The Shock Doctrine: The Rise of Disaster Capitalism

by Naomi Klein

After replacing the cautious general Jay Garner as the top U.S. envoy, Bremer spent his first four months in Iraq almost exclusively focused on economic transformation, passing a series of laws that together make up a classic Chicago School shock therapy program.

The White House was so focused on unveiling a shiny new Iraqi economy that it decided, in the early days of the occupation, to launch a brand-new currency,

bills were delivered in fleets of planes and distributed in armored vehicles and trucks that ran at least a thousand missions throughout the country—at a time when 50 percent of the people still lacked drinking water, the traffic lights weren’t working and crime was rampant.

None of the money went to Iraqi factories so they could reopen and form the foundation of a sustainable economy, create local jobs and fund a social safety net.

In November 2006, Ralph Peters, a retired U.S. Army officer, wrote in USA Today that “we did give the Iraqis a unique chance to build a rule-of-law democracy,” but Iraqis “preferred to indulge in old hatreds, confessional violence, ethnic bigotry and a culture of corruption. It appears that the cynics were right: Arab societies can’t support democracy as we know it.

Racist bigot idiot

After the toppling of Saddam Hussein, Iraq badly needed and deserved to be repaired and reunited, a process that could only have been led by Iraqis. Instead, at precisely that precarious moment, the country was transformed into a cutthroat capitalist laboratory—a system that pitted individuals and communities against each other, that eliminated hundreds of thousands of jobs and livelihoods and that replaced the quest for justice with rampant impunity for foreign occupiers.

The “fiasco” of Iraq is one created by a careful and faithful application of unrestrained Chicago School ideology.

Bremer made no secret of his antipathy for Iraq’s “Stalinist economy,” as he described the country’s state-run companies and large ministries, and he had no appreciation for the specialized skills and the years of accumulated knowledge possessed by Iraq’s engineers, doctors, electricians and road builders.

Dozens of senior U.S. military and intelligence officers have acknowledged that many of the 400,000 soldiers Bremer laid off went straight to the emerging resistance.

Bremer’s classic Chicago School decision to fling open the borders to unrestricted imports while allowing foreign companies to own 100 percent of Iraqi assets infuriated Iraq’s business class. Many responded by funding the resistance with what little revenue they had left.

James Haveman, in charge of rebuilding Iraq’s health care system, was so ideologically opposed to free, public health care that, in a country where 70 percent of child deaths are caused by treatable illnesses such as diarrhea, and incubators are held together with duct tape, he decided that an overarching priority was to privatize the drug distribution system.

Having suffered through the sanctions and the invasion, most Iraqis naturally assumed that they had the right to benefit from the reconstruction of their country—not just from the final product but from the jobs created along the way. When tens of thousands of foreign workers poured across Iraq’s borders to take up jobs with foreign contractors, it was seen as an extension of the invasion.

Freed of all regulations, largely protected from criminal prosecution and on contracts that guaranteed their costs would be covered, plus a profit, many foreign corporations did something entirely predictable: they scammed wildly.

In early April 2004, before Iraq had spiraled into violence, I visited the Baghdad Central Children’s Hospital. It had supposedly been rebuilt by a different U.S. contractor, but there was raw sewage in the hallways, none of the toilets worked and the men trying to fix the mess were so poor that they didn’t have shoes—they were subsubsubcontractors,

Parsons was handed $186 million to build 142 health clinics. Only 6 were ever completed.

In Iraq

Corruption during the occupation was not the result of poor management but of a policy decision: if Iraq was to be the next frontier for Wild West capitalism, it needed to be liberated from laws.”

Bremer’s next problem was the elections breaking out in towns and cities across the country. At the end of June, only his second month in Iraq, Bremer sent word that all local elections must stop immediately. The new plan was for Iraq’s local leaders to be appointed by the occupation,

Najaf was in the process of organizing citywide elections with the help of U.S. troops when, only one day before registration, the lieutenant colonel in charge got a call from Marine Major General Jim Mattis. “The election had to be canceled. Bremer was concerned that an unfriendly Islamic candidate would prevail … . Bremer would not allow the wrong guy to win the election.

I don’t know about you, but I absolutely LOVE the type of democracy where you only let your person win, or else cancel the election. This was the “democracy” forced on Iraq

in November 2003, after he canceled local elections, Bremer flew back to Washington for huddled meetings at the White House. When he returned to Baghdad, he announced that general elections were off the table. Iraq’s first “sovereign” government would be appointed, not elected.

49 percent of Iraqi respondents said they would vote for a party promising to create “more government jobs.” Asked if they would vote for a party promising to create “more private sector jobs,” only 4.6 percent said yes. Asked if they would vote for a party promising to “keep coalition forces until security is good,” only 4.2 percent said they would.

the entire first year of occupation, when Bremer cut down democracy wherever it reared its hydra head. Within his first six months in the job, he had canceled a constituent assembly, nixed the idea of electing the drafters of the constitution, annulled and called off dozens of local and provincial elections and then vanquished the beast of national elections—hardly

Democracy!!!!!

With Iraqi industry all but collapsed, one of the only local businesses booming is kidnapping. Over just three and a half months in early 2006, nearly twenty thousand people were kidnapped in Iraq.

Kidnapping is still common today

the vast majority of abductions are Iraqi professionals, grabbed as they travel to and from work. Their families either come up with tens of thousands in U.S. dollars for the ransom money or identify their bodies at the morgue.

I have personally had family members kidnapped in recent years and returned only after payment

Bremer was sent to Iraq to build a corporate utopia; instead, Iraq became a ghoulish dystopia where going to a simple business meeting could get you lynched, burned alive or beheaded.

An even more dramatic about-face came from the Pentagon. In December 2006, it announced a new project to get Iraq’s state-owned factories up and running—the same ones that Bremer had refused to supply with emergency generators because they were Stalinist throwbacks.

Most of the Iraq Study Group’s recommendations were ignored by the White House, but not this one: the Bush administration immediately pushed ahead by helping to draft a radical new oil law for Iraq, which would allow companies like Shell and BP to sign thirty-year contracts in which they could keep a large share of Iraq’s oil profits, amounting to tens or even hundreds of billions of dollars—unheard of in countries with as much easily accessible oil as Iraq, and a sentence to perpetual poverty in a country where 95 percent of government revenues come from oil.

In effect, the law called for Iraq’s publicly owned oil reserves, the country’s main source of revenues, to be exempted from democratic control and run instead by a powerful, wealthy oil dictatorship, which would exist alongside Iraq’s broken and ineffective government.

Iraq’s oil profits are the country’s only hope of financing its own reconstruction when some semblance of peace returns. To lay claim to that future wealth in a moment of national disintegration was disaster capitalism at its most shameless.

The corporation that gained most from the chaos was Halliburton.

Surprise surprise, Cheney gets a fat payday

Everywhere the Chicago School crusade has triumphed, it has created a permanent underclass of between 25 and 60 percent of the population.

In New Orleans, as in Iraq, no opportunity for profit was left untapped.

(According to The New York Times, “the top 20 service contractors have spent nearly $300 million since 2000 on lobbying and have donated $23 million to political campaigns.” The Bush administration, in turn, increased the amount spent on contractors by roughly $200 billion between 2000 and 2006.)

Insane return on investment

Throughout its thirty-five-year history, the Chicago School agenda has advanced through the intimate cooperation of powerful business figures, crusading ideologues and strong-arm political leaders. By 2006, key players from each camp were either in jail or up on charges.

It is precisely because the dream of economic equality is so popular, and so difficult to defeat in a fair fight, that the shock doctrine was embraced in the first place.