January 23, 2006
Yet Another Heckuva Job
Paul Krugman in today's NY Times:
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?