The Corporate Invasion of Iraq

United States Department of Defense/Wikimedia Commons

“For many conservatives, Iraq is now the test case for whether the U.S. can engender American-style free-market capitalism within the Arab world.” – Neil King Jr., the Wall Street Journal, May 1, 2003.

The Bush Administration is using the military invasion and occupation of Iraq to advance a corporate globalization agenda throughout the Middle East. It is an agenda that has not been chosen by the people of Iraq nor the Middle East. And it is an agenda that ignores the desperate human needs that have been created by two U.S.-led wars and 12 years of economic sanctions in Iraq in favor of U.S. corporate profits and Bush Administration dreams of Empire. It is an agenda that must be rejected.

While U.S. corporations did business with Iraq throughout the 1970’s and 1980’s, the ouster of Saddam Hussein by the military invasion and subsequent U.S. occupation has ushered in the first phase of a full U.S. corporate invasion. In this first phase, U.S. corporations are not only able to sell products to Iraq, they are able to set-up shop and own resources in Iraq, including the country’s most valuable resources: oil and water. The second stage of the corporate invasion envisioned by Bush is a “broad based mass privatization” program that would potentially turn all of Iraq’s services over to U.S. corporate ownership.

The third stage would be ushered in by a U.S. Middle East Free Trade Area that would bring the corporate invasion to the entire region. The ultimate goal of the Bush Administration is the ability to dictate both economic and political policy throughout the region and the world without challenge. In other words, the creation of an American Empire. Now is the time to stop this agenda before the first stage of the corporate invasion can take hold.

Courting Saddam

The U.S. and Iraq had a limited relationship before Ronald Reagan became President. Reagan initiated several significant changes that dramatically altered that relationship. For example, in 1984 Reagan reversed a ban on Export-Import Bank (the congressionally funded bank charged with promoting foreign trade) extensions of short-term loan guarantees to Iraq for the purchase of U.S.-manufactured goods. Undeterred by Hussein’s now well-documented horrendous human rights record and support of terrorism, dozens of U.S. multinational corporations including Bechtel, AT&T, United Technologies, Hewlett Packard, General Motors, Philip Morris, Coca Cola—many of them members of a little-known U.S.-Iraq Business Forum—entered Iraq, eagerly supplying the Hussein regime with everything from rice to computers to helicopters.

In fact, from 1985 to 1990, while the U.S. had an arms embargo against Iraq, the Iraqis purchased some $782 million in “dual use” goods from U.S. corporations—material ostensibly intended for civilian uses, that has military applications as well. Many of the sales were allowed by the Reagan and Bush administrations over the objections of the Pentagon, which argued they would inevitably be used for military purposes. In 1988, the day after the U.S. State Department condemned Hussein’s use of chemical weapons against the Kurds, the U.S. Senate passed a tough trade sanctions bill against Iraq which would have significantly curtailed U.S. corporate dealings with Iraq. But the Reagan Administration and Secretary of State George Shultz lobbied vehemently against the sanctions, and they were never enacted.

Two Iraqi reports to the United Nations from 1996 and 2002 revealed on December 12, 2002 in the German newspaper Die Tageszeitung, list 24 U.S. corporations, 55 U.S. subsidiaries of foreign corporations, and a number of U.S. government agencies that provided parts, material, training and other assistance to Iraq’s chemical, biological, missile, and nuclear weapons programs throughout the 1970s and 80s, some continuing till the end of 1990. The U.S. corporations include Honeywell, Rockwell, Hewlett Packard, Dupont, Eastman Kodak, Bechtel, and more.

One particularly galling example is the Bechtel corporation and the Aqaba pipeline described in detail by the Sustainable Energy and Economy Network/Institute for Policy Studies in a May, 2003 report. Many trace the breakdown in negotiations over the Aqaba pipeline as the beginning of the end of U.S. relations with Iraq, arguing that once it began to become clear that Hussein would no longer play ball with U.S. corporate interests, he was no longer tolerated.

Aqaba Pipeline

From 1983 to 1988, Iraqi warplanes dropped between 13,000 and 19,500 chemical bombs on the people of Iraq and Iran. During this same time period, Bechtel and its allies in the Reagan Administration, aggressively lobbied the Iraqi government to sign a contract with Bechtel to build an oil pipeline from Iraq to the Gulf of Aqaba, Jordan. The Reagan Administration and Bechtel not only ignored the monumental humanitarian atrocities perpetrated by their Iraqi business associates, they took steps to ensure that their business deal would not be harmed by an official U.S. government condemnation of the Iraqi crimes.

Secretary of State George Shultz orchestrated the initial discussions with Iraq in 1983 on behalf of his former employer, Bechtel. Between serving as President Richard Nixon’s Secretary of Treasury and President Ronald Reagan’s Secretary of State, George Shultz worked eight years as Bechtel’s president and director. He is currently both a board member and senior counselor. Behind the scenes, Shultz composed Donald Rumsfeld’s pipeline pitch to Saddam. At the time, Rumsfeld, officially, was special envoy on a peace mission to the Middle East.

Negotiations between the U.S. government, Bechtel and Iraq continued unabated as the U.S. government condemned Iraq’s use of chemical weapons in the war against Iran. In fact, on March 24, 1984, just fifteen days after the official condemnation, Shultz warned Rumsfeld that he was worried about the impact of the condemnation on U.S.-Iraq relations and the pipeline deal. Two days later, Rumsfeld met with Iraqi Deputy Prime Minister Tariq Aziz in Baghdad to further discussions on the pipeline. Ultimately, the deal was unsuccessful because of Iraqi concerns over the safety of the pipeline through Israel and in 1985 Hussein called off the deal.

Now Hussein is out and Bechtel is in—this time, pumping water instead of oil.

I. The Rebuilding Contracts

After being kept out of Iraq since Bush I’s invasion, U.S. corporations are now on their way back in. Before Bush Jr.’s military invasion of Iraq began, the corporate invasion was well underway.

Weeks, if not longer, before the war began, the Bush Administration invited a select few of its oldest friends and closest allies to bid on the rebuilding effort—the largest since the Marshall Plan. According to the Wall Street Journal article, the U.S. Agency for International Development (USAID) secretly sent a detailed “request for proposals” to bid on the contracts to a select handful of the nations most politically connected firms. Excluded from the secret bidding process, were, among others: Iraqis, humanitarian organizations, the United Nations and any non-U.S. businesses or organizations. Congress had no role in this “expedited process” that was, and remains to be, controlled by the Executive Branch and completely non-transparent. Members of Congress have yet to even see the contracts much less exercise oversight over their contents. Tens of billions of either U.S. taxpayer or Iraqi oil dollars are expected to change hands before the rebuilding is through.

The most public stage of the corporate invasion began with the granting of these multimillion-dollar contracts to corporations with close ties to the Bush Administration, many with long histories of human rights and environmental abuse. USAID has awarded eight reconstruction contracts thus far and three are currently in the procurement process. The awards made by the U.S. Agency for International Development (USAID) (as described by USAID) are:

—The International Resources Group (IRG), Personnel Support, $7.1 million initially.

—Stevedoring Services of America (SSA), Seaport Administration, $4.8 million initially.

—Creative Associates International, Inc., Primary and Secondary Education, $1 million initially, up to $62.6 million over 12 months.

—Research Triangle Institute (RTI), Primary and Secondary Education, $7.9 million initially, up to $167.9 million over 12 months.

—Bechtel, Capital Construction, $34.6 million initially, up to $680 million over 18 months.

—The Air Force Contract Augmentation Program (AFCAP), Theater Logistical Support, $4 million initially, with up to $26 million over 12 months.

—SkyLink Air and Logistic Support (USA), Inc., Airport Administration, the figure listed.

—Abt Associates, Inc., Public Health, $10 million initially, up to $43.8 million over 12 months.

There have been a few grants awarded by USAID to humanitarian organizations. However, in comparison to the $992.2 million outlined above, the grants—covering the “promotion of diverse and representative citizen participation in and among communities throughout Iraq; identification, prioritization, and delivery of critical reconstruction and development needs; back to school programs; and programs for health, water and sanitation services—total just $57 million.

Other rebuilding contracts awarded by the Bush Administration (as described by U.S. Labor Against the War) include:

—MCI WorldCom, awarded a $30 million contract to build a wireless network in Iraq by the General Services Administration.

—DynCorp/Computer Sciences Corp (CSC), awarded a multimillion-dollar contract to adise the Iraqi government on setting up effective law enforcement, judicial and correctional agencies by the State Department.

—Flour Intercontinental, a subsidiary of Flour Corporation, Perini Corp and Washington Group International were awarded three indefinite delivery/indefinite quantity contracts with a minimum guaranteed contract value of $500,000 and a maximum contract value of $10 million by the Army Corps of Engineers. The contacts allow the Army to call upon the companies to rapidly execute design and construction services as needed.

Two of the most important contracts cover the most valuable resources in the Middle East: oil and water. The first was granted to the Halliburton Corporation and the second to the Bechtel Corporation.

Halliburton, the Vice President’s former company, received a $77 million contract from the Department of Defense. At first, we were told the contract was for repairing Iraq’s oil systems. Then, in April, it was revealed that the contract also included the distribution of Iraq’s oil—validating the anti-war query “how did our oil get under their sand?” to a degree few anticipated. A great deal has been written about this corporation and this contract. Less well reported is the significance of Bechtel’s $608 million contract that gives it access to Iraq’s and potentially the entire region’s water.

It is important to note that Bechtel, like Halliburton and others, will not only profit off of this war, but also helped bring the war about through the actions of Board Members of Executives with key advisory positions to the Bush Administration. In Bechtel’s case, the most blatant example is George Shultz. Shultz is the chairman of the advisory board of the Committee for the Liberation of Iraq, a “fiercely pro-war group with close ties to the White House” in the words of Bob Herbert of the New York Times. The committee formed last year and made it clear from the beginning that it sought more than the ouster of Saddam’s regime. It was committed, among other things, “to work beyond the liberation of Iraq to the reconstruction of its economy.”

Bechtel: Water Control

Bechtel’s contract includes rebuilding Iraq’s water and wastewater systems. Bechtel is one of the top ten water privatization companies in the world. It is involved in over 200 water and wastewater treatment plants around the world. If Bechtel’s contract is extended to include “distribution of water,” just as Halliburton’s was for oil, the people of Iraq—and potentially the entire region—have much to fear.

In one particularly poignant example, after privatizing the water systems in Cochabamba, Bolivia, a subsidiary of Bechtel made water so expensive that many were forced to do without. The government met public protests with deadly force. Bechtel waited. Finally, the government canceled Bechtel’s contract. Bechtel responded with a $25 million lawsuit for lost profits.

The Bush Administration actually tried to impose a privatized water distribution system in Iraq already. U.S. Army Colonel David Bassert of the 354th Civil Affairs Brigade in Iraq told the New York Daily News that the Americans wanted to arrange for Iraqi contractors to sell water for a profit in Umm Qasr in order to nudge the Iraqis into free-market practices “so they don’t get used to a welfare system.” The British, on the other hand, wanted to provide the water for free, noting that a barter system for water had existed for generations in Iraq and there was no reason to alter the system now. The British won. But Bechtel was not in Iraq then. It is now.

Access to Iraq’s water is just the beginning. It is the water of the region that may ultimately be more valuable than its oil. As Fortune magazine has said, “what oil was to the 20th Century, water will be 21st.” And, more ominously stated by the Vice President of the World Bank, “The wars of the next century will be fought over water.” Just three years into the new century, the Bush Administration may have already proved the Bank correct.

Water is already the cause of wars in the Middle East and Iraq is home to the most extensive river system in the region, including the Tigris and Euphrates rivers and the Greater and Lesser Zab rivers. It also has a sophisticated system of dams and river control projects.

As Stephen C. Pelletiere, a former CIA senior political analyst on Iraq during the Iran-Iraq war, wrote in January in the New York Times, “America could alter the destiny of the Middle East in a way that probably could not be challenged for decades—not solely by controlling Iraq’s oil, but buy controlling its water. Even if America didn’t occupy the county, once Mr. Hussein’s Baath Party is driven from power, many lucrative opportunities would open up for American companies.”

Bechtel may become that company.

Other, less well-known contracts demonstrate the blind-U.S. drive to advance corporate profits in Iraq over the meeting of humanitarian needs.

Stevedoring Services of America

One of the first U.S. contracts in Iraq was awarded on March 24, 2003 to Stevedoring Services of America (SSA) for $4.8 million to manage the Umm Qasr seaport in Iraq. In the press, the contract was presented as the only way to ensure that humanitarian aid could reach Iraq. However, the British had a very different vision of things on the ground in Iraq. Air Marshall Brian Burridge, Britain’s chief military officer in the Gulf, told The Guardian of London that the port should be run by Iraqis as a model for the future reconstruction of the country, not by American corporations. The Guardian reported that the British “did not want to seem imperialist invaders.” The British even identified qualified Iraqi’s for the job, but the Americans refused.

Also in direct contradiction to claims that the contract is solely for the meeting of humanitarian needs, the $4.8 million is just the tip of the iceberg. The contract grants SSA a three-year monopoly over the port. It also guarantees that SSA will be paid for that work under a formula that guarantees a profit after costs are covered. While SSA will handle relief supplies initially, the contract doesn’t preclude expanding to carry other goods for postwar Iraq. Finally, like most companies now operating in Iraq, the initial contracts are viewed as opening the door and granting them early access to a lucrative Middle Eastern market which they have previously been locked-out of.

“SSA is positioning itself for the postwar business,” said David Olson of the University of Washington in the Seattle Times, “If the U.S. is there for three to five years in a major way, all that cargo ahs to go through one nodal point. That is an enormous amount of business activity. And with the backing of the U.S. government, you’re not going to have any competition.”

Again, as with Bechtel, the people of Iraq and the region have much to fear from SSA—a notorious union-buster. SSA has led efforts to break longshore unions in Oakland and around the world. Last year’s lockout of West Coast longshore workers was driven in large part by SSA. International Longshore Workers Union (ILWU) President James Spinosa termed SSA “the primary roadblock to an effective West Coast longshore contract settlement,” and accused them of “undermining negotiations, because their primary interests are in breaking the union.”

II. Mass Privatization

The second stage of the corporate invasion was revealed by the Wall Street Journal on May 1 when it leaked a confidential Bush Administration document outlining “sweeping plans to remake Iraq’s economy in the U.S. image. Hoping to establish a free-market economy in Iraq, the U.S. is calling for the privatization of state-owned industries such as parts of the oil sector.” The document specifically outlines a “broad based Mass Privatization Plan” for state-owned services. As quoted above, the Journal noted that “for many conservatives, Iraq is now the test case for whether the U.S. can engender American-style free-market capitalism within the Arab world.”

We do not know the details because even the U.S. Congress has not seen the plan, but as described by the Journal, the plan would put even the World Trade Organization to shame. Where the WTO’s General Agreement on Trade in Services privatizes public services in small steps through arduous negotiations that may well collapse at the next WTO ministerial, the Bush plan for Iraq is total, with neither negotiation nor explanation and with U.S. corporations in the lead.

If enacted, the plan would allow U.S. corporations to take over Iraq’s entire economy from banking to schools to health care to energy to water. This is an agenda that U.S. corporations have been advancing through every trade and investment agreement negotiated for decades. What government negotiations have been unable or slow to achieve, military invasion and occupation are enforcing without noticeable impediment.

III. Free Trade Area

The third stage takes the corporate invasion to the entire Middle East. The Bush Administration has shown that it will defy global public opinion and the United Nations to use military force when it deems necessary. Thus, it can now return to the more traditional model of advancing corporate globalization, the free trade agreement. On May 9, President Bush himself announced plans for an U.S.-Middle East Free Trade Area by 2013. The Middle East, insulated by oil revenue, has not had much need for free trade agreements in the past. Now, however, it appears that the region may have little choice.

The Bush Administration is using the military invasion of Iraq to advance a corporate globalization agenda that has thus far found few takers in the Middle East. Establishing the full access of U.S. corporations throughout the region, and in particular, guaranteed access to oil and water, are key elements of the Bush Administration’s ultimate dreams of Empire.

To stop this onslaught, and to help ensure that Iraq receives a truly democratic reconstruction, led by the Iraqi people with their long-term sustainability in mind and with the help of international humanitarian institutions, massive protests have been launched against the invading corporations, specifically SSA and Bechtel, by the Bay Area’s Direct Action to Stop the War with dramatic success. The corporations have gone on the defensive, the U.S. Congress has begun to step in, and increasing numbers of people are uniting in a demand for change. The corporate invasion can be stopped and the Empire derailed. Please join us.