DoD vs. State Dept on Reviving Iraqi Industry

Defense Skirts State in Reviving Iraqi Industry:

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Paul Brinkley, a deputy undersecretary of defense, has been called a Stalinist by U.S. diplomats in Iraq. One has accused him of helping insurgents build better bombs. The State Department has even taken the unusual step of enlisting the CIA to dispute the validity of Brinkley's work.
His transgression? To begin reopening dozens of government-owned factories in Iraq.

Brinkley and his colleagues at the Pentagon believe that rehabilitating shuttered, state-run enterprises could reduce violence by employing tens of thousands of Iraqis. Officials at State counter that the initiative is antithetical to free-market reforms the United States should promote in Iraq.

The bureaucratic knife fight over the best way to revive Iraq's moribund economy illustrates how the two principal players in the reconstruction of Iraq -- the departments of Defense and State -- remain at odds over basic economic and political measures. The bickering has hamstrung initiatives to promote stability four years after Saddam Hussein's fall ...

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Some interesting stats in this piece. I wonder where the data comes from:

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The U.S. Agency for International Development estimates that nearly half of Iraqis are unemployed or work fewer than 15 hours a week, but those figures do not include hundreds of thousands who once worked for state-owned enterprises and continue to collect about 40 percent of their original salaries. If they are counted, Brinkley believes, the true figure for unemployed and underemployed Iraqis may approach 70 percent.

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State asked the CIA to assess the link between employment and attacks on U.S. forces in Iraq, two U.S. government officials said. The CIA's subsequent regression analysis found no statistically significant tie between the two phenomena, the officials said. The CIA also told State that the vast majority of insurgents questioned by U.S. interrogators in Iraq claimed to be employed, one official said.

Brinkley said he felt stung by the opposition, but he took heart from the support of England and other Pentagon officials. He also countered with an analysis from the military's Joint Warfare Analysis Center, which asserted that a slight increase in job satisfaction among Iraqis led to as much as a 30 percent decline in attacks on coalition forces, according to a U.S. official familiar with its contents who supports Brinkley's efforts.

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"Joblessness in Baghdad is estimated at 60 percent." Audio linked from this page:

http://www.npr.org/templates/story/s...oryId=11823612

An local man was quoted as saying (IIRC), "If someone will pay me $500 to plant a roadside bomb, I'll do it. I have to support my family somehow."

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Originally Posted by tequila

I wonder where the data comes from...

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I wonder how the statistical analysis was carried out. Having a lot of experience with such things, my gut-level reaction is, uh, skeptical (about the regression analysis and what leads to what...causation can be incredibly tricky in such analyses). I guess we can't actually see such data or the analysis of it, right?

Having said that, it also looks like a case of the excluded middle to me. Probably there are some ways to think about opening those factories under some public/private ownership/control mix...say making the state a sovereign shareholder on behalf of citizens, hiring some private managers and jump-starting things with money. Details to be worked out, of course, but it still smells of lots of excluded middle to me.

U.S. Falters in Bid to Boost Iraqi Business - WASHINGTON POST, 23 Aug.

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More than a year after the Pentagon launched an ambitious effort to reopen Iraqi factories and persuade U.S. firms to purchase their goods, defense officials acknowledge that the initiative has largely failed because American retailers have shown little interest in buying products made in Iraq.

The Pentagon thought U.S. firms would be willing to help revitalize the war-torn Iraqi economy and create jobs for young men who might otherwise join the insurgency. But the effort -- once considered a pillar of the U.S. strategy in Iraq, alongside security operations and political reform -- has suffered from a pervasive lack of security and an absence of reliable electricity and other basic services.

Iraqi officials have recently highlighted pending deals with retailers such as Wal-Mart and J.C. Penney, businesses that they said were considering purchasing Iraqi products from the few local factories that have restarted. But the two companies said last week that they are not in negotiations to buy Iraqi products, citing Iraq's uncertain future and the questionable viability of potential suppliers there.

Three officials who have worked with the Pentagon's Task Force to Support Business and Stability Operations in Iraq said in recent interviews that, although some factories have achieved limited success, the larger effort to link Iraqi industries with U.S. retailers has been a "failure ..."

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Pentagon official under investigation - LATIMES, 27 Aug.

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A Bush political appointee and former Silicon Valley executive who has faced opposition in his bid to bail out Iraq's struggling factories is under investigation by the Defense Department on mismanagement allegations.

Deputy Undersecretary of Defense Paul A. Brinkley, who heads an economic task force in Baghdad, is accused of mismanaging government money and engaging in public drunkenness and sexual harassment, a Defense Department spokesman said last week.

The allegations stem from a 12-page memo filed this month by two former members of the task force. The charges are being investigated by the Defense Department's Office of the Inspector General ...

Although Brinkley has won support from military commanders for his campaign for taxpayer-funded investment in Iraqi factories, the plan is opposed by State Department officials here who believe the former state-run factories should be privatized.

Brinkley has argued that Iraqi factories need a jump-start to compete with the international companies now serving Iraq, importing everything from fruit to air conditioners.

"They're so worried about having socialism here," Brinkley said of his critics at the State Department. "The free market already won. A free market will take hold -- they just need a shot."

But critics note that despite Brinkley's efforts and millions spent on the factories, only nine of about 200 have been restarted, creating about 4,000 jobs -- fewer than the 11,000 Brinkley's task force projected in December ...

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Mar-Apr 08 Military Review: Restoring Hope: Economic Revitalization in Iraq Moves Forward

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One of the critical factors in the counterinsurgency strategy that is demonstrating early but measured progress in increasing security in Iraq is the alignment and rapid application of economic development as security improves.

As discussed in the first part of this series on revitalization of the Iraqi economy, “A Cause for Hope”, the challenges in leveraging and applying American economic expertise, investment, and other stimuli to uplift the Iraqi economy have been numerous, ranging from policy to strategy to tactics.

Prior to 1991, Iraq was the most industrialized of the Arab states with a significant base of industrial operations across a wide range of sectors, and a highly skilled civilian workforce. From 1991-2003, industry in Iraq was strictly focused on internal production to meet domestic demand—United Nations sanctions prevented export of goods or international economic engagement, although some factories remained relatively modern through investments in equipment upgrades.

Following the collapse of the regime in 2003, the Iraqi workforce experienced great economic hardship with unemployment and underemployment exceeding 50 percent. These conditions directly contributed to insurgent sympathy and economically motivated violence. The Task Force for Business and Stability Operations in Iraq (TF BSO) was established in 2006 by Deputy Secretary of Defense Gordon England to address the revitalization of the industrial economy in Iraq. What follows is a status report on this revitalization effort and the ongoing transition of the Iraqi industrial economy to a free-market state that is integrated with global financial, supply, and trade infrastructures.....

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