USAID invites selected companies to compete for Iraqi contracts

May 08, 2003 02:00 AM

For American corporations having a tough time of it, the Iraqi war is an answer to prayer. A decimated stock market, CEO scandals and the precipitous drop in business has many tightening their belts in order to ride out the hard times. But for those with a direct line to the White House the war is akin to having the bank manager as a relative, their political connections proving their salvation at a time of business stagnation. For these selected few, the Iraqi war is like the Texas oil boom all over again.
In a discreetly issued series of "requests for tenders" the US Agency for International Development (USAID) invited selected companies to compete for education, health, transport and energy reconstruction projects to begin as soon as peace is restored in Iraq. Detailed in a privately distributed USAID document titled "Vision for post-conflict Iraq", the agency selected five companies to tender for contracts worth anywhere from $ 900 mm to $ 1.5 bn, these figures being the base estimate. Since $ 30 bn is the initial White House estimate for the rebuilding of Iraq, the $ 900 mm umbrella contract is just the tip of what is sure to be a very lucrative business stream.

So who are these selected corporations; the favoured few able to by-pass normal procedures under the guise of "emergency basis requirements"? And how is it the legal requirements that would have permitted a wider array of companies to seek such contracts have been overruled?
The initial $ 900 mm-$ 1.5 bn umbrella contracts are slated to pay for construction and repairs to roads and bridges, as well as for the refurbishing of schools, hospitals and mosques, USAID officials state. Engineering giants Bechtel Group, Halliburton, Schlumberger and the Louis Berger Group as well as Fluor have been selected as nominated contractors for the initial tenders.

Justifying the by-passing of normal awarding procedures with the explanation that "the urgency and unique nature of this work requires special circumstances" USAID officials brushed aside any suggestions that these companies have an inside track due to their political connections. Few buy this, especially since all the selected corporations are well known for their strong political ties to Vice-president Dick Chaney and other US administration officials.
"While probably not illegal, this request for tenders from a tight group of hand-picked companies certainly has the appearance of impropriety," Texas-based construction companies complain. "It stinks of political favouritism."

US Vice-president Chaney served as CEO at Halliburton from 1995 to 2000 before leaving to join President Bush's election campaign. During his tenure as CEO at the Houston-based energy services company Halliburton came under Security and Exchange Commission (SEC) scrutiny for miss-reporting its financial statements. The investigation by the SEC dragged on until late last year when it was dropped for lack of evidence of any wrongdoing. Since then Halliburton has suffered a downturn in business, as havemany Texas oil corporations.
An announcement by the Pentagon in March noting that Halliburton was developing a plan under an existing contract to fight Iraqi oil fires, therefore came as a boost to corporate investors and public shareholders alike. The new "request for tender" is additional good news, the company's embattled shareholder's patience strained to breaking point as the value of Halliburton shares dropped some 60 % in 2002, much like most NASDAQ and New York Stock Exchange listed companies.

The Bush administration has refused to supply financial estimates for the Iraqi military campaign. To this end, the White House has advised its officials not to testify before the Senate Foreign Relations Committee, some Pentagon officials adding insult to injury by not even notifying the committee in advance of their intended non-attendance. Democratic Senator Dodds has described the administration's attitude as one of "arrogance".
With estimates of $ 60 bn to $ 300 bn being leaked to the press, the cost of the Iraqi war is of major concern to US lawmakers, particularly as the EU revealed it was unlikely to agree to any reconstruction costs over France's and Germany's outright objections.
"It is ridiculous to discuss reconstruction while the United States and Britain is still causing the damage," French President Jaques Chirac maintained at the EU meeting on 21 March.

This was followed by an unequivocal statement that France would veto any UN resolution allowing the UK and America control over Iraqi oil revenues. "They must be administered by the UN alone," Chirac insisted.
"The United States is going to have to pick up the bulk of what's going to happen in reconstruction, at least at the outset," Mr Bathesba Crocker, co-author of the report on post-Hussein Iraq at the Centre for Strategic and International Studies said. "It is acknowledged even by the administration that $ 900 mm is but a drop in the ocean compared to what the overall costs will be."

Construction companies in the United States are competing fiercely for the administration's favours, believing that getting a foot in the Iraqi door now will pay dividends when contracts for post-war Iraqi reconstruction are handed out. Significant in any such scenario will be the oil industry contracts, although it remains unclear as yet whether Iraqis, Americans or an international consortium will manage the industry long term. Houston oil experts believe that the renovation of Iraqi oil fields is too big a project for American oil companies alone, hence the need for international partnerships.
"Talking about such things is a sensitive topic," a Houston oil executive confided to The Middle East, "but those companies with the inside track will really win big in this situation. Iraq is a tempting prospect, with its sophisticated infrastructure and large poor population t provides an enticing market."

Steven L. Schooner, law professor at the George Washington University concurs. "The most sophisticated firms that establish some goodwill with the Iraqis will reap huge benefits down the road," he believes. Claiming that such companies will become brand names in the country, if not the region, Professor Schooner emphasises that such goodwill will be "huge" in post-Saddam Iraq.
The favoured companies are tight lipped about their dealings with the White House and USAID. Halliburton spokespeople would not even admit to the Pentagon contract and Bechtel spokesman Jonathan Marshall would only say "We hope for a peaceful settlement in Iraq but if there is a role for US companies in helping to rebuild Iraq's infrastructure, Bechtel would have the skills and would be well-suited for the job."

The United States clearly hopes the international community will help rebuild the post-Saddam Hussein Iraq. "This is wishful thinking," most analysts say believing the divisions will be too deep to heal that quickly.
The UN World Food Programme and other UN agencies only have $ 7 mm out of an estimated $ 30 mm requirement for emergency food distribution, a woeful shortfall. And, it seems, little more will be immediately forthcoming. Secretary General Kofi Annan's appeal on the opening day of the war for international cooperation in the humanitarian aspect of rebuilding of Iraq has been all but ignored.

Of great concern to international agencies are the details buried in the legal minutia of the USAID contracts. "The plan smacks of colonialisation," a British expert who has studied the documents told.
"It envisions selected companies virtually administering Iraq by changing its currency, cancelling its school curriculum, introducing a mandatory American education system, approving pro-business legislation requiring only American products to be supplied and even having an anti-abortion clause inserted for the awarding of any sub-contracts. Such requirements will sideline the UN and any multilateral agencies such as Oxfam as they would be unable to agree to such biased conditions."

In detailing the specifications for its $ 900 mm tender, the USAID stipulated a requirement for 550 diesel generators to restore 75 % of Iraq's electrical power. The repair of 3,000 schools and the delivery of supplies to another 12,500 centres of education is also detailed. A requirement for the supply of basic health services to all Iraqis within 18 months will require a huge investment, although if Afghanistan is any guide to go by, this will in any case prove impossible to achieve.
All these projects are to be administered by retired US Army General Jay Garner and a 62-member "disaster assistance response team" operating in an Iraq divided into three northern, central and southern sectors. Ex-US Ambassador to the Yemen Barbara Bodine is to be the Baghdad coordinator, her last post being in Sanaa when the USS Cole was bombed.

The United States economy is burdened by mounting deficits, corporate scandals and government overspending. With the costs of the Iraqi war already having taken some $ 800 out of the average American's pocket, how the administration will justify offering Iraqi citizens free health care when some 50 mm Americans are without even basic health insurance is difficult to see. In the meantime, it seems that certain favoured companies associated with the Bush administration will be in for a windfall.
That is as long as Iraq is quickly subdued, the Kurds brought to heel, the Shiites agree to be ruled by a US general and the cost of an occupying force of 200,000 American troops does not exceed the value of the oil the US is able to extract from the sabotaged Iraqi oil wells. Additionally, if Iran and Syria can be muscled into reorganising their political landscapes to accommodate a rampaging George W Bush intent on enforcing western style democracy in the region, then Vice President Dick Chaney's connected companies should do quite well. Under such a scenario their financial woes will seem like a blip in a distant memory, as the age of America's first-strike doctrine -- a gravy train headed directly towards their corporate bank accounts -- speeds on. To be one of the favoured few in the United States is to be fortunate indeed.

Source: ABQ Zawya Ltd.
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