Plans intended for reshaping economies have impaired the path of progress in both states. Results that include chronic mismanagement, economic decline and corrosive corruption, calls intervention and the nature of America’s reconstruction project into serious question.
In fact, intervention has reversed developmental gains made previously, but America’s economic and security interests across both geographies have remained secure.
What then can account for these failures; misuse of foreign policy tools or a wanton disregard for the fate of states undergoing US-imposed democratisation.
Development in both Haiti and Iraq screams failure. The tools needed for building economically resilient states have been at America’s disposal, but a misreading of the situation and societal needs of Iraqis stood in the way of development success.
Iraq during the 1980s was a net creditor – considered one the region’s most advanced economies – but was violently dismantled by occupying powers by the end of 2003. Past fortunes have been inverted and Iraq’s economy, despite oil wealth, is now among the world's poorest and most underdeveloped. The average annual income has fallen from between $3,600 and $4,000 in 1980 to between $500 and $600 at the end of 2003. The blossoming of today’s politically volatile environment has also held private consumption and investment back and unravelled important business deals.
But like a double edged sword, the security situation has also enabled foreign firms to secure tenders for builds that have have existed only on paper. In 2015, the non-oil economy shrunk by almost 14%, following a 5% fall in 2014. The slump, as predictions hold, is expected to sink by a further 8.1% due to low demand driven by fiscal consolidation and ongoing insecurity.
The cost of reconstruction for Washington have been formidably high. Over $20 billion has been spent on aid and an additional $37 billion was put towards Development Fund for Iraq (DFI). Even this inpouring of aid money failed to jumpstart the economy. The situation is as woeful today as it was 14 years ago. The question that presents itself once more, is why has the train of post-war recovery never reached its destination? Was it due to the absence of an integrated national development strategy, or a disinclination to lay the groundwork for long term economic growth.
Failures like these are intimately bound up with America’s haphazard foreign policy objective of sponsoring (one day) and dismantling (the next) regimes in far and near corners of the globe. America’s historical experience of overseas nation-building has not witnessed a great deal of success. Out of the 19 regimes it has forcibly removed over the last century, democracy has flourished in only 5.
America appears to have been blindsided by not the people’s economic needs, but its own. A narrow focus on the oil sector has blighted the road to recovery by limiting investment in other sectors of the economy. Job creation, employment opportunities and lack of diversification are but a few structural constraints resultingly imposed on the average citizen, whose needs for social assistance has increased.
State officials may fair better for their monthly salaries are guaranteed at the end of the working month, but the price of surrendering national sovereignty will have unintended consequences for decades to come. The debt burden carried on the shoulders of the ordinary masses, has been one method by which Washington maintains the servility of the post-2003 state in Iraq.
In Haiti a similar level of indiscriminate allocation of funds occurred without a true understanding of the needs and capabilities of Haitian people. This largely stemmed from the perception of Haiti as a consumer market for cheap U.S. products. Since 1973 the United States has been the largest donor to Haiti, but political turmoil frequently led to ineffective and improper distribution of U.S. funds. The failure to account for the institutional weakness caused by intervention, meant that development projects were prematurely embarked upon and produced no meaningful change. Weak institutions have also led to issue such as low tax collection and legal uncertainty that have caused a state of partial paralysis as far as the economic growth is concerned. Over 76% of the population live on less than $2.00 a day.
Worrying and untreated levels of corruption in an American-designed Iraqi state, have erected a barrier impossible for development projects by themselves to overcome. America’s history of interventionism spells out a familiar pattern of corruption, stifling growth in not only Iraq and Haiti. The United States supported dictators such as Jean-Claude Dulvailar from 1971 to 1988 as part of a repeated pattern of supporting Haitian politicians who agreed to enact policies that benefited the United States. Similarly, America’s relations with former Iraqi president Saddam Hussein soured after Iraq uncovered the Reagan's administration's duplicitous strategy of aiding both sides (Iran & Iraq) against each other. The loyalty of political figures in Haiti was traded for the liberalisation of economic sectors including agriculture in the 80s. Economic assistance of this sort is absent in the Iraqi context, due to the state’s command of the economy up until its removal in 2003. After occupation in Iraq ended with the appointment of a transitional government, politicians, like in the case of Haiti, were promised aid and financial support in exchange so long as they endorsed America’s economic game plan.
Economist Dambisa Moyo argues that aid and financial support increases corruption and facilitates economic regression in countries that are institutionally weak. This again brings us back to the issue that the United States largely failed to conduct an adequate survey of the capabilities and needs of both countries. Instead opting to finance and support corrupt leaderships in an attempt to bypass actual state development in order to secure U.S. economic interests as a priority.
In Iraq the cost of corruption has been astounding over a shorter period of time when compared to Haiti. By some estimates between $100 billion and $300 billion have been disappeared from the Iraqi economy since 2003 with a possible estimate of over $20 billion being lost in the economy in 2014 alone. Contributing even further to this dishonouring truth, is the on going issue of corruption undertaken by private companies operating in Iraq. The public sector has similar witnessed unprecedented theft and destruction.
In a familiar pattern of economic liberalisation, Iraq like Haiti has had to endure pressures of opening its economy to foreign companies to reel in foreign investment. Weak and outdated institutions has strengthened the hand of corrupt parties, both local and foreign. Poor governance at all levels creates greater opportunities for theft, embezzlement, nepotism and resource mismanagement. Exploitation is a two way street in which foreign firms collude with certain individuals, parties and in the case of Iraq, religious bodies too.
The Iraqi Parliament's Finance Committee under the late Ahmed Chalabi found that nearly thirty companies had taken up to $4 billion from the Iraqi Central Bank through forging invoices since 2006. Between 2013 and 2014, 27 banks had been accused of siphoning $45 billion out of the country using forged and doctored documentation. The damage and set back to an economy such as Iraq’s is incomprehensible.
In an attempt to secure a long term control over the resources of Iraq it would be difficult to dispute the argument that the primary objective of the United States is not so much reconstruction or state building, but rather to forge a type of stability that enabled U.S. investment to flow uninterrupted. This pattern has been demonstrated repeatedly in Haiti where little interest is taken in supporting institutional development and reducing the flow of indiscriminate financing. Iraq is now the latest state in a long legacy of U.S. intervention that seeks to reinvent the very nature of development along the lines of state “reconstruction” that is neither developmental nor beneficial in the long term. Instead Iraq's economic development just like Haiti's becomes a secondary consideration to the economic priorities of the United States.
By Lyndon Mukasa
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