Imperial Rounding Error in Iraq

For students of the IMF vs. Chinese theories of economic development, I think  the details of the Chinese struggle to keep its Congo copper project going in  the teeth of  Western disapproval strikingly illustrates some conspicuous  and interesting  differences.

For people who like a good anti-imperialist horse-laugh, there’s this: United States Secretary of State Hillary Clinton took a  swipe at China in a  June 11 press conference in Zambia, urging African  nations to resist “new  colonialism” and for foreign investors to  practice “good governance”. “We saw that during colonial times, it is easy to come in, take out  natural  resources, pay off leaders and leave,” Clinton said in Lusaka,  the Zambian  capital, before flying off to Tanzania. “And when you leave,  you don’t leave  much behind for the people who are there. We don’t want  to see a new  colonialism in Africa.”

Although she didn’t mention China by name, officials traveling with  Clinton  said she wanted to stress that African countries should hold  Chinese investors  to the same standards that they apply to Americans and Europeans. Clinton said  the United States didn’t want any foreign governments or investors to fail in  Africa, but wanted to make sure that they give back to local communities. “We  want them to do well, but also we want them to do good,” she said.

This declaration appeared at the same time that America’s most  conspicuous  post-colonial initiative in Africa – the bombing of Libya –  was entering its  third month with a cost approaching US$1 billion and no  end in sight.
It was the same week that the world got another look at the US exercise  of good  governance in Iraq, courtesy of the Special Inspector General  for Iraq  Reconstruction. The George W Bush administration had airlifted  $12 billion in  cash into post-conquest Iraq. $6.6 billion – more than  half – cannot be  accounted for. It is now assumed that it was stolen,  perhaps “the largest theft  of funds in [US] national history”.

The LA Times reported: U.S. officials often didn’t have time or staff to keep strict  financial  controls. Millions of dollars were stuffed in gunnysacks and hauled on pickups  to Iraqi agencies or contractors, officials have testified.

House Government Reform Committee investigators charged in 2005 that U.S.  officials “used virtually no financial controls to account for  these enormous  cash withdrawals once they arrived in Iraq, and there is  evidence of  substantial waste, fraud and abuse in the actual spending  and disbursement of  the Iraqi funds.”

Pentagon officials have contended for the last six years that they  could  account for the money if given enough time to track down the  records. But  repeated attempts to find the documentation, or better yet  the cash, were  fruitless.

In the requisite ironic coda, it turns out that the billions weren’t  even  American taxpayers’ money. The US government pulled the cash from  the  Development Fund for Iraq administered by the Federal Reserve Bank  of New York.  The fund accumulated the proceeds from Iraq’s energy  exports during the Saddam  Hussein oil-for-food sanctions years for  eventual disbursement for the benefit  of its true owners: the citizens  of Iraq.

Tough luck, Iraqi citizens.

If China decides to take the US fiduciary meltdown in Iraq as precedent  for its  overseas activities, the bar for “doing good” and “giving back”  to the local  community is going to be extremely low. For  those keeping score, $6.6 billion is 66 million $100 bills. It is 72  tons  of shrink-wrapped cash. It is the payload of three C-130 Hercules  transports.

It is also the stated value of the Sino-Congolese infrastructure-for-copper  agreement, trumpeted as the “deal of the century”.

The much-touted neo-colonialist Chinese penetration of the Democratic Republic  of Congo , in other words, is roughly equivalent to an American imperialist  rounding error.

Peter Lee writes on East and South Asian affairs and their intersection with US foreign policy.



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Peter Lee edits China Matters and writes about Asia for CounterPunch.  

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