Monday, September 22, 2003
I thought I heard you say it had all been for oil.....
Economic Overhaul for Iraq
Only Oil Excluded From Foreign Ownership
By Rajiv Chandrasekaran
Washington Post Foreign Service
Monday, September 22, 2003; Page A01
BAGHDAD, Sept. 21 -- The U.S.-led occupation authority here has ordered the overhaul of fundamental elements of Iraq's socialist economy and instituted wide-ranging free-market reforms that will allow full foreign ownership in every sector except oil, U.S. and Iraqi officials said today.
The new policy, enacted on Saturday by U.S. administrator L. Paul Bremer, allows foreign firms to enter and potentially dominate key elements of the economy, from banking to manufacturing, that had been off-limits to outside ownership. Although the sale of businesses to foreigners could prove controversial in this fiercely nationalistic country, U.S. Treasury Secretary John W. Snow said the plan offered a "real promise" of economic revival in Iraq, which is struggling to cope with rampant unemployment, crumbling infrastructure and unproductive state-run industries.
The imposition of free-market reforms in Iraq has long been a goal of the Bush administration. The decision to enact the changes now is part of an American effort to accelerate the recovery of Iraq's decayed economy, which U.S. officials hope will help promote stability.
But Snow warned, as many independent analysts have, that the restoration of security in the country is an essential prerequisite for economic recovery.
In a reminder of Iraq's continuing security problems, the U.S. military said three soldiers were killed in two attacks on Saturday night west of Baghdad, where resistance to the U.S. occupation among Sunni Muslims has been stiff. The deaths brought to 165 the number of U.S. soldiers killed in Iraq since President Bush declared major combat operations over on May 1.
A car bomb exploded early Monday at a checkpoint behind the U.N. headquarters in Baghdad, killing one policeman and the bomber, and injuring several others. It was not immediately clear whether any U.N. personnel were injured in the blast.
The U.N. compound, housed at the Canal Hotel, was devastated by a car bomb attack last month that killed 22 people, including the chief U.N. representative, Sergio Vieira de Mello.
A U.S. military official said two soldiers from the 205th Military Intelligence Brigade were killed when mortar shells fell inside the grounds of the Abu Ghraib prison at 10 p.m. Saturday. The official said 13 other soldiers were wounded in the incident, one of the largest casualty tolls from a single attack.
Abu Ghraib, which once housed thousands of political detainees but since has reopened as a U.S.-run detention center, has been targeted by insurgents. In August, several mortar rounds were fired inside the prison, killing six Iraqi inmates and wounding almost 60 others.
No prisoners were hurt in Saturday's attack, the official said.
Military officials said the incident demonstrated the increasing accuracy of mortars, which have been employed with greater frequency against U.S. forces in centers of resistance west and north of Baghdad.
Shortly before the prison attack, a soldier from the 3rd Armored Cavalry Regiment was killed near the city of Ramadi, about 60 miles west of Baghdad, when a roadside bomb exploded near his Humvee, the military said.
The latest U.S. deaths followed the attempted assassination on Saturday of Akila Hashimi, one of three women on the 25-member Governing Council and a leading candidate to become Iraq's representative at the United Nations. Hashimi, a career diplomat, was shot in the abdomen by gunmen as she was being driven to work.
An official with the occupation authority said Hashimi was in critical but stable condition at a military hospital on the grounds of a palace that once belonged to former president Saddam Hussein. The official said Hashimi underwent a second operation at the military hospital after initial surgery at an Iraqi hospital immediately after the shooting.
Douglas Brand, a British adviser to the Iraqi police, said U.S. and British investigators were conducting an "extensive investigation" into the incident with Iraqi police officers. He called the shooting, the first assassination attempt against an Iraqi political leader appointed by the U.S. occupation authority, "a cowardly attack."
Hashimi was planning to travel to New York this week with a small delegation of Iraqi leaders to attend the U.N. General Assembly, where members of the Security Council will discuss a new U.S.-sponsored resolution aimed at encouraging more nations to send troops to Iraq.
Iraq's new finance minister, Kamil Mubdir Gailani, said at an international banking conference in the United Arab Emirates that the new rules would create a "free and market-oriented economy" that would be unprecedented in the Arab world. He pledged that the reforms would "promote Iraqi economic growth and raise the living standards of all Iraqis as soon as possible."
Gailani said Iraq would "allow up to 100 percent foreign ownership in all sectors except natural resources." He said Iraq's oil reserves -- the world's second largest after Saudi Arabia's -- would remain in government hands for now. Other Iraqi officials have said decisions on privatizing the oil industry, which is forecast to generate $14 billion in revenue next year, would be decided after a democratically elected government is seated.
Gailani said six foreign banks will be permitted to purchase and fully take over Iraqi banks. Other foreign banks will be allowed to purchase 50 percent stakes in local banks, he said.
Foreigners will be permitted to lease land for as long as 40 years, he said.
The new economic policy also will slash Iraq's top tax rate for individuals and businesses from 45 percent to 15 percent starting Jan. 1. Collecting even that revenue could be challenging: Hussein's government never enforced tax collection from most people, and there is no real tax remittance system in the country.
In an effort to create sources of government revenue beyond oil sales, Gailani said, all goods except humanitarian supplies that are brought into the country will be subject to a 5 percent "reconstruction surcharge."
During three decades of Baath Party rule, Iraq had one of the world's most centrally controlled economies. Most large companies were state-owned or state-operated. The government also managed the import of most goods into the country.
Foreign investment was severely restricted under U.N. economic sanctions imposed after Hussein invaded neighboring Kuwait in 1990.
"The true source of our problems stems from decades of economic mismanagement and corruption by Saddam Hussein," said Gailani, adding that the changes would provide "Iraqi citizens the freedom and opportunity they were denied for so long."
But the new policies, which were developed by the occupation authority in consultation with Iraq's U.S.-appointed Governing Council, could prove controversial among the many Iraqis who have not aligned themselves with the United States. Some Iraqi businessmen have expressed concern that well-capitalized foreign firms will enjoy an unfair advantage and siphon profits out of the country.
Snow also warned that a restoration of security would be essential to attract investment. "Capital is a coward," he said in Dubai, where the World Bank and International Monetary Fund are holding their annual meetings this week. "It doesn't go places where it feels threatened. Companies will not send employees to places that aren't secure."
The World Bank's Iraq country director, Joseph Saba, told the Associated Press that the steps outlined by Gailani were "major steps forward in terms of creating an environment for investment."
Economic Overhaul for Iraq
Only Oil Excluded From Foreign Ownership
By Rajiv Chandrasekaran
Washington Post Foreign Service
Monday, September 22, 2003; Page A01
BAGHDAD, Sept. 21 -- The U.S.-led occupation authority here has ordered the overhaul of fundamental elements of Iraq's socialist economy and instituted wide-ranging free-market reforms that will allow full foreign ownership in every sector except oil, U.S. and Iraqi officials said today.
The new policy, enacted on Saturday by U.S. administrator L. Paul Bremer, allows foreign firms to enter and potentially dominate key elements of the economy, from banking to manufacturing, that had been off-limits to outside ownership. Although the sale of businesses to foreigners could prove controversial in this fiercely nationalistic country, U.S. Treasury Secretary John W. Snow said the plan offered a "real promise" of economic revival in Iraq, which is struggling to cope with rampant unemployment, crumbling infrastructure and unproductive state-run industries.
The imposition of free-market reforms in Iraq has long been a goal of the Bush administration. The decision to enact the changes now is part of an American effort to accelerate the recovery of Iraq's decayed economy, which U.S. officials hope will help promote stability.
But Snow warned, as many independent analysts have, that the restoration of security in the country is an essential prerequisite for economic recovery.
In a reminder of Iraq's continuing security problems, the U.S. military said three soldiers were killed in two attacks on Saturday night west of Baghdad, where resistance to the U.S. occupation among Sunni Muslims has been stiff. The deaths brought to 165 the number of U.S. soldiers killed in Iraq since President Bush declared major combat operations over on May 1.
A car bomb exploded early Monday at a checkpoint behind the U.N. headquarters in Baghdad, killing one policeman and the bomber, and injuring several others. It was not immediately clear whether any U.N. personnel were injured in the blast.
The U.N. compound, housed at the Canal Hotel, was devastated by a car bomb attack last month that killed 22 people, including the chief U.N. representative, Sergio Vieira de Mello.
A U.S. military official said two soldiers from the 205th Military Intelligence Brigade were killed when mortar shells fell inside the grounds of the Abu Ghraib prison at 10 p.m. Saturday. The official said 13 other soldiers were wounded in the incident, one of the largest casualty tolls from a single attack.
Abu Ghraib, which once housed thousands of political detainees but since has reopened as a U.S.-run detention center, has been targeted by insurgents. In August, several mortar rounds were fired inside the prison, killing six Iraqi inmates and wounding almost 60 others.
No prisoners were hurt in Saturday's attack, the official said.
Military officials said the incident demonstrated the increasing accuracy of mortars, which have been employed with greater frequency against U.S. forces in centers of resistance west and north of Baghdad.
Shortly before the prison attack, a soldier from the 3rd Armored Cavalry Regiment was killed near the city of Ramadi, about 60 miles west of Baghdad, when a roadside bomb exploded near his Humvee, the military said.
The latest U.S. deaths followed the attempted assassination on Saturday of Akila Hashimi, one of three women on the 25-member Governing Council and a leading candidate to become Iraq's representative at the United Nations. Hashimi, a career diplomat, was shot in the abdomen by gunmen as she was being driven to work.
An official with the occupation authority said Hashimi was in critical but stable condition at a military hospital on the grounds of a palace that once belonged to former president Saddam Hussein. The official said Hashimi underwent a second operation at the military hospital after initial surgery at an Iraqi hospital immediately after the shooting.
Douglas Brand, a British adviser to the Iraqi police, said U.S. and British investigators were conducting an "extensive investigation" into the incident with Iraqi police officers. He called the shooting, the first assassination attempt against an Iraqi political leader appointed by the U.S. occupation authority, "a cowardly attack."
Hashimi was planning to travel to New York this week with a small delegation of Iraqi leaders to attend the U.N. General Assembly, where members of the Security Council will discuss a new U.S.-sponsored resolution aimed at encouraging more nations to send troops to Iraq.
Iraq's new finance minister, Kamil Mubdir Gailani, said at an international banking conference in the United Arab Emirates that the new rules would create a "free and market-oriented economy" that would be unprecedented in the Arab world. He pledged that the reforms would "promote Iraqi economic growth and raise the living standards of all Iraqis as soon as possible."
Gailani said Iraq would "allow up to 100 percent foreign ownership in all sectors except natural resources." He said Iraq's oil reserves -- the world's second largest after Saudi Arabia's -- would remain in government hands for now. Other Iraqi officials have said decisions on privatizing the oil industry, which is forecast to generate $14 billion in revenue next year, would be decided after a democratically elected government is seated.
Gailani said six foreign banks will be permitted to purchase and fully take over Iraqi banks. Other foreign banks will be allowed to purchase 50 percent stakes in local banks, he said.
Foreigners will be permitted to lease land for as long as 40 years, he said.
The new economic policy also will slash Iraq's top tax rate for individuals and businesses from 45 percent to 15 percent starting Jan. 1. Collecting even that revenue could be challenging: Hussein's government never enforced tax collection from most people, and there is no real tax remittance system in the country.
In an effort to create sources of government revenue beyond oil sales, Gailani said, all goods except humanitarian supplies that are brought into the country will be subject to a 5 percent "reconstruction surcharge."
During three decades of Baath Party rule, Iraq had one of the world's most centrally controlled economies. Most large companies were state-owned or state-operated. The government also managed the import of most goods into the country.
Foreign investment was severely restricted under U.N. economic sanctions imposed after Hussein invaded neighboring Kuwait in 1990.
"The true source of our problems stems from decades of economic mismanagement and corruption by Saddam Hussein," said Gailani, adding that the changes would provide "Iraqi citizens the freedom and opportunity they were denied for so long."
But the new policies, which were developed by the occupation authority in consultation with Iraq's U.S.-appointed Governing Council, could prove controversial among the many Iraqis who have not aligned themselves with the United States. Some Iraqi businessmen have expressed concern that well-capitalized foreign firms will enjoy an unfair advantage and siphon profits out of the country.
Snow also warned that a restoration of security would be essential to attract investment. "Capital is a coward," he said in Dubai, where the World Bank and International Monetary Fund are holding their annual meetings this week. "It doesn't go places where it feels threatened. Companies will not send employees to places that aren't secure."
The World Bank's Iraq country director, Joseph Saba, told the Associated Press that the steps outlined by Gailani were "major steps forward in terms of creating an environment for investment."
Comments:
Post a Comment
