How Lucrative is this war????
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Halliburtons Axis of Influence
By Frida Berrigan | 3.28.03 print | email | comment
Is Dick Cheney still on Halliburtons payroll? Even though he supposedly sold off his assets when he moved to Washington, the vice presidents financial records reveal he is receiving between $100,000 and $1 million in deferred compensation from the company where he served as CEO for five years. The payment is not a bonus for a job well done: Cheney decided to take his severance package over five years instead of in a lump sum. Nonetheless, as his former company rakes in millions in new contracts from the war Bush and Cheney are presently pursuing in Iraq, one has to ask, Who does Cheney work for?
Even as the war rages on, Halliburton subsidiary Kellogg Brown & Root (KBR) is lining up for contracts to rebuild Iraq. According to the Wall Street Journal, this could be the largest government reconstruction effort since Americans helped to rebuild Germany and Japan after World War II. And while it is too soon to say exactly how much reconstruction will cost or how much profit is at stake, Michael Urban, an analyst with Deutsche Bank, estimates that Halliburton and other companies could reap $3 billion in infrastructure and restoration work.
But is Halliburton right for the job? Critics argue that the U.S. Agency for International Development ignored the expertise and experience of well-regarded NGOs with decades of experience in humanitarian work in Iraq in their secretive contract process. USAID asked just five for-profit corporations to submit bids for $900 million in reconstruction contracts for the initial phase of work, scheduled to last just six months. Of course, these companies will be best situated to win billions in future contracts. An American Academy of Arts and Sciences report estimated that the reconstruction of Iraq could cost anywhere from $30 billion to $105 billion over the next decade.
KBR not only has the corner on postwar reconstruction, they were also granted a potentially huge contract to fight oil well fires throughout Iraq, even though they did not submit a bid for the job. In November, the Pentagon hired KBR to write a classified contingency plan for dealing with the fires, allowing the company to position itself for this job long before the war was a fait accompli. President Bush just asked Congress for $500 million for oil field repair, and KBR is standing by to take the money.
The war on terrorism, which Cheney warned might never end- at least not in our lifetime -promises profits almost guaranteed to last a lifetime. In December 2001, the company was granted an open-ended contract for Army troops supply and Navy construction. KBR is providing planning, base camp and facilities maintenance, laundry, food and airfield services, and property accountability wherever U.S. troops go in the next 10 years. So far they have gone to Afghanistan, the Philippines, Yemen, Iraq and probably other countries the public has not yet been told about.
The contract is unique in that there is no ceiling on cost. So while the deal could be worth billions, its unclear how many billions. KBR will be reimbursed for every dollar spent plus a base fee of 1 percent, which guarantees profit. On top of that, if the military is pleased with KBRs performance, theyll add a bonus, calculated as a percentage of the companys costs. Contract expert Steve Schooner, a law professor at George Washington University, described the deal as an unprecedented way of saying, Come up with creative ways to spend my money, and the more you spend, the happier Ill be.
In addition to KBRs blank check, they have been granted several other contracts related to the war on terrorism:
$2 million to reinforce the U.S. Embassy in Tashkent, Uzbekistan, in November 2001;
$100 million to convert the Subic Bay U.S. Navy base in the Philippines into a modern commercial port facility, in the same month;
$16 million to build a prison for captured Taliban fighters at Guantanamo Bay, Cuba, in March 2002.
All of this has not escaped the attention of critics of the Bush administration. Rep. Maxine Waters (D-California) recently offered an amendment in the House that would restrict companies that enjoy close ties to the administration from bidding on government rebuilding contracts. The measure was roundly defeated. Waters notes: Given the suspicion that many Americans have about why were going to war and the constant speculation that were at war for oil, I think the vice president should do everything he can to remove even the appearance of conflicts of interest.
Frida Berrigan is a senior research associate with the Arms Trade Resource Center, a project of the World Policy Institute.
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