Who Lost Iraq?

By PAUL KRUGMAN

The New York Times

June 29, 2004

The formal occupation of Iraq came to an ignominious end yesterday with a furtive ceremony, held two days early to foil insurgent attacks, and a swift airborne exit for the chief administrator. In reality, the occupation will continue under another name, most likely until a hostile Iraqi populace demands that we leave. But it's already worth asking why things went so wrong.

The Iraq venture may have been doomed from the start but we'll never know for sure because the Bush administration made such a mess of the occupation. Future historians will view it as a case study of how not to run a country.

Up to a point, the numbers in the Brookings Institution's invaluable Iraq Index tell the tale. Figures on the electricity supply and oil production show a pattern of fitful recovery and frequent reversals; figures on insurgent attacks and civilian casualties show a security situation that got progressively worse, not better; public opinion polls show an occupation that squandered the initial good will.

What the figures don't describe is the toxic mix of ideological obsession and cronyism that lie behind that dismal performance.

The insurgency took root during the occupation's first few months, when the Coalition Provisional Authority seemed oddly disengaged from the problems of postwar anarchy. But what was Paul Bremer III, the head of the C.P.A., focused on? According to a Washington Post reporter who shared a flight with him last June, "Bremer discussed the need to privatize government-run factories with such fervor that his voice cut through the din of the cargo hold."

Plans for privatization were eventually put on hold. But as he prepared to leave Iraq, Mr. Bremer listed reduced tax rates, reduced tariffs and the liberalization of foreign-investment laws as among his major accomplishments. Insurgents are blowing up pipelines and police stations, geysers of sewage are erupting from the streets, and the electricity is off most of the time but we've given Iraq the gift of supply-side economics.

If the occupiers often seemed oblivious to reality, one reason was that many jobs at the C.P.A. went to people whose qualifications seemed to lie mainly in their personal and political connections people like Simone Ledeen, whose father, Michael Ledeen, a prominent neoconservative, told a forum that "the level of casualties is secondary" because "we are a warlike people" and "we love war."

Still, given Mr. Bremer's economic focus, you might at least have expected his top aide for private-sector development to be an expert on privatization and liberalization in such countries as Russia or Argentina. But the job initially went to Thomas Foley, a Connecticut businessman and Republican fund-raiser with no obviously relevant expertise. In March, Michael Fleischer, a New Jersey businessman, took over. Yes, he's Ari Fleischer's brother. Mr. Fleischer told The Chicago Tribune that part of his job was educating Iraqi businessmen: "The only paradigm they know is cronyism. We are teaching them that there is an alternative system with built-in checks and built-in review."

Checks and review? Yesterday a leading British charity, Christian Aid, released a scathing report, "Fueling Suspicion," on the use of Iraqi oil revenue. It points out that the May 2003 U.N. resolution giving the C.P.A. the right to spend that revenue required the creation of an international oversight board, which would appoint an auditor to ensure that the funds were spent to benefit the Iraqi people.

Instead, the U.S. stalled, and the auditor didn't begin work until April 2004. Even then, according to an interim report, it faced "resistance from C.P.A. staff." And now, with the audit still unpublished, the C.P.A. has been dissolved.

Defenders of the administration will no doubt say that Christian Aid and other critics have no proof that the unaccounted-for billions were ill spent. But think of it this way: given the Arab world's suspicion that we came to steal Iraq's oil, the occupation authorities had every incentive to expedite an independent audit that would clear Halliburton and other U.S. corporations of charges that they were profiteering at Iraq's expense. Unless, that is, the charges are true.

Let's say the obvious. By making Iraq a playground for right-wing economic theorists, an employment agency for friends and family, and a source of lucrative contracts for corporate donors, the administration did terrorist recruiters a very big favor.