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June, 2007



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Racketeering, Waste And Graft Characterize US Spending In Iraq
By Karen Nakamura

The military-industrial-complex [would] cause military spending to be driven not by national security needs but by a network of weapons makers, lobbyists and elected officials.
- Dwight D. Eisenhower

Why does President Bush insist on staying in Iraq? Many feel the best way to help Iraqis would be to get out and return the country to those who have lived there since the dawn of human history, and in departing, leave a reasonable treasury to allow Iraqis to rebuild their own infrastructure.

The White House website states the Iraqi legislature has "met a key benchmark" by budgeting $10 billion for reconstruction projects and passing legislation to "provide a framework for an equitable sharing of oil revenues."

However published indicate a major sticking point to an "equitable sharing" is that big oil interests want 50 year contracts giving them control over the country's oil, drilling and distribution. There are also charges that while some funds are trickling down, most are being held back by the U.S. and the Iraqi governments. Further, funds that are getting through are being diverted to security or being squandered.

Things are so bad that on March 3, the Mayor of Baghdad, Sabit al-Isawi, protested that while the US is spending huge sums on rubbish collection and tree planting inside the Green Zone, the rest of the city goes without electricity. Mayor al-Isawi insisted these schemes are "not what the people want."

In the meantime, important reconstruction efforts are mired in bureaucracy. The Global Policy Forum/United Nations Security Council released a report March 26 concluding that "there is precious little to show" for past expenditures. Although the U.S. allocated $38 billion in aid as of 2006 "...only $12 billion has been spent on civilian reconstruction with most it going to the Iraqi army and police." Others nations have pledged $15 billion, but most remains undelivered because of the chaos.

The report discussed the difference between the Marshall Plan after World War II and Iraq. In inflation-adjusted dollars the U.S. is spending about the same amount. The difference is that "there was less violence and the Europeans were allowed to plan their own reconstruction. The grant money was spent on local companies, not U.S. companies. Most ...went to fertilizer, food, fuel, raw materials, and semi-manufactured products, not for gigantic building projects. ... Much of the failure [in Iraqi] may be... explained by conditions and the political mess. But there is definitely a third factor--corruption, incompetence, and waste."

By the end of 2006, the U.S. had spent approximately $387 billion on the war, the money principally going to U.S. soldiers and armaments. So what's being spent on civilian reconstruction? There's that $12 billion from the U.S. plus the $10 billion from the Iraq government. That's "a mere $1,000 or $250 a year per civilian plus a similar amount to equip and train the Iraqi security forces."

Only $3.33 out of every $100 the U.S. spends goes to Iraqi civilian reconstruction. Private security costs take a quarter of that and include massive overtime payments to U.S. workers. If factored in, the actual amount shrinks to less than two dollars per $100.

Some improvements have been made for the civilian population. More children are in school. There are more cars, cell phones, Internet users, TV stations and newspapers. But quality of life indicators show failures. Water treatment capacity is down by two-thirds. Before the war, 12.9 million people had clean water while now only 9.7 million people have access. Previously 6.2 people had adequate sewage. That's down to 5.6 million."

The Washington Post reported residents get only two hours of electricity a day on average and are bitterly angry the U.S. "has not delivered a single major power plant in four years of occupation." A US official admitted that, "despite spending $22 billion on reconstruction across Iraq, the Americans didn't expect Baghdad to have a 24-hour electricity supply until 2013."

The Mayor of Baghdad pleaded: "There are essential services required by each district in the city that could be met by building power plants and bridges." He also stated US projects were "overlapping and so badly planned, that the workers hired are ineffective".

In a paper released by Global Research Jan. 12, rebuilding and service contracts are frequently called "reconstruction rackets," not only because contractors obtain generous and "often no-bid contracts from their policy-making accomplices, but also because they habitually shirk on their contracts and skimp on what they promise to do."

An investigation by the Institute for Southern Studies showed key pieces of Iraq's infrastructure; power plants, telephone exchanges, sewage and sanitation systems "have either not been repaired, or have been fixed so poorly that they don't function."

Bechtel received $2.4 billion to help rebuild Iraq. But the company's failures ranged from shoddy school repairs to failing to finish a large hospital in Basra on time and within budget.

Of a $2.2 billion 'reconstruction' contract with Halliburton, only 10 percent was spent on "community needs-the rest on servicing U.S. troops and rebuilding oil pipelines. The company also spent over $40 million searching for weapons of mass destruction."

In fact, most big defense contractors have profited from the war on terror. Lockheed Martin stock has doubled since 2001. The defense contractor that has received the most benefit is General Dynamics. It supplies the Army with "everything from bullets to tank shells to Stryker vehicles."

The Global Focus report also revealed that government rations from the Oil-for-Food in 1996 have been severely cut. "Essential staples like rice, sugar, flour, and cooking oil are still distributed, (without which there would be widespread starvation), but many other basic goods like salt, soap, and beans have been axed from the program. Meanwhile the cost of goods on the open market has shot up, because of IMF-mandated increases in fuel prices. Inflation in 2006 hit 70 percent, double the rate in 2003 and over three times the 2005 rate, largely because of the fuel price increases."

The Associated Press wrote that T. Christian Miller called the multiple failures the "pipes" problem. "A brand new water purification plant is useless if there are no pipes to deliver the water... high-tech schemes to deliver electricity, health and water, and nobody bothered to work out if they ...connected to the community. They supplied gas turbines without fixing the gas supply ...built electricity sub-stations but not power distribution lines." Then there's "...expensive health clinic equipment sitting in a warehouse while hospitals beg for disinfectant."

Oil industry giants Shell U.S., ConocoPhillips, Halliburton, ChevronTexaco are all "high rollers." Shell and Chevron have contracts with the Iraqis to train Iraqi staff and conduct studies. These arrangements give the companies vital access to Oil Ministry officials and geological data. Large Pentagon contractors have also benefited. A 2004 study by The Center for Public Integrity revealed that, for the 1998-2003 period, 1% of the biggest contractors won 80 percent of the contracts. The top ten got 38% of the money.

Profits like this have caused many critics to think Bush's reluctance to withdraw from Iraq lies in the profiteers' "unwillingness to give up further fortunes and spoils of war." Pentagon contractors make-up the overwhelming majority of these profiteers and include Lockheed Martin, Northrop Grumman and Boeing, plus over 100,000 service contractors and sub-contractors. Beneficiaries of the war are often indistinguishable from the policy makers. "More than anything else, it is the pursuit and the safeguarding of those plentiful spoils of war that are keeping US troops in Iraq."

Or as Eisenhower also said, "Beware of the military-industrial complex."

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