Another day, another dollar
The Bush administration grants the spoils of war to its corporate partners, writes Faiza Rady
illustration: Osama Qassem
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From the look of things, the Bush administration is well on its way to rebuilding a "liberated" Iraq. Following the arduous process of bombing "the hell out of Iraq" the second time around, now is the time for reconstruction.
With the United States having deployed 15,000 precision-guided munitions and having dropped 7,500 unguided bombs and 750 cruise missiles on Iraq, American construction firms are back in business.
Rumour has it that the revamped Iraq will be engineered in the image of its creators. "The new Iraq will be a McDonaldised Iraq ruled by westernised overlords and serviced by US corporations," prophesied analyst Kurt Nimmo on ZNet.
While the McDonalds crew has not yet found its way to Baghdad, other companies "embedded" themselves early on along the Anglo- American army trail. Since the Bush administration made no bones about its intentions to change the regimes of other rogue states when it declared its open-ended "war on terror", multinational corporations have heeded the call. For them, the message is clear: the path to Syria, Iran, Libya, North Korea and Cuba is lined with big bucks.
Long before the official launch of the war, US multinationals scrambled to grab their share of the action. Among a handful of worthy short-listed contenders, none proved more qualified for the job than corporate superstar Bechtel. A pioneer in the Arab Gulf region, Bechtel practically built Saudi Arabia from scratch in the late 1940s. As a result, the Saudis Arabised Bechtel. When out on the town, Bechtel executives tell how Jeddah residents referred to switching on the "Bechtel" after the company installed the city's electrification system in the late 1940s.
Armed with such an impressive CV, it is only right that the Bush administration awarded Bechtel a closed-bid, open-ended Iraq reconstruction contract. Capped at $680 million over 18 months, the contract does not look like much on the surface -- but experts estimate that long-term costs will eventually add up to $100 billion.
Although they may seem exorbitant, the estimated costs are not surprising given the scope of the project to rebuild Iraq's ravaged infrastructure. The first contract covers all seaports, two international and three domestic airports, potable water, electric power plants, roads, railroads, schools, hospitals and irrigation systems.
But not to worry, Bechtel is on top of things. In addition to sporting exemplary credentials, the corporation is backed by friends in high places, including the US president. Major Bechtel shareholder Riley Bechtel advises George W Bush on how to create markets for US multinationals abroad in his capacity as a member of the president's Export Council. Then, there is Jack Sheehan, Bechtel senior vice president, who is also a member of the Defense Policy Board, a government-appointed body that acted as adviser to the Pentagon on the war. And then, of course, there is former US Secretary of State George Schultz, who is now a prominent Bechtel board member. With such friends and allies, Bechtel is sure to rank among the chosen few.
That chosen few includes Kellogg, Brown & Root (KBR), a company that set up shop north of Kuwait City in September 2002. The Pentagon contracted KBR to build tent cities and provide logistical support for the US army, then on its way to Iraq and other potential hot spots for the "war on terror". KBR worked wonders in Kuwait. Camp Arifjan, in particular, is a model of the private sector's competence at its best. It took KBR no time at all to set up fast food outlets such as Burger King, Subway and Baskin-Robbins at the Arifjan military base. In addition, the multinational thoughtfully threw in a state-of-the-art gym and commissary for the boys' rest and recreation.
The Pentagon duly rewarded KBR's hard pre-war work. In March, the US Army Corps of Engineers awarded KBR a no-bid contract to extinguish oil well fires in Iraq. The otherwise illegal no-bid deal came under a new Bush administration provision allowing government agencies to hand-pick multinationals for Iraqi reconstruction projects.
A subsidiary of Halliburton Co -- the oil and military hardware outfit headed by Vice President Dick Cheney from 1995 to 2000 -- KBR was, along with Bechtel, one of the first companies to secure a share of the Bush administration's 9/11 military fall-out.
Dick Cheney remains on Halliburton's payroll. Over a five-year period, the vice president is receiving an annual one million dollars in severance pay.
In all fairness to Cheney, he deserves every last penny he gets. After all, it was only after he became Halliburton's CEO in 1995 that the multinational jumped from 73rd to 18th on the Pentagon's list of top contractors, benefiting from at least $3.8 billion in federal contracts and taxpayer-insured loans, as reported by the watchdog CorpWatch. Under Dick Cheney's able tenure, Halliburton also went from paying $302 million in company taxes in 1998 to getting an $85 million tax refund in 1999.
But then Halliburton is a corporation with solid credentials, "a triple header of war-time spoils", says CorpWatch. An oil-services outfit that also provides construction and military support services, Halliburton is well positioned to profit from the "war on terror".
Regardless, critics blast the conflict of interest. "That's why we haven't seen Cheney. He's cutting deals with his old buddies who gave him a multimillion-dollar golden handshake," fumed political writer Harvey Wasserman.
However, criticism has never phased the Bush administration -- one known for keeping its poise. "This is an administration of total integrity. That's all that needs to be said," US Secretary of Commerce Donald Evans declared.
Mundane considerations of morality aside, analysts point out that Evans' definition of integrity is a sign of the times. The revolving door between the politicians and the corporations has become almost standard in Washington these days. The Centre for Public Integrity, an American government watchdog, has documented that at least nine of the 30 members of the US Defence Policy Board have ties to corporations that were awarded more the $76 billion in defence contracts in 2001 and 2002.
But regardless of other politico-cum-corporate machinations, it is evident that Halliburton outmanoeuvred everybody else in the field -- with the noted exception of Bechtel.
In December 2001, the Pentagon awarded the Halliburton subsidiary KBR a 10-year deal called the Logistics Civil Augmentation Programme (LOGCAP). The contract, explains CorpWatch, is a "cost-plus-award-fee, indefinite- delivery/indefinite-quantity service" contract. The bizarre formulation masks an unprecedented government guarantee to recover costs as well as make a profit. The essential idea is, of course, to at least partially privatise the army. The US government can thus send KBR, or other contracted companies, anywhere in the world to serve its army. And KBR will follow US troops wherever the call of duty and profits lead. CorpWatch traced KBR-supporting operations to Afghanistan, Djibouti, Georgia, Jordan and Uzbekistan.
The benefits of privatising the army are many. Consider the use of cheap local labour, which is obviously more cost effective than employing US army personnel. For that matter, even imported southern labour will do -- as long as it comes at a discount. Filipino workers and engineers set a useful precedent. During the war in Afghanistan they helped build the infamous detention centre for the Al-Qa'eda and Taliban prisoners at less than the US minimum wage.
Although cost effective, the use of cheap labour does not cut all corners in the case of the likes of LOGCAP "cost-plus" government contracts. This is because overstaffing and overbilling seem to be the norm with such contracts, featuring interrelated politico-corporate interests. In the case of KBR, the General Accounting Office charged the US army for not properly investigating the company's $2 billion price-tag for logistical and engineering services in the Balkan war. "A lot of money is going to be wasted, and a lot of money is going to be made," said Peter Singer, a specialist on US government contracting jobs. Courtesy of the American tax payers, war-time corporate profiteering will certainly soar on the trail of the American "war on terror".
