Paul Krugman | As Bechtel Goes
As Bechtel Goes
By Paul Krugman
The New York Times
Friday 03 November 2006
Bechtel, the giant engineering company, is leaving Iraq. Its mission - to rebuild power, water and sewage plants - wasn't accomplished: Baghdad received less than six hours a day of electricity last month, and much of Iraq's population lives with untreated sewage and without clean water. But Bechtel, having received $2.3 billion of taxpayers' money and having lost the lives of 52 employees, has come to the end of its last government contract.
As Bechtel goes, so goes the whole reconstruction effort. Whatever our leaders may say about their determination to stay the course complete the mission, when it comes to rebuilding Iraq they've already cut and run. The $21 billion allocated for reconstruction over the last three years has been spent, much of it on security rather than its intended purpose, and there's no more money in the pipeline.
The failure of reconstruction in Iraq raises three questions. First, how much did that failure contribute to the overall failure of the war? Second, how was it that America, the great can-do nation, in this case couldn't and didn't? Finally, if we've given up on rebuilding Iraq, what are our troops dying for?
There's no definitive way to answer the first question. You can make a good case that the invasion of Iraq was doomed no matter what, because we never had enough military manpower to provide security. But the lack of electricity and clean water did a lot to dissipate any initial good will the Iraqis may have felt toward the occupation. And Iraqis are well aware that the billions squandered by American contractors included a lot of Iraqi oil revenue as well as U.S. taxpayers' dollars.
Consider the symbolism of Iraq's new police academy, which Stuart Bowen, the special inspector general for Iraq reconstruction, has called "the most essential civil security project in the country." It was built at a cost of $75 million by Parsons Corporation, which received a total of about $1 billion for Iraq reconstruction projects. But the academy was so badly built that feces and urine leak from the ceilings in the student barracks.
Think about it. We want the Iraqis to stand up so we can stand down. But if they do stand up, we'll dump excrement on their heads.
As for how this could have happened, that's easy: major contractors believed, correctly, that their political connections insulated them from accountability. Halliburton and other companies with huge Iraq contracts were basically in the same position as Donald Rumsfeld: they were so closely identified with President Bush and, especially, Vice President Cheney that firing or even disciplining them would have been seen as an admission of personal failure on the part of top elected officials.
As a result, the administration and its allies in Congress fought accountability all the way. Administration officials have made repeated backdoor efforts to close the office of Mr. Bowen, whose job is to oversee the use of reconstruction money. Just this past May, with the failed reconstruction already winding down, the White House arranged for the last $1.5 billion of reconstruction money to be placed outside Mr. Bowen's jurisdiction. And now, finally, Congress has passed a bill whose provisions include the complete elimination of his agency next October.
The bottom line is that those charged with rebuilding Iraq had no incentive to do the job right, so they didn't.
You can see, by the way, why a Democratic takeover of the House, if it happens next week, would be such a pivotal event: suddenly, committee chairmen with subpoena power would be in a position to investigate where all the Iraq money went.
But that's all in the past. What about the future?
Back in June, after a photo-op trip to Iraq, Mr. Bush said something I agree with. "You can measure progress in megawatts of electricity delivered," he declared. "You can measure progress in terms of oil sold on the market on behalf of the Iraqi people." But what those measures actually show is the absence of progress. By any material measure, Iraqis are worse off than they were under Saddam.
And we're not planning to do anything about it: the U.S.-led reconstruction effort in Iraq is basically over. I don't know whether the administration is afraid to ask U.S. voters for more money, or simply considers the situation hopeless. Either way, the United States has accepted defeat on reconstruction.
Yet Americans are still fighting and dying in Iraq. For what?
For One California Profiteer, Iraq is Going Great
By Sarah Anderson
Thursday 02 November 2006
"War is hell," Gen. William Tecumseh Sherman once stated. This Civil War giant clearly did not hold stock in a major defense contractor.
For soldiers on the frontlines in Iraq, Sherman's words might still resonate. But for defense executives and their shareholders, the open-ended "War on Terror" has been anything but hell for the bottom line.
A look at the San Francisco-based URS Corp., a major provider of Pentagon engineering and equipment repair services, can help illustrate this hell-only-for-some reality.
URS recently ran a help-wanted ad for experienced mechanics to work in Iraq. The ad made the job sound only slightly less brutal than Sherman's March.
"Extreme danger, stress, physical hardships, and possible field living conditions are associated with this position," the ad read. "You should expect to work 12 hour days, seven days a week."
For mechanics who agree to these terms, URS offers $80,000 a year. Meanwhile, company CEO Martin Koffel made 180 times that amount last year in his somewhat less hazardous office environs on San Francisco's Montgomery Street.
The pay gap stretches even wider between Koffel and soldiers on the battlefield. Army privates made about $25,000 last year, extra combat pay and housing allowances included.
Koffel and URS are booming. One big reason: Equipment under war-time stress, as URS officials happily report, wears out five times as fast as equipment in peacetime. In all, the defense contracts that URS has snared have brought in over $1 billion in each of the three years since the Iraq invasion, compared to only a few hundred million in 2002.
URS stock, not surprisingly, is worth nearly five times what it was before the war started.
These stock gains have bloated CEO Koffel's personal bottom line. Last year, he cashed in more than $10 million worth of stock options, bringing his total compensation to $14.4 million.
In his good fortune, Koffel hardly stands alone, according to a study from the Institute for Policy Studies and United for a Fair Economy (PDF). According to the report, CEOs at the top 34 publicly held defense contractors have doubled their averaged pay during the four years since the "War on Terror" began.
The highest-paid defense executive - George David, the CEO of helicopter maker United Technologies - has hauled in more than $200 million total over the past four years. The CEO of another company laden with Pentagon contracts, Health Net's Jay Gellert, has seen his pay leap over 1,000 percent during the post-9/11 period.
Health Net, thanks to Pentagon outsourcing, provides lucrative managed care services for military personnel and their families. The company is currently crowing about particularly strong demand for its mental health counseling services.
Some would argue that as long as defense executives keep their shareholders happy we shouldn't begrudge them their millions in compensation. But such excessive pay levels during wartime actually imperil our nation. War requires shared sacrifice, not personal aggrandizement. What kind of message do those on the front lines get when they see defense industry executives strike it fabulously rich year after year?
Massive payoffs for defense executives also muddy our nation's policymaking waters. We are creating, with these incredibly excessive rewards, an incentive for powerful, often politically connected corporate leaders to want to continue the war in Iraq - or to start new ones.
So what should we do? For starters, we can overhaul government procurement standards. Current U.S. laws already deny government contracts to companies that discriminate against women and people of color. Why should we let our tax dollars subsidize war profiteering?
Congress could put an end to this by requiring that all defense contractors restrain executive pay to reasonable levels during wartime. This restraint wouldn't need to be a fixed dollar cap. Procurement rules could instead deny defense contracts to companies that pay their top executives more than 20 times what their lowest-paid worker receives.
Today, unlike in William Tecumseh Sherman's day, we are fighting battles far from home, in Baghdad and Fallujah, not Atlanta and Gettysburg. But we shouldn't let these great distances from the hell of war blind us to this most basic of democratic truths: In times of war, no one ought to get rich off someone else's sacrifice.
Sarah Anderson is a Fellow of the Institute for Policy Studies and a coauthor of the report "Executive Excess 2006: Defense and Oil Executives Cash in on Conflict," published by IPS and United for a Fair Economy.
Weldon Case Recalls Ike's Warning: Corrupting Power of Military-Industrial Complex
By Jeffrey Klein and Paolo Pontoniere
New America Media
Tuesday 31 October 2006
When President Eisenhower warned in his Farewell Address of the dangers of growing, unchecked power in America, he originally described a "military-congressional-industrial complex," but dropped "congressional" in later drafts of the speech. He was right the first time, the writers say. Jeffrey Klein, a founding editor of Mother Jones, this summer received a Loeb, journalism's top award for business reporting. Paolo Pontoniere is a New America Media European commentator.
When FBI agents raided the home of the daughter of Congressman Curt Weldon, R-Pa., on Oct. 16, he joined a long list of Republican congressmen linked to corruption scandals. Weldon's case is significant because of his vice chairmanship of the Congressional Armed Services Committee, where he oversees $73 billion a year in military spending. All of his power derives from this position. If Weldon is deprived of this power, how much of the corruption around him will go away?
The FBI was looking into whether Weldon's daughter Karen's firm got $500,000 from Itera, a Kremlin-connected natural gas enterprise, as a roundabout payoff to her dad. After the Florida-based Itera was blacklisted by the U.S. Trade and Development Agency (and shortly before Karen Weldon got the half-million), Curt Weldon sponsored legislation, co-hosted a dinner in the Library of Congress and traveled to Moscow to clear Itera's good name. Around the same time, Karen Weldon was also hired by business partners of former Yugoslav leader Slobodan Milosevic; her dad and his chief of staff then flew to the U.S. Embassy in Belgrade to lobby personally (and unsuccessfully) for the removal of the Milosevic partners from America's not-welcome list.
Another one of Weldon's daughters, Kim, landed a full-time job at Agusta-Westland, a subsidiary of Italy's defense giant Finmeccanica, after it won a $1.6 billion contract to build a fleet of new Marine One helicopters for President Bush.
Finally, Weldon's son Andrew's expensive race car driving hobby is financed by Boeing, his father's top campaign contributor.
Weldon himself was a key promoter of Finmeccanica for the Marine One contract, which has been widely reported as a payoff for Italy's support of Bush's Iraq policy. Italy provided what have now been proved to be forged documents that ostensibly showed Saddam Hussein attempted to acquire uranium ore from Niger - a claim that President Bush leaned upon in his 2003 State of the Union address preparing for pre-emptive war. Italian defense groups have since become partners with the United States in the sale of American warfare technology to sensitive and controversial countries such as Israel, Libya, Iran and republics of the former Eastern Bloc.
During the months leading up to Finmeccanica's surprising capture of the Marine One contract, consulting money flowed to Cecelia "Cece" Grimes, Weldon's real estate agent who calls herself "a longtime family friend." According to disclosure records, Rep. Weldon's chief of staff made a $14,400 trip to Rome, Bari, Genoa and Milan with his wife. This and an $8,200 Italian trip by another Weldon staffer were covered by Fincantieri, an Italian ship maker fully owned by Finmeccanica.
Weldon presents himself as a fierce opponent of unfair foreign competitors who steal American jobs. At the time when Finmeccanica was accused by the European Union of receiving $3.9 billion of interest-free, not-necessary-to-repay loans from the Italian state, Weldon appeared at promotional events for the company. On such occasions, his companions were Giovanni Castellaneta, current Italian ambassador to Washington and at the time also a vice president of Finmeccanica, and Steven Bryen, Finmeccanica USA president who previously served as the Pentagon's top cop preventing foreigners from gaining access to our technologies.
Though Weldon did not return repeated phone calls from New America Media to respond to allegations of impropriety, he has blamed many institutions and individuals for conducting a "smear campaign" against him, including the FBI, the CIA, the Pentagon, Bill Clinton, Sandy Berger (former National Security Adviser) and Mary McCarthy (the discharged CIA officer who exposed the CIA's secret prisons).
Weldon's campaign slogan is "Curt Weldon, Independent Fighter for US." However an analysis of contributions received by the congressman's campaign over the years identifies a number of defense industry contractors, especially foreign ones.
For example, employees of companies represented by CeCe Grimes - including Oto Melara, another fully owned Finmeccanica subsidiary - have contributed $27,300 to Weldon's current re-election campaign, while the CEO of Oto Melara contributed $2,700 alone. Agusta-Westland and Agusta Aerospace donated $7,000.
If Weldon is defeated and the Republicans lose their majority in the House, the Congressman most likely to pick up more military-industrial clout is John Murtha, D-Pa., ranking minority member on the House Defense Appropriations Subcommittee. Because of his prominent opposition to the Iraq War, grateful Democrats are likely to approve whatever military appropriations Murtha wants. Is Murtha less corrupt the Weldon? Back in the 1980 Abscam scandal, the FBI captured Murtha on tape saying he wasn't interested "at this point" in taking a $50,000 payment from the FBI agents posing as Arab sheiks, but he was open to further discussions.
Early drafts of President Eisenhower's famous Farewell Address warned that in the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by "the military-congressional-industrial complex." He dropped the word "congressional" because he didn't want his parting words to be seen as partisan, Congress being controlled by the Democrats at the time. But Ike got it right from the start.
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