People vs. Profit in the "War on Terror"

Eight weeks after the Iraq Study Group became public, it’s clear that President Bush has taken what he wants from it (i.e. the recommendation to initially increase troop levels) and discarded the rest (e.g. recommendations for serious diplomacy with surrounding countries in the Middle East, even so-called “enemies” of the U.S.; a plan for eventually pulling troops out; and creating a plan to deal with escalating ethnic, political, and religious conflict between the Shiites and Sunnis, among others). But those of us who both care about the well-being of the Iraqi people and want to see eventual peace in the war-torn country and region can’t allow ourselves to be satisfied with this; it is our obligation as faithful citizens of the world to engage in the political realm and to call our government to responsible solutions.

In this entry, I’ll focus on just one little section of the report, the one called “U.S.-led Construction Efforts,” which starts on page 23. The section points out that “Substantial reconstruction funds have also been provided to contractors”--$16 billion to be exact, with almost all of the rest of the $34 billion allocated to reconstruction already committed—“and the Special Inspector General for Iraq Reconstruction has documented numerous instances of waste and abuse. They have not all been put right.”

How true this is. Before the U.S. invaders even handed over power to the new government in Iraq, they had already handed out to American and foreign contractors $14 billion from the $20.7 billion Development Fund for Iraq (DFI), a pot of money seized from Iraq’s oil revenues, money found in government bank accounts and in Sadam Hussein’s palaces, and the oil-for-food program balance. But no one kept track of who was being paid how much and whether the work was being done, and the office of the special inspector general for Iraq reconstruction SIGIR, which was set up by Congress to investigate allegations of misuse of funds in Iraq, later found that many companies had actually been paid twice for their work, or never completed the work they were paid for.  In fact, SIGIR identified at least 72 cases of alleged fraud and corruption by contractors in Iraq.

Companies like Halliburton subsidiary, Kellogg Brown & Root (KBR), have spent extremely high amounts—over 55 %—on overhead costs. Other companies, like Parsons, from the U.S. and Worley, from Australia, have spent 43%. One company, SIGIR reported, entered into a $243 million deal to build 150 healthcare—but recorded costs so high that the money only covered the building of 20 clinics. According to SIGIR, more than 75 percent of oil and gas restoration projects are still incomplete, as are 50 percent of electrical and 40 percent of water and sanitation projects.

Why haven’t contractors been able to complete them? The contractors argue that the inflated spending and the failure to complete projects is simply the result of a bad security situation in Iraq—but USAID administrators have testified that only 16 to 22 percent at the most should be needed for costs related to security.  SIGIR investigations found that corruption was the major reason that projects remain incomplete.

Part of the problem is also the lucrative nature of the contracts the U.S. government awarded to corporations, some of which are alleged to have ties within the U.S.government. Many contracts negotiated were “cost plus,” guaranteeing the companies’ costs would be covered, plus a set margin of profit. This let to waste and overspending.

Yet, even with the discovery of so much waste and overspending, the U.S. government has so far been horrifyingly soft-handed when fraud and waste have been discovered. For example, when KBR was found to have charged $263 million in excessive or unsubstantiated cost, the

U.S. government still agreed to pay Halliburton all but $10 million of the amount. Sadly, while the people of Iraq continue to suffer and sometimes die due to lack of health and emergency services, access to potable water, etc. U.S. corporations are profiting from the war. Lockheed Martin’s stocks have increased steadily since 2001, now almost two and a half times their value when 9/11 occurred. General Dynamics stocks have almost doubled as well, and company profits have tripled, with the Washington Post reporting that it is for this country that the

Iraq war has been most profitable. 2006 was the 20^th anniversary of the U.S. Catholic bishops’ document, Economic Justice for All, a document which emphasized a concept that is extremely important in Catholic social thought: that people should always be valued over profit.  “The fundamental moral criterion for all economic decisions, policies, and institutions is this: They must be at the service of all people, especially the poor.” Apparently, 20 years wasn’t enough time for our nation to reflect on this important concept. Profit still seems to have remained a motivating factor in war.

Much can be done in Iraq besides increasing troop levels; the Iraq Study Group Report conclusions clearly demonstrate that nonmilitary solutions abound. Fighting corruption in Iraq is one of them. If we want to challenge the Iraq government to transparency, we need to begin with ourselves. With the corporations like KBR that wasted the valuable money in the Iraq Reconstruction Fund, we need to be anything but soft-handed. There need to be consequences.

Another step would be to stop awarding no-bid contracts to the U.S. contractors who are friends of those running this war. If we were worried before about doing things efficiently, the four years since the war began have proven that American contractors have been anything but. Besides, it has already been documented that Iraqi contractors are much less likely to be the targets of attack. Let’s turn this around and stop valuing profit over people; let’s for once put people first.

Jill Rauh

Senior Project Associate

Education for Justice

Comments

[William Brennan]

Thanks for your interesting commentary and research. While strategic use of US troops is part of the Iraq problem, I feel more often than not critics of the Iraq war have failed to pin point many of the other failings of this Iraq fiasco. Indeed, an immediate withdrawl of US troops would not be a panacea for all problems-- we need to be aware of other problems like these and also bring these to the public's attention.

[Jill]

Note from the author: The BBC just reported on some new statistics on misuse of funds in Iraq. See: http://news.bbc.co.uk/2/hi/middle_east/6316057.stm The New York Times had a similar article on Feb. 1 - http://www.nytimes.com/2007/02/01/world/middleeast/01reconstruction.html?_r=1&oref=slogin