Making A Killing - The Business of War

October 30, 2003 4:50 AM

A Private Army Grows Around the U.S. Mission in Iraq and Around the World As Report Shows Iraq Contractors Politically Active
--see also Making A Killing - The Business of War, and on the inside...
posted by y2karl (21 comments total)

The International Peace Operations Association The International Peace Operations Association (IPOA) is an association of Military Service Provider companies - companies who work or are interested in international peace operations around the world. This includes companies that do everything from mine clearance, to armed logistics, to emergency humanitarian services, to actual armed peacekeepers. The association was founded to institute industry-wide standards and a code of conduct, maintain sound professional and military practices, educate the public and policy-makers on the industry's activities and potential, and ensure the humanitarian use of private peacekeeping services for the benefit of international peace and human security.

--see also Halliburton. Bechtel.
posted by y2karl at 4:51 AM on October 30, 2003

The first two links come via The Agonist.
posted by y2karl at 5:26 AM on October 30, 2003

Perhaps the reason that these firms are contributors to Republican campaigns is that I don't think many mercenary firms are staffed by liberal leaning democrats...
posted by PenDevil at 6:13 AM on October 30, 2003

Excellent info, y2karl - lots to read here, thanks. There's a lot happening under the radar and like anything else, follow the money.

See Newsweek's The $87 Billion Money Pit which reports on how Halliburton is charging $1.59 a gallon to import nearly 200 million gallons of gasoline. SOMO, the Iraqi national oil company, indicated it can buy the same fuel at no more than 98 cents a gallon.

They also report on kickbacks and fraud - reporting on instances where Iraqi contractors are encouraged to raise their bids to allow for kickbacks. You know things must be rotten to the core if mainstream media is beginning to notice.

CorpWatch sometimes has some good articles on this topic.
posted by madamjujujive at 6:31 AM on October 30, 2003

Perhaps the reason that these firms are contributors to Republican campaigns is that I don't think many mercenary firms are staffed by liberal leaning democrats...

And this surprises who? Of course such companies support those who will most likely keep them in business, no?

Thanks for these excellent links y2karl.
posted by LouReedsSon at 6:33 AM on October 30, 2003

You know things must be rotten to the core if mainstream media is beginning to notice.

Thank your higher power for that! It's about time.
posted by LouReedsSon at 6:36 AM on October 30, 2003

Wow. Nice work Y2K.
posted by dejah420 at 6:44 AM on October 30, 2003

Dick Cheney is still on the Halliburton payroll.

From a March article in The Guardian:

Halliburton, the Texas company which has been awarded the Pentagon's contract to put out potential oil-field fires in Iraq and which is bidding for postwar construction contracts, is still making annual payments to its former chief executive, the vice-president Dick Cheney.
The payments, which appear on Mr Cheney's 2001 financial disclosure statement, are in the form of "deferred compensation" of up to $1m (£600,000) a year.

posted by wsg at 6:53 AM on October 30, 2003

ok Karl, whats the point here?
that war clears the way for rebuilding?
that people are corrupt?, even people in the middle east?
posted by clavdivs at 8:00 AM on October 30, 2003

article from today's guardian about haliburton (oil section).
posted by BigCalm at 8:03 AM on October 30, 2003

Let's examine this from a philosophical/demographic point of view.

Post-Vietnam, the military was restructured with the idea that *everyone* in the ranks was an infantryman, in addition to their real job. So voila, by decree, the 15 men who supported 1 combat branch soldier were suddenly decreed "combat worthy" themselves. Helps to inflate your ego, or makes you feel better prepared or something.

Lots of highly efficient fat smokers were eliminated from the ranks because they couldn't run two miles like an infantryman. They might have been brilliant and almost irreplaceable at their real jobs, but they couldn't run two miles like a dog, so the military kicked them out.

But, in the final analysis, you ended up with a lot of infantry trained, physically fitter people who still flipped highly expensive omelets (not spam, BTW). If they ever had to fire a rifle at another human being, it would only be because of a terrible military disaster. So terrible, in fact, that their ability really wouldn't matter all that much anyway, if you think about it.

So the US now has 300 million people. 150 million of them are males, and just a tiny fraction of that want to be in the military. Of that, not all will make it through the expensive training needed to become an omelet flipper, a plumber, a painter, or any number of not-really military activities.

So why not hire civilians to do that job?

The first, biggest, perhaps only reason is money. Money that bureaucrats want to control, and hate it when they don't control it.

Right now, in Iraq, the military is using Saddam's money, not appropriated by congress and not controlled by bureaucrats, to do stuff they need to pay for *now*, not after waiting for the triplicate paperwork to go through several departments and lots of bureaucratic hands.
(also via The Agonist.)

Private companies may cost a lot, but they are paid "by the job", NOT "by the career", as soldiers are paid. The US isn't out to them for lasting health care, education or housing, either. So how much does a Halliburton project cost, or, for that matter, some Iraqi carpenter hired off the street, compared to a "service member" who, theoretically at least, could be carrying a rifle rather than a spatula?
posted by kablam at 10:07 AM on October 30, 2003

Bottom line:

Private companies put big dollars into campaign fund coffers.

Government agencies do not.
And there's a big election coming up.
Such could also explain a lot about the political leanings of said Ferengi corporations.
posted by nofundy at 10:42 AM on October 30, 2003

Kablam: valid points. But what troubles me is that we often have little or no visibility into the actual costs of these contractors.
posted by tippiedog at 11:01 AM on October 30, 2003

Private companies may cost a lot, but they are paid "by the job"

Ah, Tom Kablamcy strikes again.. .So, let's see--via madamejujive's Newsweek link (no Pentagon PR piece there)--what we get for Saddam's and our money:

Halliburton, a major defense contractor once run by Vice President Dick Cheney, has been accused of gouging prices on imported fuel—charging $1.59 a gallon while the Iraqis “get up to speed,” when the Iraqi national oil company says it can now buy it at no more than 98 cents a gallon. (The difference is about $300 million.)

Behnam Polis, the Iraqi minister of Transportation, told Newsweek that another American contractor, Stevedoring Services of America, was overcharging in its administration of Umm Qasr. “They’re unloading cargo at $12 a ton. That’s a lot. Ports in Dubai and Kuwait do it for $3 a ton,” he said. “A lot of ships are not coming because it costs too much.” Polis said he thinks part of the problem is that the company’s contract runs until the end of the year, and it is guaranteed the money no matter how much work it does. That’s nonsense, responds SSA spokesman Bob Waters: yes, SSA originally set high cargo tariffs to make the port “self-sustaining.” But now, he says, Polis’s own ministry is responsible—and hasn’t changed the prices...

The article concludes

Perhaps the greatest failure of America’s postwar adventure in Iraq was in not distinguishing between what the Iraqis can and should do and where they need help. On democracy and governance, America can certainly assist: 30 years of totalitarian rule has left Iraqis bereft of that experience. And on security, of course: for another year at least the Iraqi Army will be far from ready; just one battalion so far has been formed. Yet Rumsfeld’s Pentagon used to make a point of saying that Iraqis were far more sophisticated and educated than, say, Afghans, and that Iraq’s economic recovery would be far more self-sustaining. So why the top-heavy presence of foreign corporations? Even in finance, a six-bank consortium led by J.P. Morgan is accused of crowding out Iraqi banks. This domination by outsiders seems to be crimping the very free-market Iraq that George W. Bush says he wants to create—and requiring far more Americans on the ground. That creates more targets for Iraq’s growing numbers of disaffected militants. It’s far more expensive to: Iraq’s many unemployed engineers get paid less than one tenth what their American counterparts receive...

...So perhaps George W. Bush should heed the words of a 13-year-old schoolgirl who attends one of those Bechtel-renovated schools, with new equipment supplied by the U.S. government. "In the old days they would have made me carry a bag with Saddam’s face on it," she told her uncle, an Iraqi translator. "Now they’re making me carry one with an American flag." The child resents it, her uncle says. And that should hardly surprise any red-blooded American. The United States wants a free Iraq? Well, then, it should free the Iraqis to do what they can do best.

From the Guardian:

Christian Aid said in a report that the Coalition Provisional Authority had only explained publicly how it had spent $1 billion of the $5 billion it has been given for Iraqi development. The funds include $1 billion from the former U.N. Oil for Food program, $2.5 billion in assets seized from Saddam Hussein's former regime an $1.5 billion in oil revenues, the group said.

So, let's see, November 21st, we end, er, privatize (ka-ching!) the UN's oil for food program. 75% of Iraqi men are unemployed. No money now, next no food. What fun we will have then...
posted by y2karl at 11:29 AM on October 30, 2003

Well, reasonably enough, the argument comes down to economics. At that point, it becomes a see-saw of "opportunity costs", that marvelous thing from high school economics courses. Fortunately, honorable people can disagree about opportunity costs and still be reasonable.
In this case, as example, a modern nation needs both big and small businesses. Big businesses are those concentrations of material, capital, employees, talent, etc. that you need for the big stuff. On the other hand, small business is very quick, takes minimum everything, and employs far more people.
The big corporations, multinationals even, can be "on time, on target" with everything they need for massive projects, *and* they know how to operate with government bureaucracies and other big corporations. They also have "economy of scale".
Small businesses can muster *right now* to do the job, also doing work too small for the big ones.

So in the case of Iraq, on this just one point, though we hear about the big, name corporations, the administration is also working double time to set up the incredibly boring institutions like (literally) a small business administration, chambers of commerce, and private orgs like the Rotarians.

Back to opportunity costs: fully fund big business now, or pump lots of money into small business and radically lower Iraq's unemployment rate?

Just one issue.
posted by kablam at 2:32 PM on October 30, 2003

This begs the question implicit in the concept of privatization: do the Iraqis get any say in this? Whare is the economy of scale in ending the Oil For Food program and transferring the money into opaque Provisional Governing Authority bank accounts without providing the Iraqis either food or an income to buy food?

From Juan Cole *Informed Comment* :

Noah Feldman, an independent consultant to the Coalition Provisional Authority and to President Bush has written a report to the White House casting severe doubts on the likelihood that Iraq will emerge as a Western-style democarcy with separation of religion and state and a foreign policy stance friendly to the West. Al-Zaman's London office appears to have seen a copy of the report, and summarizes it today. Feldman, an NYU professor of law, says that after observing the situation there he is convinced that the Iraqi constitution will enshrine Islam as the religion of state and Islamic law as the basis for national law, that the new regime will refuse to recognize Israel, and that it is likely to be antagonistic to the West. Feldman said that the outcome is likely to contradict all the prognostications made before the war, that it would establish a pluralistic, secular democracy. Feldman, a Democrat, was appointed to consult on constitutional issues because he also has a degree in Islamic Law from Princeton. But his report, if al-Zaman summarizes correctly, has ended up demolishing the rhetoric of the neoconservatives who hyped the war last spring and who predicted that a new democratic Iraq would lead a wave of democratization in the region.

Doesn't it seem possible the Iraqis may prefer a different economic system as well? So, do we let the Iraqis have a say in what they get or shove it down their throats via our handpicked IGC stooges? What? Let them eat depleted uranium?
The chief just sold us Manhattan for $24 in trade beads--here's the contract, it's a done deal!

Just one issue.
posted by y2karl at 4:55 PM on October 30, 2003

The most interesting thing about this is that private companies need and want war to profit, and that private companies make up an unprecedented amount of the total involvement from the cook to the Presidential advisors. This is of course nothing new in history as Eisenhower warned us.
posted by stbalbach at 5:29 PM on October 30, 2003

Important quote from Eisenhowers 1961 speech:

Until the latest of our world conflicts [WWII], the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
posted by stbalbach at 5:36 PM on October 30, 2003

y2karl: just FYI, I stumbled across a strong critic of Noah Feldman, Martin Kramer.

He has some pointed disputes with Noah Feldman on his weblog.
posted by kablam at 7:44 PM on October 30, 2003

Oh, Martin Kramer, who along with Daniel Pipes maintains that cute little Campus Watch, where they make complaints like Middle East studies in the United States has become the preserve of Middle Eastern Arabs, who have brought their views with them. Membership in the Middle East Studies Association (MESA), the main scholarly association, is now 50 percent of Middle Eastern origin. Yes, academic as you can get. How dare those arabs have an opinion on arabs--what do they know about arabs?

Pipes, kablam and Kramer sitting in a tree...

Next thing you'll be posting links to that objective fount of information known as debkafile, I suppose. Gee, if only Douglas Feith had a weblog you could link to...
posted by y2karl at 9:34 PM on October 30, 2003

Just another thing:

The US-led provisional authority in Iraq may be breaking international law by selling state assets, experts have warned, raising the prospect that contracts signed now by foreign investors could be scrapped by a future Iraqi government.
posted by y2karl at 8:57 AM on October 31, 2003