The Shock Doctrine: The Rise of Disaster Capitalism

In September 2003, the US convened a conference in the Green Zone [the US military-secured compound in Baghdad] of veterans from their past shock therapies in Poland, Russia, and elsewhere. They wanted to encourage Iraqi officials to likewise pursue shock therapies. The leader of the Coalition Provisional Authority, Paul Bremer, was a true believer in Chicago School economics. Klein argues Bremer’s job was to “get the country ready for the launch of Iraq Inc.” (344) Bremer imposed a raft of neoliberal policies, such as privatization of state-held assets and tax cuts.

The US government sent billions of dollars to Iraq for “reconstruction.” Although this garnered comparisons to the Marshall Plan, Klein argues that it was actually an “anti-Marshall Plan,” because the money went to foreign contractors rather than to help Iraqis rebuild their country. Klein notes that even the US delegation in Iraq was a victim of outsourcing—there were far more private contractors providing services in Iraq than US government employees. For instance, the Green Zone was almost entirely run and managed by Halliburton. The Authority rejected offers from Iraqi industry to contribute to rebuilding efforts, choosing instead to award contracts to foreign construction firms. This resulted in mismanagement, inefficiencies, graft, and embezzlement, because the foreign firms created webs of contractors and subcontractors, with middlemen at each point taking a cut.

Klein argues that the turbulence and violence in Iraq following the US invasion is largely a result of “blowback” to the imposition of “unrestrained Chicago School ideology” (361). The Authority fired 500,000 Iraqi government employees and 400,000 soldiers as part of its “De-Baathification” policy and drive to shrink the government. Meanwhile, the refusal of the Authority to award contracts to Iraqi businesses led Iraqi businessmen to give money to the insurgency. 

The Authority likewise pushed for a new Iraqi constitution to ensure that the “structural adjustment” policies would not be reversed. Nationalized factories were sold off and workers fired. Collectively, this all led to high unemployment, low wages, and unrest. This created opportunities for Islamist groups like that led by Moqtada al-Sadr; these groups gained followers by providing support to the Iraqi people where the government did not.

Klein notes that before he became de facto leader of Iraq, Paul Bremer had recognized that free trade can create unrest due to the resulting poverty and “can lead to a range of attacks on U.S. firms, including terrorist attacks” (361). She argues that this is exactly the case of what happened in Iraq.

Dismantling Democracy

Initially, the Iraqi people believed the US government’s claims that the invasion was intended to create the conditions for democracy in Iraq. Shortly after Saddam fell, Iraqi people began holding municipal elections to elect their own local governments. However, the US stepped in and cancelled these elections or prevented the governments from sitting because they recognized that a democratically-elected Iraqi government would not support their desired market reforms. Instead, the US appointed their own government officials, many of whom had been in leadership under Saddam. This interference contributed further to the “blowback.”

Body Shocks

During the occupation, US forces captured and imprisoned an estimated 61,500 Iraqis. Many of these forces were contractors who were not subject to the same scrutiny and oversight as the US military. Detainees were tortured using a variety of sadistic Kubark-style methods, including electrocution, sleep deprivation, stress positions, and more. A Human Rights Watch report described the use of these torture methods (or as the administration called them, “enhanced interrogation tactics”) as “systemic.”

Failure: The New Face of Success

The violence and destruction of Iraq and its people was so destabilizing that it eventually became difficult to attract international investment despite the market reforms. Companies like General Motors and Bechtel pulled out of their investment commitments, citing the ongoing instability.

In 2006, the Authority pivoted away from the use of foreign contractors for rebuilding efforts and instead began working with Iraqi industry, both because it was more efficient and because reducing unemployment reduced unrest and terror threats. However, the Bush administration was unwilling to give up access to Iraq’s oil profits. They pushed through a law that allowed foreign companies to earn tax-free profits on oil extraction and created an “independent” Federal Oil and Gas Council to manage oil contracts.

Although the US invasion of Iraq is largely seen as a “failure,” Klein argues that it “succeeded” in accomplishing several of its real key goals. Government employees, including soldiers and Veteran’s Administration medical staff, were largely replaced by private contractors. Further, the contractor-led “rebuilding” model was established. She notes that this allows contractors to profit from both the war itself and its aftermath.