Looting the Iraqi Economy

J uly 14 has been Iraq’s National Day since 1958. This year, under the occupation, it was declared a “Saddam-era holiday” and its celebration banned. Instead, occupation authorities declared, the people of Iraq should celebrate the fall of the Saddam regime. While most Iraqis were glad to see Saddam go, prohibiting the day’s celebration is not just an insult, but a sign of the occupation’s true intentions. 

For progressive Iraqis, June 14 is a celebration of the history of their anti-imperialist struggle. In 1958, Iraqi nationalists and radicals threw out the king imposed on them by the British after World War I. Over the next five years of relative freedom and democracy, Iraq began putting together a nationalized, planned economy, based on its oil wealth. Hundreds of factories were eventually built, making it the most industrialized country in the Middle East. A new deepwater port was constructed on the Persian Gulf, Umm Qasr, which became a lynchpin in that plan. From its piers, Iraq began to ship goods from those factories to buyers in other countries throughout the region. The port became a symbol of progress and independence, an achievement of the Iraqi revolution. 

Following the revolution of 1958, a thousand longshore workers labored on Umm Qasr’s docks. Even in the heady days of Arab nationalism, however, they still had no guarantees for their rights and jobs. At first, subcontracting companies were allowed to hire dockers in a daily shapeup. Finally, workers rebelled. After winning recognition for their union, they demanded and won a hiring system under their control and a daily guaranteed wage, whether or not there was a boat at the dock to load or unload. 

Those achievements now seem like a distant dream. Life in Umm Qasr has changed completely for the people on the piers. A decade-long war with Iran, then the first Gulf War followed by 12 years of sanctions, and finally a new invasion and occupation have all taken their toll. Much of the port lies in a shambles, although the basic infrastructure is still in place. As a result, the status of the people whose living depends on the jobs the port provides hangs in the balance. Even before U.S. troops had reached Baghdad, the Bush administration gave the concession for operating the port to Stevedoring Services of America, a politically connected firm handling cargo around the world. 

The free trade ideologues of the Bush administration see the occupation of Iraq as a beachhead into the Middle East and South Asia. Their first objective is the transformation of the state-dominated economy of what was once one of the region’s wealthiest and most industrialized countries.  

Stevedoring Services of America, now SSA Marine, is poised to take advantage of both aspects of the growth of the private sector. The company, which has a history of tight political connections with the White House, received a $4.8 million no-bid contract to operate the port of Umm Qasr on March 24, 2003. According to the USAID website, the contract may reach as high as $14.3 million by its completion. It covers the assessment of the port’s needs, assistance in making it operational, and also the ongoing management of dockside operations.

San Francisco’s Bechtel Corp. began dredging the harbor in May. Then, on July 16, SSA began accepting commercial cargo, including container, break- bulk, and rollon-rolloff shipments. Despite its dilapidated state, Umm Qasr is still a highly developed facility, with 23 berths for ships, 4 modern container cranes, and a grain and cement dock. (Oil exports are handled through another, unrelated port.) The possibilities for the profitable employment of these facilities weren’t lost on other port operators, who would have liked the plum themselves. The British shipping giant, Peninsular and Oriental Steam Navigation (the famous “P&O”), thought it was entitled to run Umm Qasr, inasmuch as the British were given responsibility for occupying and administering the south of Iraq. The firm complained bitterly that only U.S. companies were getting the profitable concessions created by the occupation. Alan Larson, U.S. undersecretary of state, responded that giving SSA the port was “the responsible thing to do.” Even other U.S. firms complained that the company seemed to have the inside track, since it didn’t have the usual security clearance. Instead of rejecting SSA, however, USAID dropped the security requirement. 

U.S. shippers have since complained of “gross profiteering” via the high tariffs charged for handling cargo in the port. SSA denies that it profits from the tariffs and says they’re set by USAID. But in a privatized port, the tariffs will eventually flow into the pockets of whatever private operator holds the concession and SSA advises USAID on the rates required to make the port “self-sustaining.” When USAID was slow in taking SSA’s “advice” in July, the agency got a call from Congressperson Norm Dicks (D-WA) telling them to pay more attention to the company’s recommendations. SSA’s home office is in Seattle, Washington. 

The process by which SSA became Iraq’s port operator says a lot about the company’s relationship with the Bush White House. SSA Marine is a $1 billion-a-year family-owned business, with over 10,000 employees worldwide. It has profited from its political connections for years—between 1990 and 2002, for instance, its government contracts were worth $86,117,000. 

While the shipping industry as a whole has been a heavy political contributor, giving 68 percent of its $4.3 million in campaign contributions to Republicans in the 2000 election cycle, SSA has not spread the same big bucks. In 2003 the company paid $40,000 to Denny Miller Associates for lobbying services. According to the Center for the Study of Responsive Politics, SSA contributed $24,825 (77 percent to Republicans) between 1999 and 2002, of which President Bush received a mere $1,000. 

But these (relatively) small expenditures don’t give an accurate picture of the real relations between SSA and the White House. Those were revealed in 2002, during the negotiations of the labor agreement between the Pacific Maritime Association and the International Longshore and Warehouse Union. SSA was widely viewed, especially by the union, as the most anti-union employer in the association. PMA’s director, Joseph Miniace, who came on board promising to bring the union to heel, was SSA’s man, according to industry insiders. 

Weeks before the contract expired on July 31, the Administration began to intervene directly. Homeland Secretary Tom Ridge, and then Labor Secretary Elaine Chao, both told the union’s bargaining committee that the Administration would prevent any strike. They made clear that Bush would begin by invoking the Taft-Hartley Act, under which striking longshore workers would be prevented from stopping work for 80 days. They then threatened that Bush would call on Congress to place the union under the Railway Labor Act, instead of the National Labor Relations Act, which would effectively make future strikes impossible. In addition, they said, the union’s coastwise bargaining structure might be declared an illegal monopoly, meaning that if the union struck one port, shippers could simply load and unload their cargo in another, making strikes pointless. 

Finally, the Bush officials said, the government would replace striking longshoremen with Navy personnel in the huge cargo cranes that load and offload the giant shipping containers. These threats were the end product of a months-long process in which administration officials met secretly with the PMA, along with the large corporations dependent on trans-Pacific shipping, like The Gap, Mattel, and Home Depot. The government then set up a task force, headed by White House advisor Carlos Bonilla, which produced the strategy for massive federal intervention. 

All the Bush proposals had the same immediate intent—removing the union’s bargaining leverage by making a waterfront strike impossible. But their long-term strategy extended far beyond the docks. They began defining threats to national security in economic terms, rather than as interruptions in vital life-dependent services. Using their new definition, any halt in the operation of an industry or large profitable enterprise could be defined as a national security threat and made illegal. The Administration’s legal brief voicing this startling new philosophy was elaborated by Defense Secretary Donald Rumsfeld. 

When the ILWU avoided being provoked into a strike, the PMA locked workers out of the terminals in late September 2002. The employers then demanded Bush invoke the Taft-Hartley Act and, after 10 days, got what they wanted. Despite the fact that they had closed the gates of their own terminals, the Bush administration got a federal judge to order the union to work under its old contract with no interruption, for 80 days. The union, which then had to negotiate under the federal no-strike order, compared it to having to bargain in a “barbed-wire straitjacket.” 

The close relationship between SSA and the Bush administration developed a life of its own. In Bangladesh, the company proposed building a new, private container terminal to compete with government-operated docks. When longshore workers and popular organizations protested the $500 billion deal, U.S. Ambassador Mary Ann Peters threatened that U.S. investors would boycott the country if the contract didn’t go through. 

SSA started rubbing shoulders with the Bush national security apparatus in other areas as well. In May 2003, the company was a founding member of the Marine Terminal Discussion Agreement, a forum in which shippers talk with U.S. government authorities about “security issues.” The group was ostensibly created to make shipping containers more secure from tampering by terrorists or narcotics smugglers, but the initiative gives SSA an even closer relationship with the government in an area with a great impact on the jobs of longshore workers. 

During the McCarthyite hysteria of the early 1950s, dockworkers were required to hold security clearances in order to get on the piers and work. Communists and other left-wingers, especially the ILWU’s most active members, were denied clearances and couldn’t do their jobs. Although that procedure was eventually ruled unconstitutional, after 9/11 it came back from the dead. Proposals have been floated in Washington to create a new set of security requirements for longshore workers. Putting the drafting of those requirements into the hands of companies like SSA allows the union’s worst enemies to determine which of its members can hold a job. 

The battles over the ILWU longshore contract finally ended with a new agreement in December 2002. By then the Administration was already ramping up its preparations for the invasion of Iraq. The relationship established between SSA and the Administration during the longshore labor war was undoubtedly a key element in winning the company the contract to reopen the port of Umm Qasr, once troops seized it just a few months later. 

In Iraq, the occupation authorities (known as the Coalition Provisional Authority) have taken other important steps to benefit foreign operators like SSA. In an October 8 2003 phone press conference, Tom Foley, who now directs private sector development for the CPA, announced a list of the first state enterprises to be sold off, including cement and fertilizer plants, phosphate and sulfur mines, pharmaceutical factories, and the country’s airline. In preparation, on September 19, the CPA published Order No. 39, which permits 100 percent foreign ownership of businesses, except for the oil industry, and allows repatriation of profits. 

Order No. 37, also issued on September 19, suspends income and property taxes for the year and imposes a flat tax on individuals and corporations in the future of 15 percent. Right-wing ideologues haven’t been able to get the U.S. Congress to pass a flat tax proposal despite years of advocacy, but Iraq has become the free-marketeers’ playground. 

Meanwhile, conferences take place once or twice a week in Washington and London in which Iraqi enterprises and contracts are put on display and transnational corporations come to examine profitmaking opportunities. One such conference scheduled for December 10 at Washington’s National Press Club by Equity International, a business consulting service, featured the attendence of executives from Lockheed Martin, Raytheon, Rockwell Automation, Foster Wheeler, The Livingston Group, Nissan Motor Co, M/A-COM, Federal Security Systems, Danimex Communications, Global Transportation Systems, Applied Industrial Technologies, Comprehensive Health Services, Washington Group International, International Truck and Engine Corporation, and diplomats from countries participating in the occupation coalition. 

Equity International meetings to showcase Iraqi concessions began as early as May 5 and featured speakers included U.S. Assistant Secretary of State Lincoln Bloomfield; U.S. Treasury Under Secretary John Taylor; Congressperson Curt Weldon, vice chair, House Armed Services Committee; Christopher Shays, chairperson, House Subcommittee on National Security, Emerging Threats and International Relations; as well as executives from Kellogg Brown & Root, BearingPoint, Creative Associates and USProtect; and top officials from the Coalition Provisional Authority, U.S. Army Corps of Engineers, U.S. State Department, U.S. Treasury Department, U.S. Export-Import Bank, U.S. Commerce Department, U.S. Small Business Administration, and the United Nations. 

Many Iraqi workers look at the prospect of privatization with dread. Dathar Al-Kashab, manager of Baghdad’s Al Daura oil refinery, predicted that privatization would have an enormous effect. “A worker starting here today has a job for life, under the old system,” he explains, “and there’s no law which permits me to lay him off. But if I put on the hat of privatization, I’ll have to fire 1,500 [of the refinery’s 3,000] workers. In America when a company lays people off, there’s unemployment insurance, and they won’t die from hunger. If I dismiss employees now, I’m killing them and their families.” The privatization of the Umm Qasr docks would undoubtedly have the same effect on the port’s longtime workforce. 

Iraqi workers, however, haven’t waited for the axe to fall. In June, 400 labor activists held a conference in Baghdad and laid plans for organizing unions in 12 of the country’s principal industries, including longshore and transportation. They set up an umbrella labor group, the Workers Democratic Trade Union Federation. 

The reorganization of Iraq’s unions continues a long tradition of labor activity. When the king was overthrown in the revolution of 1958, unions became legal in Iraq for the first time, although workers had organized strikes and underground protests since the British occupation in the 1920s. In 1963, however, the CIA organized a coup that overthrew the government of Karim Kassem and installed the Baath Party in power. Saddam Hussein took control of the party and government in 1968 and in 1977 purged unions of his political opponents and drove radical political parties underground or into exile. Left-wing leaders of the unions organized after 1958 were fired, driven into exile, and even executed. 

Under Saddam, Iraq eventually became a client state of the U.S., especially after the Shah was overthrown in Iran in 1978. Both Saddam and the U.S. feared that Iran’s Islamic Revolution would spread, and threaten their interests. The U.S. gave Saddam arms and money to fight Iran. By the conflict’s end, over 400,000 Iraqis, including some of its most skilled and educated workers, were dead. During that decade-long war, Umm Qasr proved its strategic value. Loading and unloading ships at the docks in Basra, on the Chatt-al-Arab waterway just a few miles from Iran’s border, was practically impossible. Umm Qasr became Iraq’s only usable port. 

In 1987, Saddam issued a law declaring that the class struggle was over. Workers in state-owned enterprises were no longer to be considered workers at all, but civil servants. As such, Saddam said, they had no right to organize unions or bargain. On the Umm Qasr docks and in factories and refineries throughout the country, unions were effectively banned. 

That 1987 law is still being enforced by the U.S. occupation authority. The law affects workers employed in the enterprises set to be privatized and that is why it hasn’t been repealed as hundreds of other Saddam-era laws have been. If those workers have no legal union, no right to bargain, and no contracts, then privatization and the huge job losses that will come with it, will face much less organized resistance. 

On June 5, CPA head Paul Bremer issued a decree called Public Notice Number One, prohibiting “pronouncements and material that incite civil disorder, rioting or damage to property.” The phrase can easily be interpreted to mean strikes or other organized labor protest. Those who violate the decree “will be subject to immediate detention by Coalition security forces and held as a security internee under the Fourth Geneva Convention of 1949” (in other words, as a prisoner of war). 

U.S. occupation forces in Iraq escalated their efforts to paralyze Iraq’s new labor unions on December 6, when soldiers arrested eight members of the Federation’s executive board and took them into detention. Although the eight were released the following day, there was no explanation from the Coalition Provisional Authority. 

While the Federation has set up an organization for dockers and other transport workers, there is still no union on the docks in Umm Qasr, according to one retired longshore union organizer, Muhsen Mull Ali. In nearby Basra, however, there is already a trade union council and two general strikes have taken place since the beginning of the occupation. “In Basra, 70 percent of the people are unemployed,” Muhsen says. “American companies hire Iraqis at $70 and foreigners at $300. There’s so much unemployment in Iraq that people will take jobs at any wage and the Americans took advantage of this.” 

Muhsen spent two long stints in prison for organizing unions in Basra (first under the king and then under Saddam), but says he intends to return to the area nevertheless to begin reorganizing workers on the docks. “They will reimpose capitalism on us, so our responsibility is to oppose privatization as much as possible and fight for the welfare of our workers,” he explains. Jassim Mashkoul, the new Federation’s director for internal communications, adds, “At the beginning, we thought our situation might be better afterwards, since we got rid of Saddam Hussein. But it hasn’t been.” The Federation calls for an end to the occupation and for a democratic government of Iraqis to replace it. 

Arab trade unionists are even more critical of the occupation’s effect on workers. According to Hacene Djemam, general secretary of the International Confederation of Arab Trade Unions, “war makes privatization easy: first you destroy the society and then you let the corporations rebuild it.” 

Labor Against the War, a national group of unions which opposed the Bush intervention before it took place, prepared a research paper after the occupation started, profiling U.S. corporations like SSA that were given reconstruction contracts. Clarence Thomas, former secretary-treasurer of San Francisco’s longshore union, Local 10 of the International Longshore and Warehouse Union, was a member of a USLAW delegation that went to Iraq in October. He took copies of the report and offered to assist unions there if and when they confront the kind of union-busting activity the ILWU faced in 2002. At the Labor Assembly for Peace in Chicago in late October, USLAW resolved to make Iraqi labor rights under the occupation an issue in the 2004 election. 

Thomas told the leadership of the WDTUF, “The Bush administration doesn’t like unions in the U.S., so how can it like them in Iraq? Capital has international unity and mobility, so it’s obvious that workers have to have the same thing if we’re all to survive.”