-----Original Message----- Ian Murray wrote
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And racketeers too....
US firms set for postwar contracts
Danny Penman and agencies The Guardian Tuesday March 11, 2003
The American government is on the verge of awarding construction contracts worth hundreds of millions of dollars to rebuild Iraq once Saddam Hussein is deposed.
Halliburton, one of the companies in the running for the deals, was headed by the US vice-president Dick Cheney between 1995 and 2000. Halliburton has already been awarded a lucrative contract, worth hundreds of millions of dollars, to resurrect the Iraqi oilfields if there is a war.
Other companies have strong ties to the US administration, including the construction giant Bechtel, the Fluor Corporation, and the Louis Berger Group, which is presently involved in the reconstruction of Afghanistan. Both Bechtel and the Fluor Corporation undertake construction and project management work for the US government.
Only US companies are on the shortlist of five. The US agency for international development (USAID) defended the narrow shortlist.
A spokeswoman said: "Because of the urgent circumstances and the unique nature of this work, USAID will undertake a limited selection process that expedites the review and selection of contractors for these projects."
The spokeswoman said that it was a policy of USAID to use US companies for projects funded by the American taxpayer. Non-US companies were free, through their governments, to organise their own business, she said.
The winning company would get about $900m (£563m) to repair Iraqi health services, ports, airports, schools and other educational institutions.
Sources at the companies said the invitation was unusual in that USAID did not ask them to set a price for defined services but rather asked them to say what they could do for $900m. However, the winning company could expect to make a profit of about $80m from the deal.
All five bidders have submitted their proposals or are preparing to do so after USAID "quietly" sent out a detailed request soliciting proposals from the likely bidders.
According to the Wall Street Journal, the Iraq reconstruction plan will require contractors to fulfil various tasks, including reopening at least half of the "economically important roads and bridges" - about 1,500 miles of roadway - within 18 months.
The contractors will also be asked to repair 15% of Iraq's high-voltage electricity grid, renovate several thousand schools and deliver 550 emergency generators within two months.
Construction industry executives said the handful of firms are competing fiercely in part because they believe it could provide an inside track to postwar business opportunities. The most highly sought-after prizes are oil industry contracts.
The US government is believed to be wary of any backlash against an invasion and is preparing plans for a "hearts and minds" operation that will swing into place as soon as the country is occupied. The government is mindful of the longterm benefits of feeding hungry Iraqis, delivering clean water, and paying teachers and health workers.
"It's a sensitive topic because we still haven't gone to war," one industry executive told the Wall Street Journal. "But these companies are really in a position to win something out of this geopolitical situation."
It remains unclear whether Iraqis, Americans or an international consortium will manage the oil industry during an early post-conflict period.
Steven Schooner, a George Washington University law professor, said many billions of dollars are at stake. He estimated that $900m would barely last six months given the scope of the projects the administration has sketched out.
"The most sophisticated firms that come in first, and establish good will with the locals obviously will reap huge benefits down the road," said Mr Schooner.
"These are going to become brand names in Iraq. That's huge."
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Building block
The surreptitious way the process for inviting engineering companies to submit bids for the rebuilding of Iraq was handled could lead to more trouble for the Bush administration, writes Mark Tran
The Guardian Tuesday March 11, 2003
On the face of it, the Bush administration should get a pat on the back for inviting engineering companies to submit bids for reconstruction work in Iraq.
The move shows foresight as the US contemplates the enormous task of rebuilding Iraq after a likely war and 10 years of crippling sanctions that have undone years of economic progress.
But whatever kudos the White House may get for its foresight risks being undone by the surreptitious way the bid process was handled. Only five US companies have been invited to bid for contracts worth at least $900m (£563m) and the names on the list are bound to give conspiracy theorists a field day.
The select group of companies includes Kellogg Brown & Root, a subsidiary of Halliburton, an oil services company, where the vice-president, Dick Cheney, held the position of chief executive from 1995 to 2000.
Kellogg Brown & Root has already won a government contract to oversee firefighting operations at Iraqi oilfields after any US-led invasion, while the other companies also have strong ties to the US administration, including the construction giant Bechtel, the Fluor Corporation, and the Louis Berger group, already involved in the reconstruction of Afghanistan.
The winning company would get contracts to repair Iraqi health services, ports, airports, schools and other educational institutions. The Bush administration is only too aware of the need to be seen feeding hungry Iraqis, delivering clean water, and paying teachers and health workers to dispel accusations of imperial ambitions.
To speed up the project, the US agency for international development (USAID) invoked special authority to solicit bids from just a few companies. The move bypassed the usual rules that would have permitted a wider array of companies to seek the contract, first reported by Time magazine and the Wall Street Journal.
A USAID official defended the restricted nature of the contract on the grounds of urgency and because of the unique nature of the work. But that cut little ice with British unions, who criticised the move as typical of the US's "master and servant" attitude towards its only key ally on the eve of war.
"Why should Britain have to share the blood in a war but British companies not be allowed to share in the economic upturn afterwards," said Richard O'Brien, a spokesman for Amicus, Britain's largest manufacturing union.
An unseemly row over the spoils even before war has been fought is the last thing the Bush administration needs as it desperately seeks votes for a second resolution in the UN security council. But the US has only itself to blame for the clumsy way it has handled this particular aspect of reconstruction.
The brouhaha over these initial contracts is just a foretaste of what is to come. The cost of reconstruction is bound to be a bone of contention in congress as the US faces record budget deficits and struggles to invigorate economy.
So far the White House has been coy about putting a price tag for war and reconstruction so as not to alarm the American public on the vast amount of work and expense that will be needed. President Bush has only said that his administration would ask congress "at the appropriate time" for a supplemental spending bill outside the regular budget to pay for the war - estimated by analysts to cost anything between $50bn and $200bn.
There has been talk about using revenue from Iraqi oil sales to pay for reconstruction and to pay back nations for the costs of fighting Iraq. But in reality, Iraqi oil is being used to meet the basic needs of Iraqis at subsistence level, so there will be little scope for using Iraqi oil to pay for reconstruction. Very probably, the scale of reconstruction will be so large that US companies will not be able to hog all the work, even if they wanted to.
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"If protection rackets represent organized crime at its smoothest, then war making and state making - quintessential protection rackets with the advantage of legitimacy - qualify as our largest examples of organized crime...[C]onsider the definition of a racketeer as someone who creates a threat and then charges for its reduction. Governments' provision of protection, by this standard, often qualifies as racketeering. To the extent that the threats against which a given government protects its citizens are imaginary or are consequences of its own activities, the government has organized a protection racket. Since governments themselves commonly simulate, stimulate, or even fabricate threats of external war and since the repressive or extractive activities of governments often constitute the largest current threats to the livelihood of their own citizens, many governments operate in essentially the same way as racketeers." [Charles Tilly]