This could be seen as the second looting of Iraq

22 September 2003

The American plan to put Iraq up for sale is as insensitive as any of the mistakes made by the occupying powers since the war ended in May.

It is all too easy to see why the error occurred. Money is urgently needed to pay for the reconstruction of Iraq - more than was originally estimated because the country is in a worse state than was thought; and sooner than originally planned because oil production, which was supposed to pay the bills, has been slower to build up. The cost to the US taxpayer of the equivalent of modernising East Germany is, as Nick Raynsford, the minister for council tax, might put it, at the "limit of acceptability".

Hence the rush to get private-sector money into Iraq, and the desire to make the conditions as favourable as possible for foreign investors wanting to buy up whatever enterprises have not already been privatised by the looters.

In fact, neither the open door to foreign investment nor the 15 per cent maximum tax rate is wrong. Far from it. But they are policies that ought to be decided by a legitimate Iraqi government and not dictated by outsiders.

According to John Snow, the US Treasury Secretary, the proposals come from the Iraqi Governing Council. "These are our ideas," he said the council said, a statement as plausible as any made during the war by Mohammed Saeed al-Sahhaf, Saddam Hussein's spokesman who was dubbed "Comical Ali".

Perhaps the economic philosophy of Kamel al-Keylani, Finance Minister of the Council, just happens to be pure Chicago school. But the way in which the policy has been sprung on the world does not inspire confidence that any political party espousing it would win a landslide in an Iraqi election.

Even in advanced capitalist countries such as the US or Britain, there are restrictions on the foreign ownership of, for example, media companies, not to mention tariffs on imports of food, steel and cotton.

To propose a free-for-all that could so easily be portrayed as the second looting of the country is to risk provoking a nationalist, protectionist backlash that will ultimately be in no one's interest, least of all that of the Iraqi people themselves.