IRAQ: America’s Rebuilding Shuts Out Iraqis

On this day that commemorates the 4th year of US occupation of Iraq, I wanted to reprint my article from July, 2003.

An Iraqi mother comforts her newborn, Mustafa, who is dying of leukemia likely caused by depleted uranium the US used in the first Gulf War.
(photo by Kelly Hayes-Raitt)

Halliburton overbilled American taxpayers $2.7 billion to feed and house US soldiers in Iraq. The US Dept. of Justice and the Securities and Exchange Commission are investigating Halliburton’s business operations in Iraq and Nigeria. Last week, Halliburton, the world’s second largest provider of oil field services, announced it would move its international headquarters from the US to Dubai. Although this article is about Bechtel, not Halliburton (the company formerly headed by US Vice President Dick Cheney), it forces us to ask who really profits from war. While in Baghdad in July, I sneaked into a Bechtel meeting. I had heard that the American company held regular, public briefings for Iraqis interested

in bidding for rebuilding contracts. As I found my way to room 202 of the Sheraton Hotel, however, I was in fact entering a private, non-descript suite with the only “no smoking” sign I saw in Iraq. I slipped in as if I were an invited VIP guest, smiling confidently to the burly Iraqi who sat bouncer-like behind an imposing desk. From my seat on the couch, I had a clear view of Randy Jackson, of Dallas, Texas, whose represented Bechtel in choosing which Iraqis received contracts to rebuild the damage at the airport. I watched team after team of Iraqis wander in with their 10-page application form completed (in English). Once granted an audience with Mr. Jackson, they were asked questions such as: “How many employees do you have?” “How old is your equipment?” “Do you have insurance?” This last question was a stopper. Before this last war, there were six insurance companies in Iraq, the largest of which were run by Saddam Hussein’s government. They offered basic auto and casualty insurance, workers compensation and liability insurance with maximum policies of either 200 million or 150 million dinars (about $100,000 or $60,000, respectively). As of July, only one insurance company was operating. The others had been shut down or looted. “But the government was our insurance,” said one Iraqi, shrugging his shoulders. To get a job rebuilding their country, Iraqis are required by Bechtel to carry three types of insurance: $2 million minimum indemnification insurance, which costs up to 10% of the contract’s cost, covers misfortunes such as equipment loss and injured workers. The $2 million minimum policy is 20 times Iraqis’ previous insurance policies’ maximum, and far exceeds Iraqis’ ability to afford it, or the local insurance companies’ ability to underwrite it. Bid securities insurance, where banks provide a guarantee that the company will not withdraw its bid. The Iraqi contractor bidding on the project must provide a cashier’s or certified check for 10% of the projected amount of the project. As of July (2003), 43 of the 47 banks were at some level of operation, but it was unclear if they had the capacity to issue bonds. The 10% bond may be held for the duration of the contract. Performance insurance guarantees that the job is completed. It, too, can cost 10% of the projected cost of the contract. Although Iraqis are used to advance payments, Bechtel is not providing any up-front money. So, Iraqis hoping to participate in the rebuilding of their country have to advance money for materials, labor, insurance policies and bonds at a time when they are emerging from 50% unemployment, three wars and 12 years of sanctions. On top of it all, Iraqi contractors must read and agree to the Federal Acquisition regulations — a 3,000-page document written in English. “These are American tax dollars,” Randy Jackson said to a despondent Iraqi. “Americans don’t want to pay for insurance; they want to pay for rebuilding.” “Where do I get insurance?” asked the Iraqi. “If you don’t have insurance, you can’t get a contract with Bechtel,” boomed the imposing Iraqi behind the desk. “Don’t worry, there will be American insurance companies coming in to sell you insurance,” Randy Jackson offered.

“Two companies like yourself have already obtained insurance from American companies. We have a big Bechtel managing team to work with you.” As I watched the contractor slowly rise from his chair, I realized that Iraqis must now buy insurance from American companies in order to work for an American company to rebuild the airport that the Americans bombed. It occurred to me that this war is a warped WPA program for well-connected American companies. While reviewing the application of one Iraqi team, Randy Jackson brightened and said, “I’d like to work with you. If we can’t get something going here, then maybe (we can) in Iran.”