No Money for the Halliburton Development Fund

By Ian Williams, AlterNet. Posted October 29, 2003.

According to the incurable optimists in the White House, the Madrid donors' conference for Iraq was a diplomatic triumph, as country after country dipped into its pockets to help the American reconstruction effort. Of course, if you actually paid attention what the participants were saying and doing, the take-home message to Washington was quite to the contrary.

The rest of the world is now questioning not just the morals of the U.S. occupation, but also its method.

The push to raise international funding, insofar as it made any sense at all, was an attempt by Powell to win an inter-departmental battle in Washington. Still trying to convince skeptical Pentagonistas and Dubya of the dividends of a multilateral approach, the State Department is wooing the less reactionary swing vote within the administration with a demonstration of the tangible cash benefits of working with others.

Powell displayed his share of Washingtonian chutzpah during the conference, telling the French press that France and Germany "would have better served the cause of the international community if they had accepted to make additional financial contributions." In other words, they should have paid to clean up for a war they opposed, presumably so that folks at the Pentagon would forgive them being so accurate about the results of ignoring their advice!

Powell succeeded in his donor drive, but only up to a point. Few if any of the assembled donors were prepared to put any of their cash into the so-called Iraqi Development Fund, into which the residual money from the Oil For Food program, future oil revenues, and any other cash assets of the Iraqi regime are supposed to go. They will instead be channeling their money directly through the "UN window" into funds under international rather than coalition control.

They have good reasons for their reluctance to trust Uncle Sam with their money. To begin with, it has taken six months for the U.S. to allow the establishment of the International Advisory and Monitoring Board, which is supposed to supervise the allocations made by the Development Fund, which increasingly resembles a Halliburton/Bechtel moneybox.

Faced with the obduracy of the multinational institutions who actually wanted to supervise the development fund spending rather give it the desired Arthur Anderson/Enron rubber stamp, Satrap Bremer finally succumbed on the very eve of the Madrid conference. The U.S. agreed to allow appointments on terms specified by the institutions, which include the stipulation "that export sales of petroleum, petroleum products and natural gas from Iraq are made consistent with prevailing international market best practices."

In other words, no sweetheart deals for GOP contributors. But the concession was too little, too late. Most of the donors had already noticed which way the cash was flowing: right into the pockets of U.S. companies.

That's the reason Washington's demand -- recently reiterated as part of resolution 1511 at the UN -- that all outstanding Iraqi government assets be transferred into the fund, has met with little success. Other governments have been less than impressed, and in no small part due to the fate of the $1.7 billion of Baghdad's assets that were frozen in the United States.

The White House confiscated those funds under the Patriot Act, ensuring that they were technically no longer considered Iraqi assets. While U.S. Treasury officials testified to Congress that the money was used "for the benefit of the Iraqi people" they have not been handed over to the Iraqi Development Fund. And yes, there is a Santa Claus. The seized assets are as unlikely to end up in the reconstruction fund as the large stashes of hundreds of millions of greenbacks that were recovered in the early days of the war.

Given this track record of American good faith, many, indeed possibly all, of the large and round figures announced triumphantly at Madrid will bypass the Bremer Slush Fund. Most foreign donations will be devoted to financing aid projects conducted without Halliburton's help, but through a joint UN/World Bank fund. The fund's recently drafted rules repeatedly refer to spending the money in conjunction with the Iraqi and not coalition authorities.

A perhaps equally disheartening development for Halliburton & Co was the statement by the UN's acting head in Iraq, Lopes da Silva, who pointed out that the UN had "incorrectly assumed that the professional classes would be displaced, and they have not." He was tactfully alluding to the huge proportion of the cost of previous aid exercises that had been eaten up by expensive international experts and contractors. Since Iraq has little or no need for such outside expertise, it is yet another reason to hasten the empowerment of an indigenous Iraq government that would be more likely to hire Iraqis than Texans. It would allow the Iraqi professionals in ministries and state institutions to make policy and technical choices, decide priorities, develop strategies and take the relevant decisions, said da Silva.

Indeed most UN speakers took pains to point out the long relationships that the organization had at every level with the Iraqis, and the competence of the locals. Once again, the not-so-subtle subtext pointed to the superfluity of U.S. occupation.

The nebulosity of all donation data suggests again that for Washington a major purpose of the donor conference is indeed to create an illusion of multilateral support, for both global and Washington consumption. But in this dialogue of the deaf, the gentle but sustained message from almost all concerned was an invitation to the U.S. to butt out of Iraq at the earliest opportunity. Judging from the media reports, that message was lost in translation.

Ian Williams is the Un correspondent for the Nation. His writes regularly for AlterNet, Foreign Policy in Focus, and Salon.

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