Free-Market Iraq? Not So Fast

[Manix]

NY Times
By Daphne Eviatar


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There is no doubt about American intentions for the Iraqi economy. As Defense Secretary Donald H. Rumsfeld has said, "Market systems will be favored, not Stalinist command systems."

And so the American-led coalition has fired off a series of new laws meant to transform the economy. Tariffs were suspended, a new banking code was adopted, a 15 percent cap was placed on all future taxes, and the once heavily guarded doors to foreign investment in Iraq were thrown open.

In a stroke, L. Paul Bremer III, who heads the Coalition Provisional Authority, wiped out longstanding Iraqi laws that restricted foreigners' ability to own property and invest in Iraqi businesses. The rule, known as Order 39, allows foreign investors to own Iraqi companies fully with no requirements for reinvesting profits back into the country, something that had previously been restricted by the Iraqi constitution to citizens of Arab countries.

In addition, the authority announced plans last fall to sell about 150 of the nearly 200 state-owned enterprises in Iraq, ranging from sulfur mining and pharmaceutical companies to the Iraqi national airline.

But the wholesale changes are unexpectedly opening up a murky area of international law, prompting thorny new questions about what occupiers should and should not be permitted to do. While potential investors have applauded the new rules for helping rebuild the Iraqi economy, legal scholars are concerned that the United States may be violating longstanding international laws governing military occupation.


http://www.nytimes.com/2004/01/10/arts/10OCCU.html?pagewanted=print&position=