Outside the Beltway

Iraq’s Water Problems

James Joyner · Thursday, February 26, 2004 · 5 comments

My initial thought upon seeing this WaPo piece, “Iraqi Experts Tossed With The Water” was that Iraq’s water is probably better than D.C.’s. But the story is rather serious:

Al-Ani is an employee of the General Co. for Water Projects, one of 200-odd ventures in Iraq that are owned wholly or in part by the state and have been told they are ineligible for contracts being issued by the occupation. The company’s 187 workers still collect their government salaries but they now spend their days on floors two and three of a downtown building here playing video games, reading books and chitchatting to pass the time.

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The decision to ban state-owned companies from reconstruction contracts funded by U.S. taxpayers was made for both legal and philosophical reasons. The Coalition Provisional Authority was unclear how U.S. regulations apply to a company that was owned by a rogue state that no longer exists. And it was hoping to redistribute wealth and power in a country that for decades was dominated by Saddam Hussein and his Baath Party loyalists.

The problem is that practically every company of significance — including those responsible for essential public works such as the electrical grid and telephone system — was owned by the government. The Iraqi ministries have shifted some of the roughly 400,000 workers involved to other government jobs, but the others remain sidelined. This is forcing the occupation to pay a premium for foreign workers and to import materials that could be made within the country.

“We have many good, viable government factories and it would benefit everyone if they were part of rebuilding the country,” said Sami Al-Araji, director general of planning for the Ministry of Industry and Minerals, which owns 45 companies.

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Under the initial postwar plan, the state ventures were to have a major role in the reconstruction. They were to be privatized, modernized and made profitable by foreign investors and wealthy Iraqis. But after some Iraqi leaders objected, saying they were uneasy about the idea of selling off state assets without the backing of a democratically elected government, the plan was delayed. The question of what to do with these companies has been in limbo ever since.

This was a strange move, indeed, as this was a lesson identified* during the post-WWII occupation in Germany. Trying to run the show without former Nazis was futile, as almost anyone in a position of authority had to show allegiance to the party. I agree that trying to privatize the state-owned facilities prior to a turnover would have been problematic. The obvious answer would have been to have run it under Coalition auspices. I understand the desire to maintain the illusion that we’re not an occupying force, given our benevolent intent, but that’s what we are.

*At a recent conference, I learned that the military has quit using the term “lessons learned,” noting that the lesson is often not actually “learned” since we keep making the same mistakes.