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Robbing Peter to pay Paul
By
Emad Mekay
WASHINGTON - Accused of limiting
reconstruction contracts in Iraq to United States
companies, the administration of President George W Bush
says that it will open some US$900 million worth of
projects to sub-contractors from non-US firms. But at
the same time, the administration has begun the process
of seizing billions of dollars held by Iraq in the US
and other countries, which it intends to use to pay for
those contracts.
US Agency for International
Development (USAID) administrator Andrew Natsios says
that the bidding process for rebuilding Iraq will soon
open up for any company, including international ones,
seeking sub-contracts from "primary US firms". "It will
be completely competitive," said Natsios, adding that
other countries, including Japan, Britain, Kuwait and
Nordic nations, were signaling that they would put money
towards the reconstruction of Iraq. This, he said, would
mean that those nations might want to give some
contracts to their own local firms.
"More than
50 percent of the money that goes to the contracts will,
in fact, go through sub-contracts, because these
projects are so big and the time that they [primary
contractors] have to carry out the requirements of the
contract is so short," Natsios said.
The
contracts include managing humanitarian and
transshipment operations by air; emergency repair of
electrical supplies, water and sanitation systems, roads
and bridges and public buildings such as hospitals and
schools; upgrading irrigation structures and port
facilities; warehousing; customs clearance; trucking and
provision of bottled water.
Iraq has suffered
from a long war with Iran in the 1980s, followed by the
1991 Gulf war with the US and allied nations and 12
years of United Nations sanctions that have left the
country's infrastructure neglected and ill-managed, so
reconstruction will prove to be a bonanza for the lucky
engineering and construction companies.
The New
York-based Council on Foreign Relations estimates the
cost of reconstruction at $20 billion a year for several
years, while the administration has been floating an
estimated figure of around $100 billion overall.
But Washington's decision to restrict
reconstruction contracts in Iraq to gigantic US
companies that looked set to lock in profitable
contracts, prompted accusations that the Bush
administration was seeking to benefit a select few US
companies rather than find the best, and possibly the
cheapest, options for the Iraqi people.
After
USAID waived the usual competitive bidding process, the
awarding of contracts was seen to be shrouded in
secrecy, and of benefit to firms that have relations
with the administration, or links to the agency. When no
foreign companies were invited to tender for the spoils
of war, European Union external relations commissioner
Chris Patten described the US-only bidding as
"exceptionally maladroit".
But Natsios said on
Wednesday the deals would go to US companies because of
security concerns - getting clearance for any new firms
would take too long. The companies bidding already have
security classification, he added. "Normally, we source
American companies because it's American taxpayers'
money," he said.
But that may not be entirely
true. Only last week, Washington said that it was
seizing $1.7 billion in Iraq's money frozen during the
1991 war. The administration said that it was
transferring the funds to a New York Federal Reserve
account and earmarking the money for humanitarian relief
and war efforts, without consulting the Iraqi people -
the funds' real owners.
Washington, backed by UN
Secretary General Kofi Annan, is also trying to seize
between $8 billion and $11 billion in Iraq's escrow
account under the "oil-for-food" program, and redirect
those oil revenues to fund humanitarian assistance and
possibly reconstruction.
US State Department
officials have previously said that Washington would use
some of Iraq's oil revenues - about $20 billion a year -
towards reconstruction and the war effort. But seizing
the money and redirecting it to US firms without
consulting the Iraqi people is wrong, says one expert.
"This is absolutely illegal," said Phyllis Bennis,
fellow at the Institute for Policy Studies in
Washington. "It flies in the face of international law.
You cannot just freeze the assets of a country and then
later give them to somebody else."
Bennis said
as the "belligerent occupying power", the US is
obligated to provide all the humanitarian needs of the
Iraqi population. "That means that all the oil-for-food
money ... that's been sitting in the account, has to sit
there until once again there is a legitimate government
with sovereignty in Iraq, who then takes control of that
money. That's Iraqi money. It is not the UN's money and
it's not Washington's money."
On Monday, USAID
awarded a $4.8 million contract to Seattle-based
Stevedoring Services of America to manage the Iraqi port
of Umm Qasr, recently captured by invading US and
British troops. It was the second of eight contracts
worth another $900 million to be awarded by USAID for
rebuilding infrastructure.
Among the other major
companies bidding for the primary contracts are
heavyweights like Dallas-based Halliburton, whose former
CEO is Vice President Dick Cheney, and San
Francisco-based Bechtel, whose CEO Riley Bechtel was
appointed last month by Bush to the President's Export
Council, an economic advisory panel. Industry giant
Schlumberger and Texas-based firms Weatherford
International and Baker Hughes are also among the
companies likely to win contracts in Iraq. More
engineering and construction contracts are expected to
be awarded later this week or early next week.
(Inter Press Service)
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