Critics have castigated the Bush administration’s nation-building venture in Iraq as a manifestation of U.S. imperialism. That is an apt description of the Iraq mission, as well as the ongoing missions in Bosnia and Kosovo. America’s nation-building bureaucrats are not pursuing just any kind of imperialism, however: It is a distinctly left-of-center variety. As the mission in Iraq shows, an ostensibly conservative U.S. administration is helping to install a system of politically correct welfare-state socialism.
Under the guidance of Paul Bremer’s Coalition Provisional Authority (CPA), the hand-picked Iraqi Governing Council is busy building a state structure that bears little resemblance to the ideas American conservatives advocate at home. In a country of barely 25 million people, Iraqi ministries plan to have nearly 1,048,000 employees on the payroll this year. Overall government spending is similarly outsized. The Governing Council projects spending to hit $13.4 billion this year, $19.2 billion in 2005, and $19.7 billion in 2006. Yet Iraq’s entire gross domestic product is estimated at about $25 billion. Those spending levels would create a staggering burden on the Iraqi economy were it not for the anticipated U.S. reconstruction aid funds (a little over $18 billion this year). Still, that aid flow will not go on forever (at least one hopes not). What will the Iraqis do about such excessive spending when they have to rely solely on their own sources of revenue? Bremer and his associates are not exactly teaching the Iraqis the fundamentals of sound fiscal policy.
It is not just the overall spending levels that are troubling. With Washington’s blessing, Iraq is building the same type of elephantine bureaucratic structure that is so typical of left-wing, Third World countries. The interim government has no fewer than 25 ministries, including such “vital” ones as Culture, Environment, Labor and Social Affairs, Transport, Water Resources, and—my personal favorite—Youth and Sport. Many of those bureaucracies involve missions that are either unnecessary or could be performed far better by the private sector. Perhaps most ominous for Iraq’s economic future is that there is a large Ministry of Planning.
Washington has also helped to establish a powerful central bank. It is especially troubling that the bank will extend loans directly to businesses rather than using private banks as intermediaries. That is yet another method by which the government in Baghdad can exert a tremendous amount of control over economic activity in the future. Indeed, given the current plans, there would appear to be little or no role for private banking in the “new Iraq” that the United States is helping to create.
The language and arguments the CPA and Governing Council use to promote their policies also reflect redistributionism and other strategies that rely on government control over economic affairs. For example, the 2004 budget for the Iraqi government lists a generous safety net for the poor as one of the “core principles” guiding Iraq’s economic-policy agenda. The old Baath government had a large number of programs for transfer payments, and the new regime is retaining most of them, including one referred to as a “family social bonus.” The new interim constitution guarantees, among others, “rights” to healthcare, education, and social security.
There is little evidence of a drive to privatize key elements of the Iraqi economy. Indeed, the CPA stands by while the Governing Council continues to operate mundane commercial enterprises such as the Al-Raasheed Hotel. More worrisome, at this point it appears that Iraq’s crucial and potentially lucrative oil industry will be largely government owned and operated.
If any good resides at the commanding heights of the Iraq economy, it is oil. Iraq’s American masters, however, are not content to leave the extraction and export of petroleum to the private sector and market forces. The CPA intends to make the Oil Products Distribution Company, which will be owned by the Ministry of Oil, responsible for the vast majority of the oil extraction that takes place. Even today, any private-sector extraction and export of petroleum requires explicit permission from the Ministry of Oil or one of its affiliates, a regional governor, or the CPA. The limited private commerce in oil that is allowed is heavily regulated by the Ministry of Oil, which has an obvious incentive to limit the scope of any competition to its own enterprise. And the penalties for unauthorized attempts at entrepreneurship are draconian. Any person convicted of violating the oil regulations may be imprisoned and fined up to five times the value of the petroleum products purchased, sold, or transported.
The CPA does not appear to believe in the American model of private media ownership either. Instead, the U.S. authorities have shown enthusiasm for state-run radio and television networks and government-owned newspapers. Instead of breaking up Saddam Hussein’s media monopoly, the CPA simply took it over, renamed it the Iraq Media Network, and hired an American firm to run it. That operation includes a national newspaper as well as radio and television networks.
Not surprisingly, the IMN operations devote extensive coverage to statements made by officials in the United States, the CPA, and the Governing Council. Critics of those institutions and their policies get little exposure. In addition, the CPA has given the IMN the power to regulate and license all non-IMN radio and television stations, thus creating an obvious conflict of interest and a powerful incentive to retard the development of private competitors. Having been granted this authority over radio and television, the IMN began to consider a proposal to require all newspapers to obtain licenses—something that would be anathema in the United States.
It is true that private media outlets have emerged in Iraq, but when such enterprises have to go up against well-funded government competitors, they operate at a serious disadvantage. That gives whichever political faction ultimately controls the government in Baghdad an extensive ability to propagandize the population and marginalize dissenting views. That is especially true if most of the nationwide radio and TV broadcasting is in the hands of a quasigovernmental entity. Given that Iraq will emerge from American tutelage as (at best) an embryonic democracy, setting up a state-run media conglomerate is a most unwise step.
The system that the U.S. authorities have brought to Iraq embraces government ownership of key sectors of the economy, an extensive social-welfare apparatus, and a state-dominated media. Those are characteristics that undoubtedly appeal to leftists around the world, but they are alien to America’s traditions and values.
And the Iraq mission is not unique in that regard. It replicates many of the policies that the United States and its European allies have imposed in Bosnia and Kosovo. After more than eight years of Western ministrations, Bosnia’s economy is only marginally freer than it was when it was part of socialist Yugoslavia under the dictatorship of Josip Broz Tito. Indeed, according to the latest edition of the Heritage Foundation’s Index of Economic Freedom, Bosnia ranks a dismal 99th—mired in the “mostly unfree” category between those paragons of democratic capitalism, Algeria and Tanzania. State-run enterprises are endemic in that country, as they are in the international colony of Kosovo.
Americans have ample reasons to be uneasy about Washington’s nation-building missions in Iraq and the Balkans. Those ventures bear more than a slight resemblance to imperialism, and they are often regarded as such by subject populations. That is bad enough. It is worse, however, when America’s nation builders encourage, and sometimes impose, policies that have brought political repression and economic stagnation (or worse) to so many societies. It is unlikely that the American people expected a supposedly conservative administration to enshrine the virtues of socialism abroad. Yet that is what the Bush administration is doing. This President’s betrayal of conservative principles in foreign policy is now complete.