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Not Neo-con, Just Plain Greed
The Iraqi debt and the US administration
by Naomi Klein
5 January 2004

Naomi Klein is the author of “No Logo” and “Fences and Windows”. Visit her website NO LOGO.

Contrary to all predictions, the heavy doors of Old Europe weren’t slammed in James Baker’s face as he asked forgiveness for Iraq’s foreign debt. France and Germany appear to have signed on, and Russia is softening its line.

Just last week, there was virtual consensus that Mr. Baker’s Drop the Debt Tour had been maliciously sabotaged by deputy defence secretary Paul Wolfowitz, whose move to shut out non-coalition partners from $18.6-billion (U.S.) in Iraq reconstruction contracts seemed designed to make Mr. Baker look like a hypocrite.

Only now it turns out that Mr. Wolfowitz may not have been undermining Mr. Baker at all, but rather acting as his enforcer. He showed up with a big stick — the threat of economic exclusion from Iraq’s potential $500-billion reconstruction — just when Mr. Baker was about to speak softly.

Mr. Baker hardly needed Mr. Wolfowitz to make his mission look hypocritical; one can scarcely imagine an act more rife with historical ironies than James Baker impersonating Bono on Iraq’s debt. The Iraqi people “should not be saddled with the debt of a brutal regime that was more interested in using funds to build palaces and build torture chambers and brutalize the Iraqi people,” said White House spokesman Scott McClellan.

No argument here. But when I heard about Mr. Baker’s “noble mission,” as George W. Bush described it, I couldn’t help thinking about an underreported story from earlier this month. On Dec. 4, The Miami Herald published excerpts from a declassified State Department document. It is the transcript of a meeting held on Oct. 7, 1976, between Henry Kissinger, then-secretary of state under president Gerald Ford, and Argentina’s foreign minister under the military dictatorship, navy admiral Cesar Augusto Guzzetti.

It was the height of Argentina’s dirty war, a campaign to destroy the so-called Marxist threat in Argentina by systematically torturing and killing not only armed guerrillas, but also union organizers, student activists and their families and sympathizers. By the end of the dictatorship, about 30,000 people had been “disappeared.”

At the time of the Kissinger-Guzzetti meeting at the Waldorf Astoria in New York, much of Argentina’s left had been erased, and news of bodies washing up on the banks of the Rio de la Plata was drawing urgent calls for economic sanctions against the junta. The Kissinger-Guzzetti transcript reveals that Washington not only knew about the disappearances, it approved of them.

Mr. Guzzetti reports to Mr. Kissinger on “the very good results in the last four months. The terrorist organizations have been dismantled.” After discussing the international outcry, Mr. Kissinger states, “Look, our basic attitude is that we would like you to succeed. I have an old-fashioned view that friends ought to be supported. What is not understood in the United States is that you have a civil war. We read about human-rights problems but not the context. The quicker you succeed, the better.”

Here is where Mr. Baker’s present-day mission becomes relevant.

Mr. Kissinger quickly moves on to the topic of loans, encouraging Mr. Guzzetti to apply for as much foreign assistance as possible — and fast, before Argentina’s “human-rights problem” ties the hands of the U.S. administration. Mr. Kissinger instructs the minister, “Proceed with your Export-Import Bank requests. We would like your economic program to succeed and will do our best to help you.”

The World Bank estimates that roughly $10-billion of the money borrowed by the generals went to military purchases, used to build the prison camps from which thousands never re-emerged, and to buy hardware for the Falklands War. It also went into numbered Swiss bank accounts, a sum impossible to track because the generals destroyed all records relating to the loans on their way out the door.

We do know this: Under the dictatorship, Argentina’s external debt ballooned from $7.7-billion in 1975 to $46-billion in 1982. Ever since, the country has been caught in an escalating crisis, borrowing billions to pay interest on that original, illegitimate debt, which today is only slightly higher than that held by Iraq’s foreign creditors: $141-billion.

The Kissinger transcript proves that the U.S. knowingly gave both money and high-level political encouragement to the generals’ murderous campaign. Yet despite its irrefutable complicity in Argentina’s tragedy, the United States has consistently opposed all attempts to cancel the country’s debt.

Argentina’s case is not exceptional. For decades, the U.S. government has used its power in the International Monetary Fund and the World Bank to block campaigns to cancel debts accumulated under apartheid in South Africa, the Ferdinand Marcos kleptocracy in the Philippines, the brutally corrupt Duvalier regime in Haiti, the long military dictatorship that sent Brazil’s debt spiralling from $5.7-billion in 1964 to $104-billion in 1985. The list goes on.

The U.S. position has been that wiping out the debts would lead to dangerous precedents (and, of course, would rob Washington of the leverage it needs to push for investor-friendly economic reforms). So why now is Mr. Bush so concerned that “The future of the Iraqi people should not be mortgaged to the enormous burden of debt?” Because it is taking money away from “reconstruction,” money that could be going to Halliburton, Bechtel, Exxon and Boeing.

It has become popular to claim that the White House has been hijacked by neo-conservatives, men so in love with free-market dogma that they cannot see reason or pragmatism. I’m not convinced. If there’s one thing last week’s diplomatic dustups make clear, it’s that the underlying ideology of the Bush White House isn’t neo-conservatism, it’s old-fashioned greed.

While neo-cons worship abstract free-market rules, there is really only one rule that appears to matter to the Bush clan: If it helps our friends get even richer, do it.

Seen through this lens, the seemingly erratic behaviour coming out of Washington makes a lot more sense. Sure, Mr. Wolfowitz’s contract-hogging openly flouts the free-market principles of competition and government non-intervention. But like Mr. Baker’s jubilee, it does have a direct benefit for the firms closest to the Bush administration. Not only are they buying a debt-free Iraq, but they won’t have to compete for the deals with European corporate rivals.

The entire reconstruction project defies neo-con tenets. It has sent this year’s U.S. deficit to a cartoonish $500-billion, much of it handed out in no-bid contracts, creating the kind of monopoly in which Halliburton may have been able to overcharge an estimated $61-million for imported gasoline in Iraq.

Those looking for ideology in the White House should consider this: For the men who rule our world, rules are for other people. The truly powerful feed ideology to the masses like fast food while they dine on the most rarified delicacy of all: impunity.

Naomi Klein