Saturday :: Oct 11, 2003

Doing Well In Iraq


by Mary

Bush is on the road talking about how well things are going in Iraq. Perhaps he is convinced this is true because in all the ways that really matter to him, it is going well. His friends and backers are doing remarkably well in Iraq. If you want to understand how well that is, I recommend Farhad Manjoo's excellent article in Salon: To the cronies go the spoils. [Aside: if you don't have a subscription to Salon, you can get a day pass to view all it's content by viewing an ad, so please do check out this article.]

Manjoo lays out the opportunities for making money in post-Saddam Iraq in all its glory and provides a "handy clip 'n save guide" for our edification. Noted beneficiaries are the lobbyists, Halliburton, Bechtel, and security companies. The lobbyists are those buds of Bush who are now hanging out a shingle on K-Street to help you get your piece of the Iraqi pie.

As one might suspect, the Halliburton connection is the stinkiest of them all, because of Cheney, who advocated for war and is now getting rich from the no-bid contract given to Halliburton. Last month, the Congressional Research Service determined that Cheney still had a stake in Halliburton even though he insists the money he is getting from them is not benefiting him because he is giving it to charity. And Halliburton is doing extremely well as they've racked up around $1.2B so far. Fortunately, the unseemliness of this state of affairs is now making its way into the public consciousness:

The president "is asking Congress for $80 billion to help rebuild Iraq," Letterman said. "And when you make out that check, remember -- there are two L's in Halliburton."

Bechtel is doing well too, but as Manjoo says, Bechtel has a better reputation for this type of project and they are not secretive about their work in Iraq and they have a web site where they detail their operations over there. However, they have also been awarded no-bid contracts and have more than enough ties to the Republicans to make their good fortune an issue.

In his letter to the OMB, Henry Waxman charged Bechtel with blocking Iraqi companies from participating in the rebuilding work. Waxman said that he's uncovered evidence showing that Bechtel requires local companies to carry expensive insurance plans in order to be considered fit to subcontract from Bechtel. Waxman also said that the type of contract Bechtel has with the government -- a "cost-plus" contract, in which Bechtel is paid a certain fixed fee over its costs, meaning that it's guaranteed to make money -- provides little incentive for the company to reduce costs by subcontracting to Iraqis. "It is easy to understand how this arrangement is lucrative for [Bechtel]," Waxman wrote. "But what is unclear is how these arrangements protect the interests of the U.S. taxpayer or further the goal of putting Iraqis to work rebuilding their own country."

Michael Kidder, a spokesman for the company, said that Waxman's assessment of Bechtel's work is simply incorrect. "The congressman's letter inaccurately described our method of hiring Iraqi subcontractors," Kidder said. "There is no bond industry in Iraq, but this lack of construction insurance has never prevented Bechtel from awarding any subcontracts to Iraqi firms. Following USAID's direction and their priorities, a vast majority of the subcontracting work Bechtel has awarded has gone to Iraqi subcontractors." Of the 133 subcontracts the company has awarded, 98 have gone to Iraqi firms, the company says on its Web site.

So what does Bechtel pay its subcontractors? Riverbend has reported from Baghdad, often times the money paid to the Iraqis is quite low and yet the money paid for the main contract can be very high. Another question to ask is, why aren't the Iraqi's getting to bid for the main contracts?

British security companies are also doing very well as these private companies with their honkin' huge contracts need more security than our overstretched Army can provide. Even so, they are finding things pretty rough in Iraq (albeit financially quite renumerative):

Security firms began gearing up for work in Iraq before the war, when they predicted that the chaos immediately following regime change would create temporary opportunities for their services. "We didn't know at that point how difficult it was going to be, and I think it's exceeded our expectations," says David Claridge, the managing director of Janusian, a British security firm working in Iraq. He says that few people in his business predicted "the longevity of the problem, the depth of the problem" in securing Iraq. "Probably everybody inside and outside government failed to estimate the situation."

I'd say that there were a number of Middle Eastern experts and some astute bloggers who didn't have any problem predicting this outcome. Frankly, it seems that the British should do a better job with teaching their own history as it was their occupation of Iraq in 1916 that showed that invading Iraq wasn't likely to be a walk in the park.

Manjoo concludes with how no matter what, the fates of Americans and Iraqis are now linked for the unforeseeable future (emphasis added):

The question of whether Iraqis will ultimately benefit or suffer as a result of the U.S. occupation is the most important, and freighted, issue of the war, and it can't be answered here. But it's important to note how firmly the financial fate of the average Iraqi citizen is now dependent on the continued goodwill of the average American taxpayer. At least for the next few years, until Iraq regains its oil production capacity, the country will run on U.S. dollars. And as we all share the same pool of money, our fortunes will be mutually exclusive: When the Iraqis get money, Americans will lose money, and vice versa. This situation cannot make for a fast friendship, and it's further complicated by the political imbalance: Because it's the Americans who get to vote, the Iraqis ought to be wary.

Indeed, the Iraqis are already starting to lose. After the president presented his reconstruction plan to Congress, lawmakers immediately began trimming it. In the House, Bill Young, the Florida Republican who chairs the Appropriations Committee, has "scrubbed" the bill of about $1.7 billion of the president's reconstruction request. Young deleted the $50 million the administration wanted to buy cars for the Iraq's traffic police; $153 million for "solid waste management," including the purchase of 40 trash trucks; $9 million for creating ZIP codes in the country; and the $150 million to build that advanced children's hospital in Basra.

Meanwhile, in the Senate, many Democrats and some Republicans are arguing that at least some of the money the U.S. provides to Iraq should be paid back when Iraq becomes self-sustaining. The Iraqis are obviously not pleased with this plan, and members of the governing council have cautioned senators that Iraq is already heavily burdened with Saddam Hussein's loans. But the idea of lending Iraq its reconstruction money has obvious political appeal in the U.S. -- Americans faced with a ballooning deficit and the hazy notion that Iraq is sitting on billions of dollars in oil wealth might think it only fair that Iraqis pitch in. As the conservative syndicated columnist Cal Thomas wrote recently, "Why should the Iraqis complain? It's their freedom we bought. Let them help pay for it."

But the Iraqis didn't ask for the war, and they didn't volunteer to pay for it. "I'm sympathetic to the argument that it would be nice if the U.S. could get paid back some of this money," says Bathsheba Crocker, the reconstruction expert at CSIS. "But I don't think the loan is the way to do it. I'm worried about how it looks to make Iraq fairly heavily indebted to the United States. It's not something that looks all that great given the heavy degree of suspicion about what our motives are here."

In other words, we wouldn't want to be in the position of reminding the Iraqis that, when they make their checks out for the reconstruction, there are two L's in Halliburton.

Americans have promised a brighter future for Iraqis. We owe it to them to help them rebuild their society. Fulfilling this promise doesn't mean we have to privatize their country (that should be their decision), it doesn't mean that we should let Bush's buds get rich on our backs and it does mean asking the very well off in our country to pitch in their fair share.

Update: It looks like the UN thinks it could rebuild Iraq for half the cost estimated by the Bushies. Can we please have an independent auditor (preferrably one not already on the Bush crony payroll) make sure we are spending our increasingly sparse dollars wisely?

Mary :: 12:18 PM :: Comments (5) :: Digg It!