A war for corporations?

March 3 2006

THE US has spent at least $250 billion in the invasion and occupation of Iraq since March 2003. This figure does not include about $18 billion allocated for a $35 billion fund for reconstruction of the country. Another $20 billion in proceeds from Iraqi oil sales have also been spent, but with little to show in terms of improvement of basis services for the people of Iraq. Today, the lot of the people of Iraq is much worse than the pre-war conditions. US officials continue to insist that there is indeed tangible improvement in services, but what they actually mean is that some Iraqis get four hours of interrupted power supply (never mind that they had more than interrupted 12 hours of supply prior to the war).
Where did the money that was supposed to have been spent on reconstructing Iraq disappear? No one seems to have a clear answer except that there was a gross misuse of funds and that there is a dark area while determining how much of Iraqi money was "spent" on projects (most of them only on paper) and how much came from US-allocated funds. However, one thing is abundantly clear: American corporates with close links to the powerful politicians in Washington have made a killing in Iraq, not only from American funds but also from Iraqi money. Some of the billion-dollar contracts handed down to US giants are seen tailor-made to suit the contractors' interests, and several instances of overcharging have been reported, but these were only scratches on the surface, given the massive amounts already been handed out.

FIGURES on how much money the US has spent on the Iraq war keep changing. The only figure one could go by is based on recorded allocations that the US Congress has made (these do not include independent Pentagon spending), but the actual costs are deemed to be much higher than the official figures.
In October 2005, a report published by the Congressional Research Service (CRS) concluded that $251 billion had been obligated or appropriated for the Iraq war by March 31, 2006.
Compare that figure with independent estimates that the US would have spent or committed itself to spending about $2 trillion by the end of 2007. This figure includes long-term costs such as insurance and heath-care expenses for wounded veterans.
The $251 billion figure does not include soldiers' regular pay, but combat pay is included.
From the day the US went to war against Iraq in early 2003, critics have been pointing out that the administration of President George W Bush was not only serving the "strategic geopolitical interests" of the US and Israel but also catering to the greedy paws of American corporates, particularly those close to the Republican camp.
Now three years later, it is widely reported that American corporates made and are continuing to make a lot of money from the war, but no one seems to know how much.
By definition and nature, details of defence and military contracts are supposed to be kept confidential and unrestricted access to the figures is limited to a handful of people.
One of the main features of some contracts is that they are negotiated deals, more often than not on the basis of cost plus. This means that the designated contractor supplies the goods and services as requisitioned by the US military and sends an invoice to the Pentagon certifying that the amount involved was the "actual cost" and does not include any "margin" for the contractor.
The Pentagon asks no questions and pays the contractor the invoice amount plus a seven-to-12 per cent, depending on the nature of the goods and services.
An example is the cost of a "regular military meal" supplied to the US soldiers in Iraq. The contractor charges $65 per meal delivered to US military bases in Iraq, and then collects a margin over that amount.
The price goes down to $45 per meal when cooked and supplied within a military camp without involving "transport" costs.
Says investigative journalist Pratap Chatterjee, who keeps a watch on corporate misconduct, around the world: "Private contractors work on what’s known as a 'cost-plus' basis, getting paid for costs plus a small profit. On top of that they can receive a bonus based on a per cent of the contract’s total value. The more a company spends, the more it makes, which creates a natural incentive to overcharge. Private contractors aren’t being held accountable for either their spending or their work quality. They can’t be court-martialed, obviously, nor has any company yet been prosecuted—only a few individuals for really blatant fraud."
As allegations fly that someone, somewhere siphoned off $1 billion that were supposed to have been spent on building Iraq's security forces, the reality is also emerging that someone, someone had also channelled away billions of dollars of Iraqi oil money that should have been spent on rebuilding the shattered country.
As looting erupted in Baghdad and cities and towns elsewhere in the country following the collapse of the Saddam Hussein regime in April 2003, the favourite  term used to describe the looters was "Ali Baba," the Arabian tales character who stole from the loot of a gang of thieves. Few gave a second thought that the name was perhaps misused since Ali Baba could not be described as a thief in a broader sense.
US officials have confirmed that key rebuilding projects in Iraq have ground to a halt because American money is running out and security has diverted funds intended for electricity, water and sanitation.
As a result, according US bureaucrats, projects to rebuild the country's infrastructure have been downsized, postponed or abandoned because the $24 billion budget approved by Congress has been dwarfed by the scale of the task.
The website CorpWatch reported in April 2005 that the US cut the funding for water projects in Iraq from $4.3 billion to $2.3 billion—“with further cuts planned for the future.” Those “further cuts” were another $1.1 billion.
The reconstruction of water facilities is vital in delivering clean water to the 80 per cent of families in rural areas that use unsafe drinking water. The postwar sewage systems must also be reconstructed, which according to a UN report, “seeps to the ground and contaminates drinking water systems.”
The UN development agency conducted a study, entitled Iraq Living Conditions Survey 2004. The study found that 23 percent of children in Iraq suffer from chronic malnutrition, while nine per cent of Iraqi children experienced diarrhea, a leading “childhood killer,” in the two weeks prior to the survey.
With the insurgency showing all signs of gathering strength, it is apparent that the US has little interest in focusing seriously on rebuilding Iraq since the belief has set in that the battle for the hearts and minds of Iraqi has already been lost.
The net sum of conclusions emerging from various auditing reports, official and unofficial, about the American funds spent, both for continuing the war and to rebuild Iraq, is that there had been a systematic pattern of spending that benefited none other than private American companies which are given no-bid contracts.
It was reported as far back as October 2003 that basic reconstruction in Iraq would cost less than half the amount requested by the Bush administration from the US Congress.
A joint report prepared by the United Nations and World Bank estimated that $9 billion were needed for reconstruction in Iraq in 2004 where as the amount that the US government had sought from Congress was $18.6 billion.
Beyond that, the Bush administration had estimated that $55 billion will be needed for Iraqi reconstruction between 2004 and 2007. While there was no comparable UN/World Bank estimate, independent think-tanks estimated the requirement at less than half that amount.
Where did the money disappear?
Today, very few people actually seem to know how much was actually spent in reconstructing Iraq although there is little sign of any reconstruction. Iraqis continue to suffer from water and power shortages and there is little in the way of employment opportunities except perhaps in the high-risk security forces.
The pattern of mismanagement of funds was established in the audit reports of the accounts of the Coalition Provisional Authority (CPA) that was disbanded on June 28, 2004.
But that was not American money. It was Iraqi money, and no one seems to be bothered anymore to hold to account those who misappropriated it.
Paul Bremer, who headed the CPA, left behind what turned out to be a gross misuse of proceeds of Iraqi oil exports to benefit American contractors, with the major beneficiary being Halliburton, the company which was once headed by US Vice-President Dick Cheney.
There were three sources of funding for the war and occupation of Iraq. The first was $65 billion directly allocated as military spending by the US Congress and administered by the US Defence Department. It was American taxpayer's money.
The second was $18.4 billion, also approved by the US Congress, but administered by the CPA. Again, it was American taxpayer's money and supposed to be spent on reconstruction of Iraq along with $16 billion or so pledged by other countries.
The third was the Development Fund for Iraq, which represented proceeds from Iraq's oil exports and leftover money from the oil-for-food programme that the UN ran in co-ordination with the Saddam Hussein regime. The fund handled about $20 billion by the time the CPA was disbanded when the US handed over "sovereignty" to the interim government in June 2004.
The first war chest was further replenished by another $87 billion, but the bulk of it was earmarked for direct military spending.
From the $18.4 billion allocation for reconstructing Iraq, the CPA spent only two per cent since allocating American funds for reconstruction projects in Iraq had many riders and it was easier to dipping into the Development of Iraq Fund — which was strictly Iraqi money.
Halliburton has admitted to overcharging on some of its contracts. It drew up invoices and got paid for meals that were never eaten and never cooked.
According to Time reporter Jyoti Thottam, “Why would a company like Halliburton, which, after all, runs a successful oil-field-services business far removed from Iraq, agree to stay there? Profits. Iraq contracts have added $5.7 billion to Halliburton’s revenues since January 2003, accounting for almost all the company’s growth at a time when it was struggling with $4 billion in asbestos claims. The fact is, war is one of Halliburton’s specialties.”
Halliburton, which already has contracts worth $17 billion in Iraq, is one of five large US corporations - the others are the Bechtel Group, Fluor Corp, Parsons Corp, and the Louis Berger Group vying for contracts in the war-torn country. None of the other companies has been cited in an Iraq scandal yet.
Top among the American companies having Iraq-related contracts are:
Aegis Defence Services, BearingPoint, Inc., Bechtel, BKSH and Associates , CACI International and Titan Corporation, Custer Battles, Halliburton Lockheed Martin, Loral Satellite and Qualcomm
Bechtel has contracts worth about $2 billion in Iraq. They include rehabilitation of Iraq’s power, water and sewage systems that were destroyed in the war, rehabilitation of airports, and the dredging of the Umm Qasr port, repair and reconstruction of hospitals, schools, government buildings and irrigation and transportation systems.
San Francisco-based Bechtel had been given tens of millions to repair Iraq's schools. Yet many schools remain untouched, and several schools that Bechtel claims to have repaired are in shambles. One "repaired" school was overflowing with unflushed sewage; a teacher at the school also reported that "the American contractors took away our Japanese fans and replaced them with Syrian fans that don't work" —  billing the US government for the work (The Centre for Media and Democracy).
"A handful of well-connected corporations are making a killing off the devastation in Iraq," observes Chris Kromm, publisher of Southern Exposure, a report about war profiteering in Iraq. "The politics and process behind these deals have always been questionable. Now we have first-hand evidence that they're not even doing their jobs."
Halliburton received $1.6 billion in Iraqi oil proceeds under a contract to import fuel and repair oil fields. According to US auditors, Halliburton's overcharges under this contract are more than $218 million.
A security firm, Custer Battles, received over $11 million in Iraqi funds, including over $4 million in cash. The company has been barred from receiving federal contracts and faces a False Claims Act lawsuit for multiple fraudulent billings.
A federal jury on March 9 this year ordered Custer Battles to pay nearly $10 million in damages and penalties for defrauding the government on its work in Iraq.
"Americans are fighting and dying in Iraq," said Alan Grayson, the lead attorney for two whistle-blowers who brought the civil suit on behalf of the government. "Companies like Custer Battles go there with the idea of stuffing their pockets with cash. This jury of eight people heard the evidence and were repelled by it."
Custer Battles was accused used fake invoices, forgery and shell companies in the Cayman Islands to run up millions of dollars in profits.
Another misuse of funds came to light when it was found that over $600 million in cash was shipped from Baghdad to four regions in Iraq to allow commanders flexibility to fund local reconstruction projects. An audit of one of the four regions found more than 80 per cent of the funds could not be properly accounted for and that over $7 million in cash was missing.
CPA officials gave over $8 billion in cash to Iraqi ministries. Auditors have found significant funds paid to "ghost employees" and billion-dollar discrepancies in some expenditures.
"These problems evince a lack of concern for people in Iraq," says Brian J. Foley, a professor at Florida Coastal School of Law. "They and their land are being treated as a profit centre for businesses well-connected to our government."
Transparency International stated in its Global Corruption Report 2005 that foreign contractors should abide by anti-corruption laws and that the revenues streaming in from Iraq oil “needed to be much more transparent and accountable.”
Transparency International’s chairman Peter Eigen said: “Corruption doesn't just line the pockets of political and business elites, it leaves ordinary people without essential services and deprives them of access to sanitation and housing,
Transparency International directly criticised the US for awarding companies contracts in a process that was “secretive and favoured a small number of firms.” As this corruption became more commonplace, the resistance towards the occupation surged.
Remi Kanazi writes on sccop.co.nz:
"Instead of starting a massive campaign to empower and employ the Iraqi people, the Bush administration protected US corporate interests, including close administration allies such as Halliburton and Bechtel. Figures of unemployment in Iraq reach as high as 60 per cent. If the US heavily integrated Iraqi companies and workers from the outset, the reconstruction process would have stimulated the Iraqi economy. Nearly 60 percent of Iraqis rely on food handouts. The average Iraqi income in 2004 was $800 compared with $3,000 in the 1980s. In the 1990s, the UN sanctions severely weakened the Iraqi economy only to then have the US invasion exacerbate the dilemma."
The net picture that emerges from Iraq today is: The US is unwilling to accept it is fighting a war it cannot win and is determined to stay on, and is spending billions of dollars to the benefit of American corporates. Meanwhile, the suffering and uncertainties of the people of Iraq are mounting every day.

With agency and website inputs

Counter-productive to peace

May 6 2006

THE DEMONSTRATIONS in the streets of Palestine to press demands of overdue salaries from the Palestinian National Authority (PNA) are signals of brewing trouble for the Hamas-led Palestinian government. Indeed, the PNA employees are in serious trouble because they have not been paid salaries for March and April, and the economy of the occupied territories are in doldroms not simply because of the cash shortage but as a result of decades of a deliberate Israeli policy of making the people under occupation dependent on the Israeli economy. At the same time, pressuring the Hamas government for political reasons — it was obvious that Fatah was behind the demonstrations — might not be the right approach at this juncture. The world knows that the PNA is facing a cash crisis because of political reasons prompted by Hamas winning elections and assuming power. Those behind the pressure are trying to exploit the situation and force compromises over the Palestinian rights. The strongest among the holdouts against any compromise whatsoever is indeed Hamas.
That should be a key consideration for the same Palestinians who took to the streets on Saturday.
It is highly unlikely that Hamas would bend under pressure because that would go against the Islamist record of remaining firm on their positions. On the other hand, if the group is assured that Israel would recognise and respect the legitimate Palestinians rights, then the day is near when it would accept the demands that it renounce armed resistance as a means for liberation and recognise Israel.
Israel and its backers know this well. However, since Israel has no intention of respecting the Palestinian rights and entering a peace agreement on the basis of these rights, the Hamas position suits it well. In all probability, Israeli Prime Minister Ehud Olmert might indeed be hoping that Hamas refuses to budge until such time he implements his unilateral plan to draw Israel's final borders without Palestinian agreement.
This is the reality facing the international Quartet, which is meeting on Tuesday to discuss the dealock in Palestine. The group needs no elaborate explanation of the geopolitics behind the Israeli-Palestinian conflict. It the Quartet opts to play by the rules based on publicly stated positions of the two sides — Hamas declining to meet the demands imposed on it and Israel arguing that it does not have a Palestinian negotiating partner — then it does not have do make further move to explain to the world that it is only paying lipservice to the rights of the Palestinians and international legitimacy.
In the meantime, the politicised demonstrations aimed at applying pressure on the Hamas government could be counter-productive to the Palestinian cause. If the Hamas government were to collapse — as some parties might want to see — then Palestinian politics would undergo a dramatic change to the worse, and that would not serve the cause of peace in the Middle East.

Rhetoric or real intentions?

May 3 2006
DIFFERENTIATING between rhetoric and actual intentions in the US-Iran confrontation over Tehran's nuclear programme has become intensely difficult. On the one hand, Iran has cranked up the intensity of what could be nothing but provocation to the US and Israel. It is as if Iranian President Mahmoud Ahmedinejad, having concluded that Iran is targeted for regime change by the US, is daring the US and Israel to stage military strikes against his country.
If that is indeed the case, then his strategy is based on a conviction that the Iranians, who are in no position to launch a military offensive against the US, could draw the Americans into starting military action. Such action would justify a "defensive" war by Iran into defensive war that could prove catastrophic for the US, given the American military and non-military exposure in Iraq and Afghanistan and elsewhere in the region. American analysts speculate that more US soldiers than those who lost their lives in the invasion and occupation of Iraq so far could die in a matter of weeks if not days as a result of military action against Iran. It does not matter for the Iranian leadership how many Iranians and pro-Iranians could die since the Iranian mindset has an intense focus on martyrdom.
Beyond military casualties, the chain of events sparked by US military action against Iran could shoot up international oil prices through the roof, and this could pull the rug under the feet of the US dollar, the key currency in which oil is traded around the world. If the dollar collapses at this point in time, so does the American economy, throwing chaos in the international scene. Again, that expectation, coupled with the awareness that the US could not but be mindful of the eventuality, could be a central pillar of Ahmedinejad's strategy. If the US pulls back from the brink and puts off military plans against Iran, then it would also be touted as a major victory by the Iranian leadership.
On the other hand, the US, despite having the most advanced and sophisticated spying technology, does not seem to have any clue about Iran's nuclear programmes except what has been reported by the International Atomic Energy Agency (IAEA). Veteran members of the US congressional intelligence committees have already admitted that there is no way the US could determine how far the Iranians have gone ahead with their nuclear programme. They have asserted that US intelligence network simply lacks the capability to secure accurate information on Iran's nuclear activities.
The painful and embarrassing truth — which also exposes the gaping shortcomings in US intelligence work — is also prodding Washington into undertaking a military adventure against Iran. At the same time, to propagate that the world is in the dark about Iran's plans also suits the US strategy because it could always cite the benefit of the doubt in favour of action against Iran.
Whatever considerations the US might have, Israel, which is determined not to allow any Middle Eastern power other than itself to have a nuclear programme, is straining to hold back itself from staging a repeat in Iran of the 1981 attack that demolished Iraq's sole nuclear reactor. Israeli lobbyists are hard at work in Washington, hyping up the "Iranian nuclear threat" and lobbying for military action against Iran. Leading and misleading interpretations of Iran's strategy are being sown around in order to create murky waters to exploited to benefit Israel's objective of using the US military to wage war for the sake of the Jewish state.
Against these realities, what is indeed unmistakable is that Iran might be engaging in rhetoric, but the US is not. Washington has made up its mind that Iran should not be allowed any leeway that would permit it to develop an effective nuclear programme. It is only a matter of time and methods to achieve that objective.

Placing priories

April 12 2006

AS IRAN basked in what it considers as the glory in its announcement that it had successfully enriched uranium to make nuclear fuel, the international community is alarmed over the dramatic course of events.
It could not be said that the Iranian announcement shocked everyone because many suspected that something was indeed going on behind the scenes as the nuclear dispute was being debated across continents. However, the Iranian move has indeed dramatically raised tension and apprehension by several notches.
Almost every country in the world has described the Iranian move to enrich uranium as a step in the wrong direction. This iindicates a rare international consensus that would have a strong adverse impact not only on the Middle East but also the rest of the world.
However, the Iranian move has indeed dramatically raised tension and apprehension by several notches, particularly in the Gulf region, where the Gulf Co-operation Council (GCC) has always made it clear that its members wanted the entire Middle East area to be a nuclear-free zone.
In diplomatic terms, Iran is being urged to call of its nuclear work, but, from judging from Iran's record and behaviour, it is unlikely that Tehran would respond positively to such calls. That leaves the US and its allies  — which now include hitherto reluctant Russia and China — with the option of pursuing punitive sanctions against Iran through the UN Security Council.
Indeed, such sanctions were a strong possibility even before Tuesday's Iranian announcement, which in fact gave the additional ammunition that the US wanted in order to ensure UN action against Tehran. Washington and its allies in Europe and elsewhere, including Israel, might have their own agenda to pursue against Iran. That agenda may have to do with what the US and others consider as their strategic geopolitical interests in the Middle East.
In the immediate region, the Gulf countries have more than one reason to worry about. Nuclear activity in Iran, whether for peaceful purposes or otherwise, could have serious unhealthy effects on the region. Any process going wrong in Iran's nuclear work would be catastrophic for its immediate neighbours. Then there are concerns that the Iranian nuclear stand-off with the US and its allies might lead to sanctions against Tehran and the Iranians would retaliate by impeding the flow of oil from the Gulf. Finally, with seemingly credible reports coming from the US that the administration might use tactical nuclear weapons to destroy Iran's nuclear facilities, there is also fear of the consequences of such actions.
To be fair, Iran, like any other country in the world, has the right to pursue nuclear programmes for peaceful purposes under the supervision of the International Atomic Energy Agency (IAEA). And Tehran insists that its nuclear work is very much within its rights. Until now, there is no concrete proof that the Iranians are developing nuclear wepons, but many others believe that it is only a matter of time before it becomes clear that they had always sought to have nuclear weapons. Therefore, exercising international rights is indeed one thing, but citing those rights to achieve a different goal is something else. How to tackle both in a balanced and effective way is the dilemma facing the world today.
We could only hope that the Iranians, having achieved their purpose of proving to the world that they could do nuclear work on their own, would seek to check the situation from getting worse. On the other side, the US and allies accept that the only way out is through realistic dialogue.
There are so many ifs and buts in the equation, but the core issue is the mutual distrust between the US and Iran.
Washington sees Iran as a major stumbling block against the strategic interests of not only the UN but also those of Israel — and not necessarily in that order either. The US seems to think that working out a rapproachement with Iran is all but impossible under the present geopolitical givens. And, if one goes by the published comments of many in the US and outside, the administration's ultimate goal is "regime change" in Iran.
Therefore the first step in any move to defuse the situation and ensure that the Middle East is free of nuclear weapons is an iron-clad American assurance — supported and guaranteed by the world — to Iran that it is not targeted for "regime change."
That should, hopefully, break the ice and set the ground for initialising a dialogue that could eventually lead to building trust and confidence between Tehran and Washington. That is a long way ahead and might sound like wishful thinking beyond imagination. If anything, recent strategy papers adopted by the Bush administration classify Iran as the source of the greatest threat to the US. Coupled with reports of planned American military action against Iran, there does not seem to an iota of hope for dialogue.
However, if the US is sincere when it says it is interested only ensuring the security and stability of the Middle East, then it should step forward with transparency, seriousness, determination and commitment and adopt international legitimacy as enshrined in UN decisions and conventions as the basis for any dialogue with Iran.
Simply put, the US should put its American interests first in any consideration, and then it would be crystal clear that Washington has no ground to see anyone in the Middle East an adversary.
Once the US does that, then the rest is easy. But the first step, seen against the realities of today, is all but impossible, and that is where the deadlock is.