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The scramble for spoils
The
fate of Iraq as a US protectorate is already foreshadowed by emerging US plans
for post-war reconstruction and the handing out of lucrative reconstruction
contracts to a favoured handful of US corporations.
At the same time, leaks from the State Department reveal
that Washington has already drawn up plans for the privatisation of Iraq’s
state-owned national oil company, which will allow Big Oil to grab the country’s
huge oil assets.
EVEN BEFORE US-BRITISH forces entered Iraq, USAID (US Agency
for International Development) and USACE (US Army Corps of Engineers) awarded
initial contracts worth up to $1 billion to several corporations closely
connected to the right-wing leadership of the Republican Party. Only US firms
were in the running and the usual competitive tendering process was bypassed on
grounds of speed and security.
The contracts cover reconstruction or repairs to airports,
railroads, schools, telephone exchanges, hospitals and irrigation systems.
Successful contractors can expect to reap millions of dollars of profits from
repairing the damage now being inflicted on Iraq by the US-British invasion
force.
USAID awarded a $4.8 million contract to the Seattle-based
Stevedoring Services of America to manage the Umm Qasr port, Iraq’s only
seaport, long before it was taken by US-British forces. USACE awarded the
contract for extinguishing oil field fires to KBR, a subsidiary of Houston-based
Halliburton Co. The ties of vice-president Dick Cheney with Halliburton are well
known. He was the company’s chief executive from 1995 to 2000 (irregularities
during that period were later investigated by the Securities and Exchange
Commission). Cheney severed his links when he ran for vice-president, but is
still receiving up to $1 million a year in ‘deferred’ severance pay. Halliburton
made political donations to Cheney, as well as contributing $17,677 to Bush’s
2000 presidential campaign. (Sunday Times, 30 March)
"Halliburton is the most prominent example", comments
Charles Tiefer, a University of Baltimore expert on government contracting, "but
the largely non-competitive nature of the bidding continues to favour companies
politically connected to the administration through campaign donations and shut
out competitive offers even from our fighting allies like Great Britain".
(Washington Post, 31 March)
Facing a growing outcry against political corruption, USAID
announced that KBR was no longer in the running for the first batch of post-war
reconstruction contracts. Nevertheless, KBR will still continue to make huge
profits from the US occupation of Iraq under a ten-year deal, made in December
2001, to provide logistical support to US forces. It has already collected $830
million from the US government for supporting operations in Afghanistan,
Djibouti, Georgia, Jordan and Uzbekistan. Under the ‘cost-plus-award-fee’ terms
of the contract, KBR rakes in guaranteed profits. (CorpWatch, 20 March 2003)
Other companies with strong Republican connections, however, are still very much
in the running. One is the giant Bechtel Group, whose directors include the
former secretary of state, George Shultz, and other former Republican cabinet
members. Bechtel is the main contractor for Boston’s notorious ‘Big Dig’, the
downtown highway project which is years late and millions of dollars overspent.
Bechtel’s record (and its relationship with the Port Authority, which has been
shaken by several corruption scandals) is currently under scrutiny in public
hearings in Boston. Bechtel was also one of the main contractors on London
Underground’s notoriously unreliable Jubilee Line extension.
Another prominent bidder for Iraq reconstruction projects is
the Fluor Corporation, which is currently facing a multi-billion dollar lawsuit
claiming that it exploited and brutalised black workers in South Africa during
the apartheid era.
The Center for Responsive Politics says that the five
construction companies on the shortlist for the initial rebuilding contract
donated $2.8 million to candidates during the last two election cycles.
(Financial Times, 21 March)
Big business leaders in Europe, South Korea, and elsewhere
are furious that they are being excluded from the Iraqi reconstruction
contracts. This is especially true in Britain, where the big international
contractors believe they should benefit from a ‘most favoured nation’ status for
Britain on account of its contribution to the invasion force. About 80 British
building contractors and engineering consultants called a meeting with the
director of Trade Partners UK, a government agency, to put pressure on Blair to
lobby the US for a share of the contracts. Stuart Doughty, chief executive of
Costain, was blatant in calling for a big business payback for Britain’s
military support for the US intervention. Doughty argues that the UN should be
kept out of plans for post-war Iraq, to ensure that "those who have been
violently against this conflict don’t share in the reconstruction". (Observer, 6
April) No wonder one unnamed business leader criticised the lobbyists’ meeting
as "an ambulance chasers’ convention".
Up to now, the US government has only offered British firms
the possible consolation prize of subcontracts from successful US contractors.
Frances Cook, the former US ambassador to Oman and now a consultant to several
Middle Eastern companies, has been lobbying the US to include companies from
Egypt and Jordan to show appreciation for their cooperation in the war effort.
"They are already screaming in the Middle East – you call us corrupt, look at
you giving contracts to American companies and no one else". (New York Times, 19
March)
But Colin Powell, speaking to Congress on 26 March, bluntly
spelt out the US position: "We didn’t take on this huge burden with our
coalition partners not to be able to have a significant dominating control over
how it unfolds". A determination to maintain tight economic control of Iraq
suggests that the Bush regime will be very reluctant to concede any real control
to the UN. Washington is more likely to assign a subordinate, ‘humanitarian’
role to the UN. EU leaders are clearly alarmed at this prospect. Christopher
Patten, the EU foreign affairs commissioner, warned Washington that Europe would
find it difficult to help finance reconstruction after the war without UN
approval. "It will be that much more difficult for the European Union to
cooperate fully and on a large scale also in the longer term reconstruction
process if events unfold without proper UN cover…" Patten described the awarding
of contracts exclusively to US companies as "exceptionally maladroit". (New York
Times, 18 March)
The new US viceroy
IN ANOTHER UNDIPLOMATIC, not to say provocative move, Bush
has appointed a prominent arms dealer as ‘civilian’ viceroy to front the US
military occupation of Iraq. Jay Garner, who will head the so-called Office of
Reconstruction and Humanitarian Assistance (ORHA), is a former general who is
currently president of the Virginia-based SY Coleman, part of the defence
electronics groups L-3 Communication. Garner has a long association with the
Republican hawks, and has worked with Cheney, Rumsfeld, Wolfowitz and Perle both
within the military and the arms industry.
Like other hawks, Garner is a supporter of right-wing Likud
governments of the Israeli state – a record that is likely to arouse the deepest
suspicions of the Arab world. In October 2000 Garner went on a ten-day
expenses-paid visit to Israel, organised by the Jewish Institute for National
Security Affairs (JINSA). This is one of the US think-tanks, funded by religious
foundations and the arms industry, that form part of the neo-conservative hawks’
infrastructure during their long campaign for the military policy now being
implemented in Iraq. After his Israel visit, Garner signed a JINSA statement
praising the Israeli army for showing what it called "remarkable restraint" in
suppressing the Palestinian uprising.
Garner supported Rumsfeld’s push for the missile defence
project, the revival of Reagan’s Star Wars, and his company has profited from
sales of the Patriot missiles (for which it makes the guidance systems) to
Israel and US forces. SY Coleman was also awarded a $1.5 million contract to
supply logistical services to US special operation forces in the war against
Iraq (Observer, 30 March). Garner is currently facing legal action by a rival
defence research contractor, DESE, who claim that as president of SY Technology
Garner used his influence in the Pentagon to deny them a contract in return for
a pay-off in the form of another lucrative contract. (Observer, 6 April)
Meanwhile, there has also been a conflict-of-interest
scandal about Richard Perle, one of the prime architects, along with Cheney,
Rumsfeld and Wolfowitz, of the aggressive military policy adopted after 11
September.
In the late 1990s, Perle worked for a major satellite maker,
Loral Space and Communications, defending them against US government charges
that they had illegally transferred advanced military technology to the Chinese
government. In January 2002, Loral, without admitting any violation, agreed to
pay a $20 million penalty. More recently, Perle has been lobbying the department
of defence on behalf of Global Crossing, the bankrupt telecommunications giant,
to persuade the defence department to drop its objections to a proposed sale of
its fibre optics network to foreign buyers in Hong Kong and Singapore. Perle
stands to make up to $725,000 for this work. (New York Times, Richard Perle’s
Conflict, 25 March) He is also a partner in Trireme Partners who invest in
Homeland Defense, and a director of the British-based Autonomy Corporation,
which has a large US government security contract. Although his Pentagon
position is unpaid, Perle is nevertheless considered a ‘special government
employee’ subject to federal ethics rules. Following criticism of his business
deals, Perle announced (28 March) that he would resign as chairman of the
Defense Policy Board, but he nevertheless remains a member of the board. (New
York Times, 29 March)
Garner will play a key role in the awarding and supervision
of reconstruction contracts. Yet the Bush regime sees no ‘conflict of interest’
involved in Garner’s appointment as viceroy, despite his big-business
connections with the armaments industry. After the first Gulf war, Garner was
responsible for three months for feeding and protecting Kurdish refugees in
Northern Iraq. He was reportedly very popular, which is not surprising given
that the US, for its own reasons, was establishing an autonomous Kurdish region.
In the present situation, however, his appointment as US ‘viceroy’ will arouse
resentment and anger amongst Iraqis and Arab opinion throughout the Middle East.
Washington insists that Garner’s ‘Office’ will provide a
‘temporary’ government for Iraq, but it more and more appears to be an apparatus
for US direct rule. The government will comprise 23 ministries, each headed by a
US administrator (mainly ex-diplomats and business leaders who share the hawk
outlook) assisted by Iraqi advisors. Leaders of both the Kurdistan Democratic
Party and the Iraqi National Accord (INA) have denounced the US plans as
unworkable. (Guardian, 2 April)
After a frosty meeting between Garner and senior UN
officials in early March, one UN official commented: "It is clear that Rumsfeld,
Cheney and the rest have the ascendancy and think, having gone it alone in the
war, they should get the benefit of being seen as liberators. Garner is their
man. He is a true believer". "It is common knowledge", he added, "that they want
to go it alone without the UN".
The ‘true believer’, however, has become caught up in a
bitter conflict between the Pentagon and the State Department over the
composition of Garner’s interim government. Determined to keep direct control of
‘reconstruction’ of Iraq, Rumsfeld and company have vetoed the State
Department’s nominees as, according to Rumsfeld, "too low profile and
bureaucratic". They have put forward counter proposals, including the former CIA
director, James Woolsey, as director of information. Even Bush, it seems, may
balk at this. Wolfowitz is pushing for Hamed Chalabi, leader of the CIA-created
Iraqi National Congress, and a number of his entourage to be given positions.
Chalabi is apparently to be offered an advisory post in the finance ministry,
despite the fact that he was previously convicted in his absence of a
multi-million dollar banking fraud in Jordan. (Guardian, 2 April) Chalabi,
however, who was ambitious to become Iraqi prime minister after the fall of
Saddam, is far from pleased and is threatening to set up his own rival
government.
The black-gold rush
US-DIRECTED RECONSTRUCTION, under Garner’s government, will
be funded from Iraqi oil revenues. Powell recently said: "We’re going to use the
assets of the people of Iraq, especially their oil assets, to benefit their
people". (New York Times, 24 March) The distribution of initial reconstruction
contracts, however, points to the way the Iraqi oil industry is likely to go
under US domination. According to a recent study, "Iraq’s oil sector will sector
will require $5 billion in investment over three years to return it to pre-1991
production levels… That would jump to $15 billion to achieve full production
levels". (Companies Start Discreet Lobbying for a Tilt at Contracts, Financial
Times, 21 March)
Who can doubt that US oil companies will be allowed to grab
the lion’s share of Iraq’s oil wealth? James Woolsey, the former CIA director,
blatantly stated last year that those supporting the US-led ‘coalition’ would
get a share of the spoils while those who refuse would be shut out. The close
connections between the Bush leadership, as well as the right-wing Texas
Republican establishment, with the big oil and gas corporations is notorious.
Leaks from the State Department’s ‘Future of Iraq Office’
show Washington plans to privatise the Iraqi economy and particularly the
state-owned national oil company. (Jonathan Steele, Read the Small Print: The US
Wants to Privatise Iraq’s Oil, Guardian, 31 March) First they intend to
privatise retail petrol stations, a quick way of raking in cash from Iraqi
consumers. Then they aim to privatise exploration and development. Oil revenues
would no doubt be used to fund reconstruction. But a huge share of the wealth
would be channelled off into profits for private, mainly US companies.
The experience of energy privatisation in Russia after the
collapse of the Soviet Union is a warning of the way things are likely to go. A
new class of oil capitalists pumped huge profits from the oil and gas fields,
depositing most of their gains in offshore bank accounts. Russia’s huge energy
resources have contributed very little to the modernisation of the economy and
have far from ‘reconstructed’ the living standards of a majority of people.
Russia’s gross domestic product, writes Joseph Stiglitz, the ex-Chief Economist
of the World Bank, "remains almost 30% below what it was in 1990. At 4% growth
per annum, it will take Russia’s economy another decade to get back to where it
was when communism collapsed". (Guardian, 9 April)
The Iraqi people have enjoyed minimal benefits from the
country’s oil wealth, especially in the last 20 years. Before nationalisation,
profits were creamed off by British and other Western oil companies. After
nationalisation, proceeds were used by the Baathist state to create a huge
military apparatus and support the prestige projects and luxurious lifestyle of
Saddam and his ruling clique. For the last ten years the majority of Iraqis have
struggled to survive on the meagre rations allowed by the Western powers under
the UN’s food-for-oil programme.
Oil will only become an ‘asset for the Iraqi people’ as a
nationalised industry run under democratic control. Through state control Saddam
squandered the oil wealth. Privatisation, with takeover by US and other foreign
oil companies, would be a return to the most blatant form of neo-colonial
exploitation. Oil should be used as the foundation for the planned development
of the whole economy under the democratic ownership and control of the Iraqi
people. That is the only way in which energy will become (in Blair’s words at
his Azores summit with Bush and Aznar) a "national asset of and for the Iraqi
people".
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