Iraqi Council Invites Total Foreign Ownership Of Iraqi Businesses

by Simran Bose

The Iraqi Governing Council, appointed by the U.S. announced sweeping economic changes to allow total foreign ownership of businesses in the country without the need for prior approval by anyone.

These measures, which include tax cuts and trade tariff rollbacks, would apply to all industries except oil. Oil, of which Iraq has the world's second largest reserves, would be controlled by the U.S.

News reports have quoted Kamel Al-Gailani, finance minister in Iraq's provisional government, as saying that the moves would open Iraq to free market competition that would deliver investment, job creation and long-term economic growth.

But what he presented as steps forward is causing concern among those who find these measures out of place at a time when the greatest problems in Iraq remain instability and violence against the U.S. occupiers.

"It has taken a lot of people by surprise," remarked an Arab journalist, who did not wish to be named. "On the one hand, the situation is so volatile in Iraq right now and such economic reforms would not be the best option. But then the reforms have all the trademarks of a typical program that is backed by American self-interest."

The biggest reconstruction contracts have already been given to U.S. firms like Bechtel and Halliburton, which are closely associated with the Bush administration.

Significantly, the heads of both the IMF and World Bank had nothing to say at Wednesday's briefing regarding the new economic policy.

These 'reforms' include 100 percent foreign ownership in all sectors except natural resources, direct ownership as well as joint ventures and setting up branches and full, immediate remittance to the host country of profits, dividends, interest and royalties.

"We did not come up with the program, which seems to me to be something, frankly, which I have not had a lot of influence on or not a lot of knowledge about," World Bank President James Wolfensohn said.

IMF managing director Horst Kohler opted for a similar response: "Related to the question of the economic program for Iraq, I can only say that I have not seen it."

But unlike the Cancun WTO meeting, which ended in a deadlock after developing countries refused to entertain a new round of trade talks, the meetings in Dubai appeared to acknowledge more the might of the sheer numbers of the poor and developing nations and the urgency of seeing some of their expectations heeded by international institutions.

"I did not sense any great hostility at these meetings. I sensed a willingness to engage on issues in a very positive sense," remarked Wolfensohn. "That does not mean that people are writing checks immediately, but I do think that the framework of discussion this time was one in which people were prepared to address difficult issues together."

The parley came to a close Wednesday, and officials, delegates and ministers left with the unanimous sentiment that the developing world must be given a larger role and louder voice within the two organizations.

In the closing press conference, Wolfensohn said: "I believe that we need to address the questions of linkage between trade and aid and debt forgiveness and I think we picked up from Cancun the fact that the voices of the developing and the developed world need to be more equal."

Wolfensohn's address to the Board of Governors of the World Bank Group on Wednesday and his stress on the need to listen to the needs of the developing world, especially after the World Trade Organization meetings in Cancun, Mexico earlier this month, was hailed by many.

But critics and analysts expressed skepticism at the materialization of these goals.

"Why would the developed world surrender its position of power when there is absolutely nothing in it for them?" Arun Kumar Singh, an economic analyst with the Indian newspaper, 'The Hindustan Times', said in an interview.

India's position and voice at the World Bank and IMF meetings here was relatively mute compared to its recent high-profile stands at Cancun.

The governor of the Reserve Bank of India, Y.V. Reddy, said he did not really consider the meeting a success. "Unlike Cancun, the developed world was more prepared for the developing world's unity and was able to postpone the issue of better representation until next year."

"But optimists might look at it as a positive sign that they haven't ruled out further discussion," he added.

Currently, rich countries control more than 60 percent of the votes in the Bretton Woods institutions. The U.S, where both institutions are situated, alone has veto power over any radical vote that requires a super majority.

In response to a question on whether there had been any progress on the proposals for changing the right to vote of developing countries in the IMF and World Bank, the Fund's, said that many governors had made clear that there was a need for more voice and better representation for developing countries.

"I very much hope that shareholders from the advanced countries have listened to their colleagues from the developing countries so that they can reflect on the position," he said.

Marwan Nemr, a political and economic analyst from Lebanon with 'Al-Iktissad Wal-Aamal' newspaper, said that the only significance of these meetings was that they were held in the Middle East and North Africa region for the first time -- and with the present war in Iraq as a backdrop.

"Normally the Middle East is viewed as a region of conflict but the fact that the meetings came here, the officials were forced to address issues that are directly related to the region," he told IPS.