Top economists are making dire predictions about the Bush administration's plan for a shock-therapy style reorganization of Iraq's postwar economy -- a policy that met with mixed success across eastern Europe after the fall of the Soviet Union a decade ago.
Experts say the U.S. plans, which aim to upend Iraq's closed state-run economy and convert it to one of the most open, capitalist economies in the world, would unleash new waves of unrest in an already strife-weary Iraqi population. International law forbids occupying powers from making such deep changes, they say.
To revive Iraq's wilting economy, U.S. administrators and their Iraqi allies approved a plan to abolish most restrictions on trade, capital flows and foreign investment, allowing, for instance, foreign banks to open branches and buy Iraqi banks. It sets the top personal income and corporate tax rates at 15 percent, while slashing import tariffs to 5 percent.
The new investment law approved last month doesn't address one of the most contentious issues -- privatization of state-owned companies other than those dealing with oil -- that the U.S.-led Coalition Provisional Authority and its Iraqi allies are considering.
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