Gerhard Sporl and Bernhard Zand, "Legal, But Disreputable: US companies' ties to the administration count in the awarding of contracts in postwar Iraq," Der Spiegel, 15 December 2003


The winners in this war are invisible. Those who come to Baghdad nowadays to do business try to remain as incognito as possible. There is fear in the air. American SUVs with darkened windows bring businessmen and commercial agents to only the most essential meetings. In most cases, they are escorted by foreign security personnel.

The American firm Kellogg Brown & Root (KBR) has transformed its headquarters in the Sheraton Hotel on the banks of the Tigris River into a veritable fortress. From the former Presidential Suite, the Americans now enjoy an unobstructed view of the former Saddam Palace across the river, where their compatriot, Paul Bremer, resides as US Administrator.

This proximity to politics is telling. In the reconstruction of Iraq, a vigorous crony capitalism has become established, with politicians and businesspeople taking advantage of it in equal measure. Scruples are seldom voiced about the unseemliness of such close relationships between politics and business. A Washington study recently found that ten major companies that are playing a key role in the reconstruction of Afghanistan and Iraq were also some of the most generous contributors to the Republicans during elections.

Halliburton, the world's largest provider of services to the oil industry, is the prime example of the snug relationship between the White House and corporate America. Vice President Richard Cheney was the chairman of Halliburton, and is still paid a portion of his salary, a payment he extended beyond the term of his employment there, legally but disreputably.

Under Cheney, Halliburton hired Washington insiders and doubled its contributions to political parties to 1.2 million dollars. Today retired General Charles Dominy is the Texas company's chief lobbyist in Washington. During his military career, Dominy was a member of the Army Corps of Engineers, which routinely awards major contracts to Halliburton.

To rebuild Iraq's infrastructure, the Houston-based firm managed to acquire contracts worth two billion dollars. For 1.4 billion dollars, Halliburton's subsidiary KBR is focusing its efforts on repairing the oil fields. Now the Pentagon is investigating allegations that KBR may have overcharged the US occupation forces by 61 million dollars for gasoline imported from Kuwait. "If we overpaid," says Cheney's boss George W. Bush, "we have to get the money back."

In the conquered Middle Eastern state, Halliburton has made sure that it is very well-placed for the biggest prize of all, which is still in the offing - the reconstruction and expansion of the country's oil production infrastructure, a project valued at an estimated five billion dollars. On December 19, a decision is to be reached on the use of the 18.3 billion dollars in reconstruction aid now approved by the US Congress.

Before being appointed Secretary of State under Ronald Reagan, George Schultz was president of construction giant Bechtel. Today he is a member of the company's board of directors. Bechtel was awarded the contract for road construction, for rebuilding the power infrastructure, for water works and sanitary systems. Because of the delays caused by massive attacks in Iraq, the costs of the entire project have increased by 680 million dollars to a total of more than a billion.

Bechtel has also signed a large number of contracts with subcontractors. In theory, the bidding process is open to companies from any country. In fact, however, it is an open secret that America's military allies are being given preferential treatment, entirely in keeping with instructions from Washington.

Such close cooperation between politics and business has always been a tradition among US presidents, but the Republicans under George W. Bush are taking advantage of it openly and shamelessly. Party strategist Charlie Black has made a business of brokering these deals. First he helped Ahmed Chalabi, whom the Pentagon still hopes to install as Iraq's first post-war prime minister. Now he consults to companies that are looking to do business in Iraq, and Black's best recommendations are his contacts at the White House and in the Iraqi Governing Council.

Another good old boy is Joe Allbaugh, who was in charge of the Federal Emergency Management Agency until March. Now he heads his own firm, providing costly advice to American corporations on how to get themselves a share of the business in Iraq. Allbaugh prides himself unashamedly on his friendship with Bush, and asks: "Should I stay out of it because my friend is the President of the United States?"


Translated by Christopher Sultan

Copyright 2003 The New York Times Company


Return to Vinnie's Home Page

Return to Iraq War Page

Return to Bush Administration Page