01 Mar 2004

David Horgan: Iraqi Briefing, 21st November, 2003


We have been working in Iraq since 1999. I have been 4 times in Iraq since June 2003, most recently last month, traveling all over the country, meeting ordinary people and staying in small hotels, often dining with locals. Things change by the week, yet there are few surprises.

Had there been a rigorous case discussion at any HBS section including people with knowledge of Iraq and the Middle East, we would never have gone to war. The best way to avoid post-conflict problems is to avoid conflict. If conflict were forced upon us, a well-informed Harvard section would have taken a completely different approach. But Iraq can still be fixed, if we change policy now:

How to fix Iraq

Restore the national police, army and even security services. If you’ve evidence of wrongdoing against individuals, prosecute the individuals. But no collective or retrospective punishments. Saddam and the Ba’ath party are past. But you must deal with the people who can run the country. The USA will end up imposing a regime similar to that ousted.

Internationalising the conflict by handing authority to the UN would restore legitimacy but not resolve the security problem. Maybe 3 months ago it would but not now. Only Iraqis can secure their country.

Give a date for Coalition withdrawal. Any date, even distant, would calm sensitivities.

Hold immediate free and fair elections - open to all comers, including former government and Islamists. Otherwise they’ll lack legitimacy. You won’t like the result but it’s better than alternatives.

Returned emigrants have little support. Those who arrived on Coalition tanks will leave on Coalition helicopters - if they’re lucky. Everything the Coalition builds in Iraq will be swept aside by a sovereign government.

Withdraw US forces into the former British colonial bases. This will enable the USA to dominate the region and intervene in Saudi Arabia when the monarchy falls. But they will not aggravate ordinary Iraqis. Educated Iraqis are pragmatic. They can control the firebrands.

What we found in Iraq last month:

Criminality reduces as police are re-hired, but resistance becomes more deadly. Coalition military morale has collapsed. The outcome will be decided by approaching US elections. High economic and political costs force rethinks. Oil drives all. Production averaged about 2 million barrels daily - about two-thirds the pre-war level, depressed by sanctions. Much of the southern improvement comes, not from oil production, but removing bottlenecks arising from sanctions. Improved underlying performance results from reversing prior policy mistakes. The authorities rehire the police. They have effectively re-started the army, first hiring privates and now professional officers. But policy is confused: in Falluja we vindictively destroy buildings, hoping to terrorise rebels - a policy adopted from Israelis in the Occupied Territories. In nearby Ramadi, the local commander effectively rehires part of the old Iraqi army. The reprisals are counter-productive. The returning soldiers loyalties are suspect. We fear that many serve the Coalition by day and brief the rebels by night.

Policy confusion and vacuum undermines confidence. The Coalition purged former apparatchiks, then re-hired them as consultants to restore the economy. Now purges are again underway, this time by returned emigrants hoping to entrench themselves by weakening the ‘permanent government’.

Pre-war rhetoric has not translated into free elections. Conservative, tribal and religious candidates will win early elections. Former regime players will bide their time, reorganising like the eastern European elites, to take power subsequently. Spin-doctors also overstate aid commitments, while understating cost and casualties. Peaceniks likewise exaggerate difficulties. The only people putting national interest and common sense above faction are the very apparatchiks being purged. Without them, there would be no progress. Most set aside nationalist objections, for now, to rebuild their country. But repairing war damage is all a weakened technical class can achieve. Progress requires investment, which requires security. Instead, policy is unclear. Many reforms create only the illusion of transparency - while delaying work.

Donations yield reduced value because of inefficiency and security costs. A worse problem surrounds Madrid pledges. Pledges are not the same as cash, as Afghans found. Credits must be repaid. International aid is typically ineffective, because overcharging absorbs the interest rate subsidy.

Anyway, the true shortfall is closer to $100 than $36 billion - and that’s before dealing with inherited debt. It would be ironic if an Anglo-American invasion led to early repayment of Franco-German and Soviet-era debt! The Coalition is finally ditching its appointees: they are unelectable, too westernised to rule by force and unreliable even as puppets. The likely outcome is a government similar to that recently ousted.

There were many wasted opportunities in the Middle East. Fixing problems is now trickier, requiring wisdom and knowledge of regional dynamics.

Oil industry

Postwar oil-field pacification and reconstruction policy has failed. Oil production is under half the 1990 level, and still - after 7 months - under two-thirds the pre-invasion level. This is disappointing when you consider that merely lifting sanctions removed artificial bottlenecks that should quickly have added several hundred thousand barrels production - for example, from destroying wreaks that hampered tanker access.

Urgent reform is necessary. Without boosted oil output there is insufficient electricity, little money and few well-paying jobs. Many key managers are prepared to work with interim authorities to minimise further suffering. Formerly the skilled ‘permanent government’ feared elections as likely to bring fundamentalists to power. Now they increasingly support immediate and free elections as the only way to establish a legitimate government.

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Class of MBA 1986, Section C

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