The money trail
In Iraq American multinationals cash in on cronyism and corruption, writes Faiza Rady
Do you want to make big bucks quick? Then follow the money trail and go to Iraq. Many people already had the idea back in April when the United States Congress allotted $79 billion in reconstruction costs for bombed-out Iraq and Afghanistan. These people went to Iraq in April, scrambled for the fat contracts and gobbled up what was to be had. But now there are new funds to delve into. With the recent US House of Representatives vote approving a hefty $87.5 billion package for Iraq's "reconstruction" and "post-war operation costs", Iraq is definitely where it's at. Do the math yourself: American taxpayers are dishing out $4 billion a month.
But first things first. Iraqi "reconstruction" and "post- war occupation costs" sound like big words, but where exactly is the action? Of the $87.5 billion, the US House allotted $17.8 billion for "personnel costs" -- a decent enough sum, all things considered. Unfortunately, however, the loot has already been earmarked for the 132,000 deployed American troops who are aided by the 90,000- strong Iraqi security forces.
No matter: all things being equal, this kind of money can go a long way and provide jobs for unemployed British and Americans in Iraq. Most unemployed Iraqis seem unqualified for the lion's share of jobs. Foreign nationals, on the other hand, have lucked out. According to Pentagon figures, non-Iraqi security guards working for US companies earn $1,200 per day, while Iraqis are paid $8.33 per day for the same job -- 144 times less than their foreign counterparts. At the going rate, one non- Iraqi security guard equals 144 Iraqi guards. Although conditions are harsh for unskilled working class Iraqis, and inequality is the norm, Iraqi professionals fare somewhat better. American engineers working for US companies make $1,000 per diem in Iraq, while Iraqi engineers are paid $1,000 a month -- in this case, non- Iraqis earn only 30 times more than locals.
These figures, however, can be considered small change compared with the big bucks. It is now common knowledge that the major contracts for the reconstruction of Iraq and Afghanistan were offered on a silver platter to Bush administration cronies and major campaign contributors, no questions asked. Since the biggest chunk of the "Iraq reconstruction" package -- namely $64.7 billion -- goes to the Pentagon to support military operations, the military-industrial complex is obviously the way to go in terms of cashing in. Furthermore, the "operation and maintenance" sectors also look promising -- having been allotted the princely sum of $41.1 billion. Land a contract with them, and you have it made.
Unfortunately, time has a vexing way of running out. At this point, the Bush administration has already granted all major Iraq reconstruction contracts to its friends and allies in the corporate world. The big boys like Bechtel, Halliburton and its subsidiary Kellogg Brown and Root (KBR) control the real thing. It is by now old news that the oil and military hardware outfit, Halliburton, employed Vice President Dick Cheney as CEO from 1995 to 2000. The vice president remains on the Halliburton payroll with a remuneration of $1 million per annum for five years -- not a bad severance pay from Cheney's former employer.
Still, Cheney deserves every penny he gets from Halliburton for keeping the revolving door between the politicians and the multinationals open. This trend was confirmed by the Washington-based Centre for Public Integrity (CPI), a research organisation which investigates special interests and ethics in government. According to the latest CPI study, the 10 largest contracts in Iraq and Afghanistan went to companies that employed former high-ranking government officials, or executives with close ties to members of Congress.
Along with Halliburton, the biggest winner and maybe the most deserving of them all is Bechtel. A luminary among multinationals, Bechtel provides anything and everything an occupying power may desire. Besides exhibiting first class credentials, Bechtel also has friends in high places, noted the CPI.
A case in point, it does not hurt the multinational that former US Secretary of State George Schulz sits on its board of directors. In addition, the company chairman and CEO, Riley Bechtel, sits on US President George W Bush's Export Council, advising him on corporate- friendly ins and outs of trade. Last, but not least, senior vice president in Bechtel's petroleum and chemicals business, Jack Sheehan, served on the Defence Policy Board, which acts in an advisory capacity to the defence secretary. With bums on seats in the defence and export council boards, sweetheart deals are on the make.
Hence it came as no surprise when Bechtel landed the choice contract in Iraq, namely a closed-bid, open-ended reconstruction contract. Although capped at only $680 million over 18 months, a contract that may not look like much at first glance, experts estimate that long-term costs will eventually add up to $100 billion. The costs are especially relevant to the company since Bechtel's contract is defined as "cost-plus", whereby company profits are tied directly to project expenses. In other words, the costlier the projects, the higher the profits. An ingenious recipe for inflating costs and looting the public treasury in the process, comments Moscow Times columnist Chris Floyd.
Open-ended and unique, the contract covers practically everything: the reconstruction of all seaports, provision of drinkable water, electric power plants, roads, railroads, schools, hospitals and irrigation systems. In addition to being closed-bid, ie, monopolistic, it also provides sufficient capacity for plenty of sub-contract jobs.
Sub-contracts are nothing to be sneered at, especially in occupied Iraq where sub-contracting acquires a highly elastic dimension. Capital, therefore, stretches a long way and money can be made at every corner -- given the right kind of spirited entrepreneurship. A case is point is Bechtel's tortuous, if ingenious, sub-contracting travails. The multinational's much-touted showcase comprises the "rehabilitation" of some 1,595 of the 10,000 schools in Iraq. However, many of these allegedly rebuilt and refurbished schools are non-functional as a result of Bechtel's subcontracting system. Pushing to inflate rather than deflate costs, Bechtel has granted other companies open- ended sub-contracts to cash in on its "cost-plus" contract option.
Thus derailed and rerouted, one sub-contracting job leads to another -- diverting ever more money along the way. "The original tender for our school called for an air conditioning unit in every classroom," Newsweek reported an Iraqi engineer called Marwan as saying. "Once the subcontractors got it, it was an air cooler. Once we got it, it was a ceiling fan for $11 apiece," explained Marwan. So the billions are frantically spent, while the "reconstruction" job loses its lustre. The Bechtel and Halliburton crowd have yet failed to deliver on electricity grids, functioning phone lines and drinkable water. At any rate, things may improve in time for the millions of jobless Iraqis whose unemployment level has reached 75 per cent.
Al-Ahram Weekly Online : 13 - 19 November 2003 (Issue No. 664)
Located at: http://weekly.ahram.org.eg/2003/664/in6.htm