What I'm Reading
Imperial Life in the Emerald City: Inside Baghdad's Green Zone by Rajiv Chandrasekaran.

Depressing but informative book about the Coalition Provisional Authority under Gardner and Bremer at the start of the occupation. Complements Ali A. Allawi's The Occupation of Iraq: Winning the War, Losing the Peace (my writeup) which covered the initial Iraqi government, from an insider perspective.

As a journalist, Chandrasekaran keeps things much more interesting and adds plenty of colour, with lots of little vignettes about life in the Green Zone bubble. He himself moved between the Green zone and real Baghdad, getting a perspective on the difference. However, he didn't have the inside access of Allawi, so the information is more second-hand. Chandrasekaran quotes an extensive list of sources, though some are anonymous. Hopefully as a senior Washington Post journalist even the anonymous sources are reported accurately, unless there's some Jayson Blair stuff going on.

Administratively, the Paul Bremer regime seems to have run in a rather odd way. I would have expected some kind of equivalent of a cabinet or a military staff meeting: a group of people meeting regularly to discuss events and share information, with Bremer acting as chair. Instead, Bremer seems to have tried to run the whole show personally: he's criticized as a micromanager several times. While he delegated to an extent, his subordinates were controlled through sending and receiving vast numbers of memoes from his desk, rather than discussion in groups.

Bremer seems to have interpreted leadership as direct hierarchical control, and disagreements as attacks on his authority. While failure is always an orphan, he does seem to have been warned about the major failures. From the decision to purge all middle as well as senior Baathists, despite the fact that they made up almost all the managerial class:

After Bremer summarized the order, Steve Browning, the army engineer who by this time was running five ministries, said that Baathists were "the brains of the government... the ones with a lot of information and knowledge and understanding." If you sent them home, he said, the CPA would have "a major problem" running most ministries.

Bremer responded tersely that the subject was not open for discussion.

Another CPA staffer, who had been seconded from USAID, asked Bremer if he understood the impact of the policy, her face growing redder as she spoke. Browning thought she was going to burst.

Bremer cut her off. The subject was not open for discussion.

Then he walked out.

Browning didn't have to fire anyone. The day after the order was announced, senior Baathists in the Health Ministry stopped coming to work. Eight of the ministry's top dozen posts were now empty. A third of the staff were gone. This is crazy, Browning thought as he walked through the ministry's offices. This is a huge mistake.

David Nummy, a Treasury Department specialist who was an advisor to the Finance Ministry, told one of Bremer's aides, "If you want me to enforce this, I'm leaving on the next plane out of the country, because it's ill-advised, and you have no idea how far you're gonna set us back. If those people disappear, we don't have the tools to find the next generation."^p79

Another administrative problem was the tendency to appoint inexperienced Republican party loyalists rather than people with actual expertise. The most notorious case presented here is the twentysomething appointed to rebuild the Iraqi stock exchange. Formerly a room full of blackboards, he spent months trying to create a high-tech computerized system. As he left, they brought it back into use with whiteboards.

That pattern of loyalty favoured over ability is repeated in many cases throughout the book

...The Future of Iraq Project was Washington's best attempt to prepare for the post-Saddam era. Run by midlevel State Department personnel. the project organized more than two hundred Iraqi exiles into seventeen different working groups to study issues of critical importance in the post-war period, including the reconstruction of shattered infrastructure, the creation of free media, the preservation of antiquities, the development of the moribund economy, and most important, the formation of a democratic government. The working groups produced reports with policy recommendations that totaled about 2,500 pages.

The task of organizing the project fell to Thomas Warrick, an international lawyer who had left a lucrative private practice five years earlier to work on war crimes at State...

Warrick joined Garner's team within two days. A week later, Rumsfeld approached Garner.

"Hey, Jay, do you have anyone in your organization named Warrick?" Rumsfeld asked. When Garner said he did, Rumsfeld told him to remove Warriwck from ORHA... "Look, I got this request from above me," the defense secretary said. "I can't defer it. You're just going to have to do what I ask."

Garner said he was later told that Dick Cheney had objected to Warrick's involvement in ORHA. The reason, like so many foolish decisions before the war, had to do with Ahmed Chalabi. Warrick regarded Chalabi as a smarmy opportunist who believed in democracy only so long as it suited his own interests. The vice president's office, which wanted Chalabi to lead a liberated Iraq, deemed Warrick a threat to its man...

With Warrick gone, Garner never got to see any of the Future of Iraq reports.

Another notable point is that Bremer was released from the normal chain of accountability, not having to make the usual reports.

A few weeks after he landed in Iraq, Bremer informed Hadley [Rice's deputy] that he didn't want to subject his decisions to the "interagency process", a bureaucratic safety valve that allowed the State Department, the Pentagon, the CIA and the NSC to review and comment on policies. Bremer said he couldn't wait around for the approval from the home office. Rice and Hadley were reluctant to remove Bremer's very long leash, but he was the man on the ground. And after the Garner debacle, the White House wanted a take-charge guy. All right, Hadley told him, you don't have to go through the interagency process. But make sure you run the big stuff by us first.

Bremer told confidants in Baghdad he didn't want to "deal with the Washington squirrel cage". He was a presidential appointee who reported to the president through the secretary of defense. He had no obligation to answer to anyone else. When Paul Wolfowitz or Doug Freith sent messages to him, Bremer directed his deputies to respond.

If Washington wanted something from Bremer's underlings, the request had to be approved by Bremer himself...

In his first several months in Iraq, Bremer had no formal deputy. Although he brought along three veteral diplomats to serve as advisors-- one of them, retired ambassador Clayton McManaway, was an old friend, and another, Hume Horan, was one of the State Department's foremost Arabists-- their roles were soon eclipsed by a coterie of sycophantic young aides who rarely challenged Bremer's decisions. Most of them had never worked in government before, and those who had were too junior to be beholden to anyone back home. They had no preconceived notions other than an unfailing belief in building a democratic Iraq, and their only loyalty was to the viceroy.

Before he even arrived, Bremer sidelined Zal Khalilzad, the White House's envoy working on the political transition. The Afghan-born Khalilzad... had spent months interacting with Iraq's exiled political leaders. He knew more about them than anyone else in the U.S. government, and he had their trust. When Bush tapped Bremer to be the viceroy, Powell and others assumed that Khalilzad would become Bremer's top deputy and would remain in charge of assembling an interim government. But Bremer didn't want someone in Bagdad who had pre-existing relationships with Iraqi leaders. Bremer regarded Khalilzad as a potential threat-- someone who knew more about the players and the country than he did and could disagree with the viceroy's agenda.^p70

The picture that emerges is of a pathological administration. Any system or individual providing oversight, collective discussion, second opinions, dissent or critical discussion was removed. Instead, a hierarchy of groupthink passed unenforceable decisions down and comfortingly-tailored information up.

This was reinforced by the separation of the Green Zone from the reality of life in Iraq: even before the insurgency really started, US administrators lived in a hermetically sealed bubble within the walls.

In terms of policy, there was a strong emphasis on bringing the benefits of a free market economy to Iraq. Rather than continue the inefficient state-subsidized industries, they were deliberately allowed to fail, on the theory that private industries would quickly spring up to replace them. Possibly without the insurgency this would have happened, but the growing instability made foreign investment even less likely.

"What's your top priority?" I asked [Bremer]

Economic reform, he said. He had a three-step plan. The first was to restore electricity, water, and other basic services. The second was to put "liquidity in the hands of people"-- reopening banks, offering loans, paying salaries. The third was to "corporatize and privatize state-owned enterprises" and to "wean people from the idea that the state supports everything". Saddam's government owned hundreds of factories. It subsidized the costs of gasoline, electricity and fertilizer. Every family received monthly food rations. Bremer regarded all of that as unsustainable, as too socialist. "It's going to be a very wrenching, painful process, as it was in Eastern Europe after the fall of the Berlin wall", he said.

"But won't that be very complicated and controversial?" I asked. "Why not leave it up to Iraqis?"

Bremer had come to Iraq to build not just a democracy but a free market. He insisted that economic reform and political reform were intertwined. "If we don't get their economy right, no matter how fancy our political transformation, it won't work", he said. ^p68

Later, it seems that that they almost consciously acted to destroy existing institutions in the hope that private companies would spring up to replace them.

A self-described conservative with an unshakable faith in the power of the free market, [Peter] McPherson believed that the best way to promote economic development was through a vibrant private sector. He had never worked in the Middle East or in a post-conflict environment, but when a senior Treasury Department official called and offered him the job of CPA economic policy director, he didn't hesitate in accepting. Bremer was bringing democracy to Iraq. McPherson's mission, he was told, was to bring capitalism

The neoconservative architects of the war-- Wolfowitz, Feith, Rumsfeld and Cheney-- regarded wholesale economic change in Iraq as an integral part of the American mission to remake the country. To them, a free economy and a free society went hand in hand. If the United States were serious about having democracy flourish in Iraq, it would have to teach Iraqis a whole new way of doing business-- the American way...

After months of secretive discussions, USAID and treasury officials came up with an ambitious plan for economic transformation. The plan was detailed in a confidential, 101-page document titled "Moving the Iraqi economy from Recovery to Sustainable Growth"... The goal, according to the document, was to lay "the groundwork for a market-oriented private sector economic recovery." The plan envisioned the sale of state-owned enterprises through a "broad-based mass privatization program", the establishment of a "world-class exchange" for trading stocks, and "a comprehensive income tax system consistent with current international practice"...

In the days after Saddam's government was toppled, if you asked any Iraqi-- from a man in the street to one of the formerly exiled political leaders-- what the country's biggest economic problem was, the reponse was always the same: unemployment. Nobody could be sure how many people were out of a job, but it seemed that more than half of working-age men were unemployed; estimates pegged unemployment at around 40 percent. But the USAID-Treasury document outlined no progam to create jobs. The words tax and privatize were mentioned dozens more times than the word employment. ^p128

McPherson soon began to grasp the difficulty of selling off the state-owned firms... He eventually concluded that an outright sale would have to wait until Iraq was stabilized.

But there was still something he could do in the interim. The state-run companies sucked up hundreds of millions of dollars a year in subsidies. Cement factories didn't have to pay for power. Petrochemical companies didn't have to pay for crude-oil inputs and nobody had to pay market price for imports. Eliminating the subsidies, he figured, would result in a process of natural selection: viable companies would survive, and unprofitable ones would wither away. McPherson called it "shrinkage". As inefficient state companies shrank, or simply went out of business, he expected imports to increase and new private firms to flourish...

To McPherson, looting was a form of much-needed shrinkage. If the theft of government property promoted private enterprise-- such as when Baghdad's municipal bus drivers began driving their own routes and pocketing the fees-- it was a positive development in his view. "I thought the privatization that occurs sort of naturally when somebody took over their state vehicle, or began to drive a truck that the state used to own, was just fine," he said. Fellow CPA officials were aghast. Hundreds of police cars had been stolen and turned into private taxis-- good for the private sector but bad for law enforcement. The same problems plagued the Ministry of Trade's food-distribution system. Many of the trucks that had transported monthly rations were being used to haul private reconstruction supplies. "The Robin Hood philosophy might have sounded good to the economists inside the palace", one CPA ministry advisor said, "but when you looked at the real-world impact, it was lunacy." ^p133

This does seem to me more ideologically driven than due to corruption. That fact that nobody was interested in buying up Iraqi businesses or assets suggests that no-one was really manipulating for it to happen.

Even looting was essentially tolerated, as a means of redistributing assets to the private sector, despite the harm done to the infrastructure being ransacked.

The overall strategy seems to have been misguided by ideology. Rather than concentrate on security, and maintaining the existing institutions to hand over, they seized the opportunity to try to create a radical free market utopia out of nothing.

Overall, an informative if depressing book. Well worth reading.

Me
Went to see the parents for a long weekend. Dad seems to be recovering from the radiotherapy a bit, not so tired anymore. Will be a while before they know if it's cleared the cancer though.

What I'm Watching
Saw Jumper on DVD. Might have worked better on the big screen. Seemed fairly entertaining though pretty silly.

What I'm Not Watching
Tried watching Elizabeth since I just finished that thing on the Tudors. Gave up halfway though: couldn't cope with all the costume drama stuff and all the male characters trying to mug Smouldering Looks at the camera. I wonder if this is how women feel about Jessica Alba?

Web
London Sandwichmen threatened.

Economics. Against Intellectual Monopoly (amazon, online versions) argues against patents and copyrights. MR review

Online pornographers are usually among the first to exploit new technologies -- from videostreaming and fee-based subscriptions to pop-up ads and electronic billing. Their bold experimentation has helped make porn one of the most profitable online industries, and their ideas have spread to other "legitimate" companies and became the source of many successful and highly valuable imitations.

Notice that if intellectual monopoly were a necessary requisite for sustained innovation, the circumstances we are describing should have brought the porn industry to commercial standstill, halted innovation, and greatly reduced the amount of pornographic materials available to consumers. We are all well aware that exactly the opposite has happened.

Interesting VoxEU article on the NHS: Do targets produce better healthcare?

The Blair government’s healthcare reforms sought to reduce patient waiting times through targets and sanctions -- crude instruments of which economists are often sceptical...

In contrast, the Scottish Parliament, which assumed responsibility for the NHS in Scotland on devolution in 1999, downplayed the use of targets, preferring to promote cooperation and collaboration instead. This policy variation, in a system that had been common until devolution, provides an opportunity to evaluate whether targets work.