Lying Media Bastards

January 6, 2006

We’re From the International Monetary Fund and We’re Here to Help!


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After the recent Iraqi parliamentary elections, I planned on having a good laugh at the expense of Ahmed Chalabi. He’s the con artist who helped pave the way to the invasion of Iraq, hoping that he could seize power in the new regime. He failed, but has proved to be amazingly Rasputin-like in the political world, repeatedly losing it all only to miraculously appear in yet another high ranking position. But his election returns from December were pitiful (e.g. he got 9000 votes in Baghdad out of a potential 6 million), which put quite the grin on my face.

But just as I prepared to mock, I found an article announcing that Chalabi had suddenly become the new oil minister of Iraq. How the hell did that happen?

Well, I guess it wasn’t as abrupt as I thought. Turns out that prior to this shift, Chalabi had been the deputy oil minister, so he was already most of the way there. Which also meant, really, that I had no basis for mocking him. Sure, he lost his run at parliament, but he was second-in-command of one of the largest oil reserves on planet Earth. Nice work if you can get it.

But Chalabi’s “promotion” was abrupt and shady. The former head of the ministry, Ibrahim Bahr al-Uloum, was relieved of duty for 30 days, because he publicly objected to the government’s plan to raise the domestic price of oil. After finding out that he’d been put on “mandatory administrative leave”, Uloum resigned.

Why would the government choose to raise the price of oil for its own people, especially in the midst of such chaos? Ah, now we get down to it.

On December 24, the Iraqi government cut a deal with the International Monetary Fund for an emergency loan of $685 million and a “debt exchange” (which if I understand correctly means that Iraq’s $14 billion in foreign debts somehow gets converted into $3 billion). And to receive these financial incentives, the government agreed to cut public subsidies that kept prices low for the staples of gas, kerosene, and cooking oil. Without these subsidies, the price of gas has jumped up about 13 times, and will likely continue to around 20 times.

As you can imagine, when the price of gasoline suddenly increases by a factor of 10 or more, people get angry. Because not only does that mean you’re paying more at the pumps, it means that everything you buy that needs to be transported from one place to another also increases. Add to that the increase in kerosene, which you use to heat your home at night, and cooking oil so you can prepare meals for yourself and your family, and, well, here come the riots.

It’s estimated that the cost of the fuel subsidies was about $6 billion. So $6 billion of the $11 billion in debt racked up by the tyrant Saddam Hussein is being taken out of the hides of the Iraqi people he oppressed. Sounds like freedom to me.

And this is just the first of presumably multiple deals between the Iraqi government and the IMF (I stress the term “Iraqi government”, because the Iraqi people probably wouldn’t make these deals, and it’s unlikely that Iraqi officials will feel the same hardships that these deals will cause the majority of the Iraqi people). The IMF’s typical gameplan is to help a country become economically successful is to get that country to make itself “friendly to foreign investment.” This usually means that the government has to cut subsidies, cut social services, curtail workers’ rights, eliminate environmental protections, and privatize state-owned industries. Ironically, the country that most closely followed IMF mandates, Argentina, saw its economy utterly collapse due to these policy changes. You’ve gotta wonder who’s side they’re on.

The absolute kicker to the Iraq-IMF deal is that the the post-occupation Coalition Provisional Authority was given $12 billion by the US Congress to rebuild Iraq, and somehow can’t explain where $8.8 billion of it went. While I suppose it could be bookkeeping snafus, it seems most likely that this money was embezzled, stolen, wasted, and used in other corrupt manners. If the Iraqi government had that money now (and if the government was at all accountable to its people), they wouldn’t have needed this $635 million emergency loan, they could’ve paid off much of Saddam’s debt, and they wouldn’t be following the grisly IMF plan for success.

Posted by Jake on January 6, 2006 4:55 pm

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