Monday, December 27, 2004

Brother Can You Spare a Dime?

A great deal has been written about the failure of military strategy in Iraq, but an even more important reason for the failure of the occupation has barely been discussed: the coalition's economic strategy. Following the Second World War, the Allied forces understood that fascism arose in conditions of unemployment, poverty and desperation. That's why there was a massive effort to reflate the German economy; by early 1947, unemployment was down to 10 per cent. In Iraq today, unemployment stands at an incredible 60 per cent. For young Sunni men - the main recruiting pool for the insurgency - it has soared to 80 per cent. This is a recipe for rage and rebellion.

    It would be bad enough if the coalition had simply done nothing to reflate and re-energize the Iraqi economy. Incredibly, the truth is even worse: they have imposed on Iraq a program of ultra-neoliberal reforms that have brought economic collapse to every country they have been inflicted upon. Joseph Stiglitz, the Nobel prize-winning economist and dissident former chief economist at the World Bank, describes the economic policies of the coalition as "a proven and predictable catastrophe". They imposed a form of capitalism more extreme than anything tried in a democratic country: immediate privatization of almost all services (without any debate), non-competitive contracts, and a 15 per cent flat tax. This is not democracy. It is market fundamentalism.
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