Corporate Colonialism

Companies . . . March!

Like one of the 19th-century European colonial empires, 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.


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.

A firm hand.
photo: Susan Sterner www.whitehouse.gov
A firm hand.

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.


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 contract—its secretive details still classified—with 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.


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.

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