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<b>Devangshu Datta:</b> An ode to crony capitalism

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Devangshu Datta New Delhi
Last Updated : Jan 29 2013 | 1:34 AM IST

It depends on what the mission was. The stated objectives were to destroy Iraq's (non-existent) arsenal of weapons of mass destruction, overthrow Saddam and replace him with a real, live democracy.

Iraq possesses over 10 per cent of known oil reserves. Establishing a friendly regime would secure those resources.

That mission isn't accomplished. Iraq is still in chaos. Iraqi crude production is still 40 per cent below pre-sanction (1990) levels. The US and the world are in recession. Oil prices that have risen 300 per cent play a large role in that.

The stagnation is reflected in the Dow Jones Industrial Average, which has gained only 30 per cent in five years. The CAGR of 5.5 per cent is well below the DJIA's 20-year trend growth rate of 9 per cent.

For some businesses though, the occupation was indeed mission accomplished. One beneficiary was the oil industry. The share prices of integrated producers like Shell have 5-year CAGR of 12 per cent or more.

Another gainer has been the logistics industry. Here profits are unevenly distributed. Kellogg Brown & Root (KBR) won most of the reconstruction and logistical support contracts in Iraq. At that time, KBR was a subsidiary of Haliburton.

Haliburton's share price was $10 in May 2003 and its $53 now

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Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

First Published: Jul 05 2008 | 12:00 AM IST

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