Tuesday, November 20, 2012

Iraq Ranks As One Of The Worst Countries To Do Business In According To World Bank


Iraq continues to rank as one of the worst countries to do business in. The latest report by the World Bank, “Doing Business in the Arab World 2012,” not only placed Iraq at the bottom of the region in many categories, but at the low end internationally as well. Whether it was ease of doing business, obtaining credit, or trade, companies faced major barriers to success. That’s largely because the country has had a state-run economy since the 1960s. That legacy continues to negatively affect the nation, because many government bureaucrats and politicians do not know how to work with the private sector. Not only that, but the country’s growing oil wealth makes it even less likely to diversify. Those twin factors will largely keep Iraq from fully developing, and keeping it a rentier economy.

Every year the World Bank issues a report on doing business around the world. It looks at several economic indicators, and then ranks 183 countries. Its “Doing Business in the Arab World” included Iraq and nineteen other nations. Among those, Iraq ranked second to last overall. Saudi Arabia was number one in Arab countries and 12th internationally, compared to Iraq, which was 164 out of 183, and 19 out of 20 in the region. Only Djibouti did worse at 170. Iraq’s standing has actually been declining in the last several years according to the World Bank. In 2009, it was 153, then it fell to 166 in 2010, before hitting 164 last year, where it remains today. The reason for this stagnation is the fact that Iraq has carried out no economic reforms in the last several years, which would help improve its ranking. For example, it became more expensive to start a business from 2011 to 2012 with the cost of getting certificates of incorporation and the necessary lawyers increasing. Overall, beginning a company cost 115.7% of the national per capita income. The time involved was also considerable. In Saudi Arabia it only took 5 days to start a business, compared to 77 in Iraq, the longest of any in the Arab world. The government has done nothing to ease this process, and in fact, the World Bank said that the business climate has gotten worse in Iraq.

World Bank’s Doing Business Rankings (World Rank out of 183/Arab World Rank out of 20)
Saudi Arabia 12/1
United Arab Emirates 33/2
Qatar 36/3
Bahrain 38/4
Tunisia 46/5
Oman 49/6
Kuwait 67/7
Morocco 94/8
Jordan 96/9
Yemen 99/10
Lebanon 104/11
Egypt 110/12
West Bank/Gaza 131/13
Syria 134/14
Sudan 135/15
Algeria 148/16
Comoros 157/17
Mauritania 159/18
Iraq 164/19
Djibouti 170/20

The World Bank looked at countries according to ten different categories, almost all of which Iraq did badly in. At starting a business Iraq ranked 176 out of 183 internationally, and 18 out of 20 in the Arab world. There were 11 procedures entrepreneurs had to go through to set up a firm, tied for 3rd most in the Arab world. To complete all those steps took 77 days, the longest in the region. There were 13 procedures to go through to get construction permits, the fourth fewest in the Arab world. It took 187 days to complete that process however, which was the fifth longest in the region. The cost was exorbitant at 469.8% of Iraq’s per capita income, the fifth most expensive in the Arab world. Registering property took five procedures and 51 days, which was third worst in the region. Getting electricity to a firm was relatively easy however, ranked 46 out of 183 and 6th in the Arab world. There were five procedures, and they could be finished in 47 days. The price was very expensive however at 609.9% of Iraq’s per capita income. Paying taxes was not really an issue. Iraq ranked 49th internationally and 10 out of 20 in the Arab world, with a taxation rate of 28.4% of profits. The really big problems outside of starting a business were in terms of credit, protecting investors, importing and exporting, enforcing contracts, and resolving insolvency. Iraq was 174 out of 183 in getting credit. That’s largely because state-run banks dominate Iraq’s financial sector, and mostly support the government rather than businesses. Iraq ranked 122 out of 183 in terms of protecting investors with it consistently getting low marks in terms of disclosure and liability. Conducting trade was extremely difficult with Iraq ranked 180 out of 183. It takes 80 days to export at a cost of $3,550 per container, and 83 days to import at a cost of $3,650 per container. In comparison, in neighboring Jordan, it only took 13 days to export at a cost of $825 per container and 15 days to import at $1,335 per container. Finally, it took 520 days to enforce contracts, and there were no set practices for resolving insolvency, which was why Iraq ranked 183 out of 183 in that category. Because so many of the costs involved with starting a business are so expensive, getting credit or investors is a must. Those options are simply not available to many in the country, because of the underdeveloped banking system, and the lack of regulations and standards. Even foreign entities have a hard time in Iraq, because of the red tape and bureaucracy they have to go through. These are all reasons why Iraq ranks so badly.

World Bank Rankings (World Rank out of 183/Arab World Rank out of 20)

Starting a business: 176/18
Number of procedures 11
Time 77 days
Cost 115.7% of per capita income

Dealing with construction permits 120/13
Number of procedures 13
Time 187 days
Cost 469.8% of per capita income

Getting electricity 46/6
Number of procedures 5
Time 47 days
Cost 609.9% of per capita income

Registering property 98/15
Number of procedures 5
Time 51 days
Cost 6.9% of property value

Getting credit 174/18
Strength of legal rights index 3 out of 10
Depth of credit information index 0 out of 6
Public registry coverage 0% of adults
Private bureau coverage 0% of adults

Protecting investors 122/13
Extent of disclosure index 4 out of 10
Extent of director liability index 5 out of 10
Ease of shareholder suits index 4 out of 10
Strength of investor protection index 4.3 out of 10

Paying taxes 49/10
Payments 13 per year
Time 312 hours
Total tax rate 28.4% of profits

Trade 180/20
Documents to export 10
Time to export 80 days
Cost to export $3,550 per container
Documents to import 10
Time to import 83 days
Cost to import $3,650 per container

Enforcing contracts 140/15
Number of procedures 51
Time 520 days
Cost 28.1% of claim

Resolving insolvency 183/20
Time no practice
Cost no practice
Recovery rate 0

Iraq Compared To Other Arab Countries

Ease of starting a business

Number of procedures
Fewest
Saudi Arabia 3
Lebanon 5
Oman 5
Egypt 6
Yemen 6
Most
Iraq 11
West Bank/Gaza 11
Djibouti 11
Kuwait 12
Algeria 14

Time
Fastest
Saudi Arabia 5 days
Egypt 7 days
Oman 8 days
Bahrain 9 days
Lebanon 9 days
Slowest
Kuwait 32 days
Sudan 36 days
Djibouti 37 days
West Bank/Gaza 49 days
Iraq 77 days

Cost (% of income per capita)
Least
Bahrain 0.7%
Kuwait 1.2%
Oman 3.1%
Tunisia 4.2%
United Arab Emirates 5.6%
Most
Yemen 83.8%
West Bank/Gaza 96.0%
Iraq 115.7%
Djibouti 169.8%
Comoros 176.2%

Exporting

Number of documents
Fewest
United Arab Emirates 4
Tunisia 4
Saudi Arabia 5
Djibouti 5
Qatar 5
Most
Syria 8
Algeria 8
Mauritania 8
Comoros 10
Iraq 10

Time
Fastest
United Arab Emirates 7 days
Oman 10 days
Morocco 11 days
Bahrain 11 days
Egypt 12 days
Slowest
Yemen 27 days
Comoros 30 days
Sudan 32 days
Mauritania 34 days
Iraq 80 days

Cost per container
Least
Morocco $577
Egypt $613
Saudi Arabia $615
United Arab Emirates $630
Oman $745
Most
Algeria $1,248
West Bank/Gaza $1,310
Mauritania $1,520
Sudan $2,050
Iraq $3,550

Importing

Number of documents
Fewest
United Arab Emirates 5
Saudi Arabia 5
Djibouti 5
West Bank/Gaza 6
Tunisia 7
Most
Algeria 9
Syria 9
Kuwait 10
Comoros 10
Iraq 10

Time
Fastest
United Arab Emirates 7 days
Oman 9days
Egypt 12 days
Bahrain 15 days
Jordan 15 days
Slowest
Lebanon 32 days
Mauritania 38 days
West Bank/Gaza 40 days
Sudan 46 days
Iraq 83 days

Cost per container
Least
United Arab Emirates $635
Oman $680
Saudi Arabia $686
Qatar $730
Egypt $755
Most
Yemen $1,475
Mauritania $1,523
Syria $1,625
Sudan $2,900
Iraq $3,650

More and more countries, companies, and Iraqis are interested in doing business in Iraq. Iraq has a large population, a booming energy industry, rising incomes, and an economy that’s predicted to have double-digit growth over the next several years. That hides large structural problems. Oil for example, is the reason for the projected expansion since it contributes 60% of the Gross Domestic Product (GDP). At the same time, it only accounts for 1% of jobs. The increase in buying power is actually from a growing public sector that is fueled by oil revenues rather than any productive enterprises. That huge energy wealth is also the reason why the government feels no real reason to improve the business environment. It can simply continue with its oil dependency, and appease the public by giving them government jobs. There has been lots of talk about Baghdad diversifying its economy so that it doesn’t fall victim to the resource curse, but it has taken no substantive actions in the last several years, and instead just pumped in more money into the state. Since the ruling parties all benefit from this system, by taking their share of government contracts through corruption, and placating their followers with large patronage systems out of the ministries there will be no change any time soon.

SOURCES

Hall, Camilla, “Iraq held back by slow pace of bank reform,” Financial Times, 10/15/12

Special Inspector General for Iraq Reconstruction, “Quarterly report to the United States Congress,” 10/30/12

World Bank, “Doing Business in the Arab World 2012,” 2012

REUTERS VIDEO: Iraq's Shahristani On Oil Market, Production Outlook


AL JAZEERA VIDEO: Many Killed In String Of Iraq Bomb Blasts


Monday, November 19, 2012

How Anbar Province Showed Promise And Problems From 2003-2004, Interview With Keith Mines, Former Coalition Provisional Authority Governor


Keith Mines is not your typical Foreign Service Officer. He is a former soldier in the 82nd Airborne Division and 7th Special Forces Group with service in Central America. He then joined the State Department, and served around the world, often in conflict and post-conflict nations. Some of the places he has been posted include Israel, El Salvador, Haiti, Sudan, Somalia, and Hungary. Recently he worked on counternarcotics in Mexico, and is now serving his second term in Afghanistan. From August 2003 to February 2004, he was the top Coalition Provisional Authority (CPA) officer in Anbar province. There he saw all of the early hopes and problems with the United States’ administration of Iraq. Below is an interview with Keith Mines about his work in Anbar and for the CPA.
(Anbar Investment Commission )

1. You arrived in Iraq in the summer of 2003 to work for the Coalition Provisional Authority (CPA). When you got there what was your original job?

I had paralleled Jim Dobbins from the field in his various roles as Special Coordinator for Somalia, Haiti, and Afghanistan, and asked him to get me connected to the CPA as it was starting up. This didn’t seem like the kind of thing I would want to miss. He had left government by then, but had been approached by Paul Bremer to recommend people for the CPA. He put forward my name, I thought to lead a kind of Policy Planning Cell in Baghdad that would look at a range of different issues and synchronize and suggest policies and new directions. 

2. The CPA then ended up sending you off to Anbar to be the governor in August 2003. How did that come about?

By the time I got to Baghdad in August 2003 the need was more pressing in the field than HQ, and I was assigned to the talented Arabist Mike Gfoeller’s Regional HQ in Hillah, Anbar, from which I was assigned to Ramadi to be the Governance Coordinator, or effectively the co-governor with my Iraqi counterpart.   

3. When you first arrived in Anbar, what was the situation like there?

It is odd in retrospect, to consider that we had the first suicide bombing soon after I arrived, but it was a guy whom the locals said was mentally unstable, and had been convinced to conduct the bombing by outsiders. They said no true Iraqi would be a suicide bomber. There was considerable unrest in Fallujah, still steaming after the killing of 17 or so Fallujans in a demonstration. To be honest we were flying sort of blind. The 82nd Airborne Division had been there in the initial combat phase, then one of the infantry divisions, then the 3rd Armored Calvary Regiment (ACR). We kept switching out units, and there was not the kind of good understanding of things that one would hope for, although I will say the 3rd ACR for their size and mission had developed incredibly good contacts and understanding of what was going on. I remember going to Fallujah, and getting briefed by the company commander there, and he had it pretty much figured out – old military industrial town, lots of ex-soldiers and retired officers, very religious, and very, very pissed off. Notably I was the first civilian to work there so we had none of the civilian presence and programs we needed, also limiting our reach a bit.  

4. What was the state of the insurgency at that time, and was it even being called that then?

Things were just starting to gel for the insurgents. I remember coming out of my hooch one morning on the way to the HQ, and hearing a thunderous blast that shook the buildings. It was an Improvised Explosive Device (IED) across the river, 20 artillery shells daisy chained together covering 100 meters of a road. Fortunately, only a fraction went off, but it still killed one young soldier. That was the first large IED. Before that they had been a single shell. Someone was getting serious. As we understood it this was the start of the ex-Ba’athist phase of the insurgency, the soldiers and officers who had melted into society and were starting to conduct small hit and run attacks and IED strikes against the Coalition to make life as miserable as possible, and retain some force while they figured out what to do next. I am not convinced it was on an inevitable track at that point, more of a placeholder. But the foreign insurgents were of course starting to filter in, and they were having their say as well. 

5. You were the co-governor of Anbar until February 2004. In those six months did you see the insurgency evolve at all? Was Abu Musab al-Zarqawi active there yet? Were there reports of foreign fighters coming across from Syria?

The ratlines from Syria were active, and the insurgency progressed, but very unevenly, and again not with inevitability. Zarqawi I don’t think was a household name at that point. The attacks grew with increasing frequency through November or so, when General John Abizaid came to Ramadi just after the downing of a Chinook over Fallujah that killed 30 or so soldiers going out on leave, and read the Sheikhs the riot act. The 82nd Airborne Commander Major General Charles Swannack also dropped a few 500 pound bombs to make the point that we were ready to unleash hell. They seemed to get it. 

But also reinforcing a backing away from insurgency was one of the various political announcements that seemed to indicate that the Coalition would be turning over control of Iraq to Iraqis. I actually believe you can track the ups and downs of the insurgency with some of the political announcements in Baghdad, with a diminution of attacks when we indicated we were relinquishing control, and the attacks going back up when the Iraqis realized they had misread it, and we were just anointing a new council or going through a long process of handing over to an Iraqi entity, but that foreigners would still be governing Iraq.

So a steady growth in insurgent attacks through the end of November, then things cleared up by the end of December, and into 2004, most of the sector was actually green in terms of numbers of attacks for weeks on end. Then of course the events of the spring with Abu Ghraib and the explosion of Fallujah, and the whole thing turned around.     

6. Most U.S. officials blamed Ba’athists for the creation of the insurgency. Did you think they were the cause of the resistance to the American presence or something else?

Al Anbar was not only home to tens of thousands of disenfranchised soldiers and thousands of their officers, but several hundred intelligence officers and other thousands of ex-Ba’athist civil servants. I met with them frequently and they were looking for a way forward. They were angry. When we couldn’t deliver I think it is fairly clear what course they took. 

7. How did you think the Coalition Provisional Authority’s de-Ba’athification program and the disbanding of the military affected Anbar?

No question that it fueled the insurgency, both directly by barring fathers from meaningful jobs and making them available for more nefarious lines of work, and indirectly by demonstrating to the ex-Ba’athists that they really did not have a place in the new Iraq, thus motivating them to oppose the emerging new democracy. The de-Ba’athification program was one of a handful of things that really caused the whole project to go sideways. I told Ahmed Chalabi in one of the forums we held in Baghdad that the only reason he was able to promote his deep de-Ba’athification program was because he had the backing of the U.S. military to enforce his dictates. Without that he would have had to make a compromise with the former regime of the kind that most emerging democracies in Latin America and Eastern Europe had to make. In the end, he was less interested in the long-term stability of the new regime than in building his own power base.    

8. Your initial plan for the province was called the 3 Ps: power, police, and politics. How was each of those supposed to work, and what was your overall goal?

My going in position was to divide our lines of effort into these three things, figuring that it would cover the basics of governance, the economy, and security. We had more or less thorough plans and programs for each one, with the idea of creating a viable political system that was acceptable to the people (the selection end of governance), and could deliver good governance (the bureaucratic side of governance), a self-sustaining economy that was growing at an acceptable rate through the provision of stable and adequate power which would spur industry, and a police force that could establish the rule of law. 

9. You thought the U.S. was doing a particularly bad job dealing with one of your 3 Ps, creating a new Iraqi police force. What issues were they having?

This is a persistent problem, and it is a bit embarrassing that 11 years, and two failed efforts later we still do not have anyone in the U.S. government trained, equipped, and funded to build foreign security forces. The Army usually gets stuck with it, but it isn’t their main line of effort, and on the police side frankly they do it only marginally well. The Bureau of International Narcotics and Law Enforcement Affairs (INL) in the State Department should be able to do it, but for a variety of reasons can’t or won’t. This is one of the largest lessons learned from the past decade, foreign security forces can be trained and equipped for a fraction of the cost of doing the fighting ourselves, but we can’t seem to move in this direction. Maybe Patton was right, Americans simply love to fight, and we would rather keep the glory for ourselves than sub-contract it out. 

10. One idea you came up with to try to resolve this problem was to hire thousands of former Ba’athists and soldiers to help secure Anbar. How did that go down with the CPA?

Not well. We approached this from a half dozen different angles and none caught on. Everyone paid lip service to the idea of creating employment, and the concept I am told even got to the President in a meeting with General Abizaid, and in his common sense approach to things, asked simply, “Why don’t we just hire these people then?” That would invariably then come back down as another small works program, cleaning streets or something, but never as the kind of massive program I was looking for, with long term work, and the ability to take men out of their villages for service in other areas if we were concerned about fighting age men being available for the pick-up game of the insurgents. I wanted long-term security service jobs for tens of thousands; we got short term contracting jobs for hundreds. We also tried to employ hundreds of individuals through the sheikhs and other tribal leaders who offered their young men to help police power lines and protect critical infrastructure, but there was leeriness about the tribal leaders so this too fell flat. We eventually came around to this of course, but only after four years of hard fighting. We could have had the Anbar pre-awakening in 2003, and had all these guys on our side from the start.     

11. Do you think that was a lost opportunity to bring in a lot of the fighting aged men in the province to help with the American effort there?

They were pumped and ready to get to work. This would have been easy. 

12. Eventually, you changed your priorities to include jobs and reconciliation, why?

My initial idea was that if we provided power, as in electrical power, the factories would reconstitute, and there would be employment, which was always my key goal. The more I looked at the economy the more I realized this was not an automatic flow, and we simply could not depend on the natural growth of the economy to provide the jobs that we needed. So I started to go more in the direction of direct government-provided jobs. And I added reconciliation to cover the disaster that de-Ba’athification was becoming, again not something that was directly enough covered in the political process line of effort.   

13. Were your goals in Anbar the same or different from Paul Bremer’s?

The above did not go down well with Paul Bremer, who had the idea of a fully private sector economy emerging in Iraq. He was supported by some guys from Heritage Foundation who were either working in the CPA or were influencing him and others from Washington. We actually had this out in at least two of the monthly Shuras we held between CPA and the field. At that time, we had much of the future leadership of our national security apparatus, Generals David Petraeus, Martin Dempsey, and Ray Odierno, and at least two future Ambassadors – Rick Olson and Robert Ford. We in the field all agreed with the notion of direct provision of jobs in order to stabilize our regions. Ambassador Bremer argued that if we would impose security the economy would stabilize and the jobs would flow. It was interesting how literally everyone in the field was united on this; there was not a single dissenting vote. The British Ambassador Jeremy Greenstock was also with the field, but we simply didn’t prevail. 

14. Did the CPA provide you with much support or did you feel like you were on your own?

I think the CPA was well meaning in providing support, but it was an ad hoc organization with no real bones and marrow. I have no doubt Paul Bremer knew what he was missing, and tried to piece it all together, but it was a thankless task given the lack of support he got from Washington agencies, none of whom apparently felt like this was really their gig. The field support unit, forget exactly what we called that, was contractors who were there on fairly long term assignments and they were great, very focused and oriented to the field. On policy we were pretty much adrift, led ostensibly by the Political Section, but which did not have the structure or experience to manage something like this, and was slammed by their own work. I was also hamstrung by the fact that no one wanted to come to Anbar in the first place, so I was alone for several months until my contract Administration Officer was assigned, then a Naval officer on loan as a translator/political officer, then an information officer. I finally did start to get more Foreign Service Officers in December, and by the time I left in March 2004 there were three of us. That compared to perhaps a dozen in the north and in Basrah. We had a good deal of autonomy in the end, which I guess was a good thing. We were able to develop our own provincial council election template, and other initiatives such as our business conference. Our prime movers were the Civil Affairs units that worked alongside us day to day. 

15. Did you think your relationship with the CPA in Baghdad was typical or the exception of how the Coalition was running things out in the provinces?

I am pretty sure we were the worst off of all the areas. 

16. Bremer was criticized for not listening to Iraqis and their demands. Did you get that impression?

My view was he was focused and somewhat taken in by the Shi’ites and Kurds, feeling like the Sunnis had lost for legitimate reasons, i.e. their cruelty to the other ethnic groups under the Ba’ath regime, and so could be ignored or even treated badly. So I think he actually listened, just not to everyone, and in the end frankly, not to the ones who mattered. 

17. You’ve written that there was a tradeoff between the large infrastructure projects pushed by the CPA, and the local jobs programs you wanted. What was that tradeoff, and which did you think was more appropriate for Iraq?

This was a debate I first encountered in Haiti with the United States Agency for International Development (USAID). USAID had a philosophy that we should not focus on short-term employment generation, because it was not self sustaining, but rather build infrastructure, roads, power, etc., that would ultimately provide jobs through a growing private sector. In Haiti, this was a reasonable argument, because there were low levels of instability to begin with, and in the end no one was going to bring the project crashing down; it crashed due to the simply lethargy of the participants. In Iraq and similarly in Afghanistan, there were players who had to be engaged positively or they would simply undercut any gains in the infrastructure to begin with. We saw this almost daily on the drive from Ramadi to Baghdad, where the power pylons were constantly dropped either by insurgents or by villagers trying to roll up the copper wire for sale in Syria. It was a thankless game. In the end, we needed both infrastructure and jobs, it should never have been a zero sum game, but the jobs should have come from our security budget, the “feed them rather than fight them” approach, which is not something you get from Commander’s Emergency Response Program (CERP) or projects.  

18. Could you relate that to one of the lessons you learned about counterinsurgency warfare that the focus should always be on the immediate situation rather than the long term?

I am with whoever said it with regards to economics, in the long term we are all dead. If we don’t get the short term right by providing jobs, we will never get to the long term of building infrastructure, a viable governing structure, etc. 

19. One big issue for the American effort in Iraq was that in Baghdad the CPA head Paul Bremer and the military commander General Ricardo Sanchez often did not get along. What was your relationship with your military counterpart in Anbar?

I was fortunate to work with Major General Chuck Swannack.  I was an 82nd Division alum (1982-1983), and we got along extremely well. I can’t think of a major argument over our approach or a significant lane violation. He got what I was trying to do on the civilian side, and I respected his approach to security; we both worked with the sheikhs and other key leaders. 

20. Before you were deployed to Iraq you were posted in Hungary, which went through a political and economic transformation after the fall of the Iron Curtain. What lessons did you think that experience had for Iraq?

I was aghast that some in the CPA, Ambassador Bremer himself as I recall, were trying to use Hungary as an example of the kind of economic transition Iraq should use as a model, not because Hungary would not have been a good model, but because they didn’t understand what the Hungarian model entailed. They were looking at Hungary four years after the fall of the Berlin Wall when it emerged as the star of the Eastern European transition economies, not the immediate post-Wall Hungary. The first post-Communist government (1990-1994) was led by the Hungarian Democratic Forum, and it did not push the country hard into liberalization, recognizing the importance of social stability while the new political system found its footing.  The second government (1994-1998) was Socialist, which only then pushed the country through the hard economic program, the Bokros Plan, on the road to a full market economy; selling off of state enterprises, cutting social services, laying off government workers, etc. I do think Hungary offered a good model, but only if it had been followed, with a long period of state controlled transition in the economy, to include a large social safety net, while the political system settled. 

21. How did Hungary’s economic reform program compare to the CPA’s plans to modernize and privatize the Iraqi economy?

We were trying to move straight to 1994 without going through the interim period, in the mistaken idea that, as Ambassador Bremer put it, “If we don’t go through the economic pain now we may end up with yet another distorted petro economy, with a large public sector and a single source for revenue.” To which many of us answered, “We would be perfectly happy with yet another distorted petro economy at this point, as long as it is stable and no one is shooting at us.”   

22. What was the economic situation like in Anbar, and did your policies or the CPAs have much effect upon it?

We were somewhat shocked at how run down the infrastructure and the economy were. There were factories, especially in Fallujah, but they all had something wrong with them, and in many cases were producing obsolete products. Ramadi had a glass factory and a ceramic plant, high silica content in the sand there, very good for glass and ceramics, but neither was working well. We eventually got them up and running, but the machinery of the glass factory was so obsolete it would not produce viable glass, while the ceramic plant was new enough and demand high enough it could have made a go of it. Power was always a problem, and the business class had not been involved in normal commerce so there was a lot of training and adjustments to be made. They were accustomed to simply getting contracts from the government based on political patronage. The fact that there was a business class though was encouraging, and we did meet many, especially in the construction sector, who were capable and could manage large projects.  We held a business conference in December 2003 that was a fascinating look at the emerging business community, basically trying to get them to see what opportunities there were for normal business development. I think we had momentum that could have been sustained over time if we had gotten the kinds of programs we needed (USAID was prohibited from working in Anbar because of security), and had it not been for the events of the spring of 2004. Something I didn’t think of it until working in Afghanistan the second time was the importance of agriculture. The province was still very agricultural, and I believe we could have helped them with a number of food security, agro-export, and soil management issues.  

23. You had experience in Afghanistan in 2002 when a Loya Jirga was held to determine the country’s political future. You called for the same type of meeting in Iraq. What did you think that could have achieved?

I was intrigued by the Loya Jirga in Afghanistan in 2002, and always thought that a similar gathering in Iraq might have been helpful to symbolically pulling the country together, allowing voices to be heard, facilitating the selection of new leadership, allowing a bit of venting and closure to the past, and forcing the ethnicities to sit together in a big tent. It didn’t need to be definitive, but it could have been a start.

24. How did the CPA receive your idea?

They were working on a much more controlled model of transition, and there simply wasn’t the stomach for allowing the Iraqis this much power over their future that early. In fairness, the Iraqis do not have this sort of a mechanism historically. With the Afghans, they all knew exactly what it meant and who should show up. I did not see this as a panacea, but as the kind of gathering that should have been in the mix. We did mini-Jirgas in Anbar, and I am convinced it bought us a lot of good will, and induced no small amount of stability by widening the inclusiveness of the political system, and showing we were working in good faith and transparency. 

25. You worked a lot with tribal sheikhs in Anbar. What role did they play in the province, and how did they end up working with you?

Some of this is a little hazy to me now and I would have to check my notes to get it exact, but I can offer the following on the general tribal engagement. 

We worked with the sheikhs from the arrival of the first unit to Anbar, and never lost contact. There is this odd view that later units and civilian officers somehow “discovered” the sheikhs and tribal leaders after they had been ignored by earlier entities. This is simply not true. They were always in the mix. The issue though, was who were the real sheikhs and which ones were in a position to help stabilize and govern? The sheikhs, who surfaced as the 3rd ACR took over, the first unit to really put down roots, were from the Dulaimi Confederation -- Ammer and the “Sheihk of Sheikhs” Majid -- and they stayed with us throughout. There was another line, prominent among them Sheikh Bizea Gaood, who also sided with us, but was opposed by Ammer and Majid. We were able to keep both sides in the game and helpful to the transition and stabilization project, but at every turn there seemed to be some sheikh who said he had been cut out, or was the real “sheikh of sheikhs,” or whose tribal line deserved better. We later learned how Saddam had manipulated the tribal system in order to promote those who supported him, and demote those who did not. He had apparently heavily manipulated this centuries old tribal system such that some minor tribes had seven sheikhs and major tribes had two. This then became very difficult to get back on track. Once in power always in power in that system. The other key issue was a war between Majid and his main rival, whose name escapes me. During the initial phase of the war Majid convinced U.S. forces to bomb a farm where he suggested Saddam was hiding. The bombing killed his rival’s mother and 16 other family members, and set them against the Coalition. This tribal grouping was a large piece of the tribal puzzle and their sitting out or in many cases actively opposing us was not helpful. Through some skillful work by intelligence officers we were able to bring them into the provincial council elections of February 2004, and heal this rift, but I don’t know where it ended up.  

26. Did that cooperation help stem the violence in Anbar? Why or why not?

There is no question that working with the tribes was the right thing to do, and it was helpful, but as I described above, it was simply complicated. Sattar Abu Risha, who emerged later as the hero of the Awakening, was not even in the mix; I believe he was still in exile. And we were painfully aware that Majid and Ammer were not up to the task of leading their respective tribal coalitions. They were uneducated and not particularly bright, more worried about getting our permission to sell scrap metal in Jordan and other predatory business dealings. We knew over time the tribes would have to give way to more broadly capable and representative leaders from civil society, and we were moving them in that direction. We wanted to keep the support of the tribal leaders, and then carefully and over time, move them off to a supporting and participatory role in the emerging democracy, but without the stranglehold on power they started with. It was very complicated and tricky business, and was a power shift that was destined to take time. 

27. When you finished your tour in the province in February 2004, could you have predicted something like the Awakening happening there?

I was not even at the point where I could have predicted that it would have been necessary, since when I left we had a newly appointed provincial council, violence was way down, and the economy was starting to grow. I could not have anticipated the Abu Ghraib scandal, the influx of foreign fighters, and the strong reaction to their antics, and the new security template that came in with the handover from the 82nd. When things did start to deteriorate, I assumed we would most likely have to simply cordon the area off and wait for the appropriate Iraqi security forces to come in and restore order, with a parallel political process that brought the province along.  So no I did not envision the awakening.      

28. When you left Iraq in 2004 what did you think you had accomplished in Anbar?

The number of attacks was way down, we had a new provincial council that had been selected through a series of caucuses and was somewhat legitimate, I had a good dialogue with the people of the province through TV interviews and other public events, we were starting to see the stirrings of a new business class, civil society was starting to organize, and we had generated a number of new ideas that could have supported all lines of effort. 

29. What did you see as the major challenges that were still facing the Americans there?

Perpetuating all of the above. Everything was tenuous. Notably, there were simply no properly trained, equipped, and led security forces anywhere in the province. Unfortunately, the margin for error at that point was very small.  And the subsequent errors were very large. 

30. At the time, did you think things were going to turn around there, or did you think Anbar was heading for further turmoil?

I thought that with a lot of luck and continued attention, we might have muddled through. But I believed the more likely scenario was a breakdown. Part of the reason I didn’t stay longer than 7 months was I just didn’t believe we had a winning strategy. I assumed continuing unemployment, the failure in Baghdad to form a representative political system that included and gave a voice to the Sunnis, the failure to develop adequate security forces, perpetual anger over de-Ba’athification, would all add up to an unsustainable situation, and there would be a collapse of some sort. I did not anticipate it would be as bad as it was, nor that the turnaround would be quite so dramatic. I still can’t overemphasize the importance of Abu Ghraib in all of this, nor its continuing resonance in the Muslim world. We will live with that stone around our necks for a generation or longer.    

31. What was your overall impression of the CPA, and the job they did in Iraq?

We really can’t do these things ad hoc. I wrote a dissent channel cable right before the war started arguing that the post war would be a lot harder than everyone seemed to think. I had written a scene setter from Kabul in 2002 for Deputy Secretary of Defense Paul Wolfowitz with much the same argument. It was nothing brilliant, just stating the obvious. There are a number of very complicated lines of effort to nation building, and we needed to have the personnel and resources dedicated to it, and ready to launch so we get it right. The alternative is perpetual failure. The CPA did as well as could have been expected for an ad hoc organization without standing personnel, leadership, or experience. That said much of the organizational problems could have been forgiven if the main policy decisions had been right, but that was less the organization than a single point of failure in the leadership. Firing the army, deep de-Ba’athification, economic liberalization, lack of attention to the security forces, and attempting to control the political process, were simply the wrong model for transition, and no amount of good bureaucratic work could have made up for them.

I treat all of this in some more detail in a recent piece that will come out in the new Council for Emerging National Security Affairs volume on new directions in American strategy: “The Fall of the House of Westphalia: National Security Strategy and Doctrine in an Age of Atomized Destructive Power.”

SOURCES

Chandrasekaran, Rajiv, “In a Hostile Land, Trying Whatever Works,” Washington Post, 12/23/03

Dobbins, James, Occupying Iraq: A History of the Coalition Provisional Authority, RAND, 2009

Hedges, Stephen, “Shortages of power, parts, jobs drain Iraqis’ patience,” Chicago Tribune, 11/9/03

Mines, Keith, “Economic Tools in Counterinsurgency and Postconflict Stabilization: Lessons Learned (and Relearned) in al Anbar, Iraq 2003-2004,” Foreign Policy Research Institute, 9/28/06
- “Let the UN Manage the Political Transition in Iraq,” Council on Emerging National Security Affairs, May 2003
- “We Pay You Fight,” Council on Emerging Nations Security Affairs, August 2003

Ricks, Thomas, Fiasco, New York: Penguin Press, 2006

Ricks, Thomas and Chandrasekaran, Rajiv, “Attacks raise fears of guerrilla war in Iraq,” San Francisco Chronicle, 7/7/03

Tollast, Robert, “Iraq: The Whole Thing Was Much Harder Than It Needed To Be,” Small Wars Journal, 4/19/11

West, Bing, The Strongest Tribe, New York: Random House, 2008

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