Sunday, September 30, 2007

The Post-Washington Dissensus

This is a quite interesting article. As Bello details some of the alternatives they sound little better than the original Wasington Consensus if not worse.

Foreign Policy in Focus
September 24

Walden Bello*

When two studies last year detailed how the World Bank's research
unit had been systematically manipulating data to show that neo-
liberal market reforms were promoting growth and reducing poverty in
developing countries, development circles were not shocked. They
merely saw the devastating findings of a study by American University
Professor Robin Broad and a report by Princeton University Professor
Angus Deaton and former International Monetary Fund chief economist
Ken Rogoff as but the latest episode in the collapse of the so-called
Washington Consensus.

Taking off from Margaret Thatcher's famous remark, partisans of this
development model during its heyday the 1980s and early 1990s claimed
that the alternative to the Washington Consensus was TINA -- that is,
"There is no alternative." The Washington Consensus broke with
economic strategies involving heavy participation by government and
positioned the unfettered market as the driver of development.

Imposed on developing countries in the form of "structural
adjustment" adjustment programs funded by the International Monetary
Fund (IMF) and the World Bank, the Consensus reigned until the late
1990s, when the evidence became clear that on all key criteria of
development -- sustained growth, poverty reduction, and reduce
inequality -- it simply was not delivering. By the first half of
this decade, the Consensus had undergone a process of unraveling,
although neo-liberalism remained the default mode for many economists
and technocrats that had lost confidence in it, simply out of inertia.

The former adherents of the Consensus have gone off in divergent
directions. Despite frequent references to it, there is, in fact, no
"Post-Washington Consensus."

Mindful of the failures of the Washington Consensus, the IMF and the
World Bank are now promoting what Nobel laureate Joseph Stiglitz has
disdainfully described as the "Washington Consensus Plus" approach,
that is, that market reforms, while crucial, are not enough.
Financial reforms, for instance, must be "sequenced," if we are to
avoid such debacles as the Asian financial crises, which even the
Fund now admits was due to massive capital inflows into countries
that liberalized without strengthening their "financial
infrastructure." Mindful of the Russian descent into the hell of
mafia capitalism in the 1990s, the two institutions also now talk
about the importance of accompanying market reform with institutional
and legal reforms that can enforce private property and contracts.
Other accompaniments of market reforms are "good governance" and
policies to "develop human capital" such as female education.
This mix of market and institutional reforms were consolidated in the
first years of this decade in the so-called Poverty Reduction
Strategy Papers (PRSP's). In contrast to what one analyst has
described as the "bare knuckle neo-liberalism" of structural
adjustment programs, PRSPs were not only more liberal in content but
in process: they were supposed to be formulated in consultation with
"stakeholders," including civil society organizations.
Despite its icing of institutional reforms, the core of the PRSP cake
remains the same macroeconomic fundamentals of trade liberalization,
deregulation, privatization, and commercialization of land and
resources at the heart of structural adjustment programs. And
community consultation has been limited to well-resourced, liberal
non-governmental organizations rather than broad-based social
movements. PRSPs indeed are simply second generation structural
adjustment programs that seek to soften the negative impact of
reforms. As IMF Managing Director Rodrigo Rato has admitted, the
purpose of institutional reforms is "to make sure that the fruits of
growth are widely shared and the poorest people are protected from
the costs of adjustment" in order to prevent people from being
"tempted to give up on orthodox economic policies and structural

A second successor to the Washington Consensus is what one might call
the "neoconservative neo-liberalism." This approach is essentially
the development policy of the Bush administration. The inspiration
for this strategy was provided by the famous 2000 report of a
congressional commission on multilateral institutions headed by
conservative academic Alan Meltzer, which proposed a radical slimming
down of the World Bank. It supports-at least rhetorically--debt
relief for the poorest countries on the ground that they won't be
able to pay the debt and seeks a shift from loans to grants.
However, debt relief and grant aid are conditioned on how governments
perform in terms of liberalizing their markets and privatizing their
industries, land, and natural resources. Indeed, the main reason for
preferring grants is that, in contrast to loans channeled through the
World Bank, grants, as Undersecretary of State John Taylor put it,
"can be tied more effectively to performance in a way that longer-
term loans simply cannot." Moreover, grants would allow pro-market
reforms and aid policy generally to be more directly coordinated with
Washington's security objectives and with the agenda of US
corporations. Compared to the original Washington Consensus,
neoconservative neoliberalism is less doctrinaire, but in an
illiberal direction, ready, as it is, to let the market play second
fiddle to power.

A third distinctive successor to the Washington Consensus,
neostructuralism, moves, in contrast, in a more liberal direction.
This is an approach associated with the Economic Commission for Latin
America (CEPAL) that produced the structuralist theory of
underdevelopment in the 1950s under the leadership of the venerable
Argentine economist Raul Prebisch. According to neostructuralism,
neoliberal policies have simply been too costly and
counterproductive. In fact, there is no trade-off between growth and
equity, as the neoliberals claim, but a "synergy." Less inequality
in fact would enhance, not obstruct, economic growth by increasing
political and macroeconomic stability, boosting the saving capacity
of the poor, raising educational levels, and expanding aggregate
demand. The neostructuralists thus propose progressive transfer
payment policies that redistribute income in ways that increase the
human capital or productivity of the poor, including higher spending
for health, education, and housing programs. These are the kinds of
programs associated with what the Mexican polemicist Jorge Castaneda
has called the "Good Left" in Latin America, meaning the governments
of Lula in Brazil and the Concertacion alliance in Chile.
Being focused on managing transfer payments to protect and upgrade
the capacity of the poor, the neostructuralist approach does not
interfere with market forces in production, unlike the policies of
the "Bad Left" (meaning Hugo Chavez and friends) that intervene in
production, markets, and wage policies. The neostructuralists also
embrace globalization, and they say that a key objective of their
reforms is to make the country more globally competitive. Because
they simultaneously allegedly alleviate income disparities, upgrade
the capacity of the poor, and make the work force more globally
competitive, neostructuralist reforms are said to hold out the
prospect of making globalization more palatable, if not popular.
Neostructuralists proudly proclaim that their approach is the "high
road" to globalization, in contrast to the "low road" of the
The problem is that neostructuralist reforms have led to what one
of its most thoughtful critics, Chilean economist Fernando Leiva,
calls the "heterodox paradox," that is, in the quest for systemic or
comprehensive competitiveness, the carefully crafted neostructuralist
policies have actually led to "the politico-economic consolidation
and regulation of neoliberal ideas and policies." In the end,
neostructuralism, like the Washington Consensus Plus approach, does
not fundamentally reverse but simply mitigate the poverty and
inequality-creating core neoliberal policies. The Lula government's
targeted anti-poverty program may have reduced the ranks of the
poorest of the poor but institutionalized neoliberal policies
continue to reproduce massive poverty, inequality, and stagnation in
Latin America's biggest economy.

The more than residual attachment to neoliberalism of
neostructuralism is less evident in the case of what we might call
global social democracy, an approach that has become identified with
people such as economist Jeffrey Sachs, sociologist David Held, Nobel
laureate Joseph Stiglitz, and the British charity Oxfam. Unlike the
three previous approaches, this perspective acknowledges the fact
that growth and equity may be in conflict, and it ostentatiously
places equity above growth. It also fundamentally questions the
central thesis of neoliberalism: that for all its problems, trade
liberalization is beneficial in the long run. Indeed, Stiglitz says
that in the long run, trade liberalization may in fact lead to a
situation where "the majority of citizens may be worse off."
Moreover, the global social democrats demand fundamental changes in
the institutions and rules of global governance such as the IMF, WTO,
and the Trade Related Intellectual Property Rights Agreement
(TRIPs). David Held, for instance, calls for the "reform, if not
outright abolition, of the TRIPs Agreement," while Stiglitz, says
that "rich countries should simply open up their markets to poorer
ones, without reciprocity and without economic or political
conditionality." Also, "middle-income countries should open up their
markets to the least developed countries, and should be allowed to
extend preferences to one another without extending them to the rich
countries, so that they need not fear that imports might kill their
nascent industries."
The global social democrats even see the anti-globalization
movement as an ally, with Sachs thanking it "for exposing the
hypocrisies and glaring shortcomings of global governance and for
ending years of self-congratulation by the rich and powerful." But
globalization is where the global social democrats draw the line.
For, like classical neoliberalism, the Washington Consensus Plus
school, and neostructuralism, global social democracy sees
globalization as necessary and fundamentally sound and, if managed
well, as bringing benefits to most.
Indeed, the global social democrats see themselves as saving
globalization from the neoliberals. This is all the more important
because, contrary to an assumption that was gospel truth just a few
years ago -- the globalization was irreversible -- the global social
democrats worry that contemporary globalization is, in fact, in
danger of being reversed, and they hold up as a cautionary tale about
the consequences of such a development the turbulent reversal of the
first wave of globalization after 1914.
To Sachs, Held, and Stiglitz, the benefits of globalization
outstrip the costs, and what the world needs is a social democratic
or "enlightened globalization" where global market integration
proceeds but is one that is managed fairly and is accompanied by a
progressive "global social integration." The aim, as Held puts it, is
to "provide the basis for a free, fair, and just world economy,"
where the "values of efficient and effective global economic
processes...function in a manner commensurate with self-
determination, democracy, human rights, and environmental

There are several problems with global social democracy's attachment
to globalization.
First of all, it is questionable that the rapid integration of
markets and production that is the essence of the globalization can
really take place outside a neoliberal framework whose central
prescription is the tearing down of tariffs walls and the elimination
of investment restrictions. Slowing down and mitigating this
inherently destabilizing process, not reversing it, is the global
social democratic agenda. That global social democrats have come to
terms with the fundamental tendency of global market forces to spawn
poverty and inequality is admitted as much by Sachs who sees social
democratic globalization as "harnessing [of] the remarkable power of
trade and investment while acknowledging and addressing limitations
through compensatory collective action."
Secondly, it is likewise questionable that, even if one could
conceive of a globalization that takes place in a socially equitable
framework, this would, in fact, be desirable. Do people really want
to be part of a functionally integrated global economy where the
barriers between the national and the international have
disappeared? Would they not in fact prefer to be part of economies
that are susceptible to local control and are buffered from the
vagaries of the international economy? Indeed, the backlash against
globalization stems not only from the inequalities and poverty it has
created but also the sense of people that they have lost all
semblance of control over the economy to impersonal international
forces. One of the more resonant themes in the anti-globalization
movement is its demand for an end to export-oriented growth and the
creation of inwardly-oriented development strategies that are guided
by the logic of subsidiarity, where the production of commodities
takes place at the local and national level whenever that is
possible, thus making the process susceptible to democratic regulation.

The fundamental problem with all four successors to the Washington
Consensus is their failure to root their analysis in the dynamics of
capitalism as a mode of production. Thus they fail to see that
neoliberal globalization is not a new stage of capitalism but a
desperate and unsuccessful effort to overcome the crises of
overaccumulation, overproduction, and stagnation that have overtaken
the central capitalist economies since the mid-seventies. By
breaking the social democratic capital-labor compromise of the post-
World War II period and eliminating national barriers to trade and
investment, neoliberal economic policies sought to reverse the long-
term squeeze on growth and profitability. This "escape to the
global" has taken place against the backdrop of a broader conflict-
ridden process marked by renewed inter-imperialist competition among
the central capitalist powers, the rise of new capitalist centers,
environmental destabilization, heightened exploitation of the South
-- what David Harvey has called "accumulation by dispossession" --
and rising resistance all around.
Globalization has failed to provide capital an escape route from its
accumulating crises. With its failure, we are now seeing capitalist
elites giving up on it and resorting to nationalist strategies of
protection and state-backed competition for global markets and global
resources, with the US capitalist class leading the way. This is the
context that Jeffrey Sachs and other social democrats fail to
appreciate when they advance their utopia: the creation of an
"enlightened global capitalism" that would both promote and
"humanize" globalization.

Late capitalism has an irreversible destructive logic. Instead of
engaging in the impossible task of humanizing a failed globalist
project, the urgent task facing us is managing the retreat from
globalization so that it does not provoke the proliferation of
runaway conflicts and destabilizing developments such as those that
marked the end of the first wave of globalization in 1914.

*Walden Bello is professor of sociology at the University of the
Philippines and senior analyst at the Bangkok-based research and
advocacy institute Focus on the Global South.


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Hearings to be held on prison population increase

Imagine the US has 25 percent of the world's prisoners. I wonder if Americans still think the US is soft on criminals. Probably. The US has the highest incarceration rate in the world.



SENATOR JIM WEBB (D-VA) will hold a Joint Economic Committee hearing
to explore the economic consequences and causes of and solutions to
the steep increase of the U.S. prison population. The hearing
entitled, "Mass Incarceration in the United States: At What Cost?" -
in light of 500 percent increase in prison populations in last 30
years - is scheduled for Thursday, October 4, 2007 at 10:00 am in
Room 216 of the Hart Senate Office Building. The United States has 25
percent of the world's prisoners, despite having only 5 percent of
the world's population. The JEC will examine why the United States
has such a disproportionate share of the world's prison population,
as well as ways to address this issue that responsibly balance public
safety and the high social and economic costs of imprisonment. Expert
witnesses have been asked to discuss the costs of maintaining a large
prison system; the long-term labor market and social consequences of
mass incarceration; whether the increase in the prison population
correlates with decreases in crime; and what alternative sentencing
strategies and post-prison re-entry programs have been most
successful at reducing incarceration rates in states and local

Goodman, Parsi, Abrahamian discussion of Ahmadinejad's speech at Columbia

Discussion by Amy Goodman, Trita Parsi, and Ervand Abrahamian. It is interesting that there seems to be a consensus that Iran does not really believe that the US or Israel will attack it. Iran surely does not read the US very well. I thought that Ahmadinejad was trying to lower the temperature a bit but I guess it did not come over that way to most people.

In a speech at Columbia University, Iranian President Mahmoud
Ahmadinejad defended Iran's right to nuclear power but denied Iran
was seeking to build nuclear weapons. Ahmadinejad's appearance
sparked widespread protests at Columbia. We speak with Trita Parsi,
author of "Treacherous Alliance: The Secret Dealings of Israel, Iran
and the United States" and Baruch professor Ervand Abrahamian, co-
author of "Targeting Iran." [includes rush transcript]
Ervand Abrahamian, Iran expert and CUNY Distinguished Professor of
History at Baruch College, City University of New York. He is the
author of several books on Iran and the co-author of a new book from
City Lights called "Targeting Iran."
Trita Parsi, President of the National Iranian American Council
(NIAC), the largest Iranian-American organization in the US. He is
the author of "Treacherous Alliance: The Secret Dealings of Israel,
Iran, and the United States."
This transcript is available free of charge. However, donations help
us provide closed captioning for the deaf and hard of hearing on our
TV broadcast. Thank you for your generous contribution.
Donate - $25, $50, $100, more...

AMY GOODMAN: For more on Ahmadinejad's visit, we're joined by two
guests. Ervand Abrahamian is an Iran expert and CUNY Distinguished
Professor of History at Baruch College here at the City University of
New York. He's the author of several books on Iran, co-author of a
new book from City Lights called Targeting Iran. And joining me from
Washington, D.C. is Trita Parsi. He’s the president of the National
Iranian American Council, the largest Iranian American organization
in the United States, author of Treacherous Alliance: The Secret
Dealings of Israel, Iran and the United States.

First, Ervand Abrahamian, can you talk about the president's visit?
Did anything he said -- this is Mahmoud Ahmadinejad -- surprise you?

ERVAND ABRAHAMIAN: Well, I was surprised because he didn't really use
the opportunity to try to lower the tempo, the serious problem we
have now, which is we're at the abyss of war, basically. And there
are people pushing for war in the next few months. And this would
have been a very good opportunity to try to smooth things over, try
to calm the tempo down.

And it's not just he who missed the opportunity. I think Bollinger
missed the opportunity. In fact, Bollinger's speech was like a
drumbeat for war. And most of the questions from the audience missed
the opportunity. They dealt basically with important identity
questions, but they didn't really deal with the issue that we are
really on the abyss of war. And this is a far more serious issue
than, you know, either ethnic or gender issues.

And he, actually, I think -- although he made some statements about
Iran is not interested in nuclear weapons, he could have been more
forthright and more categorical about the policies of Iran in terms
of the nuclear project.

AMY GOODMAN: Does this remind you of Saddam Hussein before the war?

ERVAND ABRAHAMIAN: It does. In fact, Ahmadinejad didn't say it last
night -- yesterday, but his policy is that there is no likelihood of
war, because no one in their right senses would think of invading or
attacking Iran. And that's the premise he works on, which is, I
think, a completely wrong premise, because he doesn't seem to
understand American politics, the same people who gave us the war on
Iraq, the same people who are running foreign policy now. But he
begins from the premise that no one in their right senses would think
of attacking Iran.

AMY GOODMAN: Trita Parsi, you have written a very interesting book,
Treacherous Alliance: The Secret Dealings of Israel, Iran and the
United States. Can you take us back in time and talk about the
relationship, the secret dealings, between these three countries?

TRITA PARSI: Israel has for a very long time been a critical factor
in America's formulation of a policy vis-à-vis Iran. But what's
really interesting is that the influence of Israel has gone in
completely different directions, if we just go back fifteen years.
During the 1980s, in spite of the Iranian Revolution, in spite of
Ayatollah Khomeini’s many, many harsh remarks about Israel, far, far

worse than what anything Ahmadinejad has said so far, Israel at the
time was the country that was lobbying the United States to open up
talks with Iran to try to rebuild the US-Iran relations, because of
strategic imperatives that Israel had. Israel needed Iran, because it
was fearing the Arab world and a potential war with the Arabs.

After 1991, ’92, that's when you see the real shift in Israeli-
Iranian relations, because that's when the entire geopolitical map of
the Middle East is redrawn. The Soviet Union collapses. The last
standing army of the Arabs, that of Saddam Hussein, is defeated in
the Persian Gulf War. And you have an entirely new security
environment in the Middle East, in which the two factors, the Soviets
and the Arabs, that had pushed Iran and Israel closer together
suddenly evaporate. But as their security environment improves, they
also start to realize that they may be ending up in a situation in
which they can become potential threats to each other. And that's
when you see how the Israelis shift 180 degrees. Now the Israeli
argument was that the United States should not talk to Iran, because
there is no such thing as Iranian moderates.

And ever since, the Israelis and the pro-Israel interest in the
United States have lobbied to make sure that there is no dialogue or
there’s no rapprochement between the United States and Iran. And the

Iranians have done similar things. They have undermined every US
foreign policy initiative in the Middle East that they feared would
be beneficial to Israel. So the real shift in Israeli-Iranian
relations come after the Cold War, not with the revolution in 1979.

AMY GOODMAN: But I also do want you to go right back to 1948 and talk
about that period up to 1991. What were the secret relationships?

TRITA PARSI: Well, immediately after Israel was founded, Iran was
actually one of the states on the committee at the UN who was
preparing a plan, and they were against the partition. They were
against the idea of creating two states. And Iran, at the time, said
that this would lead to several decades of crisis. But once Israel
was a fact, the Iranian government felt that because it was facing a
hostile Arab world, as well as a very hostile Arab ideology, Pan-
Arabism, Israel was a potential ally for the Iranians, particularly
as Israel started to shift closer and closer to the Western camp and
the United States. So throughout the ’50s, ’60s and ’70s, the
Iranians and the Israelis were working very, very closely together,
had a very robust alliance.

They tried to keep it secret. It wasn't necessarily very secret, but
Iran never recognized Israel de jure. They recognized it de facto.
They had an Israeli mission in Tehran, but they never permitted it to
be called an embassy. They had an Israeli envoy to Tehran, but they
never called him an ambassador. When the Israeli planes were landing
at the Tehran airport, they created -- they built a specific tarmac
off the airport for Israeli planes to land, so that no one would
really see that there are so many El Al planes flying to Tehran. And
the reason why the Iranians were doing this is because, on the one
hand, they needed Israel as an ally because they were fearful of the
Arab world, and, on the other hand, they felt that if they got too
close to Israel, they would only fuel Arab anger towards Iran.


AMY GOODMAN: Trita Parsi is author of Treacherous Alliance: The
Secret Dealings of Israel, Iran and the United States. Our guest
also, Ervand Abrahamian, Iran expert, Distinguished Professor at
Baruch College. I wanted, Professor Abrahamian, to read from Juan
Cole's piece, who says, talking about Ahmadinejad, “He has been
depicted as a Hitler figure intent on killing Israeli Jews, even
though he is not commander in chief of the Iranian armed forces, has
never invaded any other country, denies he is an anti-Semite, has
never called for any Israeli civilians to be killed, and allows
Iran's 20,000 Jews to have representation in Parliament,” that
Khamenei is the one with the real power.

ERVAND ABRAHAMIAN: He is right on target, yes. I think Juan Cole sums
it up. And the question is, then, why is basically in American
politics so much focused on Ahmadinejad? I think he serves the
function that Saddam Hussein played. He's an easy person to demonize.
And yesterday's Bollinger's introduction, when he described him as a
dictator, I think, shows how little people like Bollinger really know
about the Iranian political system. One can call Ahmadinejad many
things, but a dictator he is by no means. He can’t even -- he doesn't

even have the power to appoint his own cabinet ministers. It's a
presidency with very limited power. And to claim that he is in a
position to threaten the United States or Israel is just bizarre,
frankly. I think someone like Bollinger should know more about Iran
before they sling around smears like terms such as “dictator.”

AMY GOODMAN: Well, talk about Khamenei, then, if he is the one with
real power.

ERVAND ABRAHAMIAN: Here, again, he is, you can say, the Supreme
Leader, but the Iranian system is actually very sort of a collective
leadership. The foreign policy is made in a council, where the
Supreme Leader appoints those members, but there are very different
views there. And Ahmadinejad does not run that committee. Someone
like Rafsanjani has a great deal of influence. The former President
Khatami has a great deal of influence. And they are much more willing
to negotiate.

In fact, they were, I think, the people who offered this grand
bargain in 2003 to settle all the issues with the United States. And
for reasons that are not clear, the White House just basically
brushed it aside. They were not interested in pursuing this. And this
is why it leads me to think that this administration is adamant in
resolving the nuclear problem by military force, because if it was
interested in resolving it through diplomacy, there were offers made
to them to follow that route, and they have very consciously decided
not follow the diplomatic routes. So if you don't follow the
diplomatic route, the only other route there is is the military
route. And, of course, it’s only a question of time when they decide

on air strikes.


AMY GOODMAN: When is the election?

ERVAND ABRAHAMIAN: In less than two years' time. And the base, in
fact, of Ahmadinejad’s -- I would say the core base -- is very
similar to Bush's core base. It's about 25%. For him to get re-
elected, he has to stretch out and find independents and others, and
this is going to be very hard. If the reformers can actually rally
around one candidate, as they did in the 1990s, they could have
landslide victories, in which over 70% of the electorate was voting
for liberals and reformers.

AMY GOODMAN: And what direction would a US attack on Iran push the

ERVAND ABRAHAMIAN: Oh, it would play right into the hands of
Ahmadinejad, because you would have a national emergency. He would
declare, basically, the country's in danger. Everyone would have to
rally around the flag. People who disliked him would keep their mouth
shut. At a time of when the existence of the state is in question,
you don't mess around with the leaders. He would basically be able to
act as a much more of a strongman national leader.

AMY GOODMAN: Trita Parsi, you've had unusual access to US decision
makers, Israeli decision makers, Iranian leaders. What is your sense
of a strike, the US or Israel, on Iran? Is it imminent?

TRITA PARSI: Well, I don't think an Israeli strike is imminent,
unless there is some sort of coordination with the United States with
the aim of being able to draw the US into the conflict. I do believe
that some sort of a conflict between the United States and Iran is
quite probable right now, mindful of the lack of diplomacy that is
taking place.

And I also do believe that this is not necessarily something that
will go away automatically just because there's going to be a change
of government in the United States within the next two years. Many of
the decisions that are made right now have the impact of limiting the
maneuverability of future administrations. We're making it more and
more difficult, not only for this administration, but also for future
administrations, to pursue diplomacy.

And what we're seeing in the Middle East right now is not necessarily
just a conflict over what's going on in Iraq or about Iran's nuclear
program. This is a conflict that, at the end of the day, is about two
powerhouses in the region, and it's a conflict about hegemony, for
lack of a better word.

And these type of shifts, with the United States currently declining
and finding itself in a more and more difficult situation in Iraq and
with Iran finding itself in a stronger position and acting very, very
confidently, these type of shifts historically do not take place
peacefully, unless there is a tremendous amount of diplomacy. And
again, we're not seeing that right now.

And I’m very concerned that even if we manage to avoid war for the
next two years, the next US administration may find itself in a
position in which its maneuverability is so limited that the military
option once again becomes a very viable one for them.


J. Jay Park on the Iraq Oil Law.

This fellow obviously knows his stuff. The mainstream media hardly noticed the Dubai meeting even though it was obviously very important. I guess it was just not sexy enough! Interesting that Park was involved in drafting a law for Somalia. The development of oil there is a part of the determination not to allow the Islamists to gain control. Until the security situation improves there is not likely to be much development.
The Iraq oil law still seems to be in limbo.

Interview: J. Jay Park on the Iraq oil law

Published: Sept. 26, 2007 at 6:02 PM
Print story Email to a friend Font size:By BEN LANDO
UPI Energy Editor
DUBAI, United Arab Emirates, Sept. 26 (UPI) -- J. Jay Park's work on international legal petroleum regimes has taken him around the world. He helped craft Somalia's new hydrocarbons law and has led training sessions for officials in Iraq's Oil Ministry.

He also represented Western Oil Sands, a Canadian firm, in its deal with the Iraqi Kurdistan Regional Government.

Earlier this month in Dubai, Park held a daylong workshop on the ins and outs of Iraq's draft oil law, as part of the Iraq Petroleum 2007 summit, organized by The CWC Group. Also at the summit were representatives from oil firms around the world, as well as top Iraqi oil officials, including Oil Minister Hussain al-Shahristani.

United Press International sat down with Park on the sidelines of the summit to discuss the mind frame for crafting an oil law; what decisions the Iraqi government now faces; what type of regime Iraq can choose from; and what types of contracts -- including the controversial production sharing agreement -- work for Iraq's oil.

UPI: You’ve worked either with companies working within certain legal regimes or helped the governments set up legal regimes, so you’ve seen this from both sides. Looking at the Iraq situation, how do you see them being able to find compromise, to agree on … to pass an oil law, either this (draft) one or another one?

Park: When I’m looking at a resource law from a legal standpoint there are certain attributes that I want to see it addresses. The attributes from the point of view of the state are: is there going to be fair share of resource revenue going to the state? Is there going to be adequate addressing of environmental, health and safety issues? Are they going to ensure there are local benefits accruing to the economy through employment, through training, through technology? Are they going to ensure that opportunities for development in respect to the resource can be seized within the economy and not just exported? And is there a transparent process for the award of rights and the administration of the business?

From the point of view of the investor, what they want to know is: is this a regime in which if they make a discovery they will be able to complete that development so they can monetize the investment that they make? Number two, is the agreement a stable agreement so that once they make an investment they’re going to be able to recover what they’ve invested, so the deal won't change on the them, which is a problem we see in a lot of places, what we call the problem of the obsolescing bargain? And then finally, are they going to be able to have adequate legal means for remedies if there is non-compliance with the agreement?

So if you’ve got all those features addressed in a petroleum law then I think the law itself is a good law because it addresses well the issues that arise between a state and investor. That’s what I look at. That’s a technical kind of analysis.

When you then say, politically, how are they going to get this passed, that to me is really an issue for Iraqis. One of the things that I always look to is this issue of the sharing of the resource. In Iraq, they address this issue in part in the constitution. It needed more definition in the petroleum law and a revenue-sharing law, and that is part and parcel of the process.

Now the biggest issue you have with respect to sharing of the resource revenue is who gets to receive the revenue. And I’m advised that there has been a deal, that they have agreed to share the revenue resulting from the resource economy on a demographically equal basis. That’s the biggest issue. If they have solved the biggest issue, all the other issues about who controls activity, they’re less important. So if they’ve solved the big issue, then already then in my view the other issues are surely able to be solved and therefore I’m optimistic the (oil) law is going to be passed. Because once you’ve solved the revenue issue and how you’re going to share it, then it’s in everyone’s interest to make the revenue pie bigger. And when you’ve got everybody aligned in that sense, then I think you’re going to see success.

Q: In the oil minister’s presentation, when asked about what happens if the law is dragged out for so long, and he said ‘well we have the legal right to move forward on our own because we need to develop whether there is a new law or not,’ can you explain that, what he bases that on?

A: Iraq has an oil law. It was passed in the 1980s. It is a short law, seven or eight pages, 17 articles. It grants the power to the government to manage the industry and award rights in respect to petroleum activities. It doesn’t contain a great deal of detail on how that is to be done and you can follow from that then there is a great deal of discretion in the government as to how it may run the industry under the terms of that law.

What I believe the ministry is saying by that is ‘there is not a vacuum with respect to petroleum law in Iraq. We’d like to see the new law passed because it’s a better law than the old law,’ and I’m inclined to agree. From a technical petroleum law viewpoint, the new law is a better law than the old law. What I think the minister is saying, in effect, ‘we want this law passed and if it isn’t passed then we’ll have to just work with the old law.’

Q: You started your presentation explaining your frame of mind when you go into drafting an oil law. We have the Iraq scenario where we know there’s a lot of oil and gas and we assume there’s a lot more oil and gas and the industry is already established for a long time. Compared to, for example, Somalia or another country where we think there might be oil and gas but we don’t know so that’s why we’re creating this regime so we can figure it out, we can have the legal tools to do the exploration and development. So what are your thoughts when you’re creating, what is the difference when you’re creating the law, your mind frame when you sit down to write it.

A: The difference between developing a law for a regime that does not know if it has any oil and gas versus developing a law for a regime that knows it has a substantial existing base is what do you do with a substantial existing resource base?

What many countries have done is they’ve established a state oil company and give it the management and ownership of the existing resource base. The enhancement and the development of that resource base is then within the control of that state oil company. But new exploration operations would then be open for assessment as to how the state should deal with that. Many states take different approaches to that.

Mexico says only the state oil company can do any exploration. Consequently, there’s not a great deal of exploration and Mexico’s production is declining because their state oil company lacks the capital to explore it extensively.

Other countries, I come from Canada, says ‘no, we’re not going to have a state oil company but we’re going to award these rights to private investors.’

Iraq has chosen a middle ground. Iraq has said a state oil company will hold the existing producing base. It will also hold the discovered but undeveloped areas that are close to existing production and it may invite other companies to assist it in developing those resources but fundamentally they will be owned by the state oil company.

Then with respect to exploration areas and other discovered areas that need a lot of work to develop them, the scope is broader for how that can be done in terms of many different types of petroleum contracts that could be used, with many different structures, although it's clearly suggested that a joint venture with Iraqi participants is to be encouraged.

Q: What would you say are the risks in entering Iraq’s oil sector?

A: The principle risk that oil companies are designed to address is geological risk …

Q: Is there oil or not, will you put the money in and come up with nothing …

A: … Exactly. That generally the record on exploration is that out of every 10 exploratory wells only one or two are going to be successful. But the geology and opportunities around the world vary widely and so clearly Iraq is one of those places where the geology offers wonderful opportunities because we’ve already seen how much exploration there’s been and there’s a great deal more yet to be explored. Clearly the geological risk in Iraq is less than it is in Ireland.

Q: In your presentation you had the four annexes up there. (The annexes are a draft list of the categories of Iraq’s oil fields and exploration blocks, which the Iraq Oil Ministry has created.) You said this is the contract that you would use for each. Can you explain what specific contract per annex and why not the other ones?

A: Annex 1 is just producing fields. It’s likely the existing producing fields involve minimal to no risk in terms of, you know, it’s producing and what’s needed is services to enhance production and enhance facilities to allow production to occur. In those regimes around the world that use a service contract, that’s the type of contract that it’s used for.

Other fields that need development work, drilling of further wells, construction of more significant facilities because they are not currently producing, often a development type contract is designed differently and has different work commitments and even you might need a different skill set as well, so that’s why I deduced from the language of the draft law that a development contract is something that is suited to that kind of an arrangement.

And finally when it comes to areas that don’t have a discovery, that’s where there is a more significant degree of risk and a risk exploration contract is best suited to that. It’s designed to encourage exploration activity and if exploration is successful, to allow development.

Q: What’s the difference between the risk contract and the exploration and development contract?

A: In my opinion you’re just mixing up different terms. An exploration and development contract and a risk exploration contract, to me, would mean the same thing.

Q: So the terms that they’re (Iraqi government) putting up there, why do they have these two mixed terms?

A: One, I believe, is intended to be a broad term to describe a wide range of contracts called exploration and development contracts and then the other term, the risk exploration contract, is a specific contract they have in mind. It’s one of the details of the law that needs to be further elaborated, either in the regulations or in the model contract.

Q: And if they decided to go the route of the production sharing agreement or some modified version that would fit within the law, where within these annexes would that fall? Would that be Annex 4?

A: A production sharing type contract could be a form of risk exploration contract that would be suited to Annex 4. The word development and production contract doesn’t to me define a specific type of agreement, it defines what the activities will occur under the agreement. Consequently, that’s another area that needs better definition in the regulations and in the model contracts that will follow.

Q: But when you just take a production sharing agreement or production sharing contract, and if those were to be one of the model contracts that are available for the Iraq government to sign with an oil company, where do you see this being applicable, in the four annexes, and where would it not make sense to do a production sharing agreement, from the government’s standpoint? In Annex 1, would you sign a PSA in Annex 1?

A: The problem is we’re using a set of terms that are designed to apply to a different concept, which is exploration activities and all the types of activities we tend to see for exploration type petroleum activities, and seeking to apply it to an existing, producing resource base.

Q: So you’re saying a PSA is for when exploration is involved.

A: It would be rare to see a production sharing agreement used and granted at a time of, for a field with existing production.

Q: What about for a discovered but not producing field?

A: A discovered but undeveloped field could conceivably be the subject of a production sharing contract if the state decides that that’s the appropriate tool to use.

Q: But there’s far less risk because you know that there’s oil there.

A: The usual kinds of activities under a production sharing contract would need to be suitably revised to suit the development, instead of an exploration and development situation.



US air raid in Baghdad kills 10 civilians

How can the US claim that it tries so hard to avoid civilian casualties when it conducts air raids in a city. This is bound to produce civilian casualties. It seems that the US does not care. The same thing happens in Afghanistan. This only turns the populace against the occupying forces.

US air raid in Baghdad kills 10 civiliansArticle from: Agence France-PresseFont September 28, 2007 06:32pm
A US air raid early today killed at least 10 people, including women and children, in a building in a mainly Sunni area of Baghdad, Iraqi officials said.

The raid targeted a building in the Al-Saha neighbourhood in southwestern Baghdad where families were sleeping, the Iraqi officials said.

Bodies were pulled out of the rubble of the building, which was destroyed.

"Ten people were killed and seven wounded when American helicopters attacked Building No 139 at 2am. We have no idea of the reason for the attack," said an Interior Ministry official.

An official at Baghdad's Al-Yarmuk hospital said 13 people - seven men, two women and four children - were killed and 10 men and a women were wounded. He said all the casualties were civilians.

The survivors said their building had been attacked by US helicopters early in the morning, the hospital official said.

There was no immediate comment from the US military.

The reported attack came after the US military said the bodies of five women and four children were found in a central Iraqi village after American soldiers raided houses believed used by al-Qaeda earlier in the week.

A military statement yesterday said a raid by ground and air forces had been carried out on Tuesday on a building in Babahani village near the town of Musayyib, about 50 kilometres south of Baghdad.

"According to Iraqi police, the bodies of five adult women and four children were taken to a local hospital in Musayyib Wednesday," the statement said.

"Structures in the area have historically been found to be used as safe houses for Al-Qaeda," it added.

"Coalition Forces searching a nearby house located (bomb)-making material including command wire, batteries and timers."

Pentagon Gives Blackwater New Contract

I wonder if Blackwater also flies prisoners around to different secret prisons or renders people to outsourced torture sites? Maliki has already discovered he really doesn't have the power to make Blackwater disappear from Iraq. This article talks of Maliki revoking Blackwater's licence. Another article I have read claims that Blackwater never bothered to get a licence from Iraq in the first place! It will be interesting to see what force the new Iraqi legislation on private contractors will have if any.

Pentagon Gives Blackwater New Contract

by Ali Gharib
A U.S.-based private security firm received a contract worth up to 92 million dollars from the Department of Defense amid hard questions about its involvement in two separate violent incidents in Iraq.

"Blackwater has been a contractor in the past with the department and could certainly be in the future," said the U.S.’s top-ranking military officer, General Peter Pace, at an afternoon press conference here.

The future arrived just two hours later when the Pentagon released a new list of contracts – Presidential Airways, the aviation unit of parent company Blackwater, was awarded the contract to fly Department of Defense passengers and cargo between locations around central Asia.

The announcement comes as a cloud of suspicion is gathering around the "professional military" firm for its actions as a State Department security contractor in Iraq in which at least eight Iraqis and possibly as many as 28 were killed, including a woman and child.

Last week, the Iraqi government announced that it had revoked Blackwater's license to operate in the country.

The initial report by the State Department's Bureau of Diplomatic Security on the incident was put together by the U.S. embassy in Baghdad and details of the event where a car bomb exploded near a meeting attended by officials from the U.S. Agency for International Development. Some of the Blackwater team hired as security for the officials was involved in the shootout while apparently trying to clear an evacuation path.

In a statement issued last week, Blackwater USA spokesperson Anne Tyrrell denied any wrongdoing and said that, "Blackwater's independent contractors acted lawfully and appropriately in response to a hostile attack in Baghdad on Sunday. Blackwater regrets any loss of life but this convoy was violently attacked by armed insurgents, not civilians, and our people did their job to defend human life."

However, an official with knowledge of the investigation told the New York Times that the evacuation effort was marked by confusion and chaos – the Blackwater employees believed they were being fired on, but this contradicted the initial Iraqi report on the incident that said there was no enemy fire. There was also apparently an incident of infighting when one guard did not heed a ceasefire call.

In a press conference Wednesday, the deputy press secretary of the State Department gave a non-denial of reports in the press that the Department of Defense has hinted to the State Department that the investigation into Blackwater should be reined in, only highlighting that the departments were working together and that the reports in the press had come from anonymous sources.

Blackwater USA, which has an estimated 1,000 employees in Iraq and 800 million dollars in U.S. government contracts, has been one of the most prominent private security firms operating in the country. Some of its notable assignments have included protecting L. Paul Bremer, the former head of the Coalition Provisional Authority, as well as Crocker, who is currently the leading U.S. diplomatic envoy to Iraq.

The firm came into the public eye in March 2004, when four of its employees were killed and mutilated by an Iraqi mob in Fallujah, the war-torn Iraqi city that was an insurgent stronghold at the time. The incident touched off the unsuccessful U.S. attempt to retake the city in April 2004.

Family members of the four employees slain in Fallujah have since sued Blackwater, alleging that the firm failed to provide necessary equipment and manpower that could have saved the employees' lives.

A separate report by the House Oversight and Government Reform Committee faulted Blackwater’s conduct in the Fallujah incident, in which Blackwater was transporting flatbed trucks when its team was ambushed.

"Blackwater embarked on this mission without sufficient preparation, resources and support for its personnel," concluded the report, saying that the firm had ignored warnings by another security company, cut the staff for the mission by putting rear gunners for both involved security vehicles on administrative duties, and went out with insufficiently armored vehicles.

"Management in North Carolina made the decision to go with soft skin due to the cost" despite the fact that the contract paid for armored vehicles, said a Blackwater employee quoted in the report, referring to Blackwater’s headquarters in Moyock, North Carolina.

The Congressional report noted that the Blackwater men had been sent on their mission without maps and ended up at the wrong military base, where they had to spend the night because of fighting nearby.

Control Risks Group, another security force working in the area at the time, warned Blackwater about the mission after they had twice been offered the same task but "refused both times due to the obvious risk transporting slow-moving loads through such a volatile area."

On the heels of the House Committee report, Congressman David E. Price of North Carolina will introduce legislation next week to extend the reach of U.S. civil courts to include security contractors in Iraq. The proposed bill, H.R. 2740, will also establish F.B.I. investigative units in the war zone charged with investigating allegations of misconduct.

In a letter to U.S. Secretary of State Condoleezza Rice last week, Price wrote, "The allegations related to the Sept. 16 incident have the potential to become a flashpoint in terms of Iraqi antagonism toward U.S. personnel, with wide-ranging implications for our mission and our troops. There is no question that the lack of clarity surrounding the legal options for prosecuting criminal acts has significantly undermined our efforts in Iraq."

The various investigations into security contractors working for the U.S. government in Iraq and related legislation are heralded by critics of the Bush administration’s approach to the war, pointing to the failures of the so-called [Donald] Rumsfeld doctrine, which promotes a more streamlined and greatly privatized military based on an "entrepreneurial approach" and raising questions about rampant war-profiteering.


I have not had a chance to read Klein's book yet but this review seems more positive than some other recent reviews I have read. Some reviewers are quite upset and dismissive of Klein's views. However, Stiglitz is much more even handed perhaps because he himself of late has been also critical of the prevalent "theology" of free markets.
As I have mentioned in another post, Friedman's role is perhaps overemphasized although he was directly involved in Chile as an advisor to Pinochet. In Russia the shock was delivered more by a Harvard School featuring the likes of Jeffrey Sachs who not only delivered a privatisation shock but made themselves in some of the deals it would seem.
Stiglitz's term "bleakonomics" is a great neologism.


Published: September 30, 2007
There are no accidents in the world as seen by Naomi Klein. The destruction of New Orleans by Hurricane Katrina expelled many poor black residents and allowed most of the city’s public schools to be replaced by privately run charter schools. The torture and killings under Gen. Augusto Pinochet in Chile and during Argentina’s military dictatorship were a way of breaking down resistance to the free market. The instability in Poland and Russia after the collapse of Communism and in Bolivia after the hyperinflation of the 1980s allowed the governments there to foist unpopular economic “shock therapy” on a resistant population. And then there is “Washington’s game plan for Iraq”: “Shock and terrorize the entire country, deliberately ruin its infrastructure, do nothing while its culture and history are ransacked, then make it all O.K. with an unlimited supply of cheap household appliances and imported junk food,” not to mention a strong stock market and private sector.


The Rise of Disaster Capitalism.

By Naomi Klein.

558 pp. Metropolitan Books. $28.

Free-Market Mischief in Hot Spots of Disaster (September 10, 2007) “The Shock Doctrine” is Klein’s ambitious look at the economic history of the last 50 years and the rise of free-market fundamentalism around the world. “Disaster capitalism,” as she calls it, is a violent system that sometimes requires terror to do its job. Like Pol Pot proclaiming that Cambodia under the Khmer Rouge was in Year Zero, extreme capitalism loves a blank slate, often finding its opening after crises or “shocks.” For example, Klein argues, the Asian crisis of 1997 paved the way for the International Monetary Fund to establish programs in the region and for a sell-off of many state-owned enterprises to Western banks and multinationals. The 2004 tsunami enabled the government of Sri Lanka to force the fishermen off beachfront property so it could be sold to hotel developers. The destruction of 9/11 allowed George W. Bush to launch a war aimed at producing a free-market Iraq.

In an early chapter, Klein compares radical capitalist economic policy to shock therapy administered by psychiatrists. She interviews Gail Kastner, a victim of covert C.I.A. experiments in interrogation techniques that were carried out by the scientist Ewen Cameron in the 1950s. His idea was to use electroshock therapy to break down patients. Once “complete depatterning” had been achieved, the patients could be reprogrammed. But after breaking down his “patients,” Cameron was never able to build them back up again. The connection with a rogue C.I.A. scientist is overdramatic and unconvincing, but for Klein the larger lessons are clear: “Countries are shocked — by wars, terror attacks, coups d’état and natural disasters.” Then “they are shocked again — by corporations and politicians who exploit the fear and disorientation of this first shock to push through economic shock therapy.” People who “dare to resist” are shocked for a third time, “by police, soldiers and prison interrogators.”

In another introductory chapter, Klein offers an account of Milton Friedman — she calls him “the other doctor shock” — and his battle for the hearts and minds of Latin American economists and economies. In the 1950s, as Cameron was conducting his experiments, the Chicago School was developing the ideas that would eclipse the theories of Raul Prebisch, an advocate of what today would be called the third way, and of other economists fashionable in Latin America at the time. She quotes the Chilean economist Orlando Letelier on the “inner harmony” between the terror of the Pinochet regime and its free-market policies. Letelier said that Milton Friedman shared responsibility for the regime’s crimes, rejecting his argument that he was only offering “technical” advice. Letelier was killed in 1976 by a car bomb planted in Washington by Pinochet’s secret police. For Klein, he was another victim of the “Chicago Boys” who wanted to impose free-market capitalism on the region. “In the Southern Cone, where contemporary capitalism was born, the ‘war on terror’ was a war against all obstacles to the new order,” she writes.

One of the world’s most famous antiglobalization activists and the author of the best seller “No Logo: Taking Aim at the Brand Bullies,” Klein provides a rich description of the political machinations required to force unsavory economic policies on resisting countries, and of the human toll. She paints a disturbing portrait of hubris, not only on the part of Friedman but also of those who adopted his doctrines, sometimes to pursue more corporatist objectives. It is striking to be reminded how many of the people involved in the Iraq war were involved earlier in other shameful episodes in United States foreign policy history. She draws a clear line from the torture in Latin America in the 1970s to that at Abu Ghraib and Guantánamo Bay.

Klein is not an academic and cannot be judged as one. There are many places in her book where she oversimplifies. But Friedman and the other shock therapists were also guilty of oversimplification, basing their belief in the perfection of market economies on models that assumed perfect information, perfect competition, perfect risk markets. Indeed, the case against these policies is even stronger than the one Klein makes. They were never based on solid empirical and theoretical foundations, and even as many of these policies were being pushed, academic economists were explaining the limitations of markets — for instance, whenever information is imperfect, which is to say always.

Klein isn’t an economist but a journalist, and she travels the world to find out firsthand what really happened on the ground during the privatization of Iraq, the aftermath of the Asian tsunami, the continuing Polish transition to capitalism and the years after the African National Congress took power in South Africa, when it failed to pursue the redistributionist policies enshrined in the Freedom Charter, its statement of core principles. These chapters are the least exciting parts of the book, but they are also the most convincing. In the case of South Africa, she interviews activists and others, only to find there is no one answer. Busy trying to stave off civil war in the early years after the end of apartheid, the A.N.C. didn’t fully understand how important economic policy was. Afraid of scaring off foreign investors, it took the advice of the I.M.F. and the World Bank and instituted a policy of privatization, spending cutbacks, labor flexibility and so on. This didn’t stop two of South Africa’s own major companies, South African Breweries and Anglo-American, from relocating their global headquarters to London. The average growth rate has been a disappointing 5 percent (much lower than in countries in East Asia, which followed a different route); unemployment for the black majority is 48 percent; and the number of people living on less than $1 a day has doubled to four million from two million since 1994, the year the A.N.C. took over.

Some readers may see Klein’s findings as evidence of a giant conspiracy, a conclusion she explicitly disavows. It’s not the conspiracies that wreck the world but the series of wrong turns, failed policies, and little and big unfairnesses that add up. Still, those decisions are guided by larger mind-sets. Market fundamentalists never really appreciated the institutions required to make an economy function well, let alone the broader social fabric that civilizations require to prosper and flourish. Klein ends on a hopeful note, describing nongovernmental organizations and activists around the world who are trying to make a difference. After 500 pages of “The Shock Doctrine,” it’s clear they have their work cut out for them.

Joseph E. Stiglitz, a university professor at Columbia, was awarded the Nobel in economic science in 2001. His latest book is “Making Globalization Work.”


Friday, September 28, 2007

We'll revoke Al-Maliki's Licence First

One wonders if an American actually said this. Given US insensitivity it is possible. I was not aware of some of the other incidents with Blackwater that are listed here. They do not get much play in the western media. We will see what if anything happens as the result of the joint investigation. The Iraqi govt. is already drawing up a law that will hold contractors responsible. I wonder what the US response will be. It is unlikely that they will fire Blackwater for sure.

This is from the following site.

'We'll revoke Al-Maliki's licence first'
The privatisation of security in Iraq threatens more than innocent civilians, reports Nermeen Al-Mufti


The killing of 11 civilians in Baghdad two weeks ago has once again put Blackwater on the spot. The US security firm first came into the public eye in early April 2004, when four of its personnel were killed and mutilated by mobs in Falluja. Although Iraqi religious parties denounced the attacks at the time, Bush gave the town four days to deliver the perpetrators before ordering an all-out attack, one in which thousands of Falluja inhabitants perished.

The Iraqi government would like to see Blackwater brought to account. But that is not going to be easy. The spokesman for the Iraqi Interior Ministry, Abdul-Karim Khalif, says that the ministry provided Iraqi courts with evidence against Blackwater concerning other shootings over the past seven months. In one shooting last February, three of the guards of Al-Iraqiya television were killed. On 9 September, five Iraqis were killed when Blackwater personnel fired at them near the municipality building in Baghdad. Three days later, five other citizens were wounded in another shooting on Palestine Street. Blackwater, the Iraqi Interior Ministry maintains, is also involved in the killing of an Iraqi journalist near the Iraqi Foreign Ministry building in Baghdad in February, as well as the killing of a citizen near the Iraqi Interior Ministry building in Baghdad in May.

"Most of the laws passed by Paul Bremer, the civilian administrator of Iraq under US occupation, remain in force. Some of these laws violate Iraqi sovereignty, including a law that prevents Iraqis from prosecuting any American or any individual who cooperates with America or the coalition authorities, whether civilian or military," Abu Abdullah, an Iraqi lawyer, told Al-Ahram Weekly.

Following the recent incident in Baghdad, Prime Minister Nuri Al-Maliki threatened to revoke Blackwater's licence. What he later discovered was that the company was working in Iraq without a licence. The Americans weren't impressed by Al-Maliki's uncharacteristic boldness. "We'll revoke Al-Maliki's licence before he revokes Blackwater's licence," a US official quipped.

Within four days of the incident, Blackwater was back in operation. A spokesman for Operation Imposing Law said that the services of private contractors in Iraq cannot be discontinued without creating a security vacuum. According to media reports, the Iraqis and Americans have formed an eight-member committee to investigate the Blackwater incident. The committee is co-chaired by a top US diplomat and the Iraqi defence minister.

Blackwater has over 20,000 personnel in Iraq, all well- armed and backed with armoured vehicles and aircraft. The company has military equipment comparable to that used by the US army and its pilots fly reconnaissance missions over Baghdad on a daily basis. Last April, one of its helicopters was shot down during clashes in Al-Fadl district of Baghdad.

According to press reports, about 34 per cent of the budget the US government initially allocated for the reconstruction of Iraq has been diverted to private security firms. The "privatisation" of the war in Iraq is well underway, The Los Angeles Times reported. In his book, Blackwater: The Rise of the World's Most Powerful Mercenary Army, American investigative journalist Jeremy Scahill links the modern security firm to the Knights of Malta, an offshoot of the Knights Templar. Blackwater's employees, he argues, share the same religious zeal of ancient crusaders.

"Private security companies -- whether American, British, or South African -- do not differ much from Iraq's sectarian militias. These companies act as if they were entitled to commit any crime on the pretext of self-defence," Abu Abdullah said. US federal authorities are currently investigating the involvement of Blackwater employees in smuggling weapons into Iraq.

Meanwhile, US airborne troops shot dead seven Iraqi civilians in the predominantly Sunni town of Al-Mahmoudiya, 20km south of Baghdad. Little else is known about the operation. But US authorities regularly claim that such attacks are part of their offensive against Al-Qaeda. Similar operations take place in Sadr City frequently, the target in that case being the Mahdi Army

Lost in Translation: Ahmadinejad And the Media

This is an excellent article in that it enables one to make sense of what seem senseless statements. I took Ahmadinejad to be actually refusing to admit there were gays in Iran. This interpretation makes much more sense.
I had already realised the "wiping Israel off the map" statement was misconstrued. Of course the most extreme interpretations of Ahmadinejad on Israel are so established in the US media and the US psyche that articles such as this which do not get much coverage anyway will have nil effect.

Lost In Translation: Ahmadinejad And The Media

By Ali Quli Qarai

09/28/07 "ICH" -- - First I want to make some remarks about that now world-famous statement of President Ahmadinejad at Columbia: “We do not have homosexuals in Iran of the kind you have in your country.” The American media conveniently ignored the second, and crucial, part of his sentence as something redundant.

Obviously he was not saying, We don’t have any homosexuals whatsoever in Iran—something nobody in the world would believe, not even in Iran. And by implication, he was not telling his audience, I am a plain liar! —something which his audience at Columbia and the American media construed him to be saying.

What he was saying is that homosexuality in the US and homosexuality in Iran are issues which are as far apart from one another as two cultural universes possibly can be. They are so dissimilar that any attempt to relate them and bring them under a common caption would be misleading. “Homosexuality is not an issue in Iran as it is in present-day American society.” This was, apparently what was saying in polite terms.

Homosexuality in the US is a omnipresent social and political issue which crops up in almost every discourse and debate pertaining to American society and politics. So much so that I think it was a major issue, if not the deciding factor, in the last two presidential elections which paved Bush’s way to the White House and saddled the Democrats with defeat, because a large so-called conservative section of the American public (the red states) felt wary of the pro-gay liberalism of the Democratic Party.

By contrast, homosexuality is a non-issue in Iran and is considered an uncommon perversion (except as an occasional topic of jokes about a certain town). Prom the viewpoint of penal law, too, it is does not receive much attention as the requirements for a sentence (four eye-witnesses, who have actually seen the details of the act) are so astringent as to make punishment almost impossible. (It would be interesting to know how many have been accused of it during the last two decades)

By contrast adultery and homosexuality are legalized forms of behaviour in most of Europe and America, and regarded not as criminal acts but as perfectly acceptable forms of sexual behaviour and as legitimate natural human rights which need to be taught even to all Asian and African societies as well.

There was also a subtle hint in his remark that he wanted to move on from this topic to more serious and relevant matters, a point which would be obvious to anyone conversant with Persian language and culture (like his another hint concerning the disgraceful conduct of Columbia president, when, while formally inviting Columbia academics to Iran, he added that “You can rest assured that we will treat you in Iran with hundred percent respect.”

Iranians, being linguistically a very sophisticated people, speak a lot in hints which are invisible to outsiders. Americans in comparison tend to be straightforward and often as primitive.

(In general the Persians, like other civilized societies, have developed the art of making and responding to harsh remarks in soft and friendly words. Americans, as Prof. Bollinger proved, have still much to learn from civilized nations concerning the civilities of civilized hostility.)

Mr Bollinger’s hostility towards President Ahmadinejad had obviously been fed by devious translations and interpretations of his earlier—also world-famous—remarks about Israel and the Holocaust. As if, as one commentator has remarked, the professor had been watching only CNN and Fox News.

· Unfortunately for more than an year these remarks have given a ready-made excuse to his critics to demonize him and attack Iran’s foreign policies. Although he has made some attempts (unjustifiably belated, I think, and not quite adequate) to clarify himself, we who hear these remarks have also an intellectual duty to ourselves and others to see exactly what he exactly meant.

It is a basic linguistic principle of civilized discourse that so long as there is an acceptable and upright interpretation for someone’s remark, it should not be given a devious meaning. Moreover, as one of my teachers often says, it is easy to reject and denounce the statements of others, but the worthy task of every intelligent seeker is to try to understand people who hold different opinions. This is particular necessary when such statements originate in a different linguistic and cultural domain.

When Ahmadinejad repeated Ayatullah Khomeini’s words that “Israel baayad az bayn beravad,” (which literally means that Israel should cease to exist), what is critically important for understanding is to see how Iranian people understand these words of their president. I don’t think any mature Iranian with some awareness of regional politics has ever thought that the late Leader of Iran, or the present president of the country, were advocating some kind of military objectives against Israel. By citing the example of the Soviet Union and the Apartheid regime in South Africa Ahmadinejad, too, has clarified what he meant by ‘Israel ceasing to exist.’ By the rules of civilized discourse, every speaker’s clarification concerning what he means is authoritative as he is entitled, before all others, to state and clarify what he means by his statements. In this case, Ahmadinejad has also clarified as to how he thinks that my happen: a general referendum in undivided Palestine with the participation of its Arab, Jewish and Christian population.

As for his statement that the Holocaust in a myth, we all know that the word “myth” has several meanings in the dictionary. One of its meanings is “A fiction or half-truth, especially one that forms part of an ideology” (The American Heritage Dictionary of the English Language). Thus a myth is not something necessarily untrue and Ahmadinejad has not denied outright that the Holocaust did occur, although he seems to have—what he considers to be legitimate—doubts about its exact extent, doubts which are prone to be strengthened, rightly or otherwise, by attempts to persecute or prosecute scholars whose research leads them to conclusions different from main-current historiography. What he basically appears to question is that the Holocaust should be made an ideological tool for the pursuit of unfair and inhuman objectives—something which most of us acknowledge has happened in the case of Palestine. Why should the people of Palestine be made to pay the price for the guilt and failings of Europe? He asks. I think that is a legitimate question.

The savants of the media are free to interpret Ahmadinejad’s statement with the purpose of demonizing him and excoriating Iran, but there are better and alternate paths for those who strive for understanding and peace between nations, and to an objective like this should institutions like universities, including Columbia, contribute.

I hope that Mr Bollinger will advance a courageous apology to Mr Ahmadinejad and take advantage of his standing invitation for continuing the exchange of ideas with academic circles in Iran. Iranians generally are a large hearted people, like most Americans, and I hope the bitterness which has arisen from the unfortunate event of the past week will soon be forgotten with the sincere efforts of well-meaning intellectuals and officials on both sides. I cannot think of any other way in which good will between these nations as well as the good repute of an outstanding institution of higher learning such as Columbia can be salvaged.

Ali Quli Qarai is an Iranian scholar. He has published several books, including a translation of the Quran. He can be reached at

Dilip Hero: The Bush Oil Grab

If anyone doubts that to a considerable degree the US invasion of Iraq was about oil here is an excellent history that gives lots of evidence that it was. It seems that in the US even many leftists think that oil was really not a significant factor that oil control could have been obtained other ways etc. The Iraqis themselves have a more realistic assessment IMHO! The material comes from this site.

How the Bush Administration's Iraqi Oil Grab Went Awry

by Dilip Hiro

Here is the sentence in The Age of Turbulence, the 531-page memoir of former Federal Reserve chief Alan Greenspan, that caused so much turbulence in Washington last week: "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil." Honest and accurate, it had the resonance of the Bill Clinton's election campaign mantra, "It's the economy, stupid." But, finding himself the target of a White House attack – an administration spokesman labeled his comment, "Georgetown cocktail party analysis" – Greenspan backtracked under cover of verbose elaboration. None of this, however, made an iota of difference to the facts on the ground.

Here is a prosecutor's brief for the position that "the Iraq War is largely about oil":

The primary evidence indicating that the Bush administration coveted Iraqi oil from the start comes from two diverse but impeccably reliable sources: Paul O'Neill, the Treasury Secretary (2001-2003) under President George W. Bush; and Falah Al Jibury, a well-connected Iraqi-American oil consultant, who had acted as President Ronald Reagan's "back channel" to Iraqi President Saddam Hussein during the Iraq-Iran War of 1980-88. The secondary evidence is from the material that can be found in such publications as the New York Times and the Wall Street Journal.

According to O'Neill's memoirs, The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O'Neill, written by journalist Ron Suskind and published in 2004, the top item on the agenda of the National Security Council's first meeting after Bush entered the Oval Office was Iraq. That was Jan. 30, 2001, more than seven months before the 9/11 attacks. The next National Security Council (NSC) meeting on Feb. 1 was devoted exclusively to Iraq.

Advocating "going after Saddam" during the Jan. 30 meeting, Defense Secretary Donald Rumsfeld said, according to O'Neill, "Imagine what the region would look like without Saddam and with a regime that's aligned with U.S. interests. It would change everything in the region and beyond. It would demonstrate what U.S. policy is all about." He then discussed post-Saddam Iraq – the Kurds in the north, the oil fields, and the reconstruction of the country's economy. (Suskind, p. 85)

Among the relevant documents later sent to NSC members, including O'Neill, was one prepared by the Defense Intelligence Agency (DIA). It had already mapped Iraq's oil fields and exploration areas, and listed American corporations likely to be interested in participating in Iraq's petroleum industry.

Another DIA document in the package, entitled "Foreign Suitors for Iraqi Oilfield Contracts," listed companies from 30 countries – France, Germany, Russia, and Britain, among others – their specialties and bidding histories. The attached maps pinpointed "super-giant oil field," "other oil field," and "earmarked for production sharing," and divided the basically undeveloped but oil-rich southwest of Iraq into nine blocks, indicating promising areas for future exploration. (Suskind, p. 96)

According to high-flying oil insider Falah Al Jibury, the Bush administration began making plans for Iraq's oil industry "within weeks" of Bush taking office in January 2001. In an interview with the BBC's Newsnight program, which aired on March 17, 2005, he referred to his participation in secret meetings in California, Washington, and the Middle East, where, among other things, he interviewed possible successors to Saddam Hussein.

By January 2003, a plan for Iraqi oil crafted by the State Department and oil majors emerged under the guidance of Amy Myers Jaffe of the James A. Baker III Institute for Public Policy at Rice University. It recommended maintaining the state-owned Iraq National Oil Company, whose origins dated back to 1961 – but open it up to foreign investment after an initial period in which U.S.-approved Iraqi managers would supervise the rehabilitation of the war-damaged oil infrastructure. The existence of this group would come to light in a report by the Wall Street Journal on March 3, 2003.

Unknown to the architects of this scheme, according to the same BBC Newsnight report, the Pentagon's planners, apparently influenced by powerful neocons in and out of the administration, had devised their own super-secret plan. It involved the sale of all Iraqi oil fields to private companies with a view to increasing output well above the quota set by the Organization of the Petroleum Exporting Countries (OPEC) for Iraq in order to weaken, and then destroy, OPEC.

Secondary Evidence

On Oct. 11, 2002 the New York Times reported that the Pentagon already had plans to occupy and control Iraq's oilfields. The next day the Economist described how Americans in the know had dubbed the waterway demarcating the southern borders of Iraq and Iran "Klondike on the Shatt al-Arab," while Ahmed Chalabi, head of the U.S.-funded Iraqi National Congress and a neocon favorite, had already delivered this message: "American companies will have a big shot at Iraqi oil – if he gets to run the show."

On Oct. 30, Oil and Gas International revealed that the Bush administration wanted a working group of 12 to 20 people to (a) recommend ways to rehabilitate the Iraqi oil industry "in order to increase oil exports to partially pay for a possible U.S. military occupation government," (b) consider Iraq's continued membership of OPEC, and (c) consider whether to honor contracts Saddam Hussein had granted to non-American oil companies.

By late October 2002, columnist Maureen Dowd of the New York Times would later reveal, Halliburton, the energy services company previously headed by Vice President Dick Cheney, had prepared a confidential 500-page document on how to handle Iraq's oil industry after an invasion and occupation of Iraq. This was, commented Dowd, "a plan [Halliburton] wrote several months before the invasion of Iraq, and before it got a no-bid contract to implement the plan (and overbill the U.S.)." She also pointed out that a Times' request for a copy of the plan evinced a distinct lack of response from the Pentagon.

In public, of course, the Bush administration built its case for an invasion of Iraq without referring to that country's oil or the fact that it had the third largest reserves of petroleum in the world. But what happened out of sight was another matter. At a secret NSC briefing for the president on February 24, 2003, entitled, "Planning for the Iraqi Petroleum Infrastructure," a State Department economist, Pamela Quanrud, told Bush that it would cost $7-8 billion to rebuild the oil infrastructure, if Saddam decided to blow up his country's oil wells, according to Washington Post reporter Bob Woodward in his 2004 book, Plan of Attack (pp. 322-323). Quanrud was evidently a member of the State Department group chaired by Amy Myers Jaffe.

When the Anglo-American troops invaded on March 20, 2003, they expected to see oil wells ablaze. Saddam Hussein proved them wrong. Being a staunch nationalist, he evidently did not want to go down in history as the man who damaged Iraq's most precious natural resource.

On entering Baghdad on April 9, the American troops stood by as looters burned and ransacked public buildings, including government ministries – except for the Oil Ministry, which they guarded diligently. Within the next few days, at a secret meeting in London, the Pentagon's scheme of the sale of all Iraqi oil fields got a go-ahead in principle.

The Bush administration's assertions that oil was not a prime reason for invading Iraq did not fool Iraqis though. A July 2003 poll of Baghdad residents – who represented a quarter of the Iraqi national population – by the London Spectator showed that while 23 percent believed the reason for the Anglo-American war on Iraq was "to liberate us from dictatorship," twice as many responded, "to get oil." (Cited in Dilip Hiro, Secrets and Lies: Operation "Iraqi Freedom" and After, p. 398.)

As Iraq's principal occupier, the Bush White House made no secret of its plans to quickly dismantle that country's strong public sector. When the first American proconsul, retired Gen. Jay Garner, focused on holding local elections rather than privatizing the country's economic structure, he was promptly sacked.

Hurdles to Oil Privatization Prove Impassable

Garner's successor, L. Paul Bremer III, found himself dealing with Philip Carroll – former chief executive officer of the American operations of (Anglo-Dutch) Royal Dutch Shell in Houston – appointed by Washington as the Iraqi oil industry's supreme boss. Carroll decided not to tinker with the industry's ownership and told Bremer so. "There was to be no privatization of Iraqi oil resources or facilities while I was involved," Carroll said in an interview with the BBC's Newsnight program on March 17, 2005.

This was, however, but a partial explanation for why Bremer excluded the oil industry when issuing Order 39 in September 2003 privatizing nearly 200 Iraqi public sector companies and opening them up to 100 percent foreign ownership. The Bush White House had also realized by then that denationalizing the oil industry would be a blatant violation of the Geneva Conventions which bar an occupying power from altering the fundamental structure of the occupied territory's economy.

There was, as well, the vexatious problem of sorting out the 30 major oil development contracts Saddam's regime had signed with companies based in Canada, China, France, India, Italy, Russia, Spain, and Vietnam. The key unresolved issue was whether these firms had signed contracts with the government of Saddam Hussein, which no longer existed, or with the Republic of Iraq which remained intact.

Perhaps more important was the stand taken by Grand Ayatollah Ali Sistani, the senior Shi'ite cleric in the country and a figure whom the occupying Americans were keen not to alienate. He made no secret of his disapproval of the wholesale privatization of Iraq's major companies. As for the minerals – oil being the most precious – Sistani declared that they belonged to the "community," meaning the state. As a religious decree issued by a grand ayatollah, his statement carried immense weight.

Even more effective was the violent reaction of the industry's employees to the rumors of privatization. In his Newsnight interview Jibury said, "We saw an increase in the bombing of oil facilities and pipelines built on the premise that privatization is coming."

In the immediate aftermath of the invasion, much equipment was looted from pipelines, pumping stations, and other oil facilities. By August 2003, four months after American troops entered Baghdad, oil output had only inched up to 1.2 million barrels per day, about two-fifths of the pre-invasion level. The forecasts (or dreams) of American planners' that oil production would jump to 6 million barrels per day by 2010 and easily fund the occupation and reconstruction of the country, were now seen for what they were – part of the hype disseminated privately by American neocons to sell the idea of invading Iraq to the public.

With the insurgency taking off, attacks on oil pipelines and pumping stations averaged two a week during the second half of 2003. The pipeline connecting a major northern oil field near Kirkuk – with an export capacity of 550,000-700,000 barrels per day – to the Turkish port of Ceyhan became inoperative. Soon, the only oil being exported was from fields in the less disturbed, predominately Shi'ite south of Iraq.

In September 2003, President Bush approached Congress for $2.1 billion to safeguard and rehabilitate Iraq's oil facilities. The resulting Task Force Shield project undertook to protect 340 key installations and 4,000 miles (6,400 km) of oil pipeline. It was not until the spring of 2004 that output again reached the prewar average of 2.5 million barrels per day – and that did not hold. Soon enough, production fell again. Iraqi refineries were, by now, producing only two-fifths of the 24 million liters of gasoline needed by the country daily, and so there were often days-long lines at service stations.

Addressing the 26th Oil and Money conference in London on Sept. 21, 2005, Issam Chalabi, who had been an Iraqi oil minister in the late 1980s, referred to the crippling lack of security and the lack of clear laws to manage the industry, and doubted if Iraq could return to the 1979 peak of 3.5 million barrels per day before 2009, if then.

Meanwhile, the Iraqi government found itself dependent on oil revenues for 90 percent of its income, a record at a time when corruption in its ministries had become rampant. On Jan. 30, 2005, Stuart W. Bowen, the special inspector general appointed by the U.S. occupation authority, reported that almost $9 billion in Iraqi oil revenue, disbursed to the ministries, had gone missing. A subsequent congressional inspection team reported in May 2006 that Task Force Shield had failed to meet its goals due to "lack of clear management structure and poor accountability," and added that there were "indications of potential fraud" which were being reviewed by the inspector general.

The endorsement of the new Iraqi constitution by referendum in October 2005 finally killed the prospect of full-scale oil privatization. Article 109 of that document stated clearly that hydrocarbons were "national Iraqi property." That is, oil and gas would remain in the public sector.

In March 2006, three years after the Anglo-American invasion of Iraq, the country's petroleum exports were 30-40 percent below pre-invasion levels.

Bush Pushes for Iraq's Flawed Draft Hydrocarbon Law

In February 2007, in line with the constitution, the draft hydrocarbon law the Iraqi government presented to parliament kept oil and gas in the state sector. It also stipulated recreating a single Iraqi National Oil Company that would be charged with doling out oil income to the provinces on a per-capita basis. The Bush administration latched onto that provision to hype the 43-article Iraqi bill as a key to reconciliation between Sunnis and Shi'ites – since the Sunni areas of Iraq lack hydrocarbons – and so included it (as did Congress) in its list of "benchmarks" the Iraqi government had to meet.

Overlooked by Washington was the way that particular article, after mentioning revenue-sharing, stated that a separate Federal Revenue Law would be necessary to settle the matter of distribution – the first draft of which was only published four months later in June.

Far more than revenue sharing and reconciliation, though, what really interested the Bush White House were the mouthwatering incentives for foreign firms to invest in Iraq's hydrocarbon industry contained in the draft law. They promised to provide ample opportunities to America's Oil Majors to reap handsome profits in an oil-rich Iraq whose vast western desert had yet to be explored fully for hydrocarbons. So Bush pressured the Iraqi government to get the necessary law passed before the parliament's vacation in August – to no avail.

The Bush administration's failure to achieve its short-term objectives does not detract from the overarching fact – established by the copious evidence marshaled in this article – that gaining privileged access to Iraqi oil for American companies was a primary objective of the Pentagon's invasion of Iraq.

Dilip Hiro is the author of Secrets and Lies: Operation "Iraqi Freedom" and After, as well as, most recently, Blood of the Earth: The Battle for the World's Vanishing Oil Resources, both published by Nation Books.

Copyright 2007 Dilip Hiro

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Iraq in talks with oil majors

A glimpse of what is going on behind the scenes and out of the mainstream press it seems. This is from earthtimies.
Iraq in talks with oil majors for plans
Posted on : 2007-09-27 | Author : General News Editor
News Category : World

BAGHDAD, Sept. 27 (UPI) Iraq's government is discussing oil field development with global oil majors as it attempts to boost production amidst security concerns.

Iraq produces about 2 million barrels per day now, but the vast oil sector needs billions in investment to fix and modernize the operating infrastructure, let alone develop and explore.

Iraq Oil Minister Hussain al-Shahristani said earlier this month in Dubai his government would move forward on signing oil deals despite the lack of a modern oil law. That law is stuck in parliamentary debate. Shahristani would rely on 1980s legislation to dictate deals.

The Christian Science Monitor reports Chevron is in talks with Iraq to develop in the south of the country; Shell for fields in Kirkuk; Japex for east Baghdad fields; Ivanov, the Russian firm, in northwest Iraq; and ConocoPhillips has teamed with the state-run Northern Oil Co. for the Kirkuk area.

The five-year plan for Iraq is to boost production to more than 6 million barrels per day, exporting 5.2 million. Iraq imports much of its fuels but is looking to build new refineries to meet domestic demand.

Iraq exports about 1.6 million bpd now, nearly all from ports in Basra, in the south. The main pipeline in the north, from Kirkuk to Ceyhan, Turkey, has been attacked so often it is largely irrelevant. Security patrols along the pipeline have been stepped up and $30 million worth of fortification projects are to be finished in March, the Monitor reports.

The added protection wasn't enough to keep a bomb from exploding under the pipeline between Kirkuk and Baiji, Iraq, last week, halting the limited exports that had been flowing for a few weeks.

Copyright 2007 by United Press International
© 2007 All Rights Reserved.
This material may not be published, broadcast, rewritten, or redistributed.

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