If you believe the White House, Iraq’s future government is being designed in Iraq. If you believe the Iraqi people, it is being designed at the White House. Technically, neither is true: Iraq’s future government is being engineered in an anonymous research park in suburban North Carolina.

On March 4, 2003, with the invasion just fifteen days away, the United States Agency for International Development asked three US firms to bid for a unique job: After Iraq was invaded and occupied, one company would be charged with setting up 180 local and provincial town councils in the rubble. This was newly imperial territory for firms accustomed to the friendly NGO-speak of “public-private partnerships,” and two of the three decided not to apply. The “local governance” contract, worth $167.9 million in the first year and up to $466 million total, went to the Research Triangle Institute (RTI), a private nonprofit best known for its drug research. None of its employees had been to Iraq in years.

At first, RTI’s Iraq mission attracted little public attention. Next to Bechtel’s inability to turn the lights on, and Halliburton’s wild overcharging, RTI’s “civil society” workshops seemed rather benign. No more. It now turns out that the town councils RTI has been quietly setting up are the centerpiece of Washington’s plan to hand over power to appointed regional caucuses—a plan so widely rejected in Iraq it could bring the occupation to its knees.

In late January I visited RTI senior vice president Ronald Johnson at his offices near Durham (down the block from IBM, around the corner from GlaxoSmithKline). Johnson insists that his team is focused on the “nuts and bolts” and has nothing to do with the epic battles over who will rule Iraq. “There really is not a Sunni way to pick up the garbage versus a Shiite way,” he tells me. (Perhaps, but there is a public way and a private way, and according to a July Coalition Provisional Authority report, RTI is pushing the latter, establishing “new neighborhood waste collection systems” that “will be arranged through privatized curbside collection.”)

Neither are the councils RTI has been setting up uncontroversial. On January 28, the same day Johnson and I were calmly discussing the finer points of local democracy, the US-appointed regional council in Nasiriyah, about 200 miles southeast of Baghdad, was surrounded by gunmen and angry protesters. As many as 10,000 residents marched on the council offices demanding direct elections and the immediate resignation of all the councilors. The provincial governor called in bodyguards with rocket-propelled grenade launchers and fled the building.

Poor RTI: The appetite for democracy among Iraqis keeps racing ahead of the plodding plans for “capacity building” it drew up before the invasion. In November the Washington Post reported that when RTI arrived in the province of Taji, armed with flowcharts and ready to set up local councils, it discovered that “the Iraqi people formed their own representative councils in this region months ago, and many of those were elected, not selected, as the occupation is proposing.” The Post quoted one man telling a RTI contractor, “We feel we are going backwards.”

Johnson denies that the previous council was elected and says that, besides, RTI is only “assisting the Iraqis,” not making decisions for them. Perhaps, but it doesn’t help that Johnson compares Iraq’s councils to “a New England town meeting” and quotes another RTI consultant observing that the challenges in Iraq are “the same thing I dealt with...in Houston.” Is this Iraqi sovereignty — conceived in Washington, outsourced to North Carolina, modeled on Massachusetts and Houston and imposed on Basra and Baghdad?

The United Nations, now that it has agreed to go back to Iraq, must somehow carve out a role for itself in this mess. A good start, if it decides that direct elections are impossible before the White House’s June 30 deadline, would be to demand that the deadline be scrapped. But the UN will have to do more than monitor elections; it will have to stop a robbery in progress—the US attempt to rob Iraq’s future democracy of the power to make key decisions.

Washington wants a transitional body in Iraq with the full powers of sovereign government, able to lock in decisions that an elected government will inherit. To that end, Paul Bremer’s CPA is pushing ahead with its illegal free-market reforms, counting on these changes being ratified by an Iraqi government it can control. For instance, on January 31 Bremer announced the awarding of the first three licenses for foreign banks in Iraq. A week earlier, he sent members of the Iraqi Governing Council to the World Trade Organization to request observer status, the first step to becoming a member. And Iraq’s occupiers just negotiated an $850 million loan from the International Monetary Fund, giving the lender its usual leverage to extract future economic “adjustments.”

In other countries that have recently made the transition to democracy—from South Africa to the Philippines to Argentina— this period between regimes is precisely when the most devastating betrayals have taken place: backroom deals to transfer illegitimate debts and to maintain “macro-economic continuity.” Again and again, newly liberated people arrive at the polls only to discover that there is precious little left to vote for. But in Iraq, it’s not too late to block that process. The key is to confine any transitional council’s mandate to matters directly related to elections: the census, security, protections for women and minorities.

And here’s the really surprising part: It could actually happen. Why? Because all of Washington’s reasons for going to war have evaporated; the only excuse left is Bush’s deep desire to bring democracy to the Iraqi people. Of course, this is as much a lie as the rest—but it’s a lie we can use. We can harness Bush’s political weakness on Iraq to demand that the democracy lie become a reality, that Iraq be truly sovereign: unshackled by debt, unencumbered by inherited contracts, unscarred by US military bases and with full control over its resources, from oil to reparations.

Washington’s hold on Baghdad is growing weaker by the day, while the pro-democracy forces inside the country grow stronger. Genuine democracy could come to Iraq, not because Bush’s war was right, but because it has been proven so desperately wrong.

Naomi is a widely-printed journalist whose most recent book is No Logo. This articlewas originally printed in the February 23 issue of The Nation.