Corporate Colonialism
Village Voice
5 May, 2003
The Bush government is calling
on Bechtel, Halliburton, and other major corporations to take over the
job of running the Iraqi colony. These companies are to act in the name
of the government. They are to be paid out of our taxes. It might just
as well be the British East India company. The colonial corporations
become the instrument of the nation-state, in this case to undertake
the reconstruction of Iraq. They, not the government, are the purveyors
of laws and customs and democratic ideals.
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The main instrument of the
U.S. in Iraq is not the Pentagon, the U.S. Agency for International
Development, or the Army Corps of Engineers, but the Bechtel Group.
The giant international engineering outfit has won a contract worth
up to $680 million that gives the company a leading role in rebuilding
Iraq, a job that eventually may cost $100 billion.
Bechtel maintains close ties
with politicians and the government. It is the 17th largest defense
contractor, with $1.03 billion in Defense Department deals. (The firm's
total revenues are $11.6 billion.) It gave $1.3 million in campaign
contributions during the 1999-2000 cycle, according to the Center for
Responsive Politics. Some of Bechtel's government connections are well-known:
Jack Sheehan, a vice president, is on the Defense Policy Board, which
advises Secretary of Defense Donald Rumsfeld. Riley Bechtel, the company
chairman, is on the President's Export Council. Other connections are
not so well-known. Former Bechtel executive Ross Connelly is chief operating
officer of the Overseas Private Investment Corporation (OPIC), the government
office that insures speculative business ventures in unsafe parts of
the world. OPIC has no work in the Middle East at the moment, but as
a spokesman put it last week, "The conflict is still winding down,
and OPIC as of yet has not received official authorization to activate
its programs in Iraq. However, given OPIC's traditional role in supporting
U.S. investment in post-war reconstructions such as Afghanistan and
the former Yugoslavia, it is safe to assume that OPIC will play an important
role in the reconstruction of liberated Iraq."
Both Reagan's secretary of
defense, Caspar Weinberger, and Reagan's secretary of state, George
Shultz, came from Bechtel. Shultz is currently a director. Reagan sent
Rumsfeld to Iraq as his special envoy during the early 1980s to encourage
Saddam in Iraq's war with Iran. According to memos uncovered by the
National Security Archives, Rumsfeld may also have been upholding Shultz's
private interests in Bechtel by using his visits to lobby for an oil
pipeline Bechtel wanted to build from Iraq to the Gulf of Aqaba. In
the end, Saddam refused to go for the pipeline.
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If Bechtel is the senior
partner in rebuilding Iraq, its junior partner is Vice President Dick
Cheney's old employer, Halliburton. Its subsidiary Kellogg Brown &
Root (KBR) won an earlier deal to put out oil field fires. Through KBR,
Halliburton has an open-ended $7 billion contractits secretive
details still classifiedwith the U.S. military to provide logistical
support for various operations around the world.
In a recent conference call
with stockholders, Halliburton execs told of "a cost-reimbursable
design-build contract valued in excess of $100 million for construction
of the new U.S. embassy compound in Kabul, Afghanistan, and two contracts
from the U.S. State Department for security upgrades and general construction
work at multiple facilities of at least $70 million."
Incidentally, Halliburton
has worked for some pretty unsavory governments, including those of
Azerbaijan, Iran, Iraq, Libya, and Nigeria. It has lobbied for removal
of sanctions against those countries and in certain instances appears
to have skirted sanctions by operating through foreign subsidiaries.
(At one point, the company opened a subsidiary in Iran despite sanctions.)
Halliburton has also been
remarkably free and easy with taxpayers' dollars. Among other incidents,
it wound up having to pay the government $2 million for inflating costs
of work between 1994 and 1998 at Fort Ord in California while Cheney
was the firm's president. More recently, stockholders took Halliburton
to task for building a pipeline in Burma because of human rights abuses
there. Cheney has been accused of trying to skirt tax laws by placing
44 of the firm's subsidiaries in foreign tax havens, according to Lee
Drutman and Charlie Cray of Citizen Works. And Halliburton is the subject
of an SEC probe and shareholder lawsuit about alleged accounting irregularities
stemming from policies the company instituted while Cheney was CEO.
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The overall administrator
of U.S. operations in Iraq is retired general Jay Garner, who ingratiated
himself with his superiors during the first Persian Gulf War with adept
handling of the Kurds in northern Iraq. During the Vietnam War, Garner
was a district senior adviser in the strategic hamlet program. Recently
questions were raised about Garner's judgment in accepting a free trip
to Israel in 2000, after which he declared his support for the government
there, all this taking place during Israel's incursions into Palestinian
territory.
He has been president of
SY Coleman, a firm that specializes in military guidance systems and
is owned by a bigger firm called L-3 Communications.
Garner's operations in Iraq
will be closely tied to Iraq's oil industry. Oil is Iraq's major asset,
and the Bush government has said repeatedly that the country can at
least partially rebuild itself by selling that oil. A crucial and immediate
goal is to find people for two key jobs: a manager of operations for
the Iraqi state national oil company and an experienced oil person to
run the company's marketing operation.
As of last week, two men
with long experience at Shell and BP were being discussed as possible
candidates.
Phillip Carroll, cited by
oil industry sources as a possible director of Iraqi oil operations,
most recently was CEO of Fluor Co., and before that was president of
U.S. Shell, the American subsidiary of Royal Dutch Shell, which is owned
by both British and Dutch interests. Carroll has acknowledged he has
been approached for the job.
Both Fluor and Shell have
aroused controversy in the past. Fluor is all over the energy world,
with pipeline deals in Alaska, oil in Kazakhstan, gas and petrochemicals
in Saudi Arabia, and so on. It is a Fortune 500 company with a backlog
of contracts, as of last year, of $10.6 billion. Along with two other
companies, Fluor has contracts for as much as $100 million from the
Army Corps of Engineers for work in Afghanistan.
The company also currently
faces a lawsuit by South African black workers claiming, according to
activists, that Fluor "exploited and brutalized them during the
apartheid era." Among other things, the claimants say Fluor security
men dressed up as Ku Klux Klan members in white robes and attacked unarmed
workers. Fluor denies all the allegations.
Before working at Fluor,
Carroll ran operations for U.S. Shell during a period when the parent
Royal Dutch Shell was under attack for its handling of protests against
its operations on the Ogoni tribal lands in Nigeria. Activists were
attacked by a private police force allegedly run by the company. Nigeria
arrested opposition figures, including the leader, Ken Saro-Wiwa, and
hanged them.
The second man mentioned
by industry sources for a major job in Iraq is Rodney Chase, a long
time BP executive involved in major deals and deputy chairman of beverage
behemoth Diageo (Smirnoff's, Bailey's, Captain Morgan, Jose Cuervo,
et al.) and supermarket superfirm Tesco (the United Kingdom's largest
retailer).
Discussion of outsiders running
the Iraq oil business already has ignited controversy. Issam al-Chalabi,
the Iraqi oil minister from 1987 to 1990 (not the U.S. puppet Ahmed
Chalabi), told the Platts.com news service last week, "I believe
that any kind of direct rule by the Americans, whether military or civilian,
will be rejected and resisted by Iraqis and will not be to the advantage
of the Americans."
Commenting on one report
that speculated Bush would set up 23 ministries, al-Chalabi said such
a scheme was "absolutely absurd." He said Iraqi oil employees
couldn't stomach it, adding, "I would let the Iraqis run their
institutions, ministries, companies, departments." On the other
hand, a UN-run operation, in his view, held out some possibilities.
But the U.S. seems intent
on avoiding the UN if it can. A recent proposal by the Heritage Foundation
suggests creating a federal government with representation by the three
main groups: Kurds, Sunni Muslims and Shiite Muslims. Under this scheme
the U.S. government, through Garner, would guide Iraq toward privatization
of the oil industry.
But having captured the Iraqi
oil fields, the U.S. may find that it's not so simple to market the
oil because of Iraq's outstanding debts abroad. Creditors may well attempt
to tie up any oil shipments in an effort to get their money back. Among
them are the major oil companies, whose holdings were nationalized in
the 1950s. These firms may lay claim to their former holdings, which
would cause an endless legal fight. Until ownership of Iraqi oil is
firmly settled, the UN's Oil for Food program is the one existing and
agreed-upon arrangement for oil sales. Even Bush seems to acknowledge
that. In the end, it may not be so easy to get rid of the UN.
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Additional reporting: Phoebe
St John and Joanna Khenkine