TCS Daily

Iraq's Future vs. The UN's Track Record

By Stephen Schwartz - January 26, 2004 12:00 AM

In the five years since the NATO intervention in Kosovo, the devastated former Yugoslav province has lost the attention of global media and political leaders. This is dismaying for its residents, who have grown to depend on the world powers to assist them in finding their way, but is also unfortunate in that policy failures in Kosovo offer many lessons for the future of Iraq.

How is that possible? Kosovo is less than a tenth the size of Iraq in population, is located in Europe, and is not an Arab country. Still, the two localities have certain elements in common. Both are majority-Muslim, with extremely heterodox forms of Islam prevalent in the countryside. Kosovar Albanians include many adherents of the obscure and controversial Bektashi Sufi order, which is deeply influenced by Shia Islam, the sect comprising a majority in Iraq.

But more importantly, Kosovo has now spent a considerable period of time under the supervision of the United Nations, which governs it through a structure known as UNMIK -- the UN Mission in Kosovo. It increasingly appears that the UN will also take over a major share in ruling from Baghdad.

The Future of Privatization

Privatization is a major issue in both places. Kosovo was included in the Tito system of "Yugoslav self-managed socialism," although its Albanian majority only belatedly experienced full participation in the scheme. Iraq under Saddam featured major dependence on the state-socialist economic model.

In Kosovo, UN-administered privatization is at a standstill. Notwithstanding recent gestures toward its formal achievement, there is widespread conviction that it has failed. In the week of January 21, the territory's prime minister, Bajram Rexhepi, was reported to have exchanged "harsh words" with UN administrator-in-chief Harri Holkeri, at a meeting where a Kosovo labor leader threatened a general strike.

In this scenario, Bajram Rexhepi was elected, and Holkeri is a Finn, but they may be seen as stand-ins for their Iraqi counterparts, Ahmad Chalabi (unelected) and L. Paul Bremer, the American head of the Coalition Provisional Authority in Baghdad,

The Kosovar daily Zeri has described privatization as the "number one issue" facing the populace. Privatization is in the hands of something called the Kosovo Trust Agency (KTA), headed by a general manager, Marie Fucci. Ms. Fucci, a representative of "the international community," previously worked in Bosnia-Hercegovina. Her superior is Count Nikolaus Lambsdorff, a UN functionary who was also employed in Sarajevo.

Ms. Fucci does not enjoy the confidence of Kosovar Albanians, who say she favors maintenance of property rights in the territory by its former Serbian -- and Tito-socialist -- rulers.

An editorial in another Kosovo daily, Kosova Sot, describes the former "socially-owned enterprises" (SOEs) as "in ruins," a predictable outcome considering that the political and administrative structure of the Yugoslav state has been absent since the intervention.

Competing ethnic platforms contribute to this problem, but do not fully define it. Albanians in Kosovo believe they should be restored to jobs, even socialist jobs, that they held before the last Serbian crackdown began under Slobodan Milosevic late in the 1980s. At that time, Albanians were driven from employment en masse.

But is it intelligent, leaving aside whether it is realistic, for Albanians to advance an ethnic claim that signifies return to a discredited economic system? Many Kosovar Albanians call for restoration of their employment in the Trepca mining complex, which is obsolescent and polluting. Others call for return to positions in a parasitical bureaucracy in which enterprise management strata were accompanied by state trade union structures as well as "worker consultation" bodies.

Kosovo Serbs, of course, see it in their own interest to maintain control over sectors of the economy, whether they advocate for a return to state-socialist structures or seek privatization.

'To Whom Do SOEs Belong?'

To summarize the mess, Ibrahim Rexhepi, a widely-respected commentator on economics for the most credible Kosovo Albanian daily, Koha Ditore, asked who, finally, has the right to sell SOEs? "To whom do Kosovar SOEs belong to?," he writes. "To Kosovo, Serbia, UNMIK, KTA, some individual or nobody?"

Some Albanians do not believe that Ms. Fucci and others in UNMIK are necessarily pro-Serb, but they do observe another characteristic of the "the international community:" namely, the bias of the UN and other such bodies against entrepreneurship per se. It has long been argued that just as Russia (former socialist, now mafia domain) and China (a party-state with limited space for private enterprise) exercise a veto in the Security Council, they also influence how the UN deals with economic reform.

Add to that aspect of the paradigm the unfortunate recruitment by "the international community" of people from countries less than avid for libertarian capitalism -- representing Scandinavia and Australia as well as African dictatorships -- to administer UN programs in Kosovo and elsewhere, and you have a recipe for failed privatization. The prejudice against market solutions to economic problems is replicated in the horde of non-governmental organizations (NGOs) that accompany the UN wherever it goes.

To the credit of the U.S. government, Kosovar Albanian media report that their constituency believes the Agency for International Development (USAID), which participates in privatization, favors a more rapid process.

And finally, the UN seems to want to use privatization, even if it does not exist, as an incentive to get Kosovar Albanians to accept continuing foreign direction in their path to real self-rule. If the Albanians accept UN guidelines on their political regime, they will get privatization, the argument goes... some day.

I recently looked at a map that showed the last countries in the world that are considered dependencies. They are Greenland, Bosnia-Hercegovina, and Kosovo. I suddenly saw these as old and new exemplars of imperialism: Greenland is still ruled by the Danes, reflecting explorations a millennium ago. Bosnia-Hercegovina and Kosovo are colonies of the UN.

Lessons for Baghdad

Returning to Baghdad, can we not easily envision a similar problem there, if the UN is handed authority for the country's political and economic reconstruction? The Kosovo conflict involves the former masters of the system (Serbs), the numerical majority demanding to become new masters (Albanians), and a statist legacy. In Iraq, there is already intense, bloody rivalry between those previously favored by the dictatorship (Sunni Muslims), a numerical majority (Shias), and a dictatorial heritage.

Is it absurd, then, to imagine that the UN in Iraq would favor Sunni over Shia claims, and would also balk at reform of a statist economy?

Of course, in Iraq the stakes are much higher. Kosovo has no oil or gas resources, and among other consequences of UN mismanagement, its elderly and broken-down power plants function so badly that, in the depths of winter, local residents go for days and weeks without heat and light. ("The international community" has its own powerful generators.) But Iraqi oil is a major factor in world petroleum markets, and a long and tormented controversy over its future could further contribute to its existing chaos.

Kosovar Albanians are threatening to go on strike. Think of Iraq as ten times more volatile than Kosovo and you have an idea just how bad UN biases against efficient privatization could make Baghdad look. And remember, in Kosovo Serbs and Albanians fight each other, but don't attack NATO. We all know how that differs from Iraq.


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