Friday, August 12, 2005

The Infamous Order 39

Michael Meacher has a piece in the Times today called "My sadness at the privatisation of Iraq". Here's an extract.
Before the US proconsul Paul Bremer left Baghdad, he enacted 100 orders as chief of the occupation authority in Iraq. Perhaps the most infamous was Order 39 which decreed that 200 Iraqi state companies would be privatised, that foreign companies could have complete control of Iraqi banks, factories and mines, and that these companies could transfer all of their profits out of Iraq. The “reconstruction” of the country amounts in effect to wholesale privatisation of the economy and is little short of economic colonisation.
Well obviously I think that sounds like a wonderful thing to do for the Iraqi people, but I must say I was rather surprised that any government would make such an economically sound decision. So I took a look at Order 39. You can read it here.

It's only six pages long and is concerned with foreign direct investment. It covers all the areas you might expect - who can invest and in what and so on. Unfortunately for me and Mr Meacher, you will look in vain for any mention of state assets at all, let alone privatisation. Perhaps that's not really surprising in a paper on FDI. Quite how Mr Meacher reached the conclusion that the Order "decreed that 200 Iraqi state companies would be privatised" is beyond me. He seems to have been mistaken.

Now, also according to Mr Meacher, foreign companies can have complete control of Iraqi banks. Unfortunately for him, if you refer to Order 39 you find in Section 6, paragraph 1 the following: "... this Order does not apply to banks and insurance companies." So Mr Meacher appears to have got that wrong too.

What about mines? No, they're not included either. Again from Section 6 paragraph 1: "Foreign investment may take place with respect to all economic sectors in Iraq, except ownership of the natural resources sector involving primary extraction and initial processing remains prohibited".

In fairness to Mr Meacher, it should be pointed out that factories are covered by the order and so this paragraph is only nearly total bollocks.

Certainly his conclusions that the order is "little short of economic colonisation" is complete bollocks unless he thinks that Britain, as the biggest foreign investor in the America, has colonised that country again.

Quite why the Times gives space to someone whose views are so economically illiterate is beyond me. The silly season is meant to be on the news pages - not the opinion columns.