generations, war has meant profits for politically
has never been more true today, as a handful
of firms with close ties to the Bush Administration,
such as Halliburton, use the tools of money
and insider connections to win multi-billion
dollar contracts with no competition to rebuild
rebuilding Iraq can't be business as usual
in Washington. Much of the world opposed a
U.S. war against Saddam Hussein and continues
to question our motives for intervening. We
must rebuild right -- awarding contracts openly
and making transparent decisions -- or risk
extensive damage to our credibility as advocates
for human rights, democracy and economic development.
Nothing short of our international reputation
is at stake.
one seriously questions that Iraq must be
rebuilt, and Congress has agreed on an $87
billion assistance package to defend and rebuild
the country. But many questions remain about
how the money will be spent and who will benefit
-- questions made all the more relevant by
our own country's staggering economic shortfalls.
Cause has attempted to answer some of the
pressing questions posed by U.S. efforts to
rebuild Iraq. We urge you to send a message
to the President and Members of Congress letting
them know that that you will hold them accountable
to ensure that the Iraqi aid is spent as it
was intended, to benefit the Iraqi people
and the U.S servicemen and women, not wealthy
executives with ties to the White House.
Is $20 billion the maximum amount
it will cost to rebuild Iraq?
No. Experts estimate it will cost about $56
billion more over the next four years to rebuild
the country. (Twenty billion dollars
of the $87 billion package is for rebuilding
Iraq, and $66 billion is for defending it.
That reconstruction effort, in total, is expected
to cost $56 billion.)
the American people expected to invest so
much money in rebuilding Iraq?
No. Administration officials earlier
this year consistently downplayed the costs
of reconstruction. In April, for example,
Andrew Natsios, head of the U.S. Agency for
International Development, predicted that
rebuilding Iraq would cost the taxpayers no
more than $1.7 billion. Deputy Defense Secretary
Paul Wolfowitz told the House Appropriations
Committee in March that the United States
wouldn't bare the full financial burden of
rebuilding. "It doesn't have to be U.S. taxpayer
money," Wolfowitz said. "And it starts
with the assets of the Iraqi people.
They will now own those assets instead of
a dictator that owns them, and they should
spend them for their own welfare."
this money urgently needed?
No one seriously questions that Iraq
must be rebuilt. But congressional critics
have pointed out that the U.S. bombing campaign
did not put the country into ruins.
It's suffering rather from years of neglect
by a wasteful and irresponsible regime.
Even Administration officials strongly lobbying
for the reconstruction money report that Iraq
is not a disaster area. As L. Paul Bremer,
administrator of the Coalition Provisional
Authority (CPA), testified on Sept. 25, "All
of Iraq's 240 hospitals and 90 percent of
its health clinics are open. There is
adequate food and no evidence of epidemic.
- Electrical service will reach pre-war levels
within a month." CPA is the official
name for the temporary U.S. administration
other nations offering to pitch in?
Not many so far. The United States is asking
other countries to help rebuild and police
the country. But when it decided to attack
Iraq preemptively, the U.S. did so with the
backing of only one major ally, Great Britain.
To date, the extent of foreign assistance
has been minimal.
do we know the $20 billion reconstruction
piece of the Iraq supplemental will be spent
We don't know. Some Members of Congress have
questioned why some items Bush has requested
would be far more expensive than they are
in the United States. For example, the Administration
has proposed spending $15 million to buy 5,000
computers. That translates into a cost of
about $3,000 per computer, plus an additional
$40 million for computer training. "This does
not seem reasonable when you can find a perfectly
reasonable computer for $750," Sen. Chris
Dodd (D-CT) said recently.
Other items that have been questioned include:
maximum-security prisons, at a cost of $50,000
per bed, in addition to $99 million for
renovation and construction work at 26 existing
prisons and detention centers. (The House
Appropriations Committee voted to give Bush
$300 million less than he wanted for prisons.)
hundred hand-held radios and satellite phones
that cost an average of $6,000 each. According
to BusinessWeek, as the war was ending and
after bombing disabled Baghdad's telephone
system, enterprising Iraqis were able to
buy satellite phones from Jordan for $900
pickup trucks at a cost of $33,000 each;
new pickups in America begin at $14,000.
witness protection program for 100 families
that would average $200,000 per person,
compared to about $10,273 per person for
the U.S. federal Witness Protection Program.
$500,000 to build a museum to commemorate
the victims of Saddam Hussein's atrocities,
which even some Iraqis have questioned.
"OK, garbage collection I can understand,
but statues?" an Iraqi car dealer told USA
Can we afford an $87 billion plan
and huge tax cuts?
Sen. Joseph Biden (D-DE) and several other
Democratic senators have urged a repeal of
at least some of these tax cuts in order to
pay for Iraq assistance. Sen. Biden proposed
an amendment to the Iraq spending plan that
would have temporarily repealed the tax cut
for the richest one percent of Americans,
those earning about $400,000 or more. The
Senate defeated that amendment by a vote of
57 to 42.
the money that Congress approves for Iraq
have to go to the items President Bush has
No. Because the money is considered
"emergency" spending, in federal budget terms,
Bush has total discretion over how the money
is to be spent. Even so, Congress has suggested
that minimum levels be spent for certain activities.
For instance, the Senate has requested that
at least $100 million be used for democracy
building activities and that another $5 million
go to Iraqi nongovernmental organizations
in grants of up to $100,000. But Bush
does not have to abide by their requests because
of the "emergency" spending designation attached
to the package.
If Congress approves the $87 billion
supplemental, will Iraq have much control
over how the money is spent?
No. According to The New York Times,
the Bush Administration may agree to allow
an agency run by the World Bank and the United
Nations to control Iraq aid funds supplied
by other countries.
the U.S. done this successfully before, when
it almost solely rebuilt Europe under the
The Marshall Plan, named after then-Secretary
of State George C. Marshall, was an effort
by the U.S. to help rebuild Western European
countries after World War II. The plan
was primarily focused on rebuilding the iron,
steel and power industries of 16 countries.
From 1948 to 1952, it cost the United States
about $11.8 billion, equivalent to about
$103 billion today.
officials keep comparing their reconstruction
efforts to the Marshall Plan, but many experts
question the similarities. After World War
II, the U.S. had no choice but to go it alone
and rebuild Europe. The U.S. was the
only major power that emerged unscathed from
the conflict. At that point in history, U.S.
assets constituted 50 percent of the world's
gross domestic product, James Dobbins,
director of the RAND International Security
and Defense Policy Center, told the Senate
Committee on Foreign Relations in September.
But this is not the case now, Dobbins said.
In the 1990s, for example, U.S. assets represented
only about 22 percent of global gross domestic
product. What's more, Dobbins pointed
out the Marshall Plan involved rebuilding
countries that had "homogeneous populations
and first-world economies." Iraq, on the other
hand, has a less developed economy and an
ethnically diverse population.
very scale of the task upon which we have
embarked suggests that broad burden sharing
[with other countries] - would be more appropriate
than the largely unilateral approach" of the
Marshall Plan, Dobbins said.
contracts and who's benefiting?
are the real beneficiaries of this $87 billion
Bremer has testified that every contract of
the $20 billion rebuilding package will be
competitively bid, and the Senate already
has approved an amendment, sponsored by Sens.
Susan Collins (R-ME) and Ron Wyden (D-OR),
that would require the government to adhere
to a strict competitive bidding process and
to report to Congress whenever that process
was waived. Nevertheless, major companies
already are working in Iraq. They are
the beneficiaries of contracts already received
from the government in a far less open process.
are the winners so far?
The initial reconstruction contracts
were handled by the U.S. Agency for International
Development (USAID), under the auspices of
the State Department and the U.S. Army Corps
of Engineers (USACE). USAID's largest
contract so far, for the reconstruction of
Iraq's infrastructure, was awarded to Bechtel
with limited competition; only six U.S. firms
were invited to compete for the contract.
The USACE contract, worth up to $7 billion,
was awarded without competition to Kellogg,
Brown & Root, a subsidiary of
$680 million deal involves most of the major
civilian rebuilding projects that are not
related to oil production. The contract, which
has an extra $350 million provision in the
works, makes Bechtel responsible for rehabilitation
of Iraq's largest port (Umm Qasr), the solid
and water waste removal infrastructure, irrigation,
road networks, rail systems and key government
facilities. Bechtel must also ensure
potable water supplies are available, restore
electricity supply and support delivery of
basic health care and education.
is the same company under investigation for
the $1 billion cost overruns for the Big Dig,
the Boston highway project. Ironically, Natsios,
the USAID administrator, took over the management
of the Big Dig after the overrun scandals.
Nevertheless, interviewed on ABC's Nightline
last April, he defended the Bechtel contract.
Bechtel, he said, "had the highest quality
rating, the highest score for the technical
requirements of the contract and the lowest
Kellogg, Brown & Root
received a sole-source, no-bid contract from
the USACE to respond to oil-related emergencies
and military needs in Iraq. Payments
awarded thus far "include $142 million for
base camp operations in Kuwait, $170 million
for logistical support, and $28 million for
the construction of POW camps," according
to Army Joint Munitions Command. The current
contract is worth up to $7 billion and allowed
Halliburton to pre-position personnel in order
to put out oil well fires resulting from the
war in Iraq. Since this contract is
"cost-plus," Halliburton's profits are not
fixed but increase as the cost of the work
increases. As of September, Halliburton
had received more than $1.7 billion under
the period of emergency response passed, USACE
opened the contract up for competition in
July and expects to announce the winning bidder
by the end of the October. However,
the new contract requires immediate implementation
and the only firm that is in a position to
respond quickly is Halliburton, which is already
on the ground in Iraq. Several other
firms, most notably Bechtel, dropped out of
the bidding, noting that Halliburton had an
unfair advantage and that it was unrealistic
to expect any real competition.
What is Vice President Cheney's connection
Vice President Cheney was the chief executive
officer at Halliburton from 1995 to 1999.
That year, he resigned from the company to
run for vice president and received a $20
million retirement package as well as a $1.4
million cash bonus in 2001. At the end of
2002, he still held more than 400,000 shares
of Halliburton stock in unexercised stock
options. His deferred salary totaled $205,298
in 2001 and $162,392 in 2002, and he is scheduled
to continue receiving payments in until 2005.
Does Vice President Dick Cheney have
a continuing financial interest in Halliburton?
Yes, according to the Congressional Research
Service, the investigative arm of Congress.
Despite claims to the contrary by Cheney,
CRS recently concluded in a report that Cheney's
unexercised stock options and deferred compensation
represent a continuing financial interest
in the company.
Vice President Cheney's positions in the government
Yes. In 2000, the Chicago Tribune
quoted a Halliburton vice president, Bob Peebler,
saying, "Clearly Dick gave Halliburton some
advantages- Doors would open." According
to the New York Times, in the five
years before Cheney became CEO of Halliburton,
the U.S. Export-Import Bank guaranteed $100
million in loans to foreign borrowers to buy
Halliburton services. That amount had
risen to $1.5 billion by the time Cheney left
Halliburton. Currently, Halliburton
is working on some 93 individual projects
worldwide for the Army and Navy worth roughly
$2.4 billion, according to Mother Jones.
did Halliburton receive a no-bid contract
to repair Iraq's oil wells?
Halliburton has an exclusive contract with
the Army under what is known as the Logistics
Civil Augmentation Program (LOGCAP).
Under LOGCAP, a single company acts as consultant
to the Army to plan for war or crisis-time
logistics support. The program was formalized
in 1985 and tested in 1988 during Operation
Desert Shield in Iraq. In 1992, then-Defense
Secretary Dick Cheney contracted a company
named Brown & Root to study the ways in
which the private sector could integrate its
services with the military. Later that
year, the U.S. Army Corps of Engineers developed
LOGCAP as it is used today with a single company
as contractor. The first company to receive
the LOGCAP contract was Brown & Root.
& Root, now Kellogg, Brown & Root
(KBR), held the LOGCAP contract with the Army
until 1997 when the General Accounting Office
found significant cost overruns during the
conflict in Bosnia. One often-cited
example involved KBR charging the military
$87 dollars to fly in sheets of plywood from
the U.S. worth only $14. DynCorp held the
LOGCAP contract from 1997 until 2001 when
it was again awarded to KBR. KBR is
a subsidiary of Halliburton, where Vice President
Cheney served as CEO until running for office
that all remaining contracts in Iraq are supposed
to be competitively bid, does that mean Halliburton
no longer has an advantage over other companies?
Not necessarily. The New York Times
reports that while American officials in Baghdad
are offering contracts for open bidding worth
hundreds of millions of dollars, companies
must submit their bids within three days.
While short deadlines are not illegal, they
favor companies that are well-connected and
hurt those who might be able to do the jobs
at less cost.
Are there other companies, like Halliburton,
that have connections to the White House and
are anxious to be involved in the reconstruction
Yes. Many companies have known since
before the war was over that there was going
to be a wealth of business opportunities in
the rebuilding of Iraq. And many of
the companies that have joined in the effort
have long-time connections with the White
a look at some of the connections.
as noted above, has already received the largest
single contract in Iraq. George P.
Shultz, former Secretary of State
under President Ronald Reagan, is on the board
of directors at Bechtel and was once its president.
Bechtel's chief executive, Riley P.
Bechtel, was selected this year to
serve on President Bush's Export Council.
Jack Sheehan, a retired general
is a Bechtel senior vice president.
Sheehan is a member of the Defense Policy
Board, which advises Secretary of Defense
Donald Rumsfeld. Bechtel has also donated
generously in Washington. In 2001-2002, the
company gave $295,250 to Republicans and $221,000
to Democrats and spent an additional $820,000
connection is Joe M. Allbaugh,
former director of the Federal Emergency Management
Agency and President Bush's campaign manager
in 2000. Allbaugh recently started a new company,
New Bridge Strategies, to
help contractors get ahead in the stampede
for reconstruction money. The firm is based
in Washington, D.C. and also offers the services
of other well-connected former administration
officials, like Edward M. Rogers Jr.
and Lanny Griffith, who both
worked in the George H. W. Bush White House.
According to the website, New Bridge Strategies
is "a unique company that was created specifically
with the aim of assisting clients to evaluate
and take advantage of business opportunities
in the Middle East following the conclusion
of the U.S.-led war in Iraq."
R. Black Jr., is chairman of BKSH
& Associates and a strategist
for both George W. Bush and his father.
The company represented the Iraqi National
Congress when it was still a group of exiles
opposed to Saddam Hussein. Many of the
members of the INC are now members of the
country's provisional government. Black
told the Washington Post that his
company would use its contacts to set up business
operations in the country.
Gump Strauss Hauer & Field is
yet another firm with ties. It boasts
retired Gen. Anthony Zinni,
former head of US Central Command and special
envoy to the Middle East under Bush, who still
serves as a consultant for the state department.
Akin Gump is currently providing legal advice
for companies that are owed money by Iraq.
The well-known K Street firm, the Livingston
Group, named after former Appropriations
Committee Chair Bob Livingston
(R-LA), has secured a contract for a British
company De La Rue to print the new Iraq currency.
Former Representative Anthony J. (Toby)
Moffett Jr., (D-CT) was reportedly
working on another contract to produce secure
Goldberg & Co. Lawyer L.
Marc Zell was the former law partner
of Douglas Feith, the Pentagon
undersecretary of defense for policy. According
to the company's website: "Zell, Goldberg
& Co. has recently established a task
force dealing with issues and opportunities
relating to the recently ended war in Iraq.
The firm, together with the Federal Market
Group, is assisting regional construction
and logistics firms to collaborate with contractors
from the United States and other coalition
countries in implementing infrastructure and
other reconstruction projects in Iraq."
has also teamed up with Salem Chalabi,
nephew of Ahmed Chalabi,
one of the leaders of the post-Saddam government
in Iraq appointed by the U.S. to form a business
it difficult to coordinate a private company
with the military, especially under dangerous
Yes. Members of Congress and others
have raised concerns about long-term problems
associated with the outsourcing of jobs that
have traditionally been performed by military
lawmaker, Rep. Janice Schakowsky (D-IL), said
that despite the migration of private contractors
to Iraq, her colleagues have given little
thought to their impact on reconstruction
efforts. "They don't have to follow the same
chain of command, the military code of conduct
may or may not apply, the accountability is
absent and the transparency is absent - but
the money keeps flowing," Schakowsky told
the New York Times.
W. Singer, National Security Fellow at the
Brookings Institute, says private companies
are operating in uncharted waters in Iraq.
"At the end of the day, neither these companies
nor their employees are bound by military
justice, and it is up to them whether to show
up or not," Singer told the Washington
Post. "The result is that there have
been delays in setting up showers for soldiers,
getting them cooked meals and so on."
the Army saving taxpayers money by sending
civilians into Iraq instead of military personnel?
It's unclear. Sen. John McCain (R-AZ) has
told the New York Times he would
propose an outside audit of the spending in
Iraq "to reassure the taxpayer that the money
will be well spent and not disappear into
a black hole."
the Iraqi people part of the rebuilding process?
As of now, no. Iraq lacks a formal government,
so the ultimate authority in the country is
the Coalition Provisional Authority (CPA).
Decisions are being made in consultation with
an interim Iraqi Governing Council, whose
members were appointed by the United States.
The CPA recently made two crucial decisions
that will permit foreign companies to have
more latitude in the country's reconstruction
and economic life. One is that foreign corporations
may own firms and banks in Iraq and will have,
according to Bremer, "an unrestricted right
to remit profits and capital." That decision
reportedly is being opposed by many Iraqi
business leaders because they fear they won't
be able to compete with foreign-owned firms.
Breakdown of the $20 billion - (PDF)
Breakdown of the $20 billion
the Defense Spending Action Center
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