Risky Business | The Nation


Risky Business

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At the Microsoft-sponsored cocktail reception in the Galaxy Ballroom that evening, Robert Dees urges us "to network on behalf of the people of Iraq." I follow orders and ask Lempres what happens if "the people of Iraq" decide to seize back their economy from the US firms he has so generously insured. Who bails out OPIC? "In theory," he says, "the US Treasury stands behind us." That means the US taxpayer. Yes, them again: The same people who have already paid Halliburton, Bechtel et al. to make a killing on Iraq's reconstruction would have to pay these companies again, this time in compensation for their losses. While the enormous profits being made in Iraq are strictly private, it turns out that the entire risk is being shouldered by the public.

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Naomi Klein
Naomi Klein
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For the non-US firms in the room, OPIC's announcement is anything but reassuring: Since only US companies are eligible for its insurance, and the private insurers are sitting it out, how can they compete? The answer is that they likely cannot. Some countries may decide to match OPIC's Iraq program. But in the short term, not only has the US government barred companies from non-"coalition partners" from competing for contracts against US firms, it has made sure that the foreign firms that are allowed to compete will do so at a serious disadvantage.

The reconstruction of Iraq has emerged as a vast protectionist racket, a neocon New Deal that transfers limitless public funds --in contracts, loans and insurance--to private firms, and even gets rid of the foreign competition to boot, under the guise of "national security." Ironically, these firms are being handed this corporate welfare so they can take full advantage of CPA-imposed laws that systematically strip Iraqi industry of all its protections, from import tariffs to limits on foreign ownership. Michael Fleisher, head of private-sector development for the CPA, recently explained to a group of Iraqi businesspeople why these protections had to be removed. "Protected businesses never, never become competitive," he said. Quick, somebody tell OPIC and Paul Wolfowitz.

The issue of US double standards comes up again at the conference when a CPA representative takes the podium. A legal adviser to Bremer, Carole Basri has a simple message: Reconstruction is being sabotaged by Iraqi corruption. "My fear is that corruption will be the downfall," she says ominously, blaming the problem on "a thirty-five-year gap in knowledge" in Iraq that has made Iraqis "not aware of current accounting standards and ideas on anticorruption." Foreign investors, she said, must engage in "education--bring people up to world-class standards."

It's hard to imagine what world-class standards she's referring to, or who, exactly, will be doing this educating. Halliburton, with its accounting scandals back home and its outrageous overbilling for gasoline in Iraq? The CPA, with its two officers under investigation for bribetaking, and nonexistent fiscal oversight? On the final day of ReBuilding Iraq 2, the cover headline in our complimentary copies of the Financial Times (a conference sponsor) is "Boeing linked to Perle investment fund." Perhaps Richard Perle--who supported Boeing's $18 billion refueling-tanker deal and extracted $20 million from Boeing for his investment fund--can teach Iraq's politicians to stop soliciting "commissions" in exchange for contracts.

For the Iraqi expats in the audience Basri's is a tough lecture to sit through. "To be honest," says Ed Kubba, a consultant and board member of the American Iraqi Chamber of Commerce, "I don't know where the line is between business and corruption." He points to US companies subcontracting huge taxpayer-funded reconstruction jobs for a fraction of what they are getting paid, then pocketing the difference. "If you take $10 million from the US government and sub the job out to Iraqi businesses for a quarter-million, is that business, or is that corruption?"

These were the sorts of uncomfortable questions faced by George Sigalos, director of government relations for Halliburton KBR. In the hierarchy of Iraqi reconstruction, Halliburton is king, and Sigalos sits onstage, heavy with jeweled ring and gold cufflinks, playing the part. But the serfs are getting restless, and the room quickly turns into a support group for jilted would-be subcontractors.

"Mr. Sigalos, what are we going to have to do to get some sub-contracts?"

"Mr. Sigalos, when are you going to hire some Iraqis in management and leadership?"

"I have a question for Mr. Sigalos. I would like to ask what you would suggest when the Army says 'Go to Halliburton' and there's no response from Halliburton?"

Sigalos patiently instructs them all to register their companies on Halliburton's website. When the questioners respond that they have already done so and still haven't heard back, Sigalos invites them to "approach me afterward."

The scene afterward is part celebrity autograph session, part riot. Sigalos is swarmed by at least fifty men, who elbow each other out of the way to shower the Halliburton VP with CD-ROMs, business plans and résumés. When Sigalos spots a badge from Volvo, he looks relieved. "Volvo! I know Volvo. Send me something about what you can achieve in the region." But the small, no-name players who have paid their $985 entrance fees, here to hawk portable generators and electrical control paneling, are once again told to "register with our procurement office." There are fortunes being made in Iraq, but it seems they are out of reach to all but the chosen few.

The next session is starting and Sigalos has to run. The serfs wander off through the displays of shatterproof glass and bomb-resistant trash cans, caressing Sigalos's red-and-white business card and looking worried.

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