The
Reconstruction's Bottom-Line
By Herbert Docena
Occupation
Watch.org
December 27th, 2003
Summary: Nine months after the invasion, deteriorating
living conditions marked by constant lack of electricity, a severe gasoline
shortage, and massive unemployment highlight the failure of the US-led
reconstruction of Iraq. While insecurity and incompetence are partly
to blame, the problems could be more adequately explained by the US
and its contractors determination to hang on to as big a portion
of the post-war bounty as possible.
Even
if the occupation were working perfectly well, it would still be wrong.
This has become trite commentary among Iraqis who bitterly want the
occupation to fail but, at the same time, also earnestly hope that the
reconstruction of their country succeeds. Still, no matter how successful
the occupiers try to make the reconstruction go right, the US and its
corporations still have no right staying here.
What seems to be
exasperating Iraqis more, however, is that theyre not even trying.
NO LIGHTS, NO
GAS, NO PAYCHECKS
At night, most of
downtown Baghdad is still clad in darkness, with only the blue and red
police sirens lighting the streets and only the sound of intermittent
gunfire puncturing the silence definitely not a picture of a
festive newly liberated capital. With most of Iraq suffering from power
interruptions lasting an average of 16 hours daily, its a little
hard to party in the dark. How many US soldiers does it take to change
a light bulb? About 130,000 so far but dont hold your breath.
South of the city,
a double-columned queue of cars stretched up to three kilometers
in length snake around street blocks, and cross a bridge over
the Tigris, before finally terminating at a barb-wired gasoline station
protected by a Humvee and an armored tank. Come closing time, so as
not to abandon the queue and line up all over again the following day,
most of the car owners decide to leave their vehicles parked overnight
a nightly vigil for gasoline in a country with the worlds
second largest reserves of oil.
During the day,
some of Iraqs 12 million unemployed hang out in front of Checkpoint
3 of the Green Zone, the heavily fortified headquarters of the Coalition
Provisional Authority (CPA). The chances of an American coming out of
their version of Saddams spider hole and handing resumes is next
to nil but they come every day anyway. Others try their luck loitering
at the hotel lobbies, besieging journalists or NGO workers in need of
drivers and translators.
With many unemployed
former university professors, engineers, and civil servants choosing
to become cab drivers instead, Baghdad probably has the most educated
taxi drivers per square kilometer in the world today. Strike up a conversation
and the cabbies will most likely tell you what seems to have become
the conventional wisdom today: not even Saddam could have screwed up
this badly.
FRUSTRATED BEYOND
BELIEF
Not that they want
him back but neither could they have expected the occupation forces
to completely bungle up such simple tasks as switching back the light.
The lack of power is most Iraqis number one gripe but the list is long:
uninstalled phone lines, shoddily repaired schools, clogged roads, uncollected
garbage, defective sewage, a nonexistent bureaucracy, mass unemployment
and widespread poverty the general unexpected chaos that Iraq
still is today.
Iraqis are in broad
agreement that life is deteriorating rather than improving. The prevailing
sentiment is a complex mix of resentment and resignation, frustration
and incredulity. On the one hand, Iraqis feel bitter about being occupied
and yet many are resigned to entrusting their day-to-day survival at
the hands of the Americans. On the other hand, they could not quite
believe how despite all the time and money the worlds
sole superpower cant make the reconstruction process go right.
For its part,
the US says the Iraqis are expecting too much too soon. The bottleneck
is sheer time, explained Ted Morse, the CPAs coordinator
for the Baghdad region. Wherever you have had a true conflict
situation, there is an impatience in that people think it can be done
immediately. It cannot.
But Iraqis themselves
have showed that it can. In 1991, after the first Gulf War and despite
the UN-imposed sanctions, it took Iraqs bureaucrats and engineers
only three months to restore electricity back to pre-war capacity, boasted
Janan Behman, manager of Baghdads Daura power station. Now
after almost nine months and despite the involvement of Bechtel, builders
of the Hoover Dam and some of the worlds biggest engineering works
Iraqs power sector is still only producing less than 20%
or 3,600 MW out of the 20,000 MW required. A daily power interruption
of two to three hours would be acceptable after nine months, but 16
hours?
ITS THE
STUPIDITY, STUPID
The occupation forces
would not admit this, of course, but much of the problem could be attributed
to the efforts of the resistance to ensure that nothing works as long
as an illegal occupation stays in place. The resistance has kept the
authorities too busy dodging bombs to spare time for such trifling matters
as providing Iraqis with jobs. With the resistance targeting not just
combatants but also those profiting from the occupation, its a
little too much to expect contractors to go out of their tightly guarded
bubbles and move around.
Bechtel employees,
for example, only travel in military helicopters or armed convoys with
at least one designated shooter in every vehicle.[1] Now
unless they find a way of transporting the power plants to the trailer
camps where Bechtel employees live averse as they are from going
to the plants themselves, nothing much would really get done.
A lot of the mess
could also be attributed to the sheer incompetence and lack of experience
of the people running Iraq. Much has been said about how the administrators
housed in the Green Zone have little or no experience whatsoever in
public administration. There have also been various reports about the
confusion and lack of coordination among the different agencies involved.
Moreover, as in previous colonial administrations, it is often difficult
to entice the best and the brightest to pack up, leave everything behind,
relocate to some far-flung hardship post only to be welcomed
with guns.
HIDING THE MOON
But insecurity and
incompetence while part of the complete and complex picture
do not go far enough in explaining why the reconstruction effort has
so far been an evident failure.
First, while only
1% of those surveyed in a recent Gallup poll buy the line that the US
came to establish democracy, a majority of the Iraqis are not actively
fighting the occupation. While the resistance is growing, this is not
an intifida yet. While a mere 6% of those surveyed believed the
US are here to help [2], Iraqis who are in the position to assist in
the reconstruction effort actually want to make it work not so
much to prop up the occupying forces, they say, but to ensure that oil
and electricity are kept available. Iraqis may not necessarily like
the Americans but they would sure like some hot water in the morning
this winter.
If this is
the system, then I have to follow, said Dathar al-Khshab, general
director of the Daura oil refinery said. Its the only way to keep
things moving then so be it, he said, echoing other utilities managers.
Rank and file oil industry workers are likewise hesitant to shut down
the refineries as a bargaining chip for negotiations and as a tactic
to undermine the occupation. On the one hand, they know that this could
paralyze the Americans. On the other, they are afraid of its effect
on the Iraqi people. But asked whether they support the coalition forces,
Hassan Juma, leader of the Southern Oil Compamy union, was firm:
You cant hide the moon. Every honest Iraqi should refuse
the occupation.
LIKE DOGS
The charge of incompetence
is not completely convincing either because, for all the allegations
of unfair competition and shadowy connections, it would be difficult
to accuse Bechtel or Halliburton of not knowing what it is doing.
With projects scattered
all over the globe, Bechtel is one of the worlds biggest construction
firms and it has achieved some of historys most awesome engineering
feats. Halliburton, on the other hand, has been repairing oil wells
and refineries around the world for decades. Even Iraqi officials readily
acknowledge that, technically speaking, they should be in good hands
with these American contractors. As the grudging respect gradually gives
way to disappointment, Iraqis are even more baffled as to how these
corporations could fail their expectations.
Another popular
explanation making the rounds alleges that sabotaging the reconstruction
is a conscious and deliberate effort on the part of the occupation forces
to make the Iraqis completely dependent and subservient. Keeping a dog
hungry not only keeps it from barking, it also makes the dog follow
its master anywhere.
The problem with
this theory is that due to the relatively decentralized reconstruction
process involving dozens of contractors and subcontractors, an explicit
order for deliberate failure would have been almost impossible to secretly
enforce. Moreover, faced with a mounting resistance, this tactic could
be extremely risky because it undermines the effort to win hearts
and minds. Keeping a dog hungry could also turn it desperate and
rabid.
The answer to the
mystery of why the reconstruction has so far been botched up could be
less sinister in that it is not a deliberate tactic and
more charitable in that it does not assume that the occupying
forces are that stupid.
MADE IN THE USA
A clue lies at the
Najibiya power station in Basrah, Iraqs second largest city located
south of Baghdad. Sitting uninstalled between two decrepit turbines
were massive brand new air-conditioning units shipped all the way from
York Corporation in Oklahoma. Pasted on one side of each unit was a
glittering sticker proudly displaying the Made in USA sign
complete with the stars and stripes.
Its just what
the Iraqis dont need at this time. Since May, Yaarub Jasim, general
director for the southern region of Iraqs electricity ministry,
has been pleading with Bechtel to deliver urgently needed spare parts
for their antiquated turbines. We asked Bechtel many times to
please help us because the demand for power is very high and we should
cover this demand, Jasim said. We asked many times, many
times.
Two weeks ago, Bechtel
finally came. Before it could deliver any of Jasims requests,
however, Bechtel transported the air-conditioners useless until
the start of summer six months from now.
But even if the
air-con units become eventually useful, stressed plant manager Hamad
Salem, other spare parts would have been much more important. The air-conditioners,
Salem pointed out, were not even in the list of the equipment and machine
components that they submitted to Bechtel.
NO STARS AND
STRIPES
Ideally, said Jasim,
it would be best to get the spare parts from the companies that originally
built the turbines because they would be more readily available and
more suitable for their technology. Unfortunately, Jasim pointed out,
Iraqs generators happened to have been provided by companies from
France, Russia, and Germany the very countries banned last week
by the Pentagon from getting contracts in Iraq as well as Japan.
Upon inspection, it was clear that the turbines dont carry the
stars and stripes logo. The dilapidated turbines in Najibiya, for example,
still proudly wore Made in USSR plates.
Why then have the
required components not been delivered? Jasim replied dismissively,
as though the answer was self-evident: Because no other company
has been allowed by the US government, only Bechtel.
Unlike those of
the other banned corporations, Bechtel carries the requisite brand.
Since its founding, Bechtels officials have had a long and very
cozy relationship with and within the state now disbursing the billion-dollar
contracts. For example, Bechtel board member George Schultz was former
Treasury Secretary to Nixon, State Secretary to Reagan, and coincidentally
enough chairman of the advisory board of the Committee for the
Liberation of Iraq. Also once included in Bechtels payroll were
former Central Intelligence Agency chief John McCone, former Defense
Secretary Casper Weinberger, and former NATO Supreme Allied Commander
Jack Sheehan.
GRAND BUSINESS
PLANS
Awaiting urgent
rehabilitation, Iraqs French, Russian, German, and Japanese-made
power infrastructure is slowly disintegrating. At the station, workers
are trying to make full use of the turbines by cooking pots of rice
on the surface of the rusting hot pipes. If the stations are not rehabilitated
any time soon, repairs will no longer be enough to keep them running,
warned Jasim.
To finally end Iraqs
crippling power shortage and to ensure that the turbines are not completely
degraded, Bechtel should either quickly manufacture the required spare
parts itself a very long and very costly process, buy the spare
parts from the Russian company directly, or hire the Russian firm as
a subcontractor. That or they just allow the crumbling turbines to turn
completely useless. Then, they bid for building new billion-dollar power
generators themselves.
Incidentally, part
of Bechtels contract includes making "roadmaps for future
longer term needs and investments." In other words, Bechtel is
currently being paid to determine what the Iraqis will need
to buy in the future using the Iraqis and the US taxpayers
money. According to independent estimates, Bechtel stands to get up
to $20 billion worth of reconstruction contracts in the next few years.
[3]
If Bechtel has grander
plans for Iraqs power sector, however, theyre not telling
the Iraqis. The utilities managers interviewed said they are not being
consulted at all regarding Iraqs strategic energy plans. Bechtel
officials dont even bother to explain whats taking them
so long to deliver the parts they need. They just collect papers,
said Jasim.
AN INCENTIVE
TO FAIL
Iraqs power
sector problem is illustrative of the bigger pattern.
Iraqis spend up
to five hours lining up for gasoline not only because of the sabotage
of pipelines but also because theres limited electricity to run
oil refineries that are crying for quicker action from Kellog, Brown,
and Root (KBR), the Halliburton subsidiary and contractor for rehabilitating
the oil infrastructure. According to workers from the South Oil Company
in Basrah, which KBR is obliged to rehabilitate, they are not aware
of any repairs KBR has actually undertaken.
With Iraqs
oil refineries still awaiting rehabilitation, Iraq cannot refine enough
crude oil to meet domestic consumption. The US is instead exporting
Iraqs crude oil and employing KBR under a no-bid cost-plus-fixed
fee contract to import gasoline from neighboring Turkey and Kuwait.
Last week, an official
Pentagon investigation revealed that KBR is charging the US government
more than twice what others are paying for imported gasoline. What was
left unsaid, however, is the conflict of interest inherent in hiring
KBR for both the oil infrastructure reconstruction and the oil importation.
If Iraqs pipelines and refineries were suddenly fully functional
and Iraq is able to produce all the oil it needs, it would be the end
of KBRs lucrative oil-importing business.
There has been no
evidence that KBR is deliberately delaying the repair the refineries,
only that there is an obvious disincentive to speed things up. There
is a serious but overlooked clash of incentives when the same company
tasked to revive the oil industry is simultaneously making money from
a condition in which that industry stays in tatters.
NO MONEY AT ALL?
Just outside the
CPA headquarters, a small unorganized group of employees of the former
regime gathered and unfurled their banner: We Need our Salaries
Now. They were demanding 10 months worth of back-wages. We
thank you because you saved our lives from Saddam. But we want to live
so you should help us, their unofficial spokesperson, Karim Hassin,
said indignantly, addressing the unresponsive 10-foot high wall protecting
the compound. Paul Bremer promised us salaries. We heard it with
our own ears. What happened to these promises?
A day after that
the Pentagons investigation on KBR was publicized, 300 soldiers
walked out of the US-created 700-member New Iraqi Army decrying unreasonably
low wages. Most of the deserters were recruited from Saddams former
army but for only $50 a month, they had decided to transfer their allegiance
to the occupation forces. Trained by the military contractor Vinnell
Corporation, their only demand from their new masters was a raise in
pay to $120 a month. That would have amounted to a mere monthly increase
in spending of only $49,000 small change put beside the US
$4 billion monthly military spending in Iraq and a miniscule amount
compared to the $61 million in overcharges by KBR.
Hearing about all
these developments, it would appear as though the occupation forces
have come to liberate Iraq on a really tight budget. The common refrain
of the Iraqis who have chosen to work with the US-installed bureaucracy,
is that there is no quid. Pressed to explain the failure of his ministry
to significantly increase power, for example, Iraqs electricity
chief, Ayhem Al-Samaraie, grudgingly admitted: I have no money
in my ministry at all.
Indeed, a quick
visual survey of Baghdad from the unkempt streets, the aging
machines, the raging workers to the unbelievably long lines for gasoline
makes this explanation for Iraqs reconstruction problems
sound almost convincing. That the reconstruction effort is in shambles
because there is no money almost seems plausible.
NONE FOR IRAQ,
BILLIONS FOR BECHTEL
But it isnt.
Last November, the US Congress eventually passed Bushs $87 billion
request for Iraq with nary a fuss. Before that, the US had already spent
$79 billion for both Iraq and Afghanistan. On top of this, the US also
has complete control of the UN-authorized Development Fund for Iraq
(DFI), which contains all of the former governments assets as
well as past and future revenues from Iraqs oil exports, including
leftover from the UN Oil for Food Program.
By the end of the
year, the DFI would have given the occupation forces access to a total
of $10 billion in disposable funds.[4] Though control would be less
direct, the occupation forces can also tap a few more billions from
the estimated $13 billion grants and loans raised during the Madrid
donors conference on Iraq last October.
On paper, the amount
that will be paid to contractors like Bechtel will come from US taxpayers
money. In practice, however, all that is being spent on Iraqs
reconstruction is mixed in a pot containing the US and other coalition-member
countries grants plus the Iraqis own funds.
So theres
money; its just not going around. And here perhaps lies the solution
to the mystery of how the worlds superpower and the worlds
biggest corporations cant even begin to put Iraq together again
after almost nine months: The reconstruction is less about reconstruction
than about making the most money possible.
Firms like Raytheon,
Boeing, and Northrop Gruman will get their fair share of the $4 billion
that the US is spending monthly on military expenses in Iraq; but there
will not be an extra dime for the New Iraqi Army recruits. Bechtels
useless Oklahoma-made air-conditioners will be paid under the $680 million
no-bid contract; but there will be no money for the direly needed Russian-made
components for Najibiyas turbines. Halliburton and its subcontractors
creamed off $61 million dollars importing oil from Kuwait; but there
will be no pay-raise for Iraqs oil refinery workers.
While the US finds
it increasingly harder to raise funds for the occupation, there is still
enough money for the most critical aspects of the reconstruction. Those
profiting from it, however, are determined to keep the biggest share
possible to themselves. The bottom-line of the reconstruction mess is
the bottom-line: little gets done because contractors could not see
beyond the dollar sign.
THE BUSINESS
OF MAKING MONEY
The profit
motive is what brings companies to dangerous locations. But that is
what capitalism is all about, Richard Dowling, spokesperson of
the US Army Corps of Engineers, the agency that contracted KBR, explained.
If it takes profit to motivate an organization to take on a tough
job, we can live with that. Yes, theres a profit motive but the
result is the job gets done.
The problem is,
as evidenced most clearly by the case of Bechtel and KBR, the job is
not even getting half-done. Profit-maximization has not resulted in
the most efficient restoration of power and oil production possible.
On the contrary, it gets in the way of doing things right. The power
plants will eventually be built and the oil refineries will run again,
but not after unnecessary deprivation on the part of Iraqis and not
after Bechtel has made the most of the opportunity.
This war to liberate
Iraq was never about liberating the Iraqis. Unsurprisingly then, the
reconstruction effort is also not about reconstruction. In this occupation,
the US and its allies primary goal is not to rebuild what they
have destroyed; its to make a fast buck. Contractors like Bechtel
and KBR are assured of getting paid no matter what; that the power plants
will eventually be constructed is just incidental. They will be built
in order to justify the pretext for the profit-making: that a war had
to be waged and that everything that was destroyed have to be rebuilt.
As Stephen Bechtel,
the companys founder, once made clear, We are not in the
construction and engineering business. We are in the business of making
money. Billed as the biggest rebuilding effort since World War
II, the reconstruction of Iraq is expected to cost $100 billion
some even say $200 billion -- depending on how long they stay. For the
post-war contractors, this is not a reconstruction business; it is a
hundred-billion-dollar bonanza.
NOT EVEN TRYING
The US and its contractors
are not even trying for a simple reason: its not the point. To
assume that they are striving but are merely failing because
of factors beyond their control is to presuppose that there is
an earnest effort to succeed. There isnt. If there were, there
should have been a coherent plan and process in which the welfare of
the Iraqis and not of the corporations actually comes
first. Instead, the Iraqis need for electricity comes after Bechtels
need for billion-dollar projects. The Iraqis need for decent living
wages becomes relevant only after Halliburton has maximized its profits.
Indeed, if there
were a sincere attempt to succeed, the US as responsible occupying
powers should have had no qualms giving Iraqis what many empathically
say they need to finally make things work: the authority and the
resources. If only the money and spare parts were provided,
Jasim said, we could do a surgical operation. If Im
going to do it without KBR, I can do it, said Al-Khshab. We
have been doing this for the past thirty years without KBR. Give me
the money and give me the proper authority and Ill do it.
But the US wont because who knows what the Iraqis would do. Ask
the Russians to repair their power plants? Actually succeed in reconstructing
their country without the involvement of Bechtel and Halliburton?
The US taxpayers
are not parting with billions of dollars of their hard-earned pay to
give away to some lucky Russian firm. US and coalitions soldiers are
not sacrificing their lives to protect the wussy French. The US did
not liberate Iraq in order to let the long disempowered Iraqis rebuild
their own country.
As the reconstruction
process continues to disillusion Iraqis, the myth that the US is here
to help is also steadily collapsing. With no light, no gasoline, and
no paychecks, more and more Iraqis are no longer just cursing the darkness.
If you want to live in peace, Americans, give us our salary,
warned Hassim, the Iraqi protesting at the gates of the CPA. If
you do not, next time well come back with weapons. The logic
of this occupation carries with it its own contradiction: If the resistance
succeeds, the drive for more that propelled the war could also bring
it to a halt.
Herbert
Docena is with Focus on the Global South and the International
Occupation Watch Center.
NOTES:
[1] Steve Schifferes, The challenge of rebuilding Iraq,
BBC News Oct 21, 2003
[2] Walter Pincus, Skepticism About U.S. Deep, Iraq Poll Shows,
Washington Post, November 12, 2003
[3] Elizabeth Becker, Companies From All Over Seek a Piece of
Action Rebuilding Iraq, New York Times, May 21, 2003
[4]Christian Aid, Iraq: The Missing Billions: Transition and Transparency
in Post-War Iraq Briefing Paper for the Madrid Donors Conference,
October 23-24, 2003