Talking Points about the Iraq Contracts and War Profiteers:

SUBTOPICS:

The Lack of Effective Oversight
Problems with the Reconstruction
Crony Contracting: Halliburton, Cheney, etc.
Oil
Privatization
Private Military Contractors

INTRODUCTION

March 31, 2003

Q. New York Times columnist Thomas L. Friedman claims that the Iraq war is "the most important liberal, revolutionary U.S. democracy-building project since the Marshall Plan" (column, Nov. 30). Is that a valid comparison?

A. The Marshall Plan delivered on the promise of helping European nations rebuild their infrastructure after the Second World War. It will be difficult to build a democracy in Iraq after prosecuting a unilateral war based on deception, half-truths and a total disregard of international opinion, and through an occupation that has favored hand-picked appointees of the occupying force. Moreover, the Marshall plan did not include money to continue military operations. Of the $87 billion in the most recent appropriation for Iraq and Afghanistan, $66 billion was allocated to military spending and $5 billion for training the new Iraqi police (which critics describe as training for counterinsurgency).

There is another way to look at the Marshall Plan that suggests there are similarities with the U.S. occupation of Iraq, though probably not in the way Friedman suggests. As noted historian Howard Zinn has suggested:

"The United States, giving economic aid to certain countries, was creating a network of American corporate control over the globe, and building its political influence over the countries it aided. The Marshall Plan of 1948, which gave $16 billion in economic aid to Western European countries in four years, had an economic aim: to build up markets for American exports. George Marshall was quoted in an early 1948 State Department bulletin: "It is idle to think that a Europe left to its own efforts... would remain open to American business in the same way that we have known it in the past." ... When the Plan was beginning, Truman’s Secretary of State Dean Acheson said: "These measures of relief and reconstruction have only been in part suggested by humanitarianism. Your Congress has authorized and your Government is carrying out, a policy of relief and reconstruction today chiefly as a matter of national self-interest."

Q. Of the $87 billion supplemental appropriation for Iraq and Afghanistan last fall, how much is actually earmarked for reconstruction?

A. Only $18.6 billion. The rest goes to military operations. (See Pub. Law 108-106). Critics suggest that the ratio is just one example of how the U.S. is more interested in the occupation than the reconstruction of Iraq.

Q. What other money is being used to rebuild Iraq?

A. In addition to the money allocated by Congress, the US-led Coalition Provisional Authority (CPA) controls Iraq's state finances through the Iraqi Development Fund (which manages money from oil sales, as well as billions of dollars repatriated from abroad). Money from the IDF is also used to help rebuild the war-torn country.

The IDF was endorsed by a UN resolution in May 2003, but the CPA's lack of transparency was criticized in late 2003, when observers such as the British relief organization Christian Aid reported that the CPA had not properly accounted for $4 billion of $5 billion in oil revenues taken in since the CPA took over.

Donor countries and agencies pledged an additional $13 billion towards rebuilding Iraq at a UN/World Bank donor conference held last October in Madrid. Another donor conference is scheduled to be held in Qatar in May.

Iraq Revenue Watch issued the fifth of a series of reports critiquing the CPA's lack of transparency and budget accountability in April.

A. The World Bank and UN estimate the cost at $55 billion over the next four years.

Army Maj. Gen. Carl Strock, deputy director of operations for the CPA, estimated that $7 billion was spent on reconstruction projects by the CPA through the end of 2003. Most of the cost ($4.2 billion) was paid out of Iraqi oil-export revenues.

The Iraq Reconstruction and Relief Fund spending plan 2nd Quarter Report includes a Table which includes the status of funds, new allocations between projects, and estimated allocations for the rest of FY 2004 and FY 2005. For the full report click HERE.

The total cost of reconstruction AND the war and occupation is another issue altogether. Most estimates place the total cost of the war at hundreds of billions of dollars. For details see these reports and commentaries by Taxpayers for Common Sense, Fourth Freedom Forum (William Hartung), William D. Nordhaus (NY Rev. of Books, 12/5/02), and James K. Galbraith.

Related Links:

Government sites:
Coalition Provisional Authority business information page
CPA Program Management Office
OMB Quarterly Reports to Congress
House Committee on Government Reform (Rep. Henry Waxman, ranking member) Iraq Contracts page
Center for Public Integrity's links to Iraq contracts and reports
Wolfowitz policy memo forbidding foreign countries from contracts
Senators Daschle and Dorgan's response to Halliburton kickback story (Congressional Record)

Business Sites:

Iraq Business Reporter
Patton Boggs Government Contracts Practice Group, Washington, DC
The Center for Public Integrity has posted a list of contractors.

Key News Reports:

"Contract Sport" (What did the Vice-President do for Halliburton?) by Jane Mayer, The New Yorker, 2/9/04.
Halliburton kickbacks story Wall St. Journal, 1/23/04 (as read into Congressional Record)
"Windfalls of War" -- an excellent overview by the Center for Public Integrity
"Iraq Reconstruction Bottom Line" by Herbert Docena (Asia Times, 12/25/03)
Making a Killing (Institute for Southern Studies special investigation)
Risky Business by Naomi Klein (explores key role that OPIC plays as a consequence of reluctant insurers)
"Band of Brothers" report by Stephen Pizzo. (Includes profiles of different contractors).
"Operation Iraqi Lawsuit" by George C. Wilson (originally published in the National Journal) - explores possible legal consequences of the war and post-war decisions such as privatization.
Companies that did business with Saddam (L.A. Times story)

Groups Monitoring the Occupation and the Contracts:

Iraq Revenue Watch, a project of the Open Society Institute
Labor rights in Iraq are monitored by U.S. Labor Against the War
Corpwatch USA has regular news reports from Iraq.
Taxpayers for Common Sense analyzes contractor accountability questions.
Common Cause (Eye on Iraq) is monitoring the contracts and pushing for action on the Hill.
Project on Government Oversight exposes waste, fraud and abuse in defense and other government contracts.
The Institute for Southern Studies is organizing a Campaign to Stop War Profiteers
World Policy Institute's Arms Trade Resource Center
Government Accountability Project is challenging the Bush administration's Executive Orders (e.g. 13303) which grant legal immunity to U.S. oil companies operating in Iraq.
Sustainable Energy and Economy Network investigates oil-related issues.

General Iraq sites:

Occupation Watch
United for Peace and Justice
Foreign Policy in Focus
IPS Iraq Index
Global Policy Forum
Electronic Iraq

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