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Back in 2004, just as the insurgency was gaining traction in Iraq, I met with Naomi Klein who was then beginning to lay the intellectual foundation for her new book, Shock Doctrine: The Rise of Disaster Capitalism. In a short conversation, Klein explained that it was due to the failure of IMF and World Bank-authored free trade policies -- otherwise known as the Washington consensus -- that the United States is now forced to use military force in order to open new markets.
"The market," she said, "finds itself in a situation where its usual suppliers, its usual dealers, are cutting it off. That's what is happening in Latin America. When attempts to privatize energy and water in Bolivia are resisted, when huge popular movements are saying 'we don't want the free trade area of the Americas,' when poor countries banded together and said 'we'd rather have no deal than a bad deal.' That means that they're getting cut off."
According to Klein, the old system of using the WTO or IMF to coerce trade agreements from desperate leaders was "free trade lite." But the new framework is entirely different. It has been upgraded to one she refers to as "free trade at a barrel of a gun, or free trade supercharge."
"I believe that the goal of this war was to bomb, into being, a new free trade zone," Klein told me. "Precisely because of the enormous backlash against these economic policies by countries that have already adopted them. Capitalism functions like a drug addict. The drug is growth. It needs growth to survive. It needs growth to expand."
So, forcing regime change Iraq was conceived as a means to open a new market that could produce income for American companies. "Not just oil," Klein said, "but water, roads, schools, hospitals, private jails, anything that can be turned into a commodity and sold."
Moreover, with the supercharge model, American free traders were able to achieve in Iraq what took them three decades to engineer in Latin America, the wholesale privatization of the national economy.
"In a single day," Klein explained, "[Director of Reconstruction] Paul Bremer passed a set of policies that literally usually take three decades to get passed. Iraq's economy was protected, somewhat. In Iraq's constitution it very clearly says that there are sectors of the economy that are considered essential services and not open to privatization. Not just oil, but water and so on. And it also says that Iraqi businesses cannot be foreign-owned -- very clear rules embedded in Iraq's constitution."
"On Sept. 19, 2003, Bremer introduced Order 39, which overturned Iraq's constitution. It allowed 100 percent foreign ownership of Iraqi businesses and it put 200 Iraqi state companies up for privatization, up for sale. And it also said that companies coming into Iraq can take 100 percent of their profits out of the country. It also gave them a massive tax break. Bigger than anything Bush has been able to achieve. The top tax bracket in Iraq before Order 39 was 45 percent, which is what it is in Canada. It's now a 15 percent flat tax. So this is an economic overhaul. It is shock therapy. It has already led to 70 percent unemployment. And we're not hearing about it."
Klein pointed to the constant and extensive media coverage of the military aspect of the occupation, which generally paints the situation in a negative light. But seen in the context of the liberal economic model that has been implemented, this is a smoke screen to cover up the fact that it has been a complete success. She quoted Republican Sen. John McCain who described Iraq as a "pot of honey that's attracting a lot of flies," adding, "and we know what the honey is. And we know who the flies are: Bechtel, Halliburton and MCI. And they're having a field day."
I asked her if this new free trade supercharge is the new template for globalization.
She nodded and said something that is truly radical. "But that doesn't render the old model obsolete. Because the other countries see this, see what happens when you don't cooperate and that makes their trade negotiations a little bit easier. So I think that the free trade lite and this free trade supercharge work hand in hand."
I'd love to hear Thomas Friedman's response to that. Unfortunately we won't be treated to a debate between Friedman and Naomi Klein anytime soon. Friedman seems to ignore the young upstart, but maybe that's because she refers to him as "the White House's unofficial brand manager." So we, the ones out here in the peanut gallery, are stuck between two extremes, two mutually exclusive narratives. The problem is that, in a world that has become polarized between good and evil, Islam and Christianity, globalization and anti-globalization, most people seem to be satisfied to live with their own familiar version of the truth. This is a phenomenon that the great American economic theorist John Kenneth Galbraith elaborated in The Affluent Society.
See more stories tagged with: war, foreign policy, globalization, mark engler, naomi klein, shock doctrine
Stephen Marshall is an author and film-maker. A founder of Guerrilla News Network, he directed the award-winning documentary, Battleground: 21 Days on the Empire's Edge, and controversial, politicized music videos for the Beastie Boys, Eminem and 50 Cent. His new book is Wolves in Sheep's Clothing: The New Liberal Menace in America (Disinfo).
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