Antonia Juhasz

Did Big Oil Win the War in Iraq?

Last week, ExxonMobil became the first U.S. oil company in 35 years to sign an oil-production contract with the government of Iraq.

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No Blood for Chevron

On March 15 and 19, Bay Area peace advocates will protest the war in Iraq. As they did five years ago, protesters will focus on the corporations behind the war, including San Ramon's Chevron Corp., a company whose name most certainly adorns any list of the "winners" of this war and those who most benefit from its continuation.

2007 was Chevron's most profitable year in its 130-year history, garnering the company $18.7 billion in pure profit. According to Forbes, CEO David O'Reilly personally raked in $8.8 million in total compensation in 2006. Over the last five years, he's received almost $40 million.

No small part of these megaprofits comes directly from Iraq. Chevron hopes that Iraq will soon yield much greater profits. The key to the company's future success lies in passage of a new national oil law in Iraq and the continuation of the U.S. occupation.

Chevron began marketing Iraqi oil under contracts with the regime of Saddam Hussein in the 1980s and then under the United Nation's Oil for Food Program in the 1990s. Chevron recently paid $30 million to state and federal regulators to settle charges brought by the Securities and Exchange Commission that it had paid illegal kickbacks to the Hussein regime to win contracts.

Nonetheless, Chevron was one of the first companies to receive marketing contracts following the 2003 invasion of Iraq and continues to market significant quantities of Iraqi oil today. According to the U.S. Department of Energy, Chevron has been refining oil from Iraq at its Richmond refinery since the war began. Rather than use its new profit bounty to upgrade this heavily polluting 106-year-old refinery, Chevron is using its financial and political prowess to try to force Richmond to accept a "retooling" of the refinery to burn dirtier, more polluting, sulphur-rich crude.

While Chevron's marketing contracts with Iraq yield the company vast profits, the big money -- and the company's big hopes for the future -- lies in controlling Iraqi oil under the ground, not just selling it overseas. As then Chevron CEO Kenneth Derr told a San Francisco audience in 1998, "Iraq possesses huge reserves of oil and gas -- reserves I'd love Chevron to have access to." Chevron has found many ways to pursue this goal, particularly following the opening provided by the 2003 U.S. invasion of Iraq.

In October 2003, Chevron Vice President Norm Szydlowski followed in a line of U.S. oil company executives to serve as liaison in Iraq between the U.S. occupation government and the Iraqi Oil Ministry. Chevron regularly co-sponsored conferences, such as "Iraq Procurement 2004 -- Meet the Buyers," at which Iraqi ministers met with corporate executives. Chevron even trained Iraqi oil engineers free of charge in four-week training courses.

In 2004, Chevron co-sponsored a special project of the International Tax and Investment Centre on restructuring Iraq's economy following the invasion. The ITIC, an advocacy group that advises governments on pro-corporate economic policy, then released a highly influential report detailing the process by which Iraq's nationalized oil industry could be nearly fully privatized and opened to foreign oil companies. The president of the ITIC, Dan Witt, later boasted on a radio program on which I was also a guest that the ITIC played a significant role in drafting its recommendations into law in the form of the Bush administration's proposed Iraq Oil Law. The Iraq Oil Law remains one of U.S. government's benchmarks for Iraq. It would transform Iraq's oil industry into a privatized model, with at least two-thirds of Iraq's oil open to foreign-company control under contracts lasting for a generation or more.

Today, the press is widely reporting on Chevron's ongoing negotiations with the Iraqi government for the Majnoon oil field, one of the largest oil fields in the world. As Chevron tries to lock in the best contract deal possible, the Bush administration continues to press the Iraqis to pass the Iraq Oil Law. Once (or if) Chevron gets its desired Iraqi contracts, it will still need security to get to work: that's where the U.S. military comes in.

A confidential U.S. government intelligence report on the Iraq Oil Law leaked to ABC News concluded that if "major foreign oil companies" were going to go to work in Iraq, they would need to be "heavily underwritten by the U.S. government." As General John Abizaid, retired head of U.S. Central Command and military operations in Iraq, recently told a Stanford audience of the Iraq War, "Of course it's about oil, we can't really deny that."

The Iraq war is not just about oil. It is about oil corporations. To end a war for oil, therefore, the role of the oil corporations -- not just the U.S. military and federal government -- must be diligently exposed and opposed. After five years of spilling blood for oil, enough is enough.

To learn more about Bay Area anti-war protests, visit:

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.

Bechtel Takes a Hit for War Profiteering

A comprehensive U.S. government audit of a Bechtel project in Iraq has exposed gross mismanagement by the company. As a result, the $50 million contract has been canceled.

As the auditors plan to expand their investigations to all of Bechtel's $2.85 billion in Iraq contracts, they are sure to discover a pattern of failure. Not only should Bechtel be dropped from all of its failing contracts, but the company should be required to refund all misspent U.S. taxpayer and Iraqi funds so that Iraqi contractors can get to work and real reconstruction can finally begin.

But time is running out.

On Sept. 30, 2006, all unobligated money for reconstruction in Iraq reverts back to the U.S. Treasury. This means that unless action is taken now to ensure that this money goes to Iraqis, U.S. corporations will keep their billions, while Iraqis are left with failed projects and little money to recover.

On July 31, the office of the special inspector general for Iraq reconstruction (SIGIR) released an audit of Bechtel's Basra Children's Hospital Project. Congress established SIGIR in October 2004 to provide much needed oversight to U.S. government expenditures on Iraq reconstruction. Under pressure from the public, members of Congress and U.S. soldiers in Iraq, SIGIR expanded its work beyond broad programmatic issues and criminal activities to assessments of individual reconstruction projects. It took even more pressure and time for SIGIR to publicly release the names of contractors responsible for failing projects.

SIGIR's exhaustive (and much overdue) review in April of a $243 million contract held by the Parsons Corp. to construct primary health care centers across Iraq revealed that after more than two years and $186 million, only six of the planned 150 centers were complete. Parsons' contract for the facilities was canceled (as was a $99.1 million contract to build a prison north of Baghdad after it fell more than two years behind schedule). More importantly, the work was turned over to the Army Corps of Engineers, who then handed the contracts directly to local Iraqi companies.

Parsons and Bechtel were once partners. In 1938, Bechtel and Parsons merged with a third company to form the Bechtel-McCone-Parsons Corp. The three companies split amicably after World War II. Parsons is the second-largest recipient of reconstruction dollars in Iraq (after Halliburton) with $5.3 billion in contracts.

Bechtel's hospital boondoggle

In March 2006, SIGIR began investigating the Basra Children's Hospital Project. It found that the project was nearly $90 million over budget and more than a year and half behind schedule (PDF).

Bechtel received the contract to build the new hospital in Basra in mid-October 2004 to "improve the quality of care and life expectancy for both women and children." The original price tag was $50 million, and the due date was Dec. 31, 2005. The auditors now estimate that the project will be completed no earlier than July 31, 2007, and will cost as much as $169.5 million (including $30 million for equipment). However, the report cautions, "there is still an unclear picture of schedule control, security, construction quality, and the use of alternative contract management options that will impact the true cost to complete." Thus, the cost and time involved could be much greater.

Because SIGIR focused more on the U.S. Agency for International Development's (USAID) failure to manage Bechtel than on Bechtel's inability to build the hospital, the report provides few details as to why the project was unsuccessful other than limited references to security concerns and unsatisfactory work by Bechtel's subcontractors.

Bechtel subcontracted to a Jordanian company that subcontracted to Iraqi companies. The trail of subcontracting meant (1) a great deal of additional overhead, (2) little to no managerial oversight, and if this project was like others in Iraq, (3) short-term employment and low pay for Iraquis (compared to what they'd receive if they held the contract themselves).

In a recent article, New York Times reporter James Glanz quotes Sheik Abu Salam al-Saedi, a member of the Basra provincial council, who explains, "The pretexts given by Bechtel to the Iraqi government to justify its failure in finishing the project are untrue and unacceptable, especially the ones regarding the rise in security expenses." Mr. Saedi said that Western engineers were seldom seen at the project, and that it was simply mismanaged.

Not only was the project mismanaged, both Bechtel and USAID lied about the status of the project.

By September 2005, the project was already running 10 months behind schedule. The delay alone would add several million dollars to the estimated cost of the project. In addition, the onsite representative from the Army Corps of Engineers reported problems with construction and further delays. However, according to SIGIR, "neither USAID nor Bechtel reported any problems with the contract throughout this period (July to September 2005)." While Bechtel increasingly came clean in its reporting to USAID, USAID was unfailing in its lies to Congress: It continually reported the project as on budget and on time.

Ultimately, SIGIR found that USAID, the State Department, and the U.S. Embassy in Iraq had all failed in their accounting and managerial systems. In fact, USAID still does not know exactly how much money it has disbursed for the project. SIGIR recommended that Bechtel's contract be canceled and responsibility be given to the Army Corps of Engineers, which is likely to turn the project directly over to Iraqis.

SIGIR estimates that this transfer will save approximately $90 million "exclusively from the reduction in contractor overhead."

Bechtel's $50 million is just the tip of the iceberg in Iraq

Bechtel's $50 million Basra hospital project represents less than 2 percent of the company's $2.85 billion award for Iraq reconstruction.

However, to date, Basra hospital is the only Bechtel project to receive SIGIR's attention by name (Bechtel projects may have been investigated by SIGIR, but the company has been identified only once. I asked a SIGIR representative if other Bechtel projects have been investigated, but I did not receive a response by the time of publication.)

San Francisco-based Bechtel was one of a select handful of U.S. companies that received a quiet "request for proposals" from the Bush administration more than a month before the invasion of Iraq. Thus, without any competition, on April 17, 2003, Bechtel was awarded a $680 million contract for work in Iraq. In September of that year, an additional $350 million was added to the first contract, and then, on Jan. 6, 2004, it received a second contract -- bringing Bechtel's combined total to more than $2.8 billion.

The company's contracts are both "cost plus." This means that Bechtel is guaranteed that all of its costs are covered, and it's guaranteed a fixed profit above those costs.

In Bechtel's first contract, "Iraq Infrastructure I," the company was to "provide the successful design, rehabilitation, upgrading, reconstruction and construction in Iraq of one port, five airports, electric power systems, road networks and rail systems, municipal water and sanitation services, school and health facilities, select government building and irrigation systems, as well as institutional capacity building for operation and maintenance of roadmaps for future longer term needs and investments in support of Iraq Infrastructure Reconstruction Program."

The second contract, "Iraq Infrastructure II," is for more of the same. Both contracts are managed by USAID.

Bechtel is not the only company working on these projects, to be sure, but it was the first -- and for a considerable amount of time, the largest -- to receive such contracts for reconstruction in Iraq. These deals, in turn, led Bechtel's non-U.S revenues to increase by 158 percent in 2003. The company had record overall revenues of $17.4 billion in 2004 and $18.1 billion in 2005.

Bechtel's travesties reach beyond the health sector. It has taken over three and half long years after Bechtel entered Iraq for electricity, water and sewage systems to finally creep above prewar levels -- and not even in all cases. At the same time, services remain far below U.S. government expectations and Bechtel's (and likely most other companies') original contractual obligations. Electricity is the most crucial of these systems, as it controls both water and sewage.

Bechtel's lost summer: electricity, water and sewage

Depending on whom you ask, either Bechtel or the Bush administration decided that, instead of getting Iraq's electricity system up and running as quickly as possible, a countrywide assessment of all systems was necessary before any reconstruction could begin. The assessment took five long months. These happened to be summer months in a country where temperatures regularly top 125 degrees Fahrenheit. No electricity meant no fans, no ice, no cold drinks and no air conditioners, and a lack of clean water and reliable sewage treatment. It's difficult to exaggerate the extent of Iraqi suffering during those five months.

The summer following the March invasion was a particularly crucial period in which Iraqi goodwill all but evaporated.

It certainly made sense to assess the situation before building, but much of this assessment could have been done prior to the invasion as part of the post-invasion planning. After the invasion, short of turning the reconstruction over to the Iraqis, at least the assessment should have been done in direct discussions and partnership with Iraqi engineers who had run the systems for decades.

What the Bechtel employees discovered was that two wars and 12 years of economic sanctions had taken their toll. The systems were far more difficult to repair than they had assumed. Of course, the Iraqis who ran the systems could have easily conveyed this information to Bechtel from the start if the administrator of the U.S. occupation government of Iraq, L. Paul Bremer, had not fired the vast majority of them and if Bechtel had asked.

The critical time lost on the assessment bred increasing hostility toward the invasion among ordinary Iraqis. The lack of water, electricity, and sewage services led to increasing acts of sabotage against all foreign contractors, including Bechtel.

Nobody at Bechtel or in the U.S. government denies that the water and electricity reconstruction has failed. According to SIGIR, while $3 billion has been paid out, only half of the projects planned in the electricity, water and sewage sectors have been completed, while nearly a third in the electricity sector have not yet been begun. Many of the systems that have been built are poorly run or have not been connected to peoples' homes. In fact, one of the biggest problems plaguing the electricity system today is the failure to build transmission and distribution lines. Bechtel and some Bush administration officials lay the blame squarely with the Iraqis.

According to Bechtel, of the more than 40 water plants it has built, which are now being run by the Iraqis, "not one is being operated properly." U.S. officials say the same: "None of the 19 electrical facilities that has undergone U.S.-funded repair work is being run correctly." They blame a poor Iraqi work ethic and a lack of knowledge and skill in running the plants.

Iraqis may be unable to run the systems built by Bechtel in Iraq, but a poor work ethic and lack of knowledge are not to blame.

Paul Bremer fired the upper echelons of Iraqi management, sidestepped skilled engineers and workers, hired Bechtel to build state-of-the-art facilities that are foreign to these workers and then handed the systems over as a fait accompli, whether or not they were even connected to the homes they were intended to serve.

Baghdad's Mayor Alaa Tamimi, an engineer who returned to Iraq after years of exile to help rebuild the country, said that U.S. officials "made a lot of decisions themselves, and the decisions were wrong. This is our country. It's our city. They didn't accept that."

The other problem is money. Iraqis simply do not have enough of it to run the expensive new facilities that they have been handed. The money has gone to U.S. contractors to (largely fail to) build Iraq's systems, rather than to the Iraqis to run the systems after they have been rebuilt.

SIGIR's most recent report to Congress found that in the last week of June, overall electrical generation in Iraq finally crept above prewar levels, while remaining below what the U.S. government contracted for. However, Baghdadis are still receiving an average of just eight hours a day of electricity compared to 16-24 before the war. Iraqis throughout the country are fairing better -- receiving an average of 12 hours per day versus their previous four to eight. Water and sewage services have begun to reach a larger population than before the war, although the increase is just half of what the U.S. government contracted for (4.2 million people newly added instead of a planned increase of 8.4 million).

Return the money, hire the Iraqis

Bechtel's Iraq contracts are set to expire in October and, as David Snider of the U.S. Agency for International Development told me, Bechtel "is currently closing out and demobilizing from Iraq as scheduled." Bechtel should leave Iraq, but its misspent funds should stay.

According to USAID, Bechtel has been paid $970 million on its Infrastructure I contract. Bechtel was originally awarded $1.8 billion for its Infrastructure II contract. In November 2004, USAID reduced the amount to $1.4 billion in response to a reallocation of funds, primarily to training Iraqi soldiers. Of the $1.4 billion, $1.26 billion has been obligated and $977 million has been paid to Bechtel.

This means that $511 million from Bechtel's contracts is immediately available to for Iraqi companies.

Although we hear little about them in the United States, there are literally hundreds of companies, both public and private, with long histories and great experience in Iraq. This includes companies that rebuilt Iraq's water, electricity and sewage systems in just three months following the 1991 U.S. invasion. With unemployment hovering around 40 percent in Iraq today, these companies and their employees are more than eager to get to work.

There is also $166 million in unobligated funds from Bechtel's Infrastructure II contract that must be immediately turned over to Iraqi companies before that money reverts to the U.S. Treasury on Sept. 30. Finally, there are likely millions of misspent dollars that Bechtel must return to U.S. taxpayers and Iraqis.

In its July 2006 report to Congress, SIGIR states its plan to investigate all of Bechtel's contracts. We must remain vigilant to ensure the audits take place, the results are heard, and that Iraqis are hired to rebuild their country so that more people have the opportunity to pick up shovels rather than guns.

You can take part in a series of protests and other events focused on Bechtel in 24 states across the country Aug. 5-9, organized in commemoration of the 61st anniversary of the atomic bombings of Hiroshima and Nagasaki. Visit for more information.

What Wal-Mart Wants from the WTO

The end is near. In the time it took to create the world, the global justice movement may herald in the demise of the World Trade Organization (WTO). For six days, from December 13th to the 18th, the WTO will hold its sixth ministerial meeting in Hong Kong. All signs point to the strong possibility that once again, the ministerial will conclude in failure. After the collapse of negotiations in Seattle in 1999 and Cancun in 2003, the WTO has tried with only limited success to get back on to its feet. The combined efforts of determined developing country governments supported by social movements the world over have successfully forced the WTO into a corner from which it seems unlikely to emerge.

Already, negotiators have been forced to abandon some of the most contentious and destructive agreements sought at earlier ministerials on investment, government procurement and competition policy. While whittled down and on its last legs, however, the agenda for the Hong Kong ministerial -- if successful -- threatens fundamental public rights in favor of multinational corporate expansion über alles.

A look at Wal-Mart's free trade history and its likely Hong Kong agenda exposes some of what's a stake at the sixth WTO ministerial and will hopefully motivate more of us in to action.

The North American Free Trade Agreement (NAFTA) and the WTO have paved the way for Wal-Mart to become the world's largest corporation. These agreements have enabled Wal-Mart to enter and dominate markets with its stores and for it to use those suppliers most willing to pick up, close shop, and scour the planet for the cheapest places to make products.

Wal-Mart did not open a single store outside of the United States until 1991 in Mexico. As late as 1995, the store reports that imports accounted for no more than six percent of the products sold in its U.S. stores. While some dispute that figure as far too low, there is no debate over the dramatic changes in Wal-Mart's operations following the passage of the NAFTA in 1994 and China's entry into the WTO in 2001. Today, Wal-Mart has more than 2,400 stores in fifteen countries outside of the United States. In 2003, consulting firm Retail Forward estimated that 50 to 60 percent of the merchandise sold in Wal-Mart's U.S. stores was made overseas.

And Wal-Mart just keeps growing. Wal-Mart's international sales reached $56.3 billion in 2005, an 18.3 percent increase over the previous year, and international profits rose to nearly $3 billion, an increase of more than 26 percent. In fact, Wal-Mart's overall economic growth rate is almost four times that of the United States (3.9 percent) and the world (4 percent).

Wal-Mart and NAFTA

In 1994, the U.S., Mexico and Canada signed the most far-reaching multilateral trade and investment agreement of its time. NAFTA investment and market access rules eliminated many of the existing government restrictions on how and where Wal-Mart could operate, clearing the way for Wal-Mart to become the largest retailer in all three NAFTA countries. Today, Wal-Mart is the largest private employer in Mexico. It has nearly 700 stores and does more business than the entire tourism industry. It sells six billion dollars worth of food a year, more than any other Mexican retailer.

NAFTA eliminated tariffs and other import controls on goods moving between the three countries. This meant that Wal-Mart's suppliers could send products to be assembled in Mexico, where labor is cheap, environmental protections weak, taxes low and protections from further regulation and government oversight even greater than in the U.S., and then send the finished products back home to sell at prices far cheaper than if the goods were produced in the United States. These factories, called maquiladoras, more than doubled in number between 1990 and 2001, from 1700 to 3600 plants.

According to the U.S. Congressional Research Service, U.S. imports from Mexico increased by 229 percent between 1993 and 2001. While U.S. exports to Mexico increased 144 percent, 60 percent of these were components being shipped to the maquiladora factories for processing, meaning little or no benefit was derived by the Mexican economy or consumer. Laws that would have addressed this problem, such as requiring a certain amount of domestic content in production, a certain amount of local investment, or a transfer of new technologies, etc., were stripped away by the NAFTA: good for the companies, bad for the country.

The dramatic rise of the maquiladoras coincided with the near collapse of the Mexican farming sector due to NAFTA's elimination on agricultural tariffs and quotas. One and a half million Mexican farmers and their families were forced from their land and subsequently found themselves in search of work. The more unemployed workers there were, the more the maquiladoras could demand stiff sacrifices in return for jobs.

The result: average real wages in Mexican manufacturing are lower today than they were before NAFTA, the minimum wage has declined by 20 percent and hovers at around $4/day, and half of the nation now lives in poverty. As unemployment, low wages and poverty grow in Mexico, Wal-Mart's low prices look more and more attractive and its stores continue to swallow-up the competition.

Wal-Mart and the WTO

Free trade allows corporations to be fickle in choosing their partners. If they no longer enjoy the benefits of one nation, they can pick up and move on to the next without any thought to commitment. Wal-Mart has mastered this skill. It was aided in doing so by China's WTO membership.

Until 2000, the U.S. applied uniquely high tariffs on goods imported from China in opposition to the human rights abuses inflicted on the Chinese by their government. U.S. corporations looked to China and saw 1.2 billion potential workers in a country where unionization is illegal, workers are cheap and disciplined, unemployment is rampant and environmental protections are nil. Others saw the elimination of these tariffs and China's potential WTO membership as moves that would increase the powerlessness of China's workers, not only at the hands of the Chinese government but at the hands of U.S. corporations as well. In 2000, the corporations won, the tariffs were removed, and one year later, China became a full member of the WTO.

The result has been nothing short of phenomenal. The U.S. trade deficit with China more than doubled from $70 billion in 1999, to $162 billion today. This means that the U.S. is buying $162 billion more from China than we are selling to it. A large percentage of these purchases are made by U.S. companies that build products in China and then ship them to the United States, like Wal-Mart's suppliers.

Because the NAFTA makes it illegal for the Mexican government to require any sort of commitment on the part of U.S. producers to Mexico, when things started looking good in China, U.S. producers picked up and moved out. A full third of the 800,000 manufacturing jobs initially created under NAFTA have since disappeared. Due to the WTO's elimination of tariffs and quotas on products entering and leaving China, and elimination of many of the restrictions on which companies can operate in China and where, in the last five years, Wal-Mart alone has doubled its imports from China. It opened a global procurement center in Shenzhen, China. In 2002, it bought approximately $12 billion in merchandise from China, 20 percent more than in 2001, which represented nearly 10 percent of all Chinese exports to the United States. It is the single largest U.S. importer of Chinese consumer goods, surpassing the trade volume of entire countries, such as Germany and Russia.

In 2004, the Los Angeles Times interviewed 20-year-old Ping Quixia. Quixia makes women's underwear and other garments for Wal-Mart at the Gladpeer Garment Factory in the southern Chinese city of Dongguan. She is one of 1,200 workers, mostly young women, paid about $55 a month, living eight to a room in cramped dormitories.

"In southern China," the paper reports, "Wal-Mart has found all the ingredients it needs to keep its 'every day low prices' among the lowest in the world. Although labor costs more here than it does in Bangladesh, China offers other advantages: low-cost raw materials; modern factories, highways and ports; and helpful government officials." Wal-Mart has more than 3,000 supplier factories in China, and the number is expected to rise. But that doesn't mean workers in China are secure.

The managing director of the Gladpeer Garment Factory said that he is likely to reduce employment in Dongguan and open a new factory in Guangxi province, where labor, electricity, housing and taxes are even cheaper. "Competition is intense, and our biggest single issue is cost ... That's why we're going to Guangxi."

Lee's complaint is just as readily heard across the United States, as Wal-Mart suppliers are forced by the company to cut costs annually. In order to do so, many have closed shop in the U.S. and moved to China.

What Wal-Mart Wants in Hong Kong

Wal-Mart wants to open more stores, in more countries, under as few government regulations as possible. It therefore wants the market access rights provided by NAFTA and the WTO expanded. Wal-Mart also wants its suppliers to produce ever-more cheaply. This means, reducing tariffs on imports and exports in more countries. To this end, the Hong Kong WTO ministerial offers negotiations on the expansion of the General Agreement on Trade in Services (GATS) and on non-agriculture market access (NAMA). These two sectors plus the negotiations on agriculture are the "Three Pillars" of the Hong Kong ministerial.

General Agreement on Trade in Services (GATS) & Non-Agriculture Market Access (NAMA)

The GATS agreement restricts the ability of governments to regulate the service sector, which, as defined by the WTO includes just about everything businesses do, from selling bananas to financial services, from education to water, and from oil to electricity.

Multinational corporations have placed enormous pressure on governments to expand the service sectors covered by GATS. In Hong Kong, the United States and the European Union, in particular, are pushing for aggressive negotiations to force more countries to bring more of their service sectors under GATS and to expand the list of government regulations restricted by GATS rules.

Wal-Mart is likely particularly interested in GATS negotiations on "commercial presence" which would eliminate more government restrictions on where, when, how, or if foreign companies can open businesses, including retail stores. For example, local and national governments would not be able to pass zoning preferences for locally owned or small businesses, or laws that ban "big box stores" or chains. In fact, any law that could be argued to provide a preference to a local retailer as opposed to a foreign company, such as Wal-Mart, could be judged GATS-illegal.

This means more nations opening their doors to Wal-Mart stores without the ability to require, for example, that Wal-Mart partner with a local business, sell products made by local companies, reinvest its profits locally or limit the size of the stores it builds or the locations where they are built.

The NAMA negotiations would reduce or eliminate tariffs on imports and exports of industrial goods in more parts of the world. Wal-Mart suppliers would then have even more options for nations in which to produce goods that offer even cheaper working environments than Mexico or China. They will be able to send production inputs from the U.S., or anywhere else for that matter, build the goods in the cheaper production environment, and send the finished products either back to Wal-Mart stores in the U.S., or sell them at Wal-Mart stores around the world.

The results of increased market access and tariff elimination through the GATS and NAMA negotiations will mean more nations around the world will be forced to succumb to the economic inequalities and injustices imposed through the NAFTA in Mexico and in China through the WTO.

Wal-Mart, on the other hand, will simply continue expanding -- successfully pitting the poor against the poorer in its merciless pursuit of ever falling prices and mind-boggling profits.

None of this, however, is a done deal. Negotiations can be stalled once again in Hong Kong as they were in Cancun and Seattle.

Developing country delegates need to be able to point to the streets of America, to the Halls of Congress, to the pages of the nations' newspapers and say to the American negotiators: "you do not even have the support of your own people for the deals you are pushing, why should we follow you?"

We have six days.

Of Oil And Elections

Remember when we used to talk about how the war in Iraq was about oil? Remember the banners that read "No blood for oil?" Oil has fallen out of the discussion lately, but it's time to bring it back in light of the Iraqi elections scheduled for this Sunday.

To refresh our collective memory, President Bush himself declared just before the invasion of Iraq that, "Our jobs, our way of life, our own freedom and the freedom of friendly countries around the world would all suffer if control of the world's great oil reserves fell into the hands of Saddam Hussein."

This was Bush Sr., speaking in August 1990, on the eve of the first Persian Gulf War.

More precise are the words of Chevron CEO Kenneth T. Derr speaking in San Francisco in 1988: "Iraq possesses huge reserves of oil and gas — reserves I'd love Chevron to have access to." After two wars and one occupation, Derr may finally get his wish.

On Dec. 22, 2004, Iraqi Finance Minister Abdel Mahdi told a handful of reporters and industry insiders at the National Press Club in Washington, D.C. that Iraq wants to issue a new oil law that would open Iraq's national oil company to private foreign investment. As Mahdi explained: "So I think this is very promising to the American investors and to American enterprise, certainly to oil companies."

In other words, Mahdi is proposing to privatize Iraq's oil and put it into American corporate hands.

According to the finance minister, foreigners would gain access both to "downstream" and "maybe even upstream" oil investment. This means foreigners can sell Iraqi oil and own it under the ground — the very thing for which many argue the U.S. went to war in the first place.

As Vice President Dick Cheney's Defense Policy Guidance report explained back in 1992, "Our overall objective is to remain the predominant outside power in the [Middle East] region and preserve U.S. and Western access to the region's oil."

While few in the American media other than Emad Mckay of Inter Press Service reported on — or even attended — Mahdi’s press conference, the announcement was made with U.S. Undersecretary of State Alan Larson at Mahdi's side. It was intended to send a message — but to whom?

It turns out that Abdel Mahdi is running in the Jan. 30 elections on the ticket of the Supreme Council for the Islamic Revolution (SCIR), the leading Shiite political party. While announcing the selling-off of the resource which provides 95 percent of all Iraqi revenue may not garner Mahdi many Iraqi votes, but it will unquestionably win him tremendous support from the U.S. government and U.S. corporations.

Mahdi's SCIR is far and away the front-runner in the upcoming elections, particularly as it becomes increasingly less possible for Sunnis to vote because the regions where they live are spiraling into deadly chaos. If Bush were to suggest to Iraq’s Interim Prime Minister Iyad Allawi that elections should be called off, Mahdi and the SCIR's ultimate chances of victory will likely decline.

Thus, one might argue that the Bush administration has made a deal with the SCIR: Iraq's oil for guaranteed political power. The Americans are able to put forward such a bargain because Bush still holds the strings in Iraq.

Regardless of what happens in the elections, for at least the next year during which the newly elected National Assembly writes a constitution and Iraqis vote for a new government, the Bush administration is going to control the largest pot of money available in Iraq (the $24 billion in U.S. taxpayer money allocated for the reconstruction), the largest military and the rules governing Iraq's economy. Both the money and the rules will, in turn, be overseen by U.S.-appointed auditors and inspector generals who sit in every Iraqi ministry with five-year terms and sweeping authority over contracts and regulations. However, the one thing which the administration has not been unable to confer upon itself is guaranteed access to Iraqi oil — that is, until now.

Based on all reports from both U.S. military and Iraqi officials, the elections this Sunday could be a blood bath for Iraqis and American troops alike. They are also certain to be far from representative. Democratic elections simply cannot be held under these conditions, nor conditions in which the U.S. government and its corporations exercise such dominant economic and political control.

The Bush administration cannot be permitted to declare a war for "Iraqi freedom" and respond with an economic invasion that turns Iraq into a U.S. corporate grab bag. "No blood for oil" rings as true today as it did 15 years ago.