Bechtel Bails on Iraq
Last month, the Bechtel Corp. became the first major U.S. contractor to announce that it was pulling out of Iraq. Bechtel's departure marks yet another significant failure for Bush's economic invasion of Iraq. It does not mark, however, the end of Bechtel's adventures in the Middle East as the company looks to take advantage of the Bush administration's expanding U.S.-Middle East Free Trade Area.
Bechtel received a quiet "request for proposals" from the Bush administration more than a month before the war began, which ultimately yielded the company $2.4 billion for work on electricity, water, sewage treatment, bridges, highways, airports, hospitals, schools and more.
It is virtually impossible to assess the performance of any one company working in Iraq. Only one independent monitoring agency exists, the special inspector general for Iraq reconstruction (SIGIR), a congressionally mandated office tasked with oversight of all U.S. spending on Iraq reconstruction. Of the 13,578 projects planned and paid for by the U.S. government for work in Iraq, SIGIR has assessed just 65.
But even this limited oversight allows us to debunk claims made by Bechtel. For example, the company reports that it rebuilt "war-damaged bridges on key highways." But SIGIR's October report to Congress finds that "no bridge or expressway projects have been completed" in Iraq.
Bechtel also claims that it failed to build a key maternal and children's hospital in Basra because of "security concerns." While SIGIR, on the other hand, makes clear that it ordered Bechtel to be dropped from the $50 million project after the company misreported its progress and went $90 million over budget and a year and a half behind schedule.
SIGIR's October report also allows us to clearly assess the overall failure of U.S. reconstruction in Iraq. In the electricity sector, less than half of all planned projects in Iraq have been completed, while 21 percent have yet to even begin. The term "complete," however, can be misleading as, for example, SIGIR finds that the electricity sector has been hampered by the failure of contractors to build transmission and distribution lines to connect new generators to homes and businesses. Thus, nationally, Iraqis have just 11 hours on average of electricity a day, and in Baghdad, the heart of instability in Iraq, there are between four and eight hours on average per day.
While there has been greater success in completing water and sewage projects (79 percent are complete), electricity controls both water and sewage in Iraq. Therefore, the fact that 80 percent of potable water projects are reported complete does little good if there is no electricity to pump the water into homes, hospitals or businesses.
The health care sector is truly a tragedy, with just 36 percent of planned projects reported complete. Just 12 of 20 planned hospitals are complete, while only six of 150 planned public health centers are serving patients today.
What went wrong? U.S. Air Force Col. Sam Gardiner, author of a U.S. government study of the likely effect that U.S. bombardment would have on Iraq's power system in 2003, answered the question well when he said, "Frankly, if we had just given the Iraqis some baling wire and a little bit of space to keep things running, it would have been better. But instead we've let big U.S. companies go in with plans for major overhauls."
Companies like Bechtel entered Iraq with hopes of cashing in on much more than reconstruction contracts. As Cliff Mumm, head of Bechtel's Iraq operation, said in December 2003, Iraq "has two rivers, it's fertile, it's sitting on an ocean of oil. Iraq ought to be a major player in the world. And we want to be working for them long term."
Bechtel's vision was part of a larger Bush administration plan to transform Iraq from a state- to a market-controlled economy virtually overnight and by U.S. fiat. The administration implemented new laws in Iraq (virtually all of which remain in place today) allowing for, among other things, the privatization of Iraq's state-owned enterprises and for American companies to receive preferential treatment over Iraqis in the awarding of contracts.
So, Bechtel was hired instead of the Iraqi companies who had successfully rebuilt their country after the previous U.S. invasion. And, since Bechtel's contract guaranteed that all of its costs would be covered, plus a set rate of profit, it took its time, spending its first five months in Iraq doing a countrywide assessment rather than rebuilding. Bechtel then worked on expensive new facilities that showcased its skills and would serve its needs were it to run the systems itself one day (and which have proven far too expensive for Iraqis to run). The Iraqis, meanwhile, knew that the Americans had received billions of dollars for reconstruction, that Iraqi companies had been rejected, and that the country was still without basic services. The result was increasing hostility, acts of sabotage targeted directly at foreign contractors and their work, and a rising insurgency.
In the end, Iraq has not emerged as the wealthy free market haven companies like Bechtel had hoped for, at least not yet (the economic policies put in place by the Bush administration remain and the work is on-going to turn Iraq into a corporate-friendly Middle East Mecca). However, the war has not been completely useless.
One month after the invasion of Iraq, President Bush announced plans for a U.S. Middle East Free Trade Area (MEFTA) to expand his economic vision from Iraq to the rest of the Middle East. The war intensified the pressure on countries to prove that they were with, rather than against, the Unitede States. As a result, the MEFTA has progressed rapidly, with 14 nations signing agreements with the administration.
Bechtel is a member of the U.S. Middle East Free Trade Coalition, the corporate lobbying group behind MEFTA. Thanks to the MEFTA, a new free trade agreement expected to be signed with the United Arab Emirates this year is already opening new opportunities for U.S. firms, including Bechtel. The company was recently hired by the Abu Dhabi Ports Co. of the UAE to manage the construction of a major new industrial zone at the country's Khalifa Port.
While Bechtel turns its attention beyond Iraq, U.S. taxpayers, must remain focused. Those companies that have failed in Iraq must be held accountable and forced to return all misspent funds. This money, plus the several billions of as of yet unspent U.S. reconstruction money, and new money, must be made immediately available to Iraqi companies and workers. The U.S. corporate invasion of Iraq of must be brought to a quick end and it must not be allowed to spread.
Several key committees in the U.S. Congress are set to be run by allies in this fight. Most notably, congressman Henry Waxman of California, who will chair the House committee on government reform. Now is the time to push hard and push often to expose the companies and demand action from our newly empowered elected officials.