mahmud, Saddam’s personal secretary, and the most senior fugitive outside of the dictator’s family, was arrested, in a coup for the coalition. A few days later, Iraq’s hapless former information minister, Mohamed Saeed al-Sahaf (also known as Comical Ali), gave himself up to American forces, but was not deemed important enough to be kept in custody.
Hard to say, but the current turmoil is likely to last for some months, perhaps even years. Many parts of the country, including Baghdad, are still largely lawless. The coalition was taken aback by the speed with which Iraqi forces surrendered or melted away, and was thus slow to start to fill the vacuum left by fleeing soldiers and police. Looting broke out in most urban areas, many of which are still volatile. The new authority has made some progress: there are now 8,000 policemen operating out of 18 police stations in Baghdad, with another five due to reopen shortly. A number of courts are now up and running again, dealing with the many arrests for looting, violent crime and so on. But many people are still afraid to go out, especially at night.
The coalition has disbanded the Iraqi army because of fears that it was a corrupt organisation full of Saddam-supporting Baathists. This has left 400,000 men unemployed and angry. Thousands of them have protested against their lack of pay; at one demonstration, two ex-soldiers were shot dead by American troops. In response, Mr Bremer has now agreed that up to 250,000 former soldiers will receive a stipend of between $50 and $150 per month. Recruitment for a new army of 40,000 soldiers should begin as early as this week.
American and British soldiers have come under increasing fire since major combat operations ended almost two months ago, and the number of casualties is mounting. The attacks on the coalition troops, mostly in areas around Baghdad, resulted in the Americans launching a series of aggressive counter-attacks in mid-June. On June 29th another offensive began, with American troops raiding 20 locations to root out armed Saddam sympathisers. But such tactics can prove counter-productive. Six British military policemen were killed on June 24th by locals angry that, as they saw it, house searches were being carried out in a manner disrespectful to Muslim sensibilities.
When will Iraq have its own representative government?
As the war began, the plan—even then subject to intense disagreement in Washington—was for an interim American-led administration to be formed once the fighting was over. After that, a constitutional convention was to be set up, with the aim of having democratic elections within two years. In practice, Baghdad was so lawless that Mr Bremer decided to concentrate on law and order rather than on introducing democracy. He now plans to appoint an Iraqi political council by the middle of the month, though Kurdish and Shia groups have deep reservations about this and may refuse to join. The United Nations is pressing for the council to have executive powers, rather than being merely advisory. The timetable for the new constitution and national elections has slipped and remains unclear.
Coalition leaders have tried to appoint local officials and councils quickly, to speed up the return to normality. However, they can often pick the wrong man: on June 30th, the coalition-appointed mayor of Najaf was arrested on charges of corruption. He is also suspected of kidnapping, attacking a bank official and other activities not generally consistent with American ideals of democracy.
One of the challenges for the coalition is that Iraq is not a homogenous nation, but was cobbled together after the first world war. The biggest group is the Shia Muslims, most of whom live in the south, and who were downtrodden by Saddam, a Sunni Muslim. They deserve fair representation, but the Americans worry about the growing influence of their religious leaders; the last thing the Bush administration wants in Iraq is an Iran-style theocracy. The Sunnis, meanwhile, worry that they will not only lose their privileged position in Saddam’s Iraq, but that they will become the new Iraq’s whipping boys: it is no coincidence that most of the attacks on coalition forces and sabotage of electricity installations have occurred in Sunni areas. The third-largest group are the Kurds. While they are delighted to be rid of Saddam, they have had to trade their autonomous enclave in the north, with its own (stable) currency, for a minority position in a lawless Iraq. Moreover, America has insisted that Iraq must remain intact, so dashing their hopes of creating an independent Kurdistan.
Quite apart from the differences between ethnic groups, there are fierce rivalries within them. The leaders of the two Kurdish factions, Jalal Talabani and Massoud Barzani, would be expected to take part in an Iraqi power-sharing government despite their long and often violent rivalry. Similarly, a power struggle has broken out among conservative Shia clerics. Grand Ayatollah Ali Sistani was forced to flee Iraq after being challenged for leadership of the Shias by Moqtada Sadr, who is just 22. Mr Sadr’s faction is suspected of being behind the assassination of a senior Shia cleric who had returned to Iraq from Britain a few days after the war ended. Mr Sistani is trying to reassert his authority: on June 30th, he called for an elected body, rather than an American-appointed council, to draw up the new constitution.
How about Iraqis’ humanitarian needs?
This is the dog that didn’t bark: the humanitarian crisis that aid agencies feared and that Mr Garner had focused on did not occur. Some 27m are Iraqis being fed with food rations, as they had been before the war. The UN says that food aid for the rest of the year is fully funded, and food is now being distributed to Marsh Arabs, who didn’t receive rations before the war.
Emergency works, and the delivery of water from Kuwait, mean that water is once again widely available. Baghdad, for example, now receives 70%-90% of its pre-war supplies. However, sewage continues to be pumped untreated into rivers and canals, risking infection of the water supply. And widespread stealing of water by piercing water pipes means that the pressure is low by the time water reaches the towns. As for electricity, the UN reckons that by the first week of June Baghdad was able to cover 50%-60% of its demand, compared with just 40% before the war. However, there are frequent blackouts.
Mr Bremer believes that economic progress is more important to Iraq right now than establishing a representative government, and he has highlighted the payment of $400m to Iraqis, including public-sector salaries and pensions. The effect of this money is already evident on the streets. Iraqis can now purchase imported televisions and fridges duty-free, and are doing so with enthusiasm. There are still three currencies circulating in Iraq: the “Saddam dinar”, the “Swiss dinar” (in the Kurdish north) and the dollar, which the Americans use. The coalition has not decided yet what it will do about the currency, though there is talk of extending the Swiss dinar throughout the country.
The financial system remains rudimentary. Banks have reopened in both Baghdad and Basra, but it is impossible to wire money into Iraq: the Americans have literally shipped $550m in hard currency from the Federal Reserve to the country. Oddly, while the administration has issued a request for proposals on a wide range of economic work, including preparing state-owned companies for privatisation, it is yet to start on the commercial-banking system.
Another crying need is for trade credit. Few of Iraq’s banks are creditworthy enough to reassure foreign businesses that they will be paid if the banks stand as guarantor. J.P. Morgan Chase, Citigroup and Bank of America are among those reported to have discussed with the American Treasury how they might help to set up working payments systems, foreign exchange and trade finance in Iraq, though there are no firm plans for how this will be done. The Treasury is also looking into establishing an Iraqi Trade Bank, under the auspices of the Export-Import Bank, America's official export-credit agency. One option would be for Iraq's oil sales to be used as collateral for reconstruction loans from commercial banks. However, a Democratic congressman has written to the Ex-Im Bank angrily pointing out that such a plan would “conflict fundamentally” with America's repeated insistence that Iraq's oil belongs to Iraqis.
The coalition this week invited commercial airlines to apply to resume flights to Baghdad international airport, which is currently being used by American troops. So far, Scandinavia's SAS, KLM of the Netherlands, America's Northwest Airlines and EgyptAir have expressed an interest in operating regular flights. The airport should be reopened by the middle of the month, though no date has been set for the resumption of commercial flights.
What is happening to Iraq’s oil?
Iraq has the world’s second-largest oil reserves, but its production capacity had been devastated by two wars and a decade of sanctions and under-investment. Iraqi oil is now under the control of the coalition, thanks to a UN resolution passed in May. The coalition has made a lot of progress in both preventing any big attacks on Iraq’s oil infrastructure and repairing what damage had been done: all refineries are now working and on June 22nd Iraq made its first shipment of crude since the start of the war.
However, just how quickly Iraq will build up its production and exports is a matter of some dispute. The country’s interim oil minister, Thamer Al-Ghadban, said on June 26th that he expected the country to produce 1.3m barrels per day (bpd) in July. But Philip Carroll, the former Shell executive put in charge of the industry by the coalition, expects total production to be 1.8m bpd by then, with 1m of those barrels being exported. Mr Carroll has stepped up security around installations and pipelines following a spate of recent sabotage attacks, which have delayed the awarding of contracts for the repair of Iraq's oil fields until later this month. (Kellogg, Brown & Root, a subsidiary of Halliburton, a company once run by American vice-president, Dick Cheney, was controversially awarded the $235m contract for immediate repairs in March). The longer-term future of the industry, including the thorny issue of when and how it will be privatised, will be a question for the elected government, once it is installed in power.
Will there be enough oil to finance Iraq’s reconstruction?
Before the war, some American officials likened Iraq to an underperforming company with enough assets to fund its own takeover. Not so. Iraq is expected to sell around $5 billion-worth of oil by the end of this year. Of that, the government would get $3.5 billion after various expenses (including reparations to Kuwait for the first Gulf war). Revenues are projected to reach $13 billion next year. But Iraq is expected to need considerably more than that over the next couple of years. The UN has called a donor conference in October to discuss the shortfall.
How long will coalition forces have to remain in Iraq?
Longer than expected. There is now no question of any scaling-back of the coalition military presence in the short term. Some 145,000 American troops remain in Iraq, with a further 15,000 from Britain and other allies, and they are likely to remain until troops from other countries arrive to do peacekeeping duty. Donald Rumsfeld, the American defence secretary, has asked more than 70 countries to send troops, to enable some of the American soldiers to leave Iraq for “a rest”. Some experts think America may have to raise the level of troops to 200,000-300,000.
There are signs that the American public is beginning to get nervous about the stream of bad news and casualties coming from Iraq: an opinion poll this week put the number of Americans who believe things are not going well there at 42%, up from 13% at the beginning of May, when Saddam was toppled. Such is the level of disquiet that President George Bush was forced to address public concern in a speech on July 1st. “The rise of Iraq, as an example of moderation and democracy and prosperity, is a massive and long-term undertaking,” he said. That wasn't quite what the American public signed up for before the war, though.