[casi] Fwd: [iac-disc.] Iraq reconstruction's bottom-line

[bluepilgrim <bluepilgrim@DELETETHISgrics.net>]

Very much relevant to current discussion!
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>Date: Mon, 29 Dec 2003 08:57:39 -0500
>Subject: [iac-disc.] Iraq reconstruction's bottom-line
>
>
><http://atimes.com/atimes/Middle_East/EL25Ak05.html>http://atimes.com/atimes/Middle_East/EL25Ak05.html
>
>Iraq reconstruction's bottom-line
>By Herbert Docena
>
>BAGHDAD - 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 of their country to fail but, at the same time, also
>earnestly hope that the reconstruction of their country succeeds. Still,
>no matter how hard the occupiers try to make the reconstruction go right,
>the US and its corporations still have no right staying here.
>
>No lights, no gas, no paychecks
>At night, most of downtown Baghdad is still in darkness, with only the
>blue and red police sirens lighting the streets and the only sound that 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, it's 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 don't hold your breath.
>
>South of the city, a double-columned queue of cars up to three kilometers
>in length snakes around street blocks and crosses a bridge over the
>Tigris, before finally terminating at a barbed 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, in a
>nightly vigil for gasoline in a country with the world's second-largest
>reserves of oil.
>
>During the day, some of Iraq's 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
>accepting their resumes is next to nil, but they come every day anyway.
>Others try their luck loitering in the hotel lobbies, besieging
>journalists or non-government 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. Strike up a
>conversation and the cabbies will most likely tell you what seems to have
>become the conventional wisdom today: not even Saddam Hussein 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 such simple tasks as switching the
>lights back on. 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 sewerage, a nonexistent
>bureaucracy, mass unemployment and widespread poverty - the general chaos
>that Iraq is still in 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 to the hands of the Americans. On the other hand, they
>could not quite believe how despite all the time and money, the world's
>sole superpower can't make the reconstruction process go right.
>
>For it's part, the US says the Iraqis are expecting too much too soon.
>"The bottleneck is sheer time," explained Ted Morse, the CPA's 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 United Nations-imposed sanctions, it took Iraq's
>bureaucrats and engineers only three months to restore electricity back to
>pre-war capacity, boasted Janan Behman, manager of Baghdad's Daura power
>station. Now after almost nine months and despite the involvement of US
>giant Bechtel, builders of the Hoover Dam and some of the world's biggest
>engineering works, Iraq's power sector is still only producing less than
>20 percent 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?
>
>It's the stupidity, stupid
>The occupation forces would not admit this, of course, but much of the
>problem could be attributed to the successful 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, it's 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 percent of those surveyed in a recent Gallup poll buy
>the line that the US came to establish democracy, the majority of the
>Iraqis are not actively fighting the occupation. While the resistance is
>growing, this is not an intifada yet. While a mere 6 percent of those
>surveyed believe the US is here to help (2), Iraqis who are in a 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. It's 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
>Jum'a, leader of the Southern Oil Company union, was firm: "You can't hide
>the moon. Every honest Iraqi should refuse the occupation."
>
>Keeping a dog hungry
>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
>they are doing.
>
>With projects scattered all over the globe, Bechtel is one of the world's
>biggest construction firms and it has achieved some of history's 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
>sub-contractors, 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 could be less sinister.
>
>Made in the USA
>A clue lies at the Najibiya power station in Basra, Iraq's 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.
>
>It's just what the Iraqis don't need at this time. Since May, Yaarub
>Jasim, general director for the southern region of Iraq's 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 through. Before it could deliver any
>of Jasim's requirements, 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, emphasized plant
>manager Hamad Salem, other spare parts were 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, Iraq's generators happened to have been provided by
>companies from France, Russia and Germany, the very countries banned by
>the Pentagon from getting contracts in Iraq, as well as Japan. On
>inspection, it was clear that the turbines don't carry the Stars and
>Stripes logo. The dilapidated turbines in Najibiya, for example, still
>bore "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 among the other banned corporations, Bechtel carries the
>requisite brand. Since its founding, Bechtel's 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 Richard Nixon, secretary of state to
>Ronald Reagan, and coincidentally enough, chairman of the advisory board
>of the Committee for the Liberation of Iraq. Also once included on
>Bechtel's payroll were former Central Intelligence Agency chief John
>McCone, former defense secretary Casper Weinberger and former North
>Atlantic Treaty Organization supreme allied commander Jack Sheehan.
>
>Grand business plans
>Awaiting urgent rehabilitation, Iraq's 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 Iraq's 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 sub-contractor. 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 Bechtel's contract includes making "road maps 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 Iraqi and US taxpayers' money. According to
>independent estimates, Bechtel stands to get up to US$20 billion worth of
>reconstruction contracts in the next few years. (3)
>
>If Bechtel has grander plans for Iraq's power sector, however, their
>officers are not telling the Iraqis. The utilities managers interviewed
>said they are not being consulted at all regarding Iraq's strategic energy
>plans. Bechtel officials don't even bother to explain what's taking them
>so long to deliver the parts they need. "They just collect papers," said
>Jasim, head of Iraq's southern district oil ministry.
>
>An incentive to fail
>Iraq's 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 there's limited electricity to run
>oil refineries that are crying for quicker action from Kellogg, Brown &
>Root (KBR), the Halliburton subsidiary and contractor for rehabilitating
>the oil infrastructure. According to workers from the South Oil Company in
>Basra, which KBR is obliged to rehabilitate, they are not aware of any
>repairs KBR has actually undertaken.
>
>With Iraq's oil refineries still awaiting rehabilitation, Iraq cannot
>refine enough crude oil to meet domestic consumption. The US is instead
>exporting Iraq's 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 Iraq's pipelines and refineries
>were suddenly fully functional and Iraq was able to produce all the oil it
>needed, it would be the end of KBR's lucrative oil-importing business.
>
>There has been no evidence that KBR is deliberately delaying the repair of
>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 Coalition Provisional Authority 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 [CPA head]
>promised us salaries. We heard it with our own ears. What happened to
>these promises?"
>
>A day after that the Pentagon's 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 Saddam's
>former army, but for only US$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 monthly increase in spending of only $49,000, small change
>beside the US's $4 billion monthly military spending in Iraq and a
>minuscule amount compared to the $61 million in overcharges by KBR,
>revealed by the Pentagon auditors.
>
>Hearing about all these developments, it would appear that 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 pro quo. Pressed to explain the
>failure of his ministry to significantly increase power, for example,
>Iraq's 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 dirty streets, the aging
>machines and the raging workers to the unbelievably long lines for
>gasoline, makes this explanation for Iraq's 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 isn't. Last November, the US Congress eventually passed George W
>Bush's $87 billion request for Iraq with no fuss. Before that, the US had
>already spent $79 billion on 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 government's assets as well as
>past and future revenues from Iraq's oil exports, including leftover funds
>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 Iraq's reconstruction is mixed in a pot containing the US's and
>other coalition-member countries' grants, plus the Iraqis' own funds.
>
>So there's money; it's just not going around. And here perhaps lies the
>solution to the mystery of how the world's superpower and the world's
>biggest corporations can't 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.
>Bechtel's useless Oklahoma-made air-conditioners will be paid for under
>the $680 million no-bid contract; but there will be no money for the
>sorely needed Russian-made components for Najibiya's turbines. Halliburton
>and its sub-contractors creamed off $61 million importing oil from Kuwait;
>but there will be no pay rise for Iraq's oil refinery workers.
>
>While the US finds it increasingly hard 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 cannot 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 Kellogg, Brown
>& Root, explained. "If it takes profit to motivate an organization to take
>on a tough job, we can live with that. Yes, there's 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 of the 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; it's 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 now has to be rebuilt.
>
>As Stephen Bechtel, the company's 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. 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: it's
>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 isn't. 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 Bechtel's 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 the
>responsible occupying power, should have had no qualms giving Iraqis what
>many emphatically say they need to finally make things work: the authority
>and the resources. "If only the money and spare parts were provided,"
>electricity official Jasim said, "we could do a surgical operation." "If
>I'm going to do it without KBR, I can do it," said al-Khshab. "We have
>been doing this for the past 30 years without KBR. Give me the money and
>give me the proper authority and I'll do it." But the US won't 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 coalition
>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 Coalition
>Provisional Authority. "If you do not, next time we'll come back with
>weapons."
>
>Notes
>
>(1) Steve Schifferes, "The challenge of rebuilding Iraq", BBC News October
>21, 2003.
>
>(2) Walter Pincus, "Skepticism about US 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.
>
>Herbert Docena herbert@focusweb.org is with Focus on the Global South. He
>was in Baghdad for the Iraq International Occupation Watch Center.
>
>(Copyright 2003 Asia Times Online Ltd. All rights reserved. Please contact
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>
>
>-------------------------------------------------
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>
><http://iraqaction.org/discussion.html>http://iraqaction.org/discussion.html


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