For Sale: Iraq

John Tierney, September 24, 2003

For Sale: A fertile, wealthy country with a population of around 25 million… plus around 150,000 foreign troops, and a handful of puppets. Conditions of sale: should be either an American or British corporation (forget it if you’re French)… preferably affiliated with Halliburton. Please contact one of the members of the Governing Council in Baghdad, Iraq for more information.

To hear of the first of the economic reforms announced by Kamil Al-Gaylani, the new Iraqi Finance Minister, you’d think Iraq was a Utopia and the economy was perfect only lacking in… foreign investment. As the BBC so wonderfully summarized it: the sale of all state industries except for oil and other natural resources. Basically, that means the privatization of water, electricity, communications, transportation, health… The BBC calls it a ‘surprise’… why were we not surprised?

After all, the Puppets have been bought- why not buy the stage too? Iraq is being sold- piece by piece. People are outraged. The companies are going to start buying chunks of Iraq. Or, rather, they’re going to start buying the chunks the Governing Council and CPA don’t reward to the ‘Supporters of Freedom’.

The irony of the situation is that the oil industry, the one industry that is *not* going to be sold out, is actually being run by foreigners anyway.

The whole neighborhood knows about S. who lives exactly two streets away. He’s what is called a ‘merchant’ or ‘tajir’. He likes to call himself a ‘businessman’. For the last six years, S. has worked with the Ministry of Oil, importing spare parts for oil tankers under the surveillance and guidelines of the “Food for Oil Program”. In early March, all contracts were put ‘on hold’ in expectation of the war. Thousands of contracts with international companies were either cancelled or postponed.

S. was in a frenzy: he had a shipment of engines coming in from a certain country and they were ‘waiting on the border’. Everywhere he went, he chain-smoked one cigarette after another and talked of ‘letters of credit’, ‘comm. numbers’, and nasty truck drivers who were getting impatient.

After the war, the CPA decided that certain contracts would be approved. The contracts that had priority over the rest were the contracts that were going to get the oil pumping again. S. was lucky- his engines were going to find their way through… hopefully.

Unfortunately, every time he tried to get the go-ahead to bring in the engines, he was sent from person to person until he found himself, and his engines, tangled up in a bureaucratic mess in-between the CPA, the Ministry of Oil and the UNOPS. By the time things were somewhat sorted out, and he was communicating directly with the Ministry of Oil, he was given a ‘tip’. He was told that he shouldn’t bother doing anything if he wasn’t known to KBR. If KBR didn’t approve of him, or recommend him, he needn’t bother with anything.

For a week, the whole neighborhood was discussing the KBR. Who were they? What did they do? We all had our own speculations… E. said it was probably some sort of committee like the CPA, but in charge of the contracts or reconstruction of the oil infrastructure. I expected it was probably another company- but where was it from? Was it Russian? Was it French? It didn’t matter so long as it wasn’t Halliburton or Bechtel. It was a fresh new name or, at least, a fresh new set of initials. Well, it was ‘fresh’ for a whole half-hour until curiosity got the better of me and I looked it up on the internet.

KBR stands for Kellogg, Brown and Root, a subsidiary of… guess who?!... Halliburton. They handle ‘construction and engineering services for the energy community’, amongst other things. Apparently, KBR is famous for more than just its reconstruction efforts. In 1997, KBR was sued $6 million dollars for overcharging the American army on sheets of plywood! You can read something about the whole sordid affair here.

They are currently located in the ‘Conference Palace’. The Conference Palace is a series of large conference rooms, located in front of the Rashid Hotel and was reserved in the past for major international conferences. It is now the headquarters of KBR, or so they say. So foreign companies can’t completely own the oil industry, but they can run it… just like they’ll never own Iraq, but they can run the Governing Council.

Someone sent me an email a couple of weeks back praising Halliburton and Bechtel to the skies. The argument was that we should consider ourselves ‘lucky’ to have such prestigious corporations running the oil industry and heading the reconstruction efforts because a. they are efficient, and b. they employ the ‘locals’.

Ok. Fine. I’ll pretend I never read that article that said it would take at least two years to get the electricity back to pre-war levels. I’ll pretend that it hasn’t been 5 months since the ‘end of the war’ and the very efficient companies are terrified of beginning work because the security situation is so messed up.

As for employing the locals… things are becoming a little bit clearer. Major reconstruction contracts are being given to the huge companies, like Bechtel and Halliburton, for millions of dollars. These companies, in turn, employ the Iraqis in the following way: they first ask for bids on specific projects. The Iraqi company with the lowest bid is selected to do the work. The Iraqi company gets *exactly* what it bid from the huge conglomerate, which is usually only a fraction of the original contract price. Hence, projects that should cost $1,000,000 end up costing $50,000,000.

Now, call me naïve, or daft, or whatever you want, but wouldn’t it be a. more economical and b. more profitable to the Iraqis to hand the work over directly to experienced Iraqi companies? Why not work directly with one of the 87 companies and factories that once worked under the ‘Iraqi Military Council’ and made everything from missiles to electrical components? Why not work directly with one of the 158 factories and companies under the former Ministry of Industry and Minerals that produced everything from candy to steel girders? Why not work with the bridge, housing and building companies under the Ministry of Housing that have been heading the reconstruction efforts ever since 1991?

Some of the best engineers, scientists, architects and technicians are currently out of work because their companies have nothing to do and there are no funds to keep them functioning. The employees get together a couple of days a week and spend several hours brooding over ‘istikans’ of lukewarm tea and ‘finjans’ of Turkish coffee. Instead of spending the endless billions on multinational companies, why not spend only millions on importing spare parts and renovating factories and plants?

My father has a friend with a wife and 3 children who is currently working for an Italian internet company. He communicates online with his ‘boss’ who sits thousands of kilometers away, in Rome, safe and sure that there are people who need to feed their families doing the work in Baghdad. This friend, and a crew of male techies, work 10 hours a day, 6 days a week. They travel all over Baghdad, setting up networks. They travel in a beat-up SUV armed with cables, wires, pliers, network cards, installation CDs, and a Klashnikov for… you know… technical emergencies.

Each of the 20 guys who work with this company get $100/month. A hundred dollars for 260 hours a month comes to… $0.38/hour. My 16-year-old babysitter used to get more. The Italian company, like many other foreign companies, seems to think that $100 is appropriate for the present situation. One wonders the price of the original contract the Italian company got… how many countless millions are being spent so 20 guys can make $100/month to set up networks?

John Snow, US Treasury Secretary, claimed that the reforms were the “proposals, ideas, and concepts of the Governing Council" with no pressure from the American administration. If that’s true, then Bush can pull out the troops any time he wants because he’ll be leaving behind a Governing Council that is obviously more solicitous of Halliburton and Co. than he and Cheney can ever hope to be…