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  • Essay / The neoliberalization of Iraq and its effects on the Iraqi economy

    Table of contentsIntroductionWhy neoliberalism in Iraq?Neoliberalization in practiceNeocolonial aspect of neoliberalizationFailure of neoliberalization in IraqIntroductionNeoliberalization was a common method with which economies in development opened their markets during the 20th century. Neoliberalization can be applied narrowly or comprehensively, referring narrowly to a change in policy that increases dependence on the market, and full referring to a change in the relationship between society and the state, effectively shifting importance to the market (Walton 2004). Neoliberalization is based on privatization, deregulation and reductions in public spending on social services. Neoliberalization has occurred in Latin American countries such as Peru, Brazil, and Argentina, and has been accompanied by several problematic outcomes. For these reasons, it was not surprising that neoliberalization was the recommended strategy for rebuilding the Iraqi economy after the invasion. The purpose of this article is to ask why the United States chose to proceed with the neoliberalization of Iraq in the way that it did, and what are the effects of this neoliberalization on the Iraqi economy. The four sections of this article will examine why neoliberalization was the chosen method for reconstruction in Iraq, neoliberalization in practice in Iraq, the corruption it entailed, the neocolonial aspect of neoliberalization, and the consequences of the reconstruction of the Iraqi economy. The neoliberalization of Iraq was carried out without consideration of why the Iraqi economy behaved as it did, resulting in the creation of a humanitarian, economic, ethnic and sectarian crisis in Iraq . Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”?Get the original essayWhy Neoliberalism in Iraq?At the time of the 2003 invasion of Iraq by US special forces, it was not no doubt that some level of economic reconstruction would be necessary. After the invasion, the United States argued that the Iraqi economy suffered heavily from endemic corruption and inefficiency, making neoliberalization the most effective option to revive the Iraqi economy (Abboud 2008). . Rather than attributing the failure of the Iraqi economy entirely to endemic corruption and ineffective policies, external causes such as the militarization of the economy and economic sanctions imposed on Iraq by the United States have contributed greatly to the state of the legacy economy (Mahdi 2007). If the United States had considered the sources of the failed state when determining reconstruction methods, state failure would have been far less likely. The history of the Iraqi economy illustrates the negative impact that American intervention had on the Iraqi state before the war. 2003 invasion. The rise in oil prices caused by OPEC in the 1970s allowed Iraq to take a step in the right direction and increase its development budget, thereby increasing social and welfare spending. infrastructure. Most development spending has fallen short of allocations, due to shortages of skilled labor and transportation problems (Youssef 2007). Nevertheless, the creation of infrastructure and investment in social projects allowed Iraq to begin to lay the foundations for a strong economy and state. Military conflicts such as the Iran-Iraq War and the 1991 Gulf War have had significant consequences on Iraq, particularly in terms ofof Iraqi infrastructure (Mahdi 2007). The skilled labor market was hit hard by the Iran-Iraq conflicts that lasted from 1980 to 1988, increasing the transportation problems seen in the 1970s and costing the Iraqi economy, ultimately leading the Iraqi government to reduce social spending. Economic sanctions imposed on Iraq in 1990 placed the Iraqi economy in a state of distress, collapsing revenues and real GDP, while the 1991 Gulf War saw US troops target infrastructure such as refineries oil, telecommunications networks and industry which could only be rebuilt using imports. and/or foreign expertise (Youssef 2007). The combination of these factors left Iraq, its population and its economy in a state of distress before the invasion of Iraq in 2003. When the CPA (Coalition Provisional Authority) came to power in Iraq, it implemented neoliberal economics quickly and without regard. for reasons why the Iraqi economy followed the patterns it did, or whether the Iraqi economy was prepared to operate a free market, thereby creating long-term systemic problems. When implementing neoliberalization, it is generally assumed that the recipient country will achieve “macroeconomic stability, reduced government intervention, a vibrant private sector, and prosperity” (Looney 2004). Neoliberalization deregulates banks, privatizes state-owned enterprises, and lays the groundwork for the creation of a stock exchange to build a free and competitive market (Looney 2004). In theory, these changes would significantly benefit Iraq and its people, as a history of corruption and reliance on state enterprise has led to high poverty rates and a weakened state. There were three main arguments in favor of neoliberalizing the Iraqi economy, all largely focused on ending Iraq's endemic corruption while allowing the economy to grow. The first argument for neoliberalization was that state ownership deteriorated the Iraqi economy, limiting privatization, while harsh state policies altered economic outcomes. Second, public sector corruption was so great that to combat it, privatization was crucial. According to the CPA, the privatization of businesses and industry would increase productivity as well as the efficiency of resource allocation (Mahdi 2007). Finally, it was argued that the market needed to be neoliberalized in order to attract foreign direct investment as well as the attention of multinational corporations, which would bring with them skills and technologies and increase productivity in the long term. Another argument in favor of invasion and technology. The subsequent neoliberalization of Iraq focuses on the "transnational crisis of overaccumulation" and views the invasion and reconstruction of Iraq as a "global investment in the future." The globalization of production that began in the 1970s occurred alongside the centralization of economic control and management (Baker 2014). As capital entered economies around the world, it began to run out of space, creating a crisis of overproduction and overaccumulation. Rampant underconsumption was corrected through U.S.-led militarization, intended to boost spending and access otherwise untapped markets. Neoliberalization and subsequent privatization of the Iraqi economy was one such remedy, and aimed to orient Iraq transnationally to absorb excess capital and engage in consumption.global economy while providing the United States with privileged access to the economy (Baker 2014). Rushed neoliberalization was intended to enable faster absorption, although it left Iraq in a state of distress. Neoliberalization in Practice The neoliberalization of Iraq began well before the invasion, when President Bush worked under an executive order called the Patriot Act to combat financing of Iraq. terrorism in the war on terrorism. Executive power can be exercised by presidents without any evidence of wrongdoing on the part of the targeted parties, which has provided the president with a powerful tool to pursue his agenda. The Patriot Act allowed the president to freeze the funds of individuals and nongovernmental organizations (NGOs) suspected of having ties to terrorist organizations (McCulloch et al. 2005). This significantly reduced NGO funding, as the Patriot Act exposed anyone who donated to NGOs to devastating criminal and financial penalties. NGOs create space for civil society and are an indispensable element of any functioning democratic state. NGOs are responsible for supporting social justice and civil rights movements, but the counterterrorism tactics favored by Bush have significantly reduced the funds available to NGOs, further reducing the space for civil society and the potential for social change in these countries, which has led to higher rates of poverty and destitution (McCulloch et. al 2005). The Patriot Act also allowed the United States to freeze the funds of several informal banks, which proved problematic for the Iraqi people as informal banks were more widespread and reliable than the formal banking systems in the country. Middle East (McCulloch et al. 2005). This allowed the United States to further dominate financial networks, while forcing the Middle East to adopt a Westernized banking system, less equipped to meet their needs. Foreign banks were encouraged to open conglomerates in the Middle East or buy shares in existing banks whose assets had not been frozen. The destruction of civil society and the seizure of informal banking systems gave the United States unprecedented control over regions and left those affected by U.S. sanctions far more vulnerable to mistreatment by the state. Phase 1 of the neoliberalization of Iraq began in January 2003 and was led by President George W. Bush. The Office of Reconstruction and Humanitarian Assistance (ORHA), headed by Jay Garner, was the first office to be created, with the goal of guiding Iraqis in creating a democratic system while rebuilding their economy. The government reconstruction planned by ORHA would involve the elimination of Hussein and his close adversaries while maintaining the bureaucratic structures already in place in Iraq. The removal of Hussein's government began in March 2003 and was completed on April 9 of the same year. Saddam's removal, however, led to the collapse of the Iraqi government's bureaucratic structures and infrastructure, an unexpected outcome given ORHA's original plan. Iraq was then divided into six command centers, called major subordinate commands or MSCs. Each MSC was to focus on reconstruction in its sector - southeast, south-central, north, north-central, west and Baghdad - with funding from the Development Fund for Iraq (DFI), Intervention Program Commander's Emergency Response Unit (CERP) and oil export assets. Iraq's position as a "state of exception" at the time of its restructuring was crucial in terms ofof the CPA's ability to restructure the Iraqi economy. A "state of exception" refers to a time in which the rule of law is suspended within a state due to emergency conditions, such as war, and relies on the suspension of laws to impose a “new force of law”. The state of emergency in Iraq allowed Paul Bremer, head of the Coalition Provisional Authority (CPA), to pass laws, rebuild the budget, reallocate funds and write the new constitution that will be followed and promulgated by the Iraqi people. The separation of powers within the CPA was almost negligible, granting Bremer staggering political and legal authority. Phase 2 initiatives implemented by the CPA began in May 2003 and focused on neoliberal “shock therapy,” involving rapid privatization and commercialization within the CPA. the Iraqi economy. Around 100 free market economic ordinances were adopted by the CPA, opening the market and allowing the privatization of several key industries, with public industry considered inefficient and unprofitable (Youssef 2007). The privatization of industry has left thousands of Iraqis unemployed, with the state the country's largest employer. Phase 2 began with Order No. 1 calling for the controversial "de-Baathification" of Iraq, which ousted close associates of former President Saddam Hussein from positions of power. De-Baathification involved the elimination of Baati Party supporters from any positions of leadership or authority working in the civil service in Iraq. The second de-Baathification order given by Paul Bremer focused on removing thousands of Iraqis from their jobs and dismantling the Iraqi army, which will cost the Iraqi economy and its population even more. De-Baathification allowed the United States to completely dominate reconstruction, thereby destroying the possibility that Iraq could rebuild on its own. Order 39 of the CPA Ordinances privatized the economy and permitted foreign ownership of state-owned enterprises, as well as foreign participation. owners to move their assets out of Iraq. This has allowed foreign investors to monopolize key sectors such as electricity, banking, factories and telecommunications in Iraq. This legally binding PCA administrative order violated the Hague Regulations in that occupying states are not permitted to administer private assets, and also illustrated the US desire to economically control important private and public assets in the Middle East. -East. The CPA then ended agricultural subsidies in Iraq through Order 89, which banned the sharing of seeds by Iraqi farmers, forcing them to purchase seeds from transnational corporations whose seeds were "protected", in order to to reduce global overaccumulation. The end of agricultural subsidies created a “patent regime” in Iraq, in which transnational corporations took advantage of farmers, forcing them to produce fewer crops and leading to poverty. This moved Iraq into global capital circuits, allowing it to absorb excess capital and further benefit countries like the United States. The second phase of the CPA initiatives shook Iraq with its neoliberal shocks and left a significant part of the population unemployed and in distress. Neocolonial aspect of neoliberalizationIraq has been effectively colonized by globalization and capitalism. Some have argued that the revolution imposed on Iraq was doomed to failure, due to a history of instability and revolutionaries' disregard for the causes of instability. To escape the.