Alnasrawi: Privatization is Wrongheaded
The eminent Iraqi-born economist Abbas Alnasrawi of the University of Vermont has written a wide-ranging argument against the immediate privatization of state-owned industries by the American administration of Iraq.
He argues that such policies should have waited for an elected Iraqi government, which would have the legitimacy to implement them thoughtfully, rather than being imposed from Washington. He points out that the managers and workers at state owned enterprises are now seized by uncertainty about the future. This anxiety is likely to get in the way of the smooth functioning of the companies.
He argues that the moves will facilitate foreign ownership of Iraqi concerns without really bringing in foreign investment in new industries that might increase productivity. Moreover, since local Iraqi businessmen won’t be able to compete with the foreign carpet baggers, they will tend instead to send their money out of Iraq, speeding capital flight, which will be bad for the Iraqi economy. The whole thing is worth reading. If the US had any sense it would have talked to Iraqi economists like Alnasrawi before formulating an economic shock therapy plan of the sort that turned Russia into an economic basket case.