Paul Bremer Issues CPA Order 39 Imposing Radical Free Market Restructuring on Occupied Iraq

L. Paul Bremer III, head of the U.S. Coalition Provisional Authority (CPA) occupation government in Iraq, issues Order 39 on foreign investment as part of his ‘100 Orders’ imposing what economist Joseph Stiglitz calls ‘arguably the most radical market shock therapy tried anywhere.’ Order 39 mandates: (1) privatization of Iraq’s 200 state-owned enterprises; (2) 100% foreign ownership of Iraqi businesses; (3) ’national treatment’ requiring Iraq to favor foreign firms equally with domestic ones; (4) unrestricted, tax-free remittance of all profits and funds out of Iraq; and (5) 40-year ownership licenses for foreign investors. The CPA reduces Iraq’s corporate tax from 40% to 15% and suspends all tariffs, import taxes, customs duties, and licensing fees. As preambles to the orders state, they are intended to ’transition Iraq from a centrally planned economy to a market economy’ virtually overnight by U.S. fiat. The imposition of unrestricted free trade devastates Iraq’s domestic manufacturing industries, as more competitive foreign commodities flood the market and destroy what remains of local production capacity. Combined with de-Baathification policies that fire up to 10% of the Iraqi labor force, unemployment surges from 16.8% to 28.1% by end of 2003. The orders fundamentally alter Iraq’s existing laws in apparent violation of the Hague Regulations of 1907, the Geneva Conventions, and the U.S. Army’s own Law of Land Warfare, which prohibit occupying powers from making major structural changes. In a leaked memo, British Attorney General Lord Goldsmith warns Tony Blair that ’the imposition of major structural economic reforms would not be authorized by international law.’ In his final order on his last day, Bremer simply transfers authority over all orders to new Prime Minister Iyad Allawi, cementing the reconstruction. The shock therapy inflames sectarian divisions and greatly impedes Iraq’s recovery, demonstrating how military occupation enables the most extreme forms of neoliberal restructuring, opening a country for total corporate capture while its people are traumatized and defenseless.