Paying Off Debts

Is James Baker's appointment as special envoy good for Iraq?

Thu Dec. 11, 2003 3:00 AM EST

Cronyism has been elevated to a principle of government by the Bush administration, so the latest high-level appointment in Iraq comes as no surprise.

Last Friday President Bush appointed former Secretary of State James Baker as his envoy for restructuring Iraq's debt. Baker, a close friend of the Bush family, has long served as one of their legal advisers. Baker managed George H.W. Bush's campaign in 1980 when the latter ran with Ronald Reagan, and also oversaw his campaigns in 1988 and 1992. Most recently -- and notoriously -- he was the man sent into the Florida recount in 2000 to advocate for George W. Bush.

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Baker's connections don't stop there. He has served a senior counsel for the Carlyle group; his law firm has represented Enron; and his firm is currently defending the Saudi government against a trillion-dollar lawsuit from the families affected by September 11th.

Baker's nomination is good news for U.S. corporations vying for the $18.6 billion in reconstruction bids in Iraq -- especially after the White House shut companies from anti-war nations out from the contracting process. White House spokesman Scott McClellan glossed over the issue when Germany and Canada complained about the decision.

"Prime contracts for reconstruction funded by U.S. taxpayer dollars should go to the Iraqi people and those countries who are working with the United States on the difficult task of helping to build a free, democratic and prosperous Iraq."

Baker's appointment will also please his clients in the Saudi government. Saudi Arabia is owed more than $40 billion by Iraq.

While such appointments generally have to be approved by the Senate, the process could be skipped in Baker's case since the president is merely responding to a request from Iraqi Governing Council. As Greg Palast spins it, "Bush is acting on the authority of the puppet government he imposed on Iraqis at gunpoint."

The exact amount of Iraq's debt isn’t clear, but it's somewhere between $128 billion and $200 billion. Baker's job description includes reducing the debt and convincing the international community to do business with the new Iraqi authority. Oil pipelines from Iraq to Turkish ports will need to be operational.

Form many critics, Baker's nomination is all of a piece with the general direction of America's Iraq reconstruction project. Baker is joining the process at a time when the U.S. has been struggling to raise the necessary reconstruction funds -- a task he is going to have to spearhead. But despite the tremendous difficulties in rebuilding a struggling nation, some argue that the work has been doled out to favor private foreign interests. As Kamil Mahdi points out in the Guardian, Iraq was never given an option but to privatize and globalize its industry.

"The US corporations were granted protection by the military, while state institutions and public property were left to face the onslaught of a destructive mob. Not for the first time in the history of the Middle East, imperial interference both unleashed and benefited from chaos.

The destruction of Iraq's public facilities and infrastructure, together with the induced paralysis of its public institutions, has been the Coalition Provisional Authority's (CPA) path to privatisation in Iraq. [P]rivatisation is being imposed by bombing, looting, freezing of assets, random sacking of staff and exposure to unfair competition."

And Yale University professor Amy Chua argues that privatization won't work if Iraqis think they're getting they're getting a bad deal.

"Because the United States is the world's most powerful and most resented market-dominant minority, every move we make with respect to Iraq is being closely scrutinized...The single most important thing for the United States to do is to change the prevailing perception in Iraq that U.S. companies are planning to plunder the country's resources and that Iraqis will not be able to control their own resources and destinies.

It is vital that the United States take visible, symbolic measures to ensure that the new Iraqi government -- unlike Saddam Hussein's regime -- includes the Iraqi people in the benefits of Iraq's oil wealth."