Cutting Through Pentagon Spin About Businesses in Iraq

By Joshua Foust

The military is quick to claim credit for a systemic economic change that no one can realistically measure

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The Pentagon provides economic stimulus for small businesses in Iraq and Afghanistan. / U.S. Department of Defense

I've been trying to understand the purpose of the Pentagon's Task Force for Business and Stability Operations for about a year now. It is an intriguing effort to apply business development as a tool for economic growth and as an instrument of counterinsurgency -- a frankly rare example of really outside-the-box thinking from the military. At the same time, evaluating its effectiveness has proved to be incredibly difficult. Along the way, almost a dozen puff-pieces about the TFBSO, as its known, have been published, which repeat many talking points about the task force but don't actually discuss what it does.

Earlier this month the Asia Times published the latest example of this media puffery (every single story about the TFBSO is focused on its charismatic former leader, Paul Brinkley). When it was started in Iraq in 2006, the vision of this task force, Mark Perry writes, was to gather "a group of civilian business leaders and military experts that would focus on stimulating economic growth (including reopening Saddam Hussein's state-run industries), and that would interest outside investors in the country." Perry goes on to detail what's happened as the TFBSO completed its activities in Iraq and now focused on Afghanistan.

All the success talk sounds wonderful, but do we really know the TFBSO was successful at what it set out to accomplish? One of the original problems, as pointed out by General Chiarelli in 2006, was unemployment in Iraq. This, the general and a substantial portion of the defense establishment felt, was fueling the Iraqi insurgency -- so if we could somehow reduce unemployment, then the insurgency would therefore be reduced. Perry assembles the TFBSO-supplied evidence:

A review of Brinkley's Iraq initiative yields a formidable list of successes: by mid-2009, his task force had sponsored more than 200 visits to the country by corporate executives and investors, generating more than $5 billion of investment commitments. Unemployment dropped - from about 50 percent of the total population, to somewhere near 15 percent: by then, General Electric had contracted to build power plants and Honeywell opened a Baghdad office to sell its equipment to the oil industry.

There is one small problem to this story: it is badly incomplete. The unemployment numbers, for example, are basically made up: The World Bank, for example, reported that in 2006 Iraq's unemployment was about 18 percent and it had no data after 2006; the UN estimated in April 2011 that unemployment had dropped during the same period from 28 percent to 15 percent; and Amnesty International estimated in its 2011 report that unemployment remained above 50 percent. And just last month, the UN Population Fund noted that extremely high unemployment in Iraq's youth was driving record emigration.

Apart from the shaky numbers the TFBSO supplied to support its claims to success, it is presenting those numbers in a dishonest way. Most of the money the TFBSO attracted as investment went to restarting state-run businesses, and there are almost no data about how well those businesses are doing now, if they still employ people, or if they're capable of producing products anyone wants to buy.

During the same period of time when the TFBSO was working to drive down unemployment, USAID, the World Bank, the IMF, UNIDO, and dozens of smaller NGOs were all collectively spending billions of dollars on employment issues. There is no way to disaggregate the TFBSO's employment activities from the other much more numerous, and much better funded efforts to reduce Iraq's unemployment -- nevertheless, the TFBSO is quick to claim credit for a systemic change in Iraq's economy no one can realistically measure.

There is a bigger problem with this type of activity, too: the assumption that employment is related to insurgency. It is an idea that has become entrenched in the U.S. government: If only people had jobs, they wouldn't join the insurgency. It is an assumption based on a fundamental misunderstanding of local politics, and the many non-economic reasons people make decisions. It is also an assumption wildly at odd with empirical studies of employment and insurgency.

"Contrary to the opportunity-cost theory," a recent academic study argues, "the data emphatically reject a positive correlation between unemployment and attacks against government and allied forces." Insurgencies are not economic phenomena: they always publicly state political goals for their violence (for an Iraq-specific example, see Ahmed S. Hashim's 2006 book, Insurgency and Counterinsurgency in Iraq). Furthermore, scholarship suggests that higher incomes and more jobs might actually make insurgencies more likely, since it raises the stakes in the political system being contested. Lastly, during the earlier days of the insurgency, international financial institutions could not determine what effect the fighting had on the economy -- if it had much effect at all. It doesn't make sense to base a $150 million program on a concept on such a tenuous foundation.

Unfortunately, the Task Force has been reluctant to discuss these criticisms. I've been trying to get them to either send me data about their operations, or even to sit down for an interview, since April -- and my emails have gone ignored, my phone calls have been bounced around without resolution, and in general they've tried to avoid any critical discussion of their operations. Instead, puff pieces like Mark Perry's exit interview with Paul Brinkley are all that exist in media accounts of what this Task Force does and how it operates.

This is a real loss. While development activities have their own value, and should exist outside any sort of military objectives, I think there is a strong role for an organization like the TFBSO to play in future conflicts. While business development activities don't seem to affect insurgencies much, they can and do play a substantial role in reducing the systemic failures in a society that lead to unrest and protest, and thus have very definite security value. Keeping military-run development separate from USAID carries other benefits as well, keeping USAID's civilian employees separate from the discomfort many locals feel at having their businesses supported and run by guys wearing uniforms.

However, without a strategic and political framework to guide the activities of a group like the TFBSO, it will fall prey to the exact same problems that have befallen USAID: activities driven by good intentions but ultimately divorced from any long-term plan for sustainability after the American largess stops flowing so freely. The GAO has recently pinged the TFBSO for its non-transparency and unwillingness to coordinate with other U.S. development efforts; this is a real shame, as a comprehensive framework for guiding the TFBSO's unique programmatic activities could, potentially, make it both more effective and more accountable.

Sadly, U.S. development efforts lack strategy and long-term outlook. When the military saw a need for better and more proactive development activities in Iraq, it didn't reach out to USAID to administer them, it did what it always did and replicated a function the government already provided. Such redundancy doesn't make us function better, it makes us function worse; until programs like the TFBSO and USAID are incorporated into a comprehensive aid and development framework (the QDDR is a sick joke in this context) we'll keep getting little more than puffery and wasted millions. What a shame.



This article available online at:

http://www.theatlantic.com/international/archive/2011/08/cutting-through-pentagon-spin-about-businesses-in-iraq/243773/