Krugman- Iraq's Power Vacuum

Tuesday, January 24, 2006

Iraq's Power Vacuum
By PAUL KRUGMAN

In the State of the Union address, President Bush will surely assert, to choreographed applause, that he has a strategy for victory in Iraq. I don't believe him. In fact, I believe that three years into the conflict his administration refuses to admit defeat but has given up even trying to win.

To explain myself, let me tell you some stories about electricity.

Power shortages are a crucial issue for ordinary Iraqis, and for the credibility of their government. As Muhsin Shlash, Iraq's electricity minister, said last week, "When you lose electricity the country is destroyed, nothing works, all industry is down and terrorist activity is increased."

Mr. Shlash has reason to be strident. In today's Iraq, blackouts are the rule rather than the exception. According to Agence France-Presse, Baghdad and "much of the central regions" - in other words, the areas where the insurgency is most active and dangerous - currently get only between two and six hours of power a day.

Lack of electricity isn't just an inconvenience. It prevents businesses from operating, destroys jobs and generates a sense of demoralization and rage that feeds the insurgency.

So why is power scarcer than ever, almost three years after Saddam's fall? Sabotage by insurgents is one factor. But as an analysis of Iraq's electricity shortage in The Los Angeles Times last month showed, the blackouts are also the result of some incredible missteps by U.S. officials.

Most notably, during the period when Iraq was run by U.S. officials, they decided to base their electricity plan on natural gas: in order to boost electrical output, American companies were hired to install gas-fired generators in power plants across Iraq. But, as The Los Angeles Times explains, "pipelines needed to transport the gas" - that is, to supply gas to the new generators - "weren't built because Iraq's Oil Ministry, with U.S. encouragement, concentrated instead on boosting oil production." Whoops.

Meanwhile, in the early days of the occupation U.S. officials chose not to raise the prices of electricity and fuel, which had been kept artificially cheap under Saddam, for fear of creating unrest. But as a first step toward their dream of turning Iraq into a free-market utopia, they removed tariffs and other restrictions on the purchase of imported consumer goods.

The result was that wealthy and middle-class Iraqis rushed to buy imported refrigerators, heaters and other power-hungry products, and the demand for electricity surged - with no capacity available to meet that surge in demand. This caused even more blackouts.

In short, U.S. officials thoroughly botched their handling of Iraq's electricity sector. They did much the same in the oil sector. But the Bush administration is determined to achieve victory in Iraq, so it must have a plan to rectify its errors, right?

Um, no. Although there has been no formal declaration, all indications are that the Bush administration, which once made grand promises about a program to rebuild Iraq comparable to the Marshall Plan, doesn't plan to ask for any more money for Iraqi reconstruction.

Another Los Angeles Times report on Iraq reconstruction contains some jaw-dropping quotes from U.S. officials, who now seem to be lecturing the Iraqis on self-reliance. "The world is a competitive place," declared the economics counselor at the U.S. embassy. "No pain, no gain," said another official. "We were never intending to rebuild Iraq," said a third. We came, we saw, we conquered, we messed up your infrastructure, we're outta here.

Mr. Shlash certainly sounds as if he's given up expecting more American help. "The American donation is almost finished," he said, "and it was not that effective." Yet he also emphasized the obvious: partly because of the similar failure of reconstruction in the oil sector, Iraq's government doesn't have the funds to do much power plant construction. In fact, it will be hard pressed to maintain the capacity it has, and protect that capacity from insurgent attacks.

And if reconstruction stalls, as seems inevitable, it's hard to see how anything else in Iraq can go right.

So what does it mean that the Bush administration is apparently walking away from responsibility for Iraq's reconstruction? It means that the administration doesn't have a plan; it's entirely focused on short-term political gain. Mr. Bush is just getting by from sound bite to sound bite, while Iraq and America sink ever deeper into the quagmire.

Copyright 2006The New York Times Company

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