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Yves Cochet: The mother of all oil shocks looms
[Translated from Le Monde (Paris). A French elected official from the Green
Party warns that there will be an oil crisis unlike any that preceded it by
the end of the decade. He says our only hope is in a measure that it is hard to imagine occurring: a worldwide agreement to draw down oil consumption.
Point of view
TOWARD THE PETRO-APOCALYPSE
Le Monde (Paris)
In a few years, the global production of conventional oil will fall, while the global demand continues to rise. The resulting shock of this structural oil famine is inevitable, so great are the dependency of our economies on cheap oil and. related to the first, our inability to wean ourselves from this dependency in a short period of time.
We can hope to soften the shock, but only if its imminence immediately becomes the unique reference point for a general mobilization of our societies, with, as a consequence, drastic consequences in every sector. The alternative is chaos. This prospect is based on the work of the American geologist King Hubbert, who predicted in 1956 the peak in US domestic production of oil in 1970. This occurred exactly as predicted.
Transposing Hubbert's approach today to other countries has given similar predictive results: at present, the production of every the giant oilfield --and only the giant ones matter -- is in decline, except in the "black triangle" of Iraq-Iran-Saudi Arabia.
The Hubbert's peak of the oil-producing Middle East should be reached around 2010, depending on the more or less rapid recovery of full Iraqi production and the growth rate of demand in China.
The sectors most affected by the steady rise in the price of crude oil will be, first, aviation and intensive agriculture, since the price of jet fuel for one and of nitrogenous fertilizer as well as diesel fuel for the other are directly linked to the price of crude oil.
This will occur unless stabilizing policies are used -- for a time and in some other sectors -- to lower taxes on oil as prices rise. But afterwards ground transport, tourism, the petrochemical industry, and the automotive industry will feel the depressive effects of a reduction in the quantity of oil (depletion). To what extent will this situation lead to a general recession? No one knows, but the blindness of politicians and the usual panicked overreaction of markets allows us to fear the worst.
This unavoidable prophecy is being universally ignored, denied, or underestimated. Rare are those who realize exactly how close and how great is its advent. Michael Meacher, formerly UK minister of the environment (1997-2003), wrote recently in the Financial Times that unless there is a general awakening and decisions at the planetary scale bring radical change in the domain of energy, "civilization will confront the most acute and no doubt most violent upheaval in recent history."
If, in spite of everything, we want to maintain a bit of humanity in life on Earth in the 2010s, we ought, as the geologist Colin Campbell has suggested, to call on the United Nations to agree immediately on the following: to guarantee that poor countries will still be able to import a little oil; to forbid oil profiteering; to encourage saving energy; to promote renewable sources of energy. In order to attain these objectives, this universal agreement should impose the following measures: every State must regulate oil imports and exports; no oil-exporting country may produce more oil than its annual depletion, scientifically calculated, allows; every State must reduce its oil imports to an agreed-upon global depletion rate.
This necessary priority granted to physical econometrics will not suit economists and politicians, especially in America. No government of the United States has ever accepted questioning the American way of life. Since the first oil shock of 1973-1974, every American military intervention can be analyzed in the light of the fear of running short of cheap oil. It was, moreover, the American production peak in 1970 that enabled OPEC to seize the ocassion and cause the first shock, which coincided with the Yom Kippur War. Countries in the West then attempted to regain control and conjure away the specter of shortage, less through energy sobriety than by means of opening oilfields in Alaska and the North Sea. In 1979, the Iranian revolution and the second oil shock once again allowed OPEC to regain preeminence, as Western economies paid dearly for their thirst for oil through the recession of subsequent years.
At the beginning of the 1980s, the financing and arming of Saddam Hussein to fight Iran was part of the American reconquest of the price and flow of oil, as was the cooperation obtained from King Fahd of Saudi Arabia to increase crude oil exports to the West. That allowed the oil price crash of 1986, a return of Western growth through unlimited oil abundance, the extension of the thirst for energy up to the Iraq wars (1991, 2003) no matter how many died from them (100,000? 300,000?), no matter how much they cost ($100 billion? $300 billion?), by no matter what means (annual Dept. of Defense budget: $400 billion).
During these same last fifteen years, the multiple conflicts in the Balkans had their source and their resolution in the American desire to keep Russia away from the oil transport routes from the Black Sea and the Caspian to the ports on the Adriatic, by way of Bulgaria, Macedonia, and Albania. Oil geopolitics authorizes any pact with Islamist devils, from central Asia to Bosnia, and all the cynical connivances with terrorists, right up to Tony Blair's recent trip to Libya to allow Shell to bring its volume of reserves in return for several hundred million dollars.
The present American Greater Middle East Initiative is dressed up in humanitarian and democratic considerations, but it is nothing but an attempt to get control once and for all of every source of oil in the region.
More than thirty years of worrying about oil has not opened the eyes of American and European leaders concerning the energy crisis that is looming just before us. Despite what René Dumont and the ecologists were saying from the 1974 presidential campaign on, the governments of industrialized countries have continued and continue to believe in almost inexhaustible cheap oil -- to the detriment of the climate and human health, both perturbed by greenhouse gas emissions -- instead of organizing a reduction in their economies' reliance on hydrocarbons.
However, the oil shock that promises to strike before the end of the decade is not like the ones that preceded it. What is at stake this time is not geopolitical, but geological. In 1973 and 1979, the shortage had a political origin in OPEC's decision. Then the supply was restored.
Today, it is the wells themselves that are declining. Even if the United States succeeded in imposing its hegemony on all the oilfields in the world (outside of Russia), their army and their technology will not be able to prevail against the coming depletion of conventional oil. In any case, there is not enough time to replace a fluid so cheap to produce, so rich in energy, so easy to use, store, and transport, with so many uses (domestic, industrial, fuel, raw material...), in order to reinvest $100 billion in another source of abundance that doesn't exist.
Natural gas? It does not have the just-named qualities of oil and will reach its global production peak in around 2020 -- about ten years after the other peak. The only viable path is immediate oil sobriety organized through an international agreement along the lines I have sketched out above, authorizing a prompt weaning from our addiction to black gold.
Without waiting for this delicate international agreement, our new regional elected officials and our soon-to-be-elected European representatives should set for themselves as a top priority the local realization of these objectives by organizing, on their own territory, an oil shrinkage. Otherwise, rationing will come from the market through the coming rise in oil prices, and then be propagated by inflation, with the shock reaching every sector. Since the price will soon reach $100 a barrel, this will no longer be a simple oil shock -- it will be the end of the world as we know it.
--Yves Cochet (Green) represents Paris in the National Assembly, and is former land and environment minister (ministre du territoire et de l'environnement).
[The "Legal" Basis of POCLAD]
...Before 1886, most states had laws that prevented corporations from meddling in politics. They can't vote, the logic went, so what are they doing talking to politicians? Wisconsin, for example, had a law stating: "No corporation doing business in this state shall pay or contribute, or offer consent or agree to pay or contribute, directly or indirectly, any money, property, free service of its officers or employees or thing of value to any political party, organization, committee or individual for any political purpose whatsoever, or for the purpose of influencing legislation of any kind, or to promote or defeat the candidacy of any person for nomination, appointment or election to any political office." The penalty for any corporate official violating the law and getting cozy with politicians on behalf of the corporation was five years in prison and a substantial fine.
Humans had the right of free speech, and an individual - representing himself and his own opinions - was free to say and do what he wanted. Free speech is a human right. But corporations didn't have rights - they had privileges. Brought into being by authority of the state in which they're incorporated, that state determined the privileges its corporations could have and how they could be used.
But, they teach in law school, in 1886 the U.S. Supreme Court changed all that - a decision which leads us directly to today's war with Iraq. The Court, the textbooks say, in the Santa Clara County v. Southern Pacific Railroad case, recognized corporations as persons under the Fourteenth Amendment, and thus handed them the huge club of human rights that our Founders had given us humans to beat back government should it ever become repressive. Armed with this mighty weapon, corporations claimed free speech, privacy, the right not to speak, and used anti-discrimination statues originally passed to free slaves to throw out "bad boy" laws that favored local businesses over large corporations or companies that had been convicted of felonies.
I recently discovered that in 1886 the Supreme Court ruled no such thing. The "corporations are persons" was a fiction created by the Court's reporter. He simply wrote it into the headnote of the decision. In fact, it contradicts what the Court itself said. And we've found in the National Archives a note in the hand of the Supreme Court Chief Justice of the time to the court's reporter saying, explicitly, that the Court had not ruled on corporate personhood in the Santa Clara case. Nonetheless, corporations have claimed the human rights the Founders fought and often died to bequeath to living, breathing humans. And, using those rights, they've usurped our government to the point where our domestic policies are now based on what's best for the corporations with the largest campaign contributions, and our foreign policy has become a necessary extension of that.
... While profit is a fine value for a corporation to hold, it's not the prime value of humans and it's definitely not one of the values that drive or preserve democracy.
If we are to save our world from a profit frenzy driven Armageddon, if we are to restore democracy to our American republic, we must first get corporations out of government, so our politicians can once again become statesmen.
Thom Hartmann is the author of "Unequal Protection: The Rise of Corporate Domination and the Theft of Human Rights," a book which details how voters can return human rights to humans. www.unequalprotection.com
"It will become more and more clear that the casualties of war are not just abroad, but here. It is often said that they can get away with war because unlike Vietnam, the casualties are few. True, only a few hundred battle casualties, unlike Vietnam. But battle casualties are not all. When wars end, the casualties keep mounting up - sickness, trauma. After the Vietnam war, veterans reported birth defects in their families due to the Agent Orange spraying in Vietnam.
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Interesting comparison of what we could do with $87 billion other than send it to war--public and higher education, environmental, low income programs...
Compiled by the Center for American Progress
On September 7th, President Bush asked Congress for an additional $87 billion for the war in Iraq, acknowledging that the engagement in Iraq is going to cost many hundreds of billions of dollars. This was a surprise considering that prior to the war, the Administration dismissed such estimates, and even fired it top economic adviser Lawrence Lindsey for suggesting those estimates were correct. To get some perspective, here are some real-life comparisons about what $87 billion means.
$87B IS MORE THAN THE COMBINED TOTAL OF ALL STATE BUDGET DEFICITS IN THE UNITED STATES [Source: Center on Budget and Policy Priorities] - The Bush Administration proposed absolutely zero funds to help states deal with these deficits, despite the fact that their tax cuts drove down state revenues
$87B IS ROUGLY THE TOTAL OF TWO YEARS WORTH OF ALL U.S. UNEMPLOYMENT BENEFITS [Source: Budget Committee] - The U.S. spends about $50 billion a year on unemployment insurance. At least 1.1 million people have exhausted all of their unemployment benefits without finding a job, and yet Congress has refused to extend benefits [Source: Center on Budget and Policy Priorities]
$87B IS ENOUGH TO PAY THE 3.3 MILLION PEOPLE WHO HAVE LOST JOBS $26,363 EACH [Source: Economic Policy Institute] - The unemployment benefits extension passed by Congress at the beginning of this year provides zero benefits to "workers who exhausted their regular, state unemployment benefits and cannot find work" [Souce: Center on Budget and Policy Priorities]. All told, two thirds of unemployed workers have exhausted their benefits. [Source: Center on Budget and Policy Priorities]
$87B IS MORE THAN DOUBLE THE TOTAL AMOUNT THE GOVERNMENT SPENDS ON HOMELAND SECURITY [Source: Department of Homeland Security] - The U.S. spends about $36 billion on homeland security. Yet, Sen. Warren Rudman (R-NH) wrote "America will fall approximately $98.4 billion short of meeting critical emergency responder needs" for homeland security without a funding increase [Source: Council on Foreign Relations]
$87B IS 7 TIMES WHAT THE GOVERNMENT SPENDS ON TITLE I FOR LOW-INCOME SCHOOLS [Source: House Appropriations Committee] - President Bush proposed a budget of just $12 billion for Title I, leaving a $6.2 billion hole in what he promised to spend on Title I in his No Child Left Behind Bill [Source: House Appropriations Committee]
$87B IS 87 TIMES THE AMOUNT THE FEDERAL GOVERNMENT SPENDS ON AFTER SCHOOL PROGRAMS [Source: House Appropriations Committee] - President Bush proposed a budget that reduces the $1 billion for after-school programs to $600 million - cutting off about 475,000 children from the program [Souce: House Appropriations Committee]
$87B IS ABOUT 9 TIMES WHAT THE FEDERAL GOVERNMENT SPENDS ON SPECIAL EDUCATION [Source: House Appropriations Committee] - Legislation authorizes the federal government to pay 40% of the cost of special education, but because of budget shortfalls, it only pays roughly 18% (or $9.9 billion), driving up local property taxes [Source: House Appropriations Committee]
$87B IS MORE THAN 10 TIMES WHAT THE GOVERNMENT SPENDS ON ALL ENVIRONMENTAL PROTECTION [Source: Environmental Protection Agency] - The Bush Administration requested just $7.6 billion for the entire Environmental Protection Agency. This included a 32% cut to water quality grants, a 6% reduction in enforcement staff, and a 50% cut to land acquisition and conservation [Source: Natural Resources Defense Council]
$87B IS 8 TIMES THE TOTAL FOR PELL GRANTS - THE MAJOR COLLEGE PROGRAM IN THE U.S. [Source: House Appropriations Committee] - In 1975, when the Pell Grant program was established, it financed about 84 percent of the cost of attending a 4-year public college. Today, that share is down to about 40 percent, and under Congress's current proposal to freeze Pell Grant funding at about $10 billion,, it would drop to 38% [Source: House Appropriations Committee]
$87B IS MORE THAN THE TOTAL COST OF THE FIRST 3 YEARS OF THE MEDICARE PRES. DRUG PROPOSAL [Source: Congressional Budget Office]
$87B IS ENOUGH TO GIVE EVERY MAN, WOMAN AND CHILD IN AMERICA $300
"[We] want to control spending. And I hope Congress lives up to their words. When they talk about deficits, they can join us in making sure we don't overspend. They can join us and make sure that [they are] focused those items that are absolutely necessary to the American people." -President Bush, 1/6/03
12 Things to Do Now About Corporations
Americans know that corporate excess is about more than flawed accounting. It corrupts democracy, drives a wedge between rich and poor, degrades the environment, and disrupts communities. So what might we the people do?
1. Give it back
The first step in any rehabilitation is to take responsibility for wrongdoing and make amends. In sentencing corporate executives, judges should consider how much of their ill-gotten gains they voluntarily returned. States should seek to recoup ill-gotten gains on behalf of pensioners, ratepayers, taxpayers, and investors. To set an example of the "new ethic of personal responsibility in the business community" President George W. Bush called for in his July 9 speech, he and Vice President Cheney should give back any gains they have earned through questionable accounting and insider trading. (See "Give it Back, Mr. President," http://www.alternet.org)
2. Three strikes, you're out
Why not a corporate death penalty; three criminal convictions and your corporate charter is history. The town of Wayne is one of several Pennsylvania towns that prohibit corporations with repeated violations from setting up shop. So far, the law has been used to keep out hog farms that have repeatedly broken the law.
3. Personhood for people
Corporations were first chartered to serve the public good. POCLAD (Program on Corporations, Law, and Democracy) is developing a model charter based on that idea; it includes time limitations on corporate charters, incorporation only for specific purposes, charter revocation for violations, prohibitions on one corporation owning another. It would also require that corporations refrain from infringing on the health, dignity, and rights of employees and refrain from damaging such commons as air, water, and wildlife habitat.
The legal fiction giving corporations legal personhood was a result of an interpretation of the 14th amendment by an 1886 Supreme Court decision (Santa Clara v. Southern Pacific Railroad Co.). But there has never been a vote of the people on corporate personhood nor on bestowing on corporations the rights contained in the Constitution. We should be clear: The rights of persons are reserved for real people. (See http://www.poclad.org)
4. Favor local
From the town council up through the UN, rules, incentives, and subsidies should favor locally owned enterprises that serve local needs. (See the Institute for Local Self-Reliance http://www.ilsr.org)
5. No deals for lawbreakers
Let's quit rewarding corporate law breakers with lucrative government contracts. White-collar crime is costing America an estimated $200 billion per year, about 50 times the cost of street crime. According to Business Ethics editor Marjorie Kelly, Lockheed Martin has 63 violations and alleged violations, yet its 1999 government contract awards totaled $14 billion. Companies with more than one criminal conviction or civil judgment in three years should face contract suspensions or debarments, says the Project on Government Oversight (http://www.pogo.org)
6. Quit exporting Enron
According to the Institute for Policy Studies, Enron-related projects have received more than $4 billion in federal financing since 1992 and $3 billion from the World Bank, the European Investment Bank, and other public sources. Now Enron wants more; the company is after a $125 million loan from the Inter-American Development Bank to expand a Bolivian gas pipeline through ecologically sensitive areas and the lands of indigenous people. Of course, Enron is not the only one. Public money should not subsidize exploitation. (See http://www.ips-dc.org)
7. Clue in the public
Sunlight is the best disinfectant. All those with a stake in a corporation-employees, communities, customers-should have access to information about its practices and impacts. (See page 19.) Here's one example: Studies by EPA and others show that many corporations under-report environmental liabilities. Get real about costs; report them honestly.
8. Serve all stakeholders
Corporations are required by law to maximize profits for shareholders. Robert Hinkley, a corporate lawyer, is pressing for a law that prohibits making profit at the expense of the environment, human rights, the public safety, the welfare of the communities in which the corporation operates, or the dignity of employees. Groups in several states have taken up this Code for Corporate Citizenship. (See http://www.citizen works.org or call 202/265-6164)
9. Tax the casino
Every day, $1.5-$2 trillion is exchanged on world currency markets; over 95 percent of that is speculative. The Tobin tax, a proposed small tax on currency transactions, would calm financial markets, protect developing countries, and generate billions of dollars to address global poverty. (See http://www.waronwant.org.) A similar tax on stock transactions could slow stock speculation.
10. End corporate welfare
After working hard to get impoverished mothers and children off public assistance, Congress should turn its attention to CEOs. To start, we could help executives learn self-reliance by sunsetting corporate giveaways; eliminating tax breaks for companies that move off shore; and doing rigorous, independent assessments of tax incentives and subsidies to see which, if any, work.
11. Hands off public assets
Those who propose privatization of public assets or services carry the burden of proof to show that long-term public benefits outweigh the costs.
12. Restore democracy
Lord John Browne, CEO of British Petroleum, announced in February a halt to BP political contributions anywhere in the world. "We mustn't confuse our role," he said. "We must be particularly careful about the political process-not because it is unimportant-quite the reverse-but because the legitimacy of that process is crucial both for society and for us as a company working in that society." We can hope that other corporations will follow BP's example.
Realistically, though, we need to enact clean-election reform of the kind that is helping to restore democracy in Maine, Arizona, and Massachusetts. (See http://www.publicampaign.org)
Reprinted from Yes! A Journal of Positive Futures, PO Box 10818, Bainbridge Island, WA 98110. Subscriptions: 800/937-4451 Web: http://www.yesmagazine.org
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EPIC Iraq Alert - 10/1/03
The $87 billion supplemental request for Iraq has now reached the floor of the Senate. The Senate vote was expected to happen this week, but in a complete turnaround, it now looks as though the vote will be delayed - possibly until after the Senate recess ends. If that indeed occurs, this is an important chance for you to meet with your members of Congress while they are in their home districts during recess. Push for transparency, increased international involvement and Iraqi participation. The House is expected to vote on the supplemental next week.
While EPIC remains adamantly opposed to the process that has gotten us to this point, the Iraqi people still need assistance. Given the President´s ongoing failure of leadership and honesty in addressing what is needed in Iraq, Congress must act now by setting conditions to ensure that the U.S. effort to secure peace and restore Iraq is adequately and responsibly funded.
There is still time to act! Call your members of Congress via the Capitol Switchboard at 202-225-3121 or 226-3121.
*EPIC wishes to acknowledge the Iraq Revenue Watch for their essential information and analysis which helped inform this Alert*
TRANSPERENCY and OVERSIGHT of Funds Must Take Place
Congress must ensure transparency and oversight of the $87 billion supplemental request. Paul Bremer and the Coalition Provisional Authority (CPA) should provide a public budget. There must be an open bidding process for contractors, and Congress should require information about companies who are competing for bids. Transparency and oversight will help ensure that U.S. taxpayer dollars are not abused.
Read more information from Iraq Revenue Watch (IRW)
Full Iraqi PARTICAPATION
Iraqis must be given a greater amount of decision making power. The transfer of control to Iraqis must begin. However, so far, the Iraqis on the Iraq Governing Council have been appointed by the U.S., not elected by Iraqis. Iraqis must be able to choose their own representatives, and to do that, a clear plan must be established for a constitution and elections with the oversight of an international body. Iraqis should be allowed to comment extensively on the 2004 Iraqi budget, just as we debate our own budget. Iraqis must have representation and voting rights on the boards and councils that are making decisions.
See more from IRW
INCREASE International Involvement
In addition to sharing authority with Iraqis, the US must have a clear plan to involve the UN and international community. The US should set a clear plan for international involvement. The United Nations is best suited to transition post-war Iraq. The President has thus far failed to secure real international help, and only the UN has the legitimacy and experience needed to partner with the Iraqi people. Even in his address before the UN last week, Bush failed to secure much needed support.
Read A Failed Address from the Washington Post
PROHIBIT Pentagon Control of Reconstruction Funds
The Pentagon has neither the neutrality nor ability needed to oversee the $21 billion requested for reconstruction and humanitarian efforts. John J. Hamre, a deputy defense secretary under Clinton who testified before the Senate Foreign Relations committee, stated that the Pentagon is managing tasks "for which it has no background or competence" (Washington Post 9/23/03)
REQUIRE dismissal of Rumsfeld and Wolfowitz
Within the administration, no one questions the role that Secretary of Defense Donald Rumsfeld and Deputy Secretary Paul Wolfowitz had in relentlessly pushing our nation to wage war on Iraq. They are responsible for the deaths of thousands of innocent civilians, the international backlash against the U.S., increasing the threat of terrorism, and the colossal misjudgments of the war and its aftermath. Congress must require the dismissal of Rumsfeld and Wolfowitz.
Read Fire Rumsfeld and Wolfowitz (Boston Globe)
REDUCE Tax Cuts to Responsibly Fund Iraq Reconstruction
Senator Biden (D-DE) has introduced Resolution S.1634 that, if passed, would pay for the Iraq supplemental by reducing the size of the Bush tax cut for the wealthiest one percent of Americans from $690 billion to $600 billion (thus covering Bush's $87 billion request for Iraq). Ask your Senators to sign onto S.1634. Urge your Representative to sponsor companion legislation in the House.
Talk to Congress and Let Us Know About It!
If the Senate or House delays their vote until after the recess, this is an important chance to meet with your elected officials while they are in their home districts. If you are able to meet or talk with your Member of Congress or a staffer, we'd love to hear about it. Please take a minute to report back using EPIC's easy-to-use online form at:
Education for Peace in Iraq Center (EPIC)
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Date: 3/24/2004 11:32:48 AM Pacific Daylight Time
A Closer Look at War Profiteering: $18.6 Billion On the Loose
Before the invasion of Iraq, the Bush administration promised a short war and estimated low costs. But one year has passed since the start of the war and the costs keep rising. Last November, American taxpayers were asked to foot the bill and Congress gave the Bush administration $18.6 billion to cover the ongoing reconstruction of Iraq.
After decades of war, sanctions and tyranny, Iraq can clearly use a massive influx of funding to rebuild the country, but the Pentagon has been more willing to dole out multi-billion contracts to many companies with long-standing connections to the Bush administration, than to the Iraqi people.
Well-connected, U.S. corporations such as Halliburton and Bechtel, are making hundreds of millions of dollars in war profits despite growing stories of financial fraud, cost over-runs, and poor performance in Iraqi communities. Recent revelations about contract abuse and corruption raise important questions about the quality of government oversight in Iraq and whether the Bush Administration is adequately protecting the interests of American taxpayers.
The following are key recommendations for Congress and the Bush administration.
Improve oversight and open bidding. End all no-bid contracts and open-ended cost-plus’ multi-billion dollar contracts such as those awarded to Halliburton and Bechtel before the start of the war. All companies bidding for contracts should meet rigorous standards of accountability, and should be required to submit their history of compliance with the law for any contract bid.
End war profiteering. To stop the excesses of military contractors and the military itself, increased oversight of the rebuilding process is required. During previous U.S. wars Congress has used war oversight committees to investigate corruption and root out waste.
Cancel all contracts that work against Iraqi self-determination. Contracts that give U.S. companies the right to "privatize state-owned enterprises" should be cancelled or amended. Under the principle of self-determination, such decisions are best left to a sovereign Iraqi government once it is established. To help curb unemployment and increase Iraqi self-determination, the ban on awarding contracts to Iraqi state enterprises should be lifted; contracts should give preferential treatment to Iraqi companies and to contracts that include Iraqis as subcontractors.
Demand an end to the Pentagon´s control of Iraq reconstruction funds. Even after the CPA is replaced by the world´s largest U.S. embassy on June 30th, the Bush administration plans to keep the Pentagon in charge of postwar contracting. Yet the Pentagon´s control of Iraq reconstruction funds has led to billions of dollars of waste, obstructs economic and political rebuilding by Iraqis, and discourages the support and participation of the international community.
Click here to read more on war profiteering. This article on Bechtel, which ran in the Washington Post in February, is an example of U.S. firms being awarded contracts while capable Iraqis are left out in the cold.
How Bechtel Profits while Iraqi Experts Are Ignored http://epicalert.c.topica.com/maab4tdaa5qDcbdH349e/
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Subj: Waxman to Rumsfeld on Halliburton's business with Terrorist states
Shall we just say we're happy that we're finding more about special interests and profiting from government offices, and then forgive everyone and get on with creating heaven on earth? Some have written to me that they know about "corruption" in the U.S. government. Well, I will send the following on to my congressional representatives and ask them if they will please verify the facts and, if true, then do something about it.
Gone are the days like when F.D.R., during WW2, said "I don't want to see a single war millionaire created in the United States as a result of this world disaster" or when Harry Truman referred to war profiteering as "treason".
April 30, 2003
The Honorable Donald H. Rumsfeld
Dear Secretary Rumsfeld:
I am writing about Halliburton's ties to countries that sponsor terrorism.
Halliburton has recently been awarded a leading and lucrative role in the U.S. war against terrorism. Yet there is also evidence from press accounts and other sources that indicates that Halliburton has profited from numerous business dealings with state sponsors of terrorism, including two of the three members of President Bush's "axis of evil." I would like to know what the Defense Department knows about these ties and whether you think this should be a matter of concern to the Congress and the American taxpayer.
Republicans in the Administration and Congress have previously expressed great concern about American citizens and companies trading with countries despite U.S. embargoes. For example, the Vice President's chief of staff testified that Marc Rich, who was granted a pardon by President Clinton, could be considered a "traitor" for trading with Iran even if his actions were technically legal. These same concerns appear to be implicated by Halliburton's conduct, yet rather than being criticized, the company is rewarded with valuable government contracts.
President Bush has declared that Iran poses a potential threat to the United States. In his 2002 State of the Union address, he described how Iran "aggressively pursues" weapons of mass destruction and "exports terror, while an unelected few repress the Iranian people's hope for freedom." Iran, he memorably declared, is part of: an axis of evil, arming to threaten the peace of the world. By seeking weapons of mass destruction, these regimes pose a grave and growing danger. They could provide these arms to terrorists, giving them the means to match their hatred. They could attack our allies or attempt to blackmail the United States. In any of these cases, the price of indifference would be catastrophic.1
According to the State Department, Iran stands out as "the most active state sponsor of terrorism." Iran's government is "involved in the planning and support of terrorist acts and supported a variety of groups that use terrorism to pursue their goals."2
As a result of the country's terrorist links and pursuit of weapons of mass destruction, President Clinton issued an executive order in 1995 banning U.S. trade and investment in Iran, including the trading of Iranian oil overseas by U.S. companies. Earlier that same year, President Clinton had issued an executive order barring U.S. investment in Iran's energy sector. In 1996, the U.S. Congress passed the Iran-Libya Sanctions Act, which allowed for U.S. sanctions against foreign companies participating in Iran's oil industry.
Halliburton, however, was among several U.S. companies that circumvented these restrictions on trading with Iran by providing the country with oil equipment.3 It apparently did this by conducting its business in Iran through foreign subsidiaries. Indeed, Vice President Cheney has even defended this policy. According to the Financial Times 9 he "has said the company is allowed to operate legally in Iran through its foreign subsidiaries."4 Analysts have
The company apparently continues to do work in Iran even now. This work is reportedly being done through a Cayman Islands subsidiary, Halliburton Products and Services, which opened an office in Tehran in February 2000.6 A company brochure offered by the subsidiary apparently states that the company has done work on two offshore Iranian drilling contracts and says that "[w]e are committed to position ourselves in a market that offers huge growth potential."7 Halliburton recently agreed to reevaluate its work in Iran after sustained pressure from shareholders, particularly the New York City Police and Fire Department Pension Funds,8
In 1990, following Iraq's invasion of Kuwait, President George H.W. Bush imposed economic sanctions, including a complete trade embargo, on Iraq. The sanctions ban the export of goods, technology, and services to Iraq. Criminal penalties for violating the Iraqi sanctions range up to 12 years in jail and $1,000,000 in fines.9
Despite these sanctions, the Washington Post has reported that Halliburton performed work in Iraq while Vice President Cheney was leading the company. Halliburton had stakes in two companies that signed contracts to sell over $73 million in oil production equipment and spare parts to Iraq while Mr. Cheney was CEO. The companies were subsidiaries of a joint venture between Dresser Industries which Halliburton acquired in 1998 and Ingersoll-Rand, another large equipment maker. From 1997 through mid-2000, the subsidiaries sold water and sewage treatment pumps, spare parts for oil facilities, and pipeline equipment to Iraq.10
The Vice President initially tried to deny this involvement in Iran. In July 2002, he stated on national television: "I had a firm policy that we wouldn't do anything in Iraq, even even arrangements that were supposedly legal.... [W]e've not done any business in Iraq since the sanctions [were] imposed, and I had a standing policy that I wouldn't do that."11 A month later, confronted with an admission by a Halliburton spokesman that the company indeed did business with Iraq, Vice President Cheney admitted that "[w]hen we took over Dresser, we inherited two joint ventures with Ingersoll-Rand that were selling some parts into Iraq," but he said he did not know of this at the time. Mr. Cheney also said that "[s]hortly after we took control of Dresser, we divested ourselves of those two companies."12
Both of these statements, however, have been contradicted by other evidence. Two former senior executives of the Halliburton subsidiaries say they knew of no policy against doing business with Iraq.13 One of the executives also said that hb was certain that Mr. Cheney would have known about the business with Iraq.14 Furthermore, Halliburton did not divest itself of the subsidiaries "shortly" after Halliburton took control of Dresser. Instead, the firms traded with Iraq for more than a year under Mr. Cheney, signing almost $30 million in contracts.15
Libya has been implicated in a number of terrorist incidents, including attacks at the Rome and Vienna airports in December 1985; the April 1986 bombing of a Berlin nightclub frequented by armed services personnel; and the bombing of Pan Am Flight 103 over Lockerbie, Scotland, in December 1988, which killed 270 people. As a result of these ties to terrorism, the United States has implemented a series of over 20 sanctions against Libya since 1973 that ban a
Despite these sanctions and the Libyan regime's well-documented history of sponsoring terrorism, Brown & Root, a Halliburton construction subsidiary, has worked on a water project in Libya since the 1980s. This project, called the "Great Man-Made River Project," is a system of underground pipes and wells that are purportedly intended to carry water. Some experts believe that the pipes actually have a military purpose. The pipes are large enough to accommodate military vehicles and appear to be more elaborate than is needed for holding water.17 According to one defense expert, referring to the late North Korean leader, Libya "seems to have taken a leaf out of Kim II Sung's book and created a potential military arsenal underground."18
When the project began in 1984, Brown & Root prepared the feasibility studies and drafted the specifications.19 After the 1986 U.S. embargo on trade with Libya, Brown & Root transferred the work to its British office. As of 1997, it was still the project manager.20
In addition, Halliburton was fined $3.8 million in 1995 for re-exporting U.S. goods through a foreign subsidiary to Libya in violation of U.S. sanctions.22
Halliburton's Contracts with the Defense Department and Other Agencies
Despite its apparent connections with terrorist states, Halliburton appears to be one of the main companies profiting from the war on terror. In May 2001, Brown & Root was awarded a five-year, $300-million contract to provide logistical support to the Navy. As of August 2002, the Navy had reportedly given Brown & Root $53 million in work orders over the past 15 months, including $37 million to build detention cells at Guantanamo Bay, Cuba, where terrorist suspects captured in Afghanistan are being held.23
In December 2001, Brown & Root was awarded an exclusive, ten-year contract to provide support services to the Army. The contract has no dollar limit and it is reportedly the only logistical arrangement by the Army without an estimated cost.24 It allows Brown & Root to recover its expenses plus profits.25 It appears that this contract has been quite lucrative for the company, producing over $800 million in revenues. Some of the work has involved supporting U.S. military bases in Afghanistan.26
Brown & Root was also awarded a cost reimbursable design-build contract valued in excess of $100 million for construction of the new U.S. Embassy compound in Kabul, Afghanistan.27 In addition, the U.S. Department of State awarded Brown & Root two contracts for security upgrades and general construction work at multiple facilities worth at least $70 million.28
Most recently, the U.S. Army Corps of Engineers entered into a no-bid contract with Brown & Root to extinguish oil well fires and repair the oil infrastructure in Iraq. That contract is worth up to $7 billion.29 Halliburton was also one of a handful of companies secretly invited to bid on a USAID construction contract to rebuild Iraq worth up to $680 million.
Halliburton regards this work fighting terrorism as a "growth opportunity" for the company. According to its 2002 annual shareholder report:
We expect growth opportunities to exist for additional security and defense support to government agencies in the United States and other countries. Demand for these services is expected to grow as a result of the armed conflict in the Middle East and as governmental agencies seek to control costs and promote efficiencies by outsourcing these functions. We also expect growth due to new demands created by increased efforts to combat terrorism and enhance homeland security.30
If true, these facts have potentially serious implications. It appears that a company that has performed and apparently is continuing to perform work for state sponsors of terrorism is being given a prominent role in the Administration's war on terrorism.
Republicans in the Administration and Congress have been quick to express concern about Americans trading with nations upon which the U.S. has imposed embargoes. After President Clinton pardoned a fugitive financier, Marc Rich, who had allegedly violated the Iranian oil embargo, Republicans and Democrats alike expressed outrage. A House report detailed Mr. Rich's trades with such countries as Iran, Iraq, and Libya and denounced Mr. Rich as a man who "built his fortune by trading with so many enemies of the United States."31 Rep.
Christopher Shays, Vice-Chairman of the House Government Reform Committee, labeled Mr. Rich a "traitor."32 Even Lewis Libby, the Vice President's chief of staff and a former lawyer for Mr. Rich, conceded that, while his former client's conduct may not have been illegal, "you could consider him a traitor for trading with Iran during that period."33
While Halliburton's activities appear to raise similar concerns, the Administration has avoided criticizing the company and has instead rewarded it with lucrative contracts. Congress and the American taxpayer should know more about these contracts and Halliburton's relationship with Iran, Iraq, and Libya. I therefore respectfully request answers to the following questions:
1. What does the Defense Department know about the work of Halliburton or any of its subsidiaries in any nation that is suspected of supporting terrorism?
4. What steps, if any, has the Administration taken or does it plan to take to ensure that taxpayer dollars do not go to companies that do business with state sponsors of terrorism particularly when those dollars are being spent to combat terrorism?
5. How many contracts has the Defense Department awarded to Halliburton since September 11, 2001, and what is the value of these contracts?
6. How many task orders has the Defense Department issued to Halliburton since September 11, 2001, and what is the value of these task orders?
I look forward to receiving a response to these important questions.
'The President, State of the Union Address (Jan. 29, 2002) (online at http://www.whitehouse.gov/news/releases/2002/01/20020129-l l .html <http://www.whitehouse.gov/news/releases/2002/01/20020129-l%20l%20...html> ).
2U.S. Department of State, Patterns of Global Terrorism 2001 (May 2002).
3U.S. Companies Move Quietly into Iranian Markets, Financial Times (Oct. 5, 2000).
5Iran Throwing off Its Isolation, Washington Post (Mar. 31, 2001); See Halliburton Connected to Office in Iran, Wall Street Journal (Feb. 8, 2001).
6.Halliburton Connected to Office in Iran, Wall Street Journal (Feb. 8, 2001). "[A] U.S. official said a Halliburton office in Tehran would violate at least the spirit of American law." Id.
8In 2002, the New York City Comptroller submitted a shareholder resolution on behalf of the New York City Police and Fire Department Pension Funds asking for a review of Halliburton's actions in Iran. New York City Comptroller, Press Release (Mar. 21, 2003). After the Securities and Exchange Commission refused to let the company avoid putting the resolution to a vote, Halliburton agreed to review its Iranian operations and the resolution was withdrawn. Id. See New York City Police and Fire Pension Funds, Proposed Shareholder Resolution re. Halliburton Company Review and Report on Operations in Iran (online at http://www.comptroller.nyc.gov/press/pdfs/HalliburtonResolution3-21-03.pdf).
9.U.S. Department of the Treasury, Office of Foreign Assets Control, Iraq: What You Need to Know about the U.S. Embargo (Mar. 12, 2003).
10. Firm 's Iraq Deals Greater than Cheney Has Said, Washington Post (June 23, 2001).
11. This Weekt ABC News (July 30, 2000).
12. uThis Week, ABC News (Aug. 27, 2000).
13. Firm 's Iraq Deals Greater than Cheney Has Said, supra note 10.
16U.S. Department of the Treasury, Office of Foreign Assets Control, Libya: What You Need to Know about the U.S. Embargo (July 26, 2001).
11 Libya's Vast Desert Pipeline Could Be Conduit for Troops, New York Times (Dec. 2, 1997).
21Securities and Exchange Commission, Halliburton Company Form 10-K (Dec. 31, 2002). The report also identies [sic] Libya as one of the "[countries where we operate which have significant amounts of political risk." Id.
22 Cheney Profited Richly from His Time in Office, Baltimore Sun (Aug. 16, 2000).
23Halliburton Subsidiary Overcame Bid Protest, Fraud Investigation to Land Military Contracts, Associated Press (Aug. 4, 2002).
25A Contract to Spend, MotherJones.com (May 23, 2002).
26Will Halliburton Clean Up? The Company That Dick Cheney Once Ran Stands to Make Millions Rebuilding Iraq, Fortune (Apr. 14, 2003).
27Halliburton, Halliburton Announces Third Quarter Results (Nov. 7, 2002).
28Id.; Fair Disclosure Wire, Fourth Quarter 2002 Halliburton Company Earnings Conference Call (Feb. 20, 2003).
29Letter from Lt. Gen. Robert B. Flowers to Rep. Henry A. Waxman (Apr. 8, 2003). 30Halliburton, 2002 Annual Report (undated).
31House Committee on Government Reform, Justice Undone: Clemency Decisions in the Clinton White House, 107th Cong., 2nd Report, v.l, 110-115 (2002) (H. Rept. 107-454). Describing Mr. Rich's activities in Libya, the report noted that "[u]nlike the other American oil companies, Rich ignored the oil embargoes and executive orders of the Reagan Administration designed to punish the terrorist-sponsoring state." Id.
32House Committee on Government Reform, Hearing on the Controversial Pardon of International Fugitive Marc Rich, 107th Cong., 109 (Feb. 8, 2001) (H. Rept. 107-11).
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Testimony of William D. Hartung
Introduction: Iraq and the Hidden Costs of War
Thank you for providing me with the opportunity to address this committee this morning. Although much of my testimony will deal with Halliburton's role in Iraq, its implications go far beyond one company or one conflict. As taxpayers and as citizens of this Republic, we need to determine how best to provide effective support for our men and women in uniform, at a reasonable cost, with transparency and accountability. That's true whether we are talking about Iraq, or Afghanistan, or the Philippines, or Colombia, or Kosovo, or Liberia, or anywhere else we send American military personnel on short notice to face down tyrants or keep the peace.
Wars are costly undertakings. They almost always cost more than government officials claim they will. Yale economist William D. Nordhaus has suggested that governments have an incentive to understate the costs of conflict because "If wars are thought to be short, cheap, and bloodless, then it is easier to persuade the populace and the Congress to defer to the President." As Robert Hormats, the Vice-Chairman of Goldman Sachs International, observed during the run-up to the current war in Iraq:
History is littered with gross underestimates of the cost of war. Lincoln originally thought the civil war could last 90 days. His Treasury told him it would cost $250 million. It lasted four years and cost $3.3 billion. The First World War was originally forecast to be short and inexpensive. The Vietnam war cost 90 percent more than forecast.
Even conflicts that appear at first to be relatively "cheap," like the 1991 Persian Gulf War, often end up having substantial hidden, long-term costs. In that conflict, the bulk of the $76 billion in direct war costs were paid for by U.S. allies, and U.S. combat deaths were relatively low, at 148 personnel lost. But more than a decade later, U.S. taxpayers are absorbing billions of dollars in costs for treating the service-related injuries and disabilities of the veterans of that conflict. More than one-third of the veterans of the 1990/1991 Gulf War over 206,000 in all have filed for service- related disabilities, and as of early 2003, more than 159,000 of those claims had been approved. This extraordinary "postwar casualty rate" puts the lie to the idea that the first Gulf War was either a cheap or easy victory.
Likewise, when former White House economic advisor Lawrence Lindsey suggested to the Wall Street Journal in September of 2002 that a U.S. intervention in Iraq could cost about 2% of our Gross Domestic Product roughly $200 billion the White House quickly dismissed his estimate. A few months later, they also dismissed Lindsey from his post as White House economic advisor. Roughly a year and one- half after Lindsey made his prediction, and less than a year into the war in Iraq, his rough guess is beginning to look like a gross underestimate of the cost of intervening in Iraq. To date, U.S. taxpayers have committed roughly $180 billion to the buildup to war, the overthrow of Saddam Hussein's regime, and the ongoing occupation and rebuilding effort in Iraq. That doesn't count the costs of "buying allies" through special aid and trade deals, or any projections forward of how long we may have "boots on the ground" in Iraq. And I don't need to tell any member of this Congress that you should not expect this administration to be forthcoming about these future costs. They are going to pretend they don't exist, or let them out in dribs and drabs.
Needless to say, there are no realistic projections of the costs of the wars and occupations of Iraq and Afghanistan in the FY 2005 budget documents that were submitted to Congress recently. The biggest source of the underestimate in the case of this war was the notion among some in this administration that the war would be a "cakewalk," and that once Saddam Hussein's regime had crumbled, building a functioning democracy in Iraq would be a relatively straightforward, inexpensive affair. In fact, Deputy Secretary of Defense Paul Wolfowitz and AID administrator Andrew Natsios cited figures as low as $1.5 billion for Iraqi rebuilding, on the theory that most of the funds could come from the sale of Iraqi oil. This is particularly ironic when we consider that some of the charges of fraud and abuse relating to Halliburton have to do with overcharges in the importation of fuel into Iraq a classic case of bringing coals to Newcastle, as it were. If Iraq's oil infrastructure had been up and running as quickly as the cock-eyed neo-conservative optimists in this administration had suggested, one would not have envisioned the need to spend $1.2 billion to date to import gasoline and diesel fuel products into an oil-rich country like Iraq. How much of that $1.2 billion represents price gouging is a separate, and equally important, question.
As for hidden human costs of this war, we are already past 500 deaths of our military personnel, and combat injuries are occurring at a much higher rate than in the first Gulf War. In addition, because it is an occupation and not an air war, I think we will need to keep an eye on trauma-related issues for veterans returning from Iraq the impact of seeing friends and fellow unit members killed and maimed, of serving in close combat, of seeing the impacts of the years of brutality that Saddam Hussein imposed on his own people, and so forth. We will need to make sure that our combat personnel get all the support they need to process these experiences, which will undoubtedly include needs for traditional health care as well as psychological and emotional support services. This will cost money, and it is not something that we can in good conscience cut corners on once we have asked our men and women and uniform to go into harm's way in a very difficult situation in Iraq. If our contracts with companies like Halliburton are "indefinite cost, indefinite quantity," our social contract to meet the ongoing needs of the men and women of our armed forces and their families needs to be firm, fixed, enduring, and non-negotiable.
The Halliburton Factor: The High Price of Privatized War Just as many in the Bush administration underestimated the challenges posed by the postwar occupation and stabilization of Iraq, they overestimated the ability of private companies like Halliburton to bear a lion's share of the burden in the rebuilding process. In the January/February issue of The Atlantic, James Fallows has done us all a great service by pointing out the degree to which the Pentagon cast aside all of the detailed pre-war planning that had been done not only by the State Department, but also by the Agency for International Development, the CIA, and the Army War College. As the magazine's own summary puts it, "The U.S. occupation of Iraq is a debacle not because the government did no planning but because a vast amount of expert planning was willfully ignored by the people in charge."
A related point that Fallows doesn't mention is that there was were two sets of plans that the Pentagon did have well under way before the start of the war: 1) to drop its hand-picked Iraqi exiles into the country, and the Iraqi ministries, as soon as possible; and 2) to hand over as much of the rebuilding process and the sustainment and support of U.S. troops to private firms like Halliburton, Bechtel, Dyncorps, and SAIC, as quickly as possible. On one level, "exiles- plus-Halliburton" was the Pentagon's plan for post-war Iraq. This raises problems in terms of cost and accountability, but it also raises problems in terms of our larger objectives in Iraq, such as promoting security and democratization. I'll stick primarily to the narrower points in my prepared testimony, but I'd be glad to address the broader points in the question and answer period if there is interest in doing so.
What do we know so far about Halliburton's work in Iraq? We know that it has been secretive. If it hadn't been for persistent questioning from Rep. Henry Waxman's office, from Sen. Daschle and the members of this Committee, from the media, and from non- governmental organizations like Taxpayers for Common Sense, the Center for Corporate Policy, the Project on Government Oversight, and the Center for Public Integrity, Halliburton's Iraq work might still mostly hidden from public view. The company was already doing significant work in the region under the Logistics Civil Augmentation Program (LOGCAP) contract, a ten-year arrangement in force since 2001 under which the company is in essence the on-call logistics and supply arm for the United States Army. Under LOGCAP and other non- Iraq-related contracts, Halliburton's Kellogg, Brown and Root division (KBR) has done everything from throw up "temporary" military facilities in Afghanistan, Uzbekistan, and Iraq to build prison facilities for terror suspects in Guantanamo Bay, Cuba.
So, with or without Iraqi rebuilding money, Halliburton would be a significant Pentagon contractor. The company has been in this line of work for some time, going back to when then Secretary of Defense Dick Cheney first asked the firm to do a study of whether a private firm might be able to provide logistics planning and support for U.S. contingency operations. Its first big contract for military support operations was in Somalia, followed by a multi-billion dollar payday in the Balkans, where the company made itself essential to the conduct of U.S. operations.
But what really drew public attention was not the pre-existing LOGCAP work, it was the no-bid contract that Halliburton received to put out potential oil fires in the wake of an intervention in Iraq, and repair Iraqi oil infrastructure. The company was asked to do a scope of work prior to the war, and then they were awarded the contract. As an Army spokesman put it in an interview with Dan Baum for a piece he wrote for the New York Times Magazine, "They were the company best positioned to execute the oil field work because of their involvement in the planning." This is circular logic, to put it mildly. Who was checking Halliburton's assessment of what work needed to be done, to make sure they weren't tailoring the scope of work to what they could do rather than what needed to be done? Who was going to monitor Halliburton, which was already providing a wide array of services for the U.S. military worldwide? And if there were problems, who was going to discipline Halliburton, a company that U.S. forces were already depending on for meals, clean laundry, vehicle maintenance, base building and repair, and a host of other essential functions?
One of the arguments made for rushing to give the contract to Halliburton was simple expediency. We needed to be ready to hit the ground running, we were told, particularly if Iraq's oil fields were up in flames as had happened with the Kuwaiti fields in the first Gulf War. But it turns out that there were firms far more capable than Halliburton at putting out oil well fires that were never allowed to bid. As the late, great Mark Fineman of the Los Angeles Times pointed out in a piece filed with his colleague Dana Calvo in April of 2003, Boots and Coots International Well Control Inc., the Halliburton affiliate that would have been utilized to put out oil well fires, was actually in financial trouble at the time of the Iraqi contract and had limited "surge capacity" to deal with a major outbreak of oil well fires in the Persian Gulf. Luckily, the number of oil well fires were limited, but even to deal with a small number, Halliburton had to bring in a second firm, Wild Well Control, Inc. Bill Mahler of Wild Well told Fineman and Calvo "We would have liked to participate in the pre-planning. It was frustrating we weren't included." So, the rush to hire Halliburton didn't serve the need to get the best oil fire fighting firm in place, and could well have proved a major problem had there been more oil fires to deal with. Secrecy didn't serve the needs of expediency, but it did serve to exclude other qualified firms from bidding on the work.
A similar story emerges in the case of the gasoline overcharges out of Kuwait. It appears that Halliburton overcharged by about $1 a gallon on 57 million gallons brought in from Kuwait, using an intermediary firm called Altanmia. When pressed, Halliburton claimed that they were directed to use the firm, or alternately that the firm was the most expedient firm to truck the gasoline in from Kuwait. But when Rep. Waxman's office asked a few questions it emerged that Halliburton had spent only one day looking for companies to assist in this work, that Altanmia had no track record in fuel supply, and that there may have been nepotism involved, in the form of a relative of a member of the Kuwaiti ruling family associated with the firm. Yet both Halliburton and the Army Corps of Engineers had argued that the company had done its best under difficult circumstances to get fuel into Iraq in the most expeditious way possible. Other Pentagon officials seem to disagree, since there is now an investigation under way to see if there was criminal wrongdoing involved in the fuel overcharges.
Then of course we have the "meals not served" scandal, in which Halliburton was billing the Pentagon for 42,042 meals a day at Camp Arifjan in Kuwait while only 14,053 were actually served. That's not a small undercount, a case of being a little off in playing "guess who's coming to dinner?," as one Halliburton PR person put it. That means day in, and day out, billing U.S. taxpayers for three times as many meals as were actually served. And according to press accounts the quality of the meals was so unappealing that many U.S. soldiers in Kuwait skip out of the mess hall and go out and buy food from vendors on the street. So far, $27 million in overcharges have been detected in just five facilities, with roughly another 50 to be checked. This sounds like a case of a company that was not just "stressed out." This sounds like a company that was taking advantage of the fog of war and occupation to take U.S. taxpayers for a ride.
Finally, we have the case of at least $6.3 million in kickbacks on yet another Halliburton contract in Iraq. If there are kickbacks, that means there has to be enough "padding" in the contract to allow for the kickback, plus a profit for all concerned. And if there's a kickback on one contract, plus an overcharge on another, plus a systematic overbilling on a third, we have to ask ourselves when we stop treating these as isolated instances and acknowledge that there is a systematic problem of waste, fraud, abuse, and possible criminality involved in Halliburton's operations in Iraq. Are we going to let them rip off the taxpayers first, and then just pay back the overcharge from future contracts, as has been the case so far, or are we going to demand systematic accountability and monitoring to make sure that the examples we have learned about thus far are not the tip of a very large iceberg?
Towards Greater Accountability: A Question of Balance A number of members of Congress and representatives of good government groups have called for Halliburton to be debarred from government contracts altogether, or from future contracts for the rebuilding of Iraq, based on the overcharges, kickbacks, and overbilling practices that have emerged in its work in the Iraqi theater to date. This may well be warranted, but it is as important to think about how we would go about doing this as whether to do it. As my friend and colleague David Isenberg of the British American Security Information Council (BASIC) put it recently, for our armed forces as they are currently structured, private military companies like Halliburton are like the American Express card they can't leave home without them. So in order to contemplate punishing a company like Halliburton, you also need to think about how to accomplish the support and logistics tasks that Halliburton is currently shouldering on behalf of our armed forces. I happen to believe that we have gone too far down the road of privatization when it comes to military support services. There are certain levels of discipline, risk, and discretion that one an expect from a person who has agreed to wear the uniform of their country that one cannot necessarily expect from a person or entity who is performing a similar task for a fee. Lieutenant General Charles S. Mahan, Jr. has asserted that there were points during the current Iraq war when the refusal of contract employees to go into harm's way deprived U.S. troops of fresh food, showers, toilets, and other basic services for months at a time.
Unlike for U.S. military personnel, no one is keeping figures on the numbers of civilian contract employees killed and wounded in Iraq, but it is believed to be substantial, and some press accounts have suggested that the security costs tacked onto contracts by private companies doing rebuilding and troop support work in Iraq are anywhere from 6% to 25%. Speaking on the issue of the numbers of contract employees present in Iraq at any given point, Brookings Institution expert Peter Singer says flatly "No one knows the figures. The accounting and accountability is Enron-like." The early departure of 60 Korean engineers from Iraq in early December after two of their colleagues were killed in an ambush was only the most dramatic case of how the security issue may be affecting foreign subcontractors working for U.S. firms.
I raise the issue of what one can expect from contract employees because in situations like Iraq they are increasingly becoming explicit targets of terror-bombers, resisters, and "dead-enders." They are viewed as a potential weak link in the support system for our forces in the field that can be exploited to undermine morale, deprive them of vital supplies, and so forth. A company like Halliburton might well argue in response to this that they are better equipped than most firms to operate in dangerous environments, and that therefore they are a better choice than a firm that might otherwise seem like a logical choice based on more traditional business skills alone. But it is on the efficiency front that the case for privatization, Halliburton-style is perhaps the weakest of all. The advantage of privatization is supposed to be that it shakes up complacent government bureaucracies by introducing an element of competition. Other advantages include cutting overhead by not having to invest in full-time, long-term employees to do short-term tasks, and hiring individuals with specialized skills (such as integrating certain kinds of technologies) for as long as needed and no longer. The problem with the Halliburton case is that once you have handed over a huge swath of your operation to them for a 10-year period, mostly in the form of open-ended, cost-plus contracts, there is no more competition. If you become dependent upon a company like Halliburton for essential functions, while eliminating the people you would need to carry out those functions, then you are setting yourself up for the death of a thousand cuts. Or, in this case, a thousand cost over-runs. And that's particularly true if you don't have a good system for monitoring their activities on a regular basis.
So, where does that leave us? I think the independent investigations of Halliburton need to continue, but the punishments may have to proceed in parallel with a sort of "policy audit." If we take away this function from Halliburton, who should do it? What about this one?
This process would be helped substantially if we open the doors to genuine competitive bidding, not only among big U.S. companies, but also between private companies and units of the U.S. government that may be able to do the job better. We also could do a better job of involving indigenous Iraqi entrepreneurs. And we should lift the absurd limits on who and who cannot bid on Iraqi rebuilding work. There are qualified companies from France, and Germany, and Russia, and other countries that disagreed with us about the imminence of the threat posed by Iraq. And they happened to be right, by the way the Iraqi threat wasn't as imminent as our President claimed it was last spring when he rushed off to war against the wishes of most of the international community. But right or wrong then, that's not the main issue now. Our allies, and all nations of good will, should be part of the bidding process. If you only bring them in at the subcontracting level, then you aren't getting competition on price at the prime contractor level, which is where you would be able to save taxpayers some money.
Over time, we should re-examine which functions we want in the hands of private companies, and which ones we want the military itself to handle, particularly with respect to logistics and support functions that involve being in the midst of combat and occupation operations. But for now, part of holding Halliburton and other private companies accountable may involve scaling their responsibilities down to size, so they are not "too big to punish," without also punishing our men and women in uniform. That doesn't mean we can't hold them accountable, it just means we need a short- and long-term strategy for doing so, not a one-shot answer. The privatization of military support functions has evolved over a decade or more. Restoring the proper balance between government and corporate roles in this area could take at least that long.
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Subj: [snow] Major Rokke interview
[Forwarded from the DU-watch listserv. Here's something we
THE WAR AGAINST OURSELVES
Doug Rokke has a PhD in health physics and was originally trained as a forensic scientist. When the Gulf War started, he was assigned to prepare soldiers to respond to nuclear, biological, and chemical warfare, and sent to the Gulf. What he experienced has made him a passionate voice for peace, traveling the country to speak out. The following interview was conducted by the director of the Traprock Peace Center, Sunny Miller, supplemented with questions from YES! editors.
QUESTION: Any viewer who saw the war on television had the impression this was an easy war, fought from a distance and soldiers coming back relatively unharmed. Is this an accurate picture?
ROKKE: At the completion of the Gulf War, when we came back to the United States in the fall of 1991, we had a total casualty count of 760: 294 dead, a little over 400 wounded or ill. But the casualty rate now for Gulf War veterans is approximately 30 percent. Of those stationed in the theater, including after the conflict, 221,000 have been awarded disability, according to a Veterans Affairs (VA) report issued September 10, 2002.
Many of the US casualties died as a direct result of uranium munitions friendly fire. US forces killed and wounded US forces.
We recommended care for anybody downwind of any uranium dust, anybody working in and around uranium contamination, and anyone within a vehicle, structure, or building that´s struck with uranium munitions. That´s thousands upon thousands of individuals, but not only US troops. You should provide medical care not only for the enemy soldiers but for the Iraqi women and children affected, and clean up all of the contamination in Iraq.
And it´s not just children in Iraq. It´s children born to soldiers after they came back home. The military admitted that they were finding uranium excreted in the semen of the soldiers. If you´ve got uranium in the semen, the genetics are messed up. So when the children were conceivedthe alpha particles cause such tremendous cell damage and genetics damage that everything goes bad. Studies have found that male soldiers who served in the Gulf War were almost twice as likely to have a child with a birth defect and female soldiers almost three times as likely.
Q: You have been a military man for over 35 years. You served in Vietnam as a bombardier and you are still in the US Army Reserves. Now you´re going around the country speaking about the dangers of depleted uranium (DU). What made you decide you had to speak publicly about DU?
ROKKE: Everybody on my team was getting sick. My best friend John Sitton was dying. The military refused him medical care, and he died. John set up the medical evacuation communication system for the entire theater. Then he got contaminated doing the work.
John and Rolla Dolph and I were best friends in the civilian world, the military world, forever. Rolla got sick. I personally got the order that sent him to war. We were both activated together. I was given the assignment to teach nuclear, biological, and chemical warfare and make sure soldiers came back alive and safe. I take it seriously. I was sent to the Gulf with this instruction: Bring ‘em back alive. Clear as could be. But when I got all the training together, all the environmental cleanup procedures together, all the medical directives, nothing happened.
More than 100 American soldiers were exposed to DU in friendly fire accidents, plus untold numbers of soldiers who climbed on and entered tanks that had been hit with DU, taking photos and gathering souvenirs to take home. They didn´t know about the hazards.
DU is an extremely effective weapon. Each tank round is 10 pounds of solid uranium-238 contaminated with plutonium, neptunium, americium. It is pyrophoric, generating intense heat on impact, penetrating a tank because of the heavy weight of its metal. When uranium munitions hit, it´s like a firestorm inside any vehicle or structure, and so we saw tremendous burns, tremendous injuries. It was devastating.
The US military decided to blow up Saddam´s chemical, biological, and radiological stockpiles in place, which released the contamination back on the US troops and on everybody in the whole region. The chemical agent detectors and radiological monitors were going off all over the place. We had all of the various nerve agents. We think there were biological agents, and there were destroyed nuclear reactor facilities. It was a toxic wasteland. And we had DU added to this whole mess.
When we first got assigned to clean up the DU and arrived in northern Saudi Arabia, we started getting sick within 72 hours. Respiratory problems, rashes, bleeding, open sores started almost immediately.
When you have a mass dose of radioactive particulates and you start breathing that in, the deposit sits in the back of the pharynx, where the cancer started initially on the first guy. It doesn´t take a lot of time. I had a father and son working with me. The father is already dead from lung cancer, and the sick son is still denied medical care.
Q: Did you suspect what was happening?
ROKKE: We didn´t know anything about DU when the Gulf War started. As a warrior, you´re listening to your leaders, and they´re saying there are no health effects from the DU. But, as we started to study this, to go back to what we learned in physics and our engineeringI was a professor of environmental science and engineeringyou learn rapidly that what they´re telling you doesn´t agree with what you know and observe.
In June of 1991, when I got back to the States, I was sick. Respiratory problems and the rashes and neurological things were starting to show up.
Q: Why didn´t you go to the VA with a medical complaint?
ROKKE: Because I was still in the Army, and I was told I couldn´t file. You have to have the information that connects your exposure to your service before you go to the VA. The VA obviously wasn´t going to take care of me, so I went to my private physician. We had no idea what it was, but so many good people were coming back sick.
They didn´t do tests on me or my team members. According to the Department of Defense´s own guidelines put out in 1992, any excretion level in the urine above 15 micrograms of uranium per day should result in immediate medical testing, and when you get up to 250 micrograms of total uranium excreted per day, you´re supposed to be under continuous medical care.
Finally the US Department of Energy performed a radiobioassay on me in November 1994, while I was director of the Depleted Uranium Project for the Department of Defense. My excretion rate was approximately 1500 micrograms per day. My level was 5 to 6 times beyond the level that requires continuous medical care.
But they didn´t tell me for two and a half years.
Q: What are the symptoms of exposure to DU?
ROKKE: Fibromyalgia. Eye cataracts from the radiation. When uranium impacts any type of vehicle or structure, uranium oxide dust and pieces of uranium explode all over the place. This can be breathed in or go into a wound. Once it gets in the body, a portion of this stuff is soluble, which means it goes into the blood stream and all of your organs. The insoluble fraction staysin the lungs, for example. The radiation damage and the particulates destroy the lungs.
Q: What kind of training have the troops had, who are getting called up right nowthe ones being shipped to the vicinity of what may be the next Gulf War?
ROKKE: As the director of the Depleted Uranium Project, I developed a 40-hour block of training. All that curriculum has been shelved. They turned what I wrote into a 20-minute program that´s full of distortions. It doesn´t deal with the reality of uranium munitions.
The equipment is defective. The General Accounting Office verified that the gas masks leak, the chemical protective suits leak. Unbelievably, Defense Department officials recently said the defects can be fixed with duct tape.
Q: If my neighbors are being sent off to combat with equipment and training that is inadequate, and into battle with a toxic weapon, DU, who can speak up?
ROKKE: Every husband and wife, son and daughter, grandparent, aunt and uncle, needs to call their congressmen and cite these official government reports and force the military to ensure that our troops have adequate equipment and adequate training. If we don´t take care of our American veterans after a war, as happened with the Gulf War, and now we´re about ready to send them into a war againwe can´t do it. We can´t do it. It´s a crime against God. It´s a crime against humanity to use uranium munitions in a war, and it´s devastating to ignore the consequences of war.
These consequences last for eternity. The half life of uranium 238 is 4.5 billion years. And we left over 320 tons all over the place in Iraq.
We also bombarded Vieques, Puerto Rico, with DU in preparation for the war in Kosovo. That´s affecting American citizens on American territory. When I tried to activate our team from the Department of Defense responsible for radiological safety and DU cleanup in Vieques, I was told no. When I tried to activate medical care, I was told no.
The US Army made me their expert. I went into the project with the total intent to ensure they could use uranium munitions in war, because I´m a warrior. What I saw as director of the project, doing the research and working with my own medical conditions and everybody else´s, led me to one conclusion: uranium munitions must be banned from the planet, for eternity, and medical care must be provided for everyone, not just the US or the Canadians or the British or the Germans or the French but for the American citizens of Vieques, for the residents of Iraq, of Okinawa, of Scotland, of Indiana, of Maryland, and now Afghanistan and Kosovo.
Q: If your information got out widely, do you think there´s a possibility that the families of those soldiers would beg them to refuse?
ROKKE: If you´re going to be sent into a toxic wasteland, and you know you´re going to wear gas masks and chemical protective suits that leak, and you´re not going to get any medical care after you´re exposed to all of these things, would you go? Suppose they gave a war and nobody came. You´ve got to start peace sometime.
Q: It does sound remarkable for someone who has been in the military for 35 years to be talking about when peace should begin.
ROKKE: When I do these talks, especially in churches, I´m reminded that these religions say, And a child will lead us to peace.’ But if we contaminate the environment, where will the child come from? The children won´t be there. War has become obsolete, because we can´t deal with the consequences on our warriors or the environment, but more important, on the noncombatants. When you reach a point in war when the contamination and the health effects of war can´t be cleaned up because of the weapons you use, and medical care can´t be given to the soldiers who participated in the war on either side or to the civilians affected, then it´s time for peace.
Fairly updated set of Ref/links for DEPLETED URANIUM Weaponry ("DU")">
Subj: [snow] Declassified documents on US-Iraq relations in 1980s
[ Top of Page ]
Subj: depleted uranium shocker
Monday, April 5th, 2004
Army officials at Fort Dix and Walter Reed Army Medical Center are rushing to test all returning members of the 442nd Military Police Company of the New York Army National Guard for depleted uranium contamination.
Army brass acted after learning that four of nine soldiers from the company tested by the Daily News showed signs of radiation exposure.
The soldiers, who returned from Iraq late last year, say they and other members of their company have been suffering from unexplained illnesses since last summer, when they were stationed in the Iraqi town of Samawah.
Dr. Asaf Durakovic, a former Army doctor and nuclear medicine expert who examined and tested the nine men at The News' request, concluded four of them "almost certainly" inhaled radioactive dust from exploded depleted uranium shells fired by U.S. troops.
Sen. Hillary Clinton (D-N.Y.), after learning of The News' investigation, blasted Pentagon officials yesterday for not properly screening soldiers returning from Iraq.
"We can't have people coming back with undiagnosed illnesses," Clinton said. "We have to have a before-and-after testing program for our soldiers."
Clinton, a member of the Senate Armed Services Committee, said she will write to Defense Secretary Donald Rumsfeld demanding answers and soon will introduce legislation to require health screenings for all returning troops.
During meetings with Pentagon officials last year, Clinton said "one of the issues we raised was exposure to the depleted uranium that was in the weapons, and how they were going to handle it."
She was assured then that troops would be properly screened.
But the soldiers from the 442nd contacted The News after becoming frustrated with how the Army was handling their illnesses.
Six of them say they repeatedly sought testing for depleted uranium from Army doctors but were denied.
Three who were tested in early November for DU said they had been waiting months for the results. Two of those finally got their results last week -both negative.
Testing for uranium isotopes in 24 hours' worth of urine samples can cost as much as $1,000 each.
But late last week, after learning of The News' results, the Army reversed course and ordered immediate testing for more than a dozen members of the 442nd who are back in the U.S.
The rest of the company, comprising mostly New York City cops, firefighters and correction officers, is not due to return from Iraq until later this month.
"They ordered all of us who are here at Fort Dix to provide 24-hour urine samples by 1 p.m. today," one soldier from the company said Friday.
Late Friday, Pentagon spokesman Austin Camacho said he could not confirm or deny that new tests had been ordered for the soldiers of the 442nd.
"It's hard to imagine, theoretically, that these men could have harmful exposures," Camacho said, because none of them had been inside tanks during direct combat.
Army studies of depleted uranium have concluded that only soldiers who suffer shrapnel wounds from DU shells or who were inside tanks hit by DU shells and immediately breathe radioactive dust are at risk.
Even then, Camacho said, studies of about 70 such cases from the first Gulf War have shown no long-term health problems.
But medical experts critical of the use of DU weapons, as well as some of the Army's own early studies of depleted uranium, say exposure to it can cause kidney damage. Some studies have shown that it causes cancer and chromosome damage in mice, according to the experts.
Depleted uranium, a waste product of the uranium enrichment process, has been used by the U.S. and British militaries for more than 15 years in some artillery shells and as armor-plating for tanks. It is valued for its extreme density - it is twice as heavy as lead.
Amid growing controversy in Europe and Japan, the European Parliament called last year for a moratorium on its use.
'Every time I ran I felt my throat burning and my chest tightening.'
Sgt. Agustin Matos, a member of the 442nd Military Police of the New York National Guard and a city correction officer in civilian life, has all-too-vivid memories of his stay in Samawah, Iraq.
"The place was filthy; most of the windows were broken; dirt, grease and bird droppings were everywhere," he said. "I wouldn't house a city prisoner in that place."
He recalled a mandated morning run of about 3 miles on a sandy track near a train depot.
"Every time I ran I felt my throat burning and my chest tightening," he said.
Now, Matos, 37, believes his symptoms may be the result of radioactive dust he inhaled from spent American shells made from depleted uranium.
The Long Island man is one of four Iraq war veterans who tested positive for DU contamination, according to a Daily News investigation.
The soldiers and other members of the 442nd say they are suffering from physical ailments that began last summer while they were stationed in Samawah.
Matos, who was assigned to the 4th platoon's 2nd squad, arrived in Samawah last June, two weeks ahead of the rest of the company.
His advance team had orders from Capt. Sean O'Donnell, their commander, to ready a huge depot in a train repair yard on the outskirts of downtown Samawah as a barracks for the unit.
Once the entire company arrived, each platoon was assigned its own space inside the depot, which was bigger than a football field.
A locomotive that straddled a repair pit and an empty train car sat in the middle of the sleeping area, with two platoons assigned to bed down along one side of the train and two others along the other side.
Just outside the depot, two Iraqi tanks, one of them shot up, had been hauled onto flatbed railroad cars.
The company was so short-handed, according to the soldiers, that the commander would evacuate a G.I. only if he could no longer physically function.
Matos was sent home last year for surgery for a shoulder injury suffered in a jeep accident.
Since his return, he has had constant headaches, fatigue, shortness of breath, nausea, dizziness, joint pain and excessive urination. After he recently discovered blood in his urine, doctors at Walter Reed Army Medical Center gave him a CAT scan and discovered a small lesion on his liver.
A 1990 Army study linked DU to "chemical toxicity causing kidney damage."
"Before I left for Iraq, they tested my eyes and I was fine," Matos said. "Now my eyesight's gotten bad, on top of everything else."
Another member of the company who tested positive for DU is 2nd platoon Sgt. Hector Vega, 48, a retired postal worker from the Bronx who has been in the National Guard for 27 years.
Since being evacuated to Fort Dix for treatment for foot surgery, Vega said he has endured insomnia and constant headaches. And like many of the sick soldiers, Vega said, "I have uncontrollable urine, every half hour."
One day, during a trip a few hours south of Samawah, he and another soldier stopped on the side of the road to photograph and check out two shot-up Iraqi tanks.
"We didn't think anything of walking right up to those tanks and touching them," he said. "I didn't know anything about depleted uranium."
As for the railroad depot where they slept, Vega recalls it as "disgusting. Oil, dirt and bird droppings everywhere, insects crawling all around us."
And then there were the frequent dust storms.
"They would blow all that dust inside the depot all over us when we were sleeping or eating. It was so thick, you could see it."
Carolyn McConnell, Senior Editor
"No one can terrorize an entire nation, unless we are all his
Fairly updated set of Ref/links for DEPLETED URANIUM Weaponry ("DU")">
Shocking report reveals local troops
[Four soldiers from a New York Army National Guard company serving in Iraq are contaminated with radiation likely caused by dust from depleted uranium shells fired by U.S. troops, a Daily News investigation has found. from
By JUAN GONZALEZ
Army Sgt. Hector Vega at his Bronx home. [pic]
Four soldiers from a New York Army National Guard company serving in Iraq are contaminated with radiation likely caused by dust from depleted uranium shells fired by U.S. troops, a Daily News investigation has found.
"I got sick instantly in June," said Staff Sgt. Ray Ramos, a Brooklyn housing cop. "My health kept going downhill with daily headaches, constant numbness in my hands and rashes on my stomach."
A nuclear medicine expert who examined and tested nine soldiers from the company says that four "almost certainly" inhaled radioactive dust from exploded American shells manufactured with depleted uranium.
Laboratory tests conducted at the request of The News revealed traces of two manmade forms of uranium in urine samples from four of the soldiers.
If so, the men - Sgt. Hector Vega, Sgt. Ray Ramos, Sgt. Agustin Matos and Cpl. Anthony Yonnone - are the first confirmed cases of inhaled depleted uranium exposure from the current Iraq conflict.
The 442nd, made up for the most part of New York cops, firefighters and correction officers, is based in Orangeburg, Rockland County. Dispatched to Iraq last Easter, the unit's members have been providing guard duty for convoys, running jails and training Iraqi police. The entire company is due to return home later this month.
"These are amazing results, especially since these soldiers were military police not exposed to the heat of battle," said Dr. Asaf Duracovic, who examined the G.I.s and performed the testing that was funded by The News.
"Other American soldiers who were in combat must have more depleted uranium exposure," said Duracovic, a colonel in the Army Reserves who served in the 1991 Persian Gulf War.
While working at a military hospital in Delaware, he was one of the first doctors to discover unusual radiation levels in Gulf War veterans. He has since become a leading critic of the use of depleted uranium in warfare.
Depleted uranium, a waste product of the uranium enrichment process, has been used by the U.S. and British military for more than 15 years in some artillery shells and as armor plating for tanks. It is twice as heavy as lead.
Because of its density, "It is the superior heavy metal for armor to protect tanks and to penetrate armor," Pentagon spokesman Michael Kilpatrick said.
The Army and Air Force fired at least 127 tons of depleted uranium shells in Iraq last year, Kilpatrick said. No figures have yet been released for how much the Marines fired.
Kilpatrick said about 1,000 G.I.s back from the war have been tested by the Pentagon for depleted uranium and only three have come up positive - all as a result of shrapnel from DU shells.
But the test results for the New York guardsmen - four of nine positives for DU - suggest the potential for more extensive radiation exposure among coalition troops and Iraqi civilians.
Several Army studies in recent years have concluded that the low-level radiation emitted when shells containing DU explode poses no significant dangers. But some independent scientists and a few of the Army's own reports indicate otherwise.
As a result, depleted uranium weapons have sparked increasing controversy around the world. In January 2003, the European Parliament called for a moratorium on their use after reports of an unusual number of leukemia deaths among Italian soldiers who served in Kosovo, where DU weapons were used.
I keep getting weaker. What is happening to me?
The Army says that only soldiers wounded by depleted uranium shrapnel or who are inside tanks during an explosion face measurable radiation exposure.
But as far back as 1979, Leonard Dietz, a physicist at the Knolls Atomic Power Laboratory upstate, discovered that DU-contaminated dust could travel for long distances.
Dietz, who pioneered the technology to isolate uranium isotopes, accidentally discovered that air filters with which he was experimenting had collected radioactive dust from a National Lead Industries Plant that was producing DU 26 miles away. His discovery led to a shutdown of the plant.
"The contamination was so heavy that they had to remove the topsoil from 52 properties around the plant," Dietz said.
All humans have at least tiny amounts of natural uranium in their bodies because it is found in water and in the food supply, Dietz said. But natural uranium is quickly and harmlessly excreted by the body.
Uranium oxide dust, which lodges in the lungs once inhaled and is not very soluble, can emit radiation to the body for years.
"Anybody, civilian or soldier, who breathes these particles has a permanent dose, and it's not going to decrease very much over time," said Dietz, who retired in 1983 after 33 years as nuclear physicist. "In the long run ... veterans exposed to ceramic uranium oxide have a major problem."
Critics of DU have noted that the Army's view of its dangers has changed over time.
Before the 1991 Persian Gulf War, a 1990 Army report noted that depleted uranium is "linked to cancer when exposures are internal, [and] chemical toxicity causing kidney damage."
It was during the Gulf War that U.S. A-10 Warthog "tank buster" planes and Abrams tanks first used DU artillery on a mass scale. The Pentagon says it fired about 320 tons of DU in that war and that smaller amounts were also used in the Serbian province of Kosovo.
In the Gulf War, Army brass did not warn soldiers about any risks from exploding DU shells. An unknown number of G.I.s were exposed by shrapnel, inhalation or handling battlefield debris.
Some veterans groups blame DU contamination as a factor in Gulf War syndrome, the term for a host of ailments that afflicted thousands of vets from that war.
Under pressure from veterans groups, the Pentagon commissioned several new studies. One of those, published in 2000, concluded that DU, as a heavy metal, "could pose a chemical hazard" but that Gulf War veterans "did not experience intakes high enough to affect their health."
Pentagon spokesman Michael Kilpatrick said Army followup studies of 70 DU-contaminated Gulf War veterans have not shown serious health effects.
"For any heavy metal, there is no such thing as safe," Kilpatrick said. "There is an issue of chemical toxicity, and for DU it is raised as radiological toxicity as well."
But he said "the overwhelming conclusion" from studies of those who work with uranium "show it has not produced any increase in cancers."
Several European studies, however, have linked DU to chromosome damage and birth defects in mice. Many scientists say we still don't know enough about the long-range effects of low-level radiation on the body to say any amount is safe.
Britain's national science academy, the Royal Society, has called for identifying where DU was used and is urging a cleanup of all contaminated areas.
"A large number of American soldiers [in Iraq] may have had significant exposure to uranium oxide dust," said Dr. Thomas Fasey, a pathologist at Mount Sinai Medical Center and an expert on depleted uranium. "And the health impact is worrisome for the future."
As for the soldiers of the 442nd, they're sick, frustrated and confused. They say when they arrived in Iraq no one warned them about depleted uranium and no one gave them dust masks.
Experts behind News probe
As part of the investigation by the Daily News, Dr. Asaf Duracovic, a nuclear medicine expert who has conducted extensive research on depleted uranium, examined the nine soldiers from the 442nd Military Police in late December and collected urine specimens from each.
Another member of his team, Prof. Axel Gerdes, a geologist at Goethe University in Frankfurt who specializes in analyzing uranium isotopes, performed repeated tests on the samples over a week-long period. He used a state-of-the art procedure called multiple collector inductively coupled plasma-mass spectrometry.
Only about 100 laboratories worldwide have the same capability to identify and measure various uranium isotopes in minute quantities, Gerdes said.
Gerdes concluded that four of the men had depleted uranium in their bodies. Depleted uranium, which does not occur in nature, is created as a waste product of uranium enrichment when some of the highly radioactive isotopes in natural uranium, U-235 and U-234, are extracted.
Several of the men, according to Duracovic, also had minute traces of another uranium isotope, U-236, that is produced only in a nuclear reaction process.
"These men were almost certainly exposed to radioactive weapons on the battlefield," Duracovic said.
He and Gerdes plan to issue a scientific paper on their study of the soldiers at the annual meeting of the European Association of Nuclear Medicine in Finland this year.
When DU shells explode, they permanently contaminate their target and the area immediately around it with low-level radioactivity.
Originally published on April 3, 2004
Fairly updated set of Ref/links for DEPLETED URANIUM Weaponry ("DU")">
[ Top of Page ]
The morality of plutocracy: the Washington Post and the Harken Energy
By Joseph Kay
15 July 2002
The lead editorial in the July 12 Washington Post casts a great deal of light on the nature of social life in the United States. Entitled "The Harken Energy Distraction," the editorial is dedicated to a defense of President Bush and the corrupt dealings by which he made his millions. Coming from one of the bastions of American "liberalism," the defense is an indication of the insularity of the entire ruling elite from the broad masses of the American population.
The editorial begins with a recapitulation of the basic argument marshaled by the Bush administration regarding his past actions while on the board of directors of Harken Energy. Most of the questions surrounding these actions, the paper states, "have been aired over the years, and one has been the subject of a government investigation. Congress shouldn't let the temptation to play politics with this issue distract from corporate reform."
At his press conference earlier in the week, Bush made the same point. All the questions were old "stuff," and any further investigation was an unjustified attempt to win petty political advantage.
That this is actually presented as an argument against further inquiry is indicative of the poverty of Bush's defense. That these issues have been aired in the past means little. The Securities and Exchange Commission (SEC), after all, looked into the accounting practices of WorldCom in 2000 and did nothing, only to have that company implode in financial scandal last month.
Over the past two decades, an environment was fostered in which large-scale fraud was routinely committed. Investigations carried out by the government and auditors generally sanctioned such fraud. The fact that Bush's dealings at Harken have been raised before is not an argument against further investigation, but merely an evasion-an attempt to ensure that no serious investigation takes place.
After clearly stating its sympathies for the arguments advanced by Bush, the Post identifies two major issues regarding Bush's past corporate dealings. The first is insider trading. The Post does not provide its readers with any of the background to this issue, because to do so would raise questions that do not have an easy answer.
Bush was on the board of directors and was a member of Harken's auditing committee during the late 1980s, after the company acquired Spectrum 7, which had in turn acquired Bush's own Arbusto Energy some years back. Both Spectrum 7 and Arbusto were financial failures, but Harken paid a pretty penny for the acquisition because it provided the company with a valuable asset ... namely, George W. Bush, a business failure whose father happened to be US president.
Thanks to these connections, Harken received an extraordinary contract with Bahrain to drill offshore oil wells-extraordinary because Harken was relatively small and had no experience in such matters. As Harken ran into financial trouble, it began to manipulate its accounts. At one point it gave a loan to executives to buy a subsidiary of Harken, essentially loaning money to itself to buy a part of itself, and the payment was then booked as revenue. By means of this accounting device the company was able to understate its losses by some $10 million, a massive amount for the relatively small energy company.
As a member of the audit committee, Bush was certainly privy to knowledge that the company was in crisis, and likely knew about the accounting fraud. He sold over $800,000 of stock options while the price was right, just before an announcement by the company of large losses and some months before Harken had to restate its prior earnings.
How does the Post deal with all of this? "The Securities and Exchange Commission investigated the case," the editors write, "and did not take action, apparently because it could not find firm evidence of wrongdoing." Perhaps the SEC was not really looking very hard, since the case involved the president's son and the SEC was headed by a Bush appointee. Dismissing this possibility, the Post assures us that the chairman was a "renowned enforcement hawk" and refers to the "reckonings" of "people who worked inside the SEC" that "the organization would have gone after the son of the president if it had sufficient evidence."
Forgive us for being suspicious of these reckonings, which are generally not very difficult to come by. Bernie Ebbers and "people working inside WorldCom" will be quick to reckon that nothing criminal was going on there, and "people working inside the FBI and CIA" will not hesitate to reckon that the American government did not really know anything prior to the attacks of September 11.
To base one's case on such reckonings is to have come to a conclusion before any of the evidence has been heard. The issue is whether "people in the SEC" really wanted to find out anything about Bush.
The editors of the Post choose to withhold from their readers the fact that one of these people in the SEC was Richard Doty, the commission's general counsel, who was responsible for making decisions concerning legal action. Doty also happened to be George W. Bush's personal lawyer at one point, assisting him in carrying out the Texas Rangers deal that netted the future president millions of dollars and helped propel him into the presidency.
After thus dismissing the accusations of insider trading, the Post goes on to the "second serious question ... dubious accounting." The choice of words here is significant.
What was involved at Harken was not "dubious accounting," but outright fraud, on the basis of which Bush made a handsome profit. The money he made was essentially stolen from those investors who lost money when the stock value fell after the accounting fraud was revealed.
What does the Post have to say about this? "The fact that Mr. Bush himself may have profited from a misstatement is embarrassing. But it was not illegal, and there is no suggestion that Mr. Bush played a role in devising the accounting trick or that he sold the stock because he realized a restatement was coming."
The newspaper hopes that by merely claiming "there is no suggestion" that Bush was guilty of fraud, there will, in fact, be no such suggestion. In reality, it is not necessary to suggest anything. The facts themselves speak loudly and clearly of fraud.
After all, Bush received a memo shortly before he sold his shares warning of a company "shutdown effective 30 June unless third-party funding is found." Clearly, Bush was aware things were not quite so rosy at Harken as the accounting figures suggested.
After having thus dealt with the "main" issues, the Post proceeds to the "remaining threads," which, it declares, are "no more compelling." Bush was "late in filing some of the paperwork," but this was no big deal.
The Post would like us to believe that "paperwork" is of little importance. But what was the fraud of Enron, WorldCom and the rest, if not a manipulation of "paperwork?" What was Enron's accounting firm Arthur Andersen shredding, if not "paperwork?" If the average person is late in filing his tax reports-another form of "paperwork"-he gets a knock on the door from the IRS. Much of modern economy depends on an accurate and timely filing of paperwork.
Bush's paperwork consisted of a report that is required whenever an insider sells shares in his own company. This is because a large sell-off of company stock by its directors or executives is generally a sign that something is amiss within the company, as was the case with Harken. Bush's "late filing of some paperwork"-by some 34 weeks!-is, in fact, quite significant. It is further circumstantial evidence that he was up to no good when he sold his stock options.
The loans that Bush received from Harken are dealt with in a similarly cynical manner. The size of the loan, you see, was "relatively modest" and "there is little shame in having participated in a legal practice years ago and then advocating its reform when others turn out to have abused it." The "relatively modest" figure was ... $180,000. For the editors of the Post and the social layer with which it associates, such a figure is indeed small change. For the average American, it is a fortune.
It might strike some as unjust that Bush could, because of his connections, net a loan of $180,000 that he was never required to repay. For the editors of the Post it does not merit consideration, because it is the normal state of affairs. In today's business climate there is, indeed, "little shame" in such a practice, and there is "little shame" in the paper's defense of it. The Post is truly shameless.
Finally, we come to perhaps the one true sentence in the piece. After explaining how Bush accepted consulting fees while at the same time sitting on a committee tasked to oversee the company, the Post states, "This is the kind of conflict that undermines the board independence Mr. Bush now urges. But it has to be said that almost nobody-this page included-objected to board members accepting consulting fees before the recent outbreak of scandals."
Quite right, though here the Post's specificity is unwarranted. "Almost nobody," the Washington Post included, objected to any of the methods by which the American corporate elite perpetrated its massive fraud of the past two decades. Nobody in the political establishment or the media opposed the fantastic accumulation of wealth by a tiny elite, of which they formed a part.
To borrow a phrase from that philosopher of capitalism in Joseph Heller's novel Catch-22, Milo Minderbender: "Everyone had a share." Everyone, that is, except the majority of the population, which is now being forced to pay the tab. That Mr. Bush-now the president of the United States-took part in this orgy ... well, it is no big deal really, since "everyone" was doing it.
So, the newspaper concludes, let's forget about the whole thing. Apparently, unlike the Clinton sex scandal and the Whitewater affair dredged up the right wing, this is "not one of those cases in which an official's past dealings deserve to become a public issue."
In defending Bush, the Washington Post is at the same time defending itself. The fraud that has been committed against the American people was not simply a product of a few individuals. It benefited an entire social layer, including the "liberal" media.
It is in this light that one must understand the calls by the Post and the Democratic Party for greater reform. They are not interested in seriously changing a system that has generated their own wealth and forms the basis of their own social position. To the extent that there are differences within the highest echelons of the political and media establishment, they are differences within a privileged elite over how best to defend its dominant status.
Wall Street crisis staggers Bush [12 July 2002]
On eve of Wall Street speech Bush's past business dealings come back to
Threatened collapse of WorldCom sends political establishment into crisis
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Insider Deals Catch Up with Bush
This past Fourth of July, I was glad to see that George and Martha were in the media spotlight together. No, not the Washingtons, the first First Couple, but George W. Bush and Martha Stewart, a symbolic First Couple of insider capitalism. Thanks to WorldCom (which overstated pretax profits by a whopping $3.8 billion last year), Tyco International (which was run by executives who allegedly misused company money and covered up improper payments to themselves), Xerox (which over-duplicated its earnings), Martha Stewart (the domesticity-domme who stands accused of insider trading), and other alleged corporate malfeasants, Bush´s own less-than-stellar corporate past has been revived.
Al Gore may be thinking, "hey, it´s a little late for this." But Bush´s record as a private businessman -- a subject few journalists bothered to explore during the 2000 campaign -- is now deemed relevant, as Corporate America (Bush´s home district) turns ugly. One of Bush´s fishiest moves as a businessman who failed upward in the oil industry occurred in 1990, when Bush was on the board of directors and the audit committee of Dallas-based Harken Energy. Harken had bailed out Bush four years earlier by buying his own down-and-almost-out oil venture. In that deal Bush received a hefty dose of Harken shares. In June 1990, Bush dumped over 212,000 shares and bagged $848,000. He did so at a time when Harken was slipping but had hidden losses by selling a subsidiary, more or less, to itself in a deal the Securities and Exchange Commission later ruled a phony transaction. Moreover, Bush failed to disclose his stock sale right away, as the SEC required, and, instead, notified the SEC eight months after the federal deadline.
Bush skated. An SEC investigation concluded without penalties or charges, but the SEC did unearth other instances of late filings by Bush. Those skeptical about these things might want to note that the SEC general counsel at the time, James Doty, had earlier represented Bush during his purchase of the Texas Rangers baseball teama deal that Bush partly financed with the proceeds of his Harken stock dump. And during that SEC inquiry Bush was represented by Robert Jordan, who had been a partner of Doty at the Baker Botts law firm. Jordan is now Bush´s ambassador to Saudi Arabia. Whether Bush broke any laws, the Harken deal stunk. (And there´s more to it than the cursory description I´ve provided.)
If Bush had not engaged in insider trading, he certainly benefited as an insider. At the least, his financial ass was saved by Harken because of his DNA and his father´s job (vice-president). Yet the Harken mess has never much haunted Bush in public. Until now. On July 2, New York Times columnist Paul Krugman recalled Bush´s Harken ride and observed that Bush´s Harken trade had netted him about four times the cash Martha Stewart saved via her suspicious transaction. Krugman went on to opine that Bush´s "administration is uniquely well qualified to chase after corporate evildoers" because Bush has "firsthand experience of the subject."
Molly Ivins and others have been writing about Bush´s Harken dealings for years. (I´ve been on the case for months.) But when a Times columnist throws such a punch, things happen. In response to Krugman´s wallop, reporters asked Bush about Harken when he was traveling in Milwaukee. "It´s been fully vetted," the President snapped. "Any other questions?" (It´s amazing how quickly this down-home boy from Texas can start talking like a defense lawyer.)
Next, Bush´s chief mouthpiece Ari Fleischer got into the act, claiming that the delay in Bush´s filing with the SEC was due to a "mix-up" by Harken lawyers. The problem is, when Bush was running for governor in 1994, he explained the late filing by blaming the SEC for having lost the forms (the corporate executive´s version of "the dog ate my homework"). So which was it? Lost forms or lousy lawyers? Or, to be less delicate, when was Bush not telling the truth?
In a delicious line, a Times news story reported, "Mr. Fleischer could not completely explain the inconsistency." At a press conference Fleischer, referring to Bush´s 1994 response, said Bush was dealing with "the best explanation" available at the time. What a wonderful phrase. Next time you get caught engaging in shady business, make sure you describe your excuse as "the best explanation I have available at this time." (Are Martha Stewart´s attorneys taking notes?)
This all came at a convenient time for Bush, for he was preparing to deliver a speech on Wall Street calling for (somewhat) tougher treatment of felonious corporate execs. But Bush already delivered a speech on corporate responsibility in March. That talk was a response to the Enron scandal. Since the March address did not do the trick in persuading Americans that Bush is as outraged by corporate misbehavior as Ralph Nader, he decided to share his anger once more. But in the run-up to the Wall Street speech, Business Week reported Bush was unlikely to okay a major boost in spending for corporate crime enforcement or to embrace stringent reforms, such as creating more distance between corporations and their auditors and separating investment bankers and analysts. He was, though, expected to repeat his call for corporate insiders to report their stock trades within two days. It does take chutzpah to be president. (Which reminds me: when is Bush going to talk again about privatizing Social Security?)
The bottom line of the recent business scandals is the old complaint that the rules ain´t the same for corporate high-flyers as for everyone else. (Try selling part of your house to yourself in order to lower your mortgage payments.) And Bush is not a fellow well-positioned to deal with this problem. After all, he is president because of insider capitalism (in his case, call it nepo-capitalism). Harken rescued him from the market because he had political (not financial) worth. He was able to buy a baseball team -- and put a relatively small amount of money into the deal -- because of his inherited social and political connections. The team succeeded because Bush and his partners were able to convince friends in the state legislature to pass a measure establishing a sports authority that used the power of taxation and eminent domain to grab land and build a stadium for the Rangers. And managing that team was the only accomplishment Bush had to brag about when he ran for governor in 1994. Without insider connections, where might he be today?
The conceit of the business class in the 1990s -- or was it self-serving propaganda? -- was that with the expansion of 401(k)s and the increase of small investors playing a forever bullish market anyone could be an insider, in the sense that anyone could participate in (and profit from) the wonders of Wall Street. These days it´s common for financial analysts on cable news shows to say that small investors are screwed, for there´s no way for them to know if any particular corporation is cooking its books or being managed by executives who grab millions while they steer the business into the rocks.
Invest in what you know, they advise. Well, who in K-Mart-land knows what´s really going on in the boardroom or accounting department of a transnational company? An average Joe or Josephine looking for an investment might find Martha Stewart sheets lovely and believe in her product line. But how can she or he learn what the lady of the house is really up to?
Over night, Stewart became a symbol of the me-first corporate executive. Because she may have traded on a social relationship to avoid a $200,000 loss in her holdings of ImClone, her own company lost a third of its value. But it´s not just this one transaction for which she deserves a slap. Stewart managed to bill her company $2 million a year for using her homes in photo shoots, while the firm was eking out modest profits. But, then, why shouldn´t corporate executives place their own well-being (and retirement plans) ahead of that of their stockholders and employees. Isn´t that the market at work?
There is no way Bush can get a handle on a systemic corporate crisis of serious magnitude. His line, so far, has been that there are only a few "bad apples" out there. (Unfortunately, they just happen to include some of his closest supporters at Enron.) Perhaps all that is necessary is for Bush -- as he likes to do with foreign leaders -- to look into the soul of each Fortune 500 CEO and tell us whether he or she has a good heart. What might he see when he gazes into the eyes of Martha Stewart? That is, beyond the reflection of a fellow beneficiary of ruling-class rules. And would you believe him if he pronounced her a "fine person" and issued a buy order?
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Subj: homeland security pie
from global news net:
surprise both camps, but here is a view from the libertarian Austrian school by Lew Rockwell on the Mises site)
33 Carving Up the Homeland Security Pie
Only to the most naïve did the Department of Homeland Security sound promising. To seasoned observers of government, the idea of a new $40 billion DC bureaucracy means only one thing: billions for those who somehow manage to get their hands on the cash. Who are these people? Those who build the building, the bureaucrats who work there, the politicians who allocate the money, the outside companies who get the contracts, and the
lobbyists who make the whole system of legal graft work.
In fact, this is the essence and history of all large-scale government reform plans. What begins with promising slogans degenerates rapidly into a cash cow for interest groups who know how to play the game. This was true during the Civil War and the Progressive Era and the New Dealwhen government similarly promised great gains through sweeping reforms that ended up benefiting corporate special interestsand it is true of the Bush-backed, post-9-11 push for homeland protection.
Here is the plot of the latest caper. After 9-11, Bush had the idea that
the government ought to make some effort to protect American shores from
attacka notable change of priorities for a government that manages to spend $2 trillion a year not doing the only major thing the US Constitution says it ought to do. In any case, Bush proposed reorganizing a whole host of agencies into one mega-bureaucracyand this despite the enormous failure that 9-11 represented for precisely this bureaucratic approach. We were told that what dozens of agencies and billions couldn't donamely stop angry extremists armed with box cuttersanother agency and billions
more could do.
We were told that this would finally be Republican good government at work. But there is no such thing as "good government," if we think of that phrase as representing a government that just does what the textbook says it is
supposed to do: namely, serve the public essential goods without regard to self interest. All government activities are deeply tainted by the fact that its money is not gained through service but through force via taxation, and it is not doled out based on demonstrated need but arbitrarily based on bureaucratic decision making. There is no escaping this fact, no matter how much people talking about sweeping out corruption or "reinventing" the way government does business.
As Mises said in his book Bureaucracy, government is not a business so there is no profit-and-loss check on its activities. In the end, everything it collects and distributes is economically arbitrary but also and inevitably politically influenced. It is not the proverbial man-on-the-street who decides how the money is spent but those who have connections to the flesh-and-blood bureaucrats and politicians with the power to decideand they don't work for free, but instead insist on quid
for their pro quo. The result is what is called corruption, or what libertarians recognize as the ordinary business of government.
We are now getting the first glimpse of how the bureaucratic sausage is made. When the Department of Homeland Security was merely the Office of Homeland Security, agency head Tom Ridge surrounded himself by people with credentials for this type of work. According to the New York Times, many of them have left Ridge's inner circle to become lobbyists seeking contracts from the new Department. They cashed in on their new marketability and are now working for established lobbying groups that represent the interests of lawyers, software makers, security firms, and other corporations.
According to www.politicalmoneyline.com, lobbyist registrations related to homeland security have exploded. The number of companies and firms that use the words "homeland," "security," or "terror" on their registrations have gone from 157 in 2002 to 569 today, and the number is increasing by the day. The shift in priorities of Washington makes it all possible. Clearly, the businesses that make their living from living off others see the main chance here.
The big firm connection to the Department is a firm called Blank Rome Government Relations. It is now staffed by three of Ridge's former aides, including Ridge's former chief of staff. The firm has scheduled a big conference next month at which former Ridge aids will speak at a price, touting their credentials in gaining access to the department. Of course
all these aides have their excuses, but the main one is obvious: there is more money to be made in lobbying than in being a bureaucrat.
Some of the people involved in homeland security lobbying include former
Clinton drug czar Barry McCaffrey, former defense secretary William Cohen, former secretary of health and human service Louis Sullivan, former transportation secretary Daniel Lungren, and former general counsel of the INS William P. Cook. As the Times notes, one lawyer involved in the racket recently wrote an article called "Opportunity and Risk: Securing Your Piece of the Homeland Security Pie."
When revisionist historians look back at the amazing spectacle of government in the post 9-11 era, they will see a process fraught with the lowest form of grubbing. And so long as we are accounting for the work of special interests, consider the billions and billions doled out to defense-industry contractors to make bombs and planes used in wars supported by large industrial interests. In fact, you can safely anticipate that when all the dust settles after the Iraq and Afghanistan wars, the deep motives for the main players will have nothing to do with stopping terrorism and everything to do with lining their pockets at your expense.
In some sense, we are seeing the repeat of the history of the Civil War and Progressive Era and New Deal, periods of massive expansion of government in the name of fixing up society that quickly degenerated into immense special-interest capers. In fact, once you look past the rhetoric, this is precisely what these projects were designed to do, not fix up society but make some people enormously rich at other's expense. To recognize the fraud behind Washington's clichés about public service is not to be cynical; it is just a matter of taking off the blinders.
A huge industry of commentary and analysis exists to do something about the problem of revolving doors and fixers. Plenty of neoliberals are hard at
work trying to expose the developing homeland-security scandal. For example, government reformer Fred Wertheimer warns: "When you see lobbying firms starting to create whole new departments for the sole purpose of lobbying for homeland security contracts, I think the signal for the American people is to watch out, to be vigilant that their taxpayer dollars for homeland security get the best possible results, as opposed to going to the best Washington lobbyists."
You know what? It's futile. Public vigilance will not stop it. Wishful thinking will not cause a government dedicated to fleecing the public and rewarding its friends to suddenly become angelic. The only way to stop corruption in government is to stop government itself. As Mises wrote in
the 1963/66 edition of Human Action. "There is no such thing as a just and fair method of exercising the tremendous power that interventionism puts
into the hands of the legislature and the executive
. Corruption is a regular feature of interventionism."
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Strict embargo: 00:01 Thursday 23 October 2003
Briefing paper for the Madrid conference on Iraq 23-24 October 2003
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* Introduction 3
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IRAQ: THE MISSING BILLIONS
Delegates from the world´s richest governments are gathering in Madrid to decide how much or how little they are prepared to donate towards the reconstruction of a shattered Iraq. Clearly, more than six months after US President George W Bush declared major hostilities in Iraq to be over, there is still a huge job to be done the situation for many of the country´s poorest people has become worse rather than better over the period.
Violence and instability still plague the country, with daily reports of military and civilian casualties. This very insecurity has meant that implementation of the much boasted, and hoped for, reconstruction plans has barely begun.
Hospitals still lack medicines and basic equipment, clean drinking water is not available in many areas, and raw sewage can be seen on the streets of many towns. Christian Aid works with local organisations in many parts of Iraq and the message from them is clear.
‘In general, almost everyone involved in the reconstruction of Iraq has not been effective despite the passing of six months and the expenditure of large sums of money,´ saysthe director of one of Christian Aid´s partner agencies, working in the south of the country.
So, with the humanitarian situation still critical, there are plenty of immediate needs on which money from international donors can be spent. As this report demonstrates, the widespread assumption that reconstruction could be paid for entirely by Iraqi oil money is a false one. Due, not least, to continuing insecurity, Iraq just does not produce enough oil to pay for even immediate needs and is unlikely to do so in the near future.
What this report most shockingly reveals, however, is that the billions of dollars of oil money that has already been transferred to the US-controlled Coalition Provisional Authority (CPA) has effectively disappeared into a financial black hole. For all the talk of freedom and democracy for the Iraqi people before, during and after the war which toppled Saddam Hussein there is no way of knowing how the vast majority of this money has been spent.
This situation is in direct violation of the UN resolution that allowed Iraqi assets to be transferred to the CPA. Indeed, the body that is supposed to oversee how Iraq´s assets are used has not even been set up yet.
Just as disturbingly, if this lack of transparency is perpetuated it could well hold the seeds for future disaster in Iraq. The very oil revenues that are potentially the country´s greatest asset could, on all available evidence, prove to be a curse.
In May, Christian Aid published a major report that revealed how oil revenues can fuel poverty, war and corruption in developing countries. The toppling of Saddam Hussein´s regime, it was suggested, was a unique opportunity to show that this did not have to be the future for Iraq.
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Initial indications, however, are not optimistic with billions of dollars of unaccounted for money now in the hands of unelected foreign officials. This combination of pre-war oil sales, post-war oil sales and seized invested assets from Saddam Hussein´s regime already tops US$5 billion, of which only around US$1 billion can be accounted for. By the end of this year, that total figure will top US$9 billion.
Action needs to be taken now to ensure that the CPA reveals where this money has gone. The structure agreed at the UN must be implemented urgently, so that this Iraqi money is used in the best interests of Iraq´s people and with their cooperation and involvement. Oil revenues should benefit those who need help most the country´s poor, not just those with power and influence.
Christian Aid is calling on the international community, and particularly the UK government as a leading member of the coalition, to take swift and forceful action to ensure that the situation immediately improves. Prime Minister Tony Blair has repeatedly said that there should be transparency in the handling of oil revenues: he needs to demonstrate that this is something he truly believes.
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‘The oil revenues, which people falsely claim the US and UK governments want, should be put in a trust fund for the Iraqi people, administered through the UN.´ Tony Blair, speaking during the pre-war debate in Parliament, 18 March 2003.
‘I firmly believe that this initiative can make a significant contribution to ensuring that the proceeds from mining and energy industries are used for development.
We can draw on it in Iraq and elsewhere, and it provides an example for others to follow.´ Tony Blair at the Conference on the Extractive Industries Transparency Initiative, 17 June 2003.
‘We have absolutely no idea how the money [from Iraqi oil revenues] has been spent. We know that more than US$1 billion has already been transferred from the UN escrow Oil-for-Food account and we don´t know how this money has been spent, and this is Iraqi money I wish I knew, but we just don´t know. We have absolutely no idea .´ Senior diplomat working at UN headquarters in an interview with Christian Aid, October 2003.
Establishing peace and security in Iraq is a top priority for the international community, as well as for Iraqis themselves, and a precondition to the reconstruction of this shattered country. Unprecedented financial resources are being mobilised to this end.
The Madrid conference is a key part of this process.
Many commentators believe that it will be a long time, perhaps years, before peace and security are achieved.
Before the war many people assumed that Iraqi reconstruction would be financed by Iraqi oil revenues. After all, Iraq has the second biggest oil reserves in the world.1 However, Iraqi oil revenues cannot begin to cover the costs of reconstruction, which have been estimated at US$55 billion over the next four years.2 Oil revenues since the war have only amounted to around US$1.5 billion,3 with sabotage and insecurity slowing the industry´s rehabilitation. At least another US$1 billion of pre-war oil revenues, deposited with the Oil-for-Food programme, has now been earmarked for reconstruction.
An additional US$2.5 billion is expected to become available when the Oil-for-Food programme ends in November.
Yet, incredibly, these billions of dollars of Iraqi oil revenues have never been publicly accounted for. Christian Aid has discovered a black hole into which these funds have disappeared. The black hole is presided over not by an Iraqi government, but by the CPA, the de facto ruling authority established by the forces occupying Iraq. The US dominates the CPA. The British government is second in command.
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In round figures, and conservative estimates, Iraqi funds controlled by the coalition comprise:
* Post-war oil revenues- US$1.5 billion
The coalition has promised Iraqis freedom and democracy. Yet it continues to make vital decisions affecting the running of the country and the lives of Iraqis in secret. Such practices would not be tolerated in the countries that make up the coalition.
Christian Aid is calling on the US and British governments to say what has happened to the missing billions. Prime Minister Tony Blair has committed himself to transparency in the handling of oil revenues. He must demonstrate that he means what he says in Iraq, where the British government has a direct role in running the country.
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CHRISTIAN AID´S CONCERNS
In this document Christian Aid sets out why questions of openness, transparency and accountability are of central importance to the future of Iraq and its long-term development.
Christian Aid has been working in Iraq since 1992. Consequently, we are in touch with the concerns of Iraqis, especially those of the partner agencies with which we work.6 Christian Aid´s partners say that they feel almost entirely cut off from the decision-making processes governing their lives. ‘The CPA are isolated and not meeting Iraqis. They only have contact with politicians in Iraq´s Ruling Council, with most of their members considered to be exiled Iraqis,´7 says Christian Aid partner REACH. The CPA, which effectively governs Iraq, is seen as remote and disconnected, confined to fortified compounds where decisions are made behind closed doors with little or no Iraqi involvement. The following comment from one such partner, the Iraqi Refugee Aid Committee (IRAC), is characteristic:
‘In general almost all the actors in the reconstruction of Iraq have not been effective despite the passing of six months and the expenditure of large sums of money. There are still power cuts, fuel shortages, and a lack of medicines and equipment at hospitals.
Clean drinking water is not available in many areas and raw sewage can be seen on the streets in many towns, including Basra.´8 Like many Iraqis, IRAC links this lack of progress in reconstruction with the foreign firms contracted to undertake the work.
‘The major contracts for reconstruction, including the refurbishment of schools, have been given to large foreign companies who now find themselves unable to implement the projects due to the security situation. Much more would have been achieved, and it would have been more cost-effective, if the reconstruction contracts had been split into smaller contracts and directly given to local contactors and NGOs.´ 9 Iraqis have lived for decades under the control of a totalitarian state, and have not been used to openness and transparency from their rulers. Totalitarianism and its legacy provide fertile ground for distrust, rumour-mongering, conspiracy theories and a belief in hidden agendas. Many Iraqis are convinced that the coalition is motivated by a desire to control Iraqi oil and want important decisions to be made by Iraqis. ‘The Iraqi oil revenues should be run by an Iraqi government completely with monitoring procedures from an international committee (sic),´ says the coordinator for Christian Aid partner organisation the Iraq NGO Network (IKNN).
Coalition secrecy over the use of oil revenues only increases that conviction, and makes a transition to openness and democracy appear ever more remote.
‘How can the United States advise Iraqis on how to structure their industry and the use of oil revenues to make the government accountable with no moral high ground from having no transparency themselves from how they managed the oil revenues?´10
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OIL ON TROUBLED WATERS
Although there is agreement about the need for reconstruction, rehabilitation and reform in Iraq, there is less agreement on how this should proceed. There is, for instance, a strong moral argument that a country that has been battered by two wars and more than a decade of international sanctions should not have to pay for its own reconstruction with its own resources. But it has already been generally accepted that oil will be a major engine of Iraq´s recovery. What is of paramount concern is that countries in which oil is the major source of revenue have a very poor record in adopting policies that genuinely benefit their citizens.
In May 2003, Christian Aid published a major report, Fuelling Poverty Oil, War and Corruption, which highlighted the dangers of assuming that Iraq´s oil would be the answer to its reconstruction needs.
Fuelling Poverty focused on Angola, Sudan and Kazakhstan, but the options and dilemmas facing Iraq were highlighted in the introduction, which read:
‘How the Iraqi people benefit from oil revenue will depend, according to our evidence, on how open, transparent and justly distributed the spoils of oil exploitation are in the future. If the crimes and misdemeanours of the past where vast revenues funded a corrupt and totalitarian regime are not to be repeated, Iraq´s people must be allowed to scrutinise the spending of oil money.´ This observation has proved prescient. The US government has a generally good reputation for openness and allowing access to information. This has not, however, translated to the military authorities running Iraq. In particular, Iraqis have limited involvement in many decisions regarding the reconstruction of their country, with serious consequences for the effectiveness and credibility of the resulting policies and actions. It is essential that other coalition members, particularly the UK government, use their influence to promote a rapid change in these attitudes.
Key decisions about how the Iraqi oil industry will be run and managed in the future have yet to be made. Both Iraqi politicians and the major oil companies recognise that fundamental policy decisions cannot precede the establishment of a legitimate government, and an improvement in the security situation. The more radical schemes for privatisation favoured by some American policymakers are on hold, probably indefinitely, since it is unlikely that any incoming Iraqi government could implement them and remain electable.11 Iraq´s oilfields and oil wells are set to stay in government hands. The privatisation of the ‘downstream´ components of the industry, from pipelines to petrol stations, is more likely, and less controversial or politically problematic.
The challenge for the CPA, and subsequently the Iraqi government, is whether oil revenues can be mobilised for investment and development that will be of widespread benefit, or whether these funds will go primarily to the oil companies and to a new hyperwealthy Iraqi elite. This holds true whether the funds go directly to the government through state-owned companies, or are derived from taxes and levies on international oil companies. Unfortunately, the CPA has not made a promising start, despite some potentially favourable circumstances.
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The sanctions regime imposed on Iraq, though increasingly flouted, attempted to control oil production and to ensure that oil revenues were used for humanitarian purposes.
From 1996 this process was institutionalised under the Oil-for-Food programme (OFF), which in less than seven years spent US$13 billion in oil revenues on importing and distributing food. This programme was subjected to distortion and mismanagement by the Baathist regime, and contributed to Iraqi disenchantment with the UN, under whose auspices it operated. The programme also generated economic distortions, and undoubtedly helped to hasten the decline of Iraqi agriculture. However, the OFF programme met growing humanitarian needs, in a period in which Iraqis suffered increasing impoverishment.
Since the war the OFF programme has continued to operate under UN patronage, though oil production and revenues have declined sharply. The CPA established a Development Fund for Iraq (DFI), into which approximately US$1 billion in oil revenue from escrow accounts held by the UN and OFF was quickly transferred. The establishment of the DFI was ratified in UN Security Council Resolution 1483 in May 2003. We have calculated that the DFI will have received at least US$9 billion by the end of 2003, of which more than two-thirds will have derived from pre- and post-war oil 12 revenues.
Iraq´s immediate problems are enormous, perhaps overwhelming. Christian Aid´s fear, however, is that if proper systems of accountability are not urgently established, the country could spiral into a classic version of the ‘oil curse´ explained by Christian Aid in Fuelling Poverty. In this standard scenario, oil revenues go to bolster the profits of oil companies and are siphoned off by corrupt local elites, bypassing the great majority of the country´s citizens, who typically remain impoverished as well as unconsulted.
Iraq is not in this predicament yet the country´s post-war oil revenues are, at least on paper, largely earmarked for reconstruction and development. It is, therefore, vitally important that this commitment becomes the accepted practice, so that a proportion of oil revenues is permanently used for the long-term development of the country and the benefit of its citizens.
A major recommendation of this report is that the international community, and in particular the US and British governments, should use their influence over developments in Iraq to promote options that guarantee priority is given to ensuring oil revenues are used primarily for the overall development of the country on a permanent basis.13 Unfortunately however, developments thus far have been discouraging. It is impossible to tell exactly how these revenues have been spent though it is clear that a limited number of US corporations have benefited considerably, and that more cost-effective options with Iraqi companies (that could reduce the cost of reconstruction) have been given very limited consideration.14 However, it is not too late for the CPA, and in due course for Iraqi politicians, to opt for policies that will genuinely benefit the Iraqi people.
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An essential first step on that road is the urgent introduction of a transparent and accountable framework for the management of current revenues.
The British government, in particular, has championed the transparency of oil revenues globally under the Extractive Industries Transparency Initiative (EITI). ‘A lack of transparency,´ said Tony Blair at the EITI conference in June this year, ‘undermines public confidence in the legitimacy of the state . We need to use transparency in revenue and financial management to allow people to hold government to account and build public trust.´15 The British government needs to use its position and influence within the CPA to ensure absolute clarity and transparency over the use of Iraqi oil revenues.
The principal mechanisms through which the coalition uses these funds are set out below. It should be noted that in all of the bodies involved in the allocation and monitoring of the use of Iraqi money, there is an extremely limited amount of Iraqi representation or participation at decision-making levels. Christian Aid feels this fundamentally undermines the chances of Iraqi funds being used in the best interests of the Iraqi people.16
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THE DEVELOPMENT FUND FOR IRAQ
The Development Fund for Iraq (DFI) was set up under UN Security Council Resolution 1483 in May 2003, to meet the humanitarian needs of the Iraqi people and to finance the reconstruction of Iraq´s infrastructure. The money held in the fund comes from Iraq´s oil sales, seized assets of the Saddam regime, transfers of frozen assets from abroad (including those removed overseas by Saddam Hussein, his family and officials), and outstanding or surplus funds from the UN Oil-for-Food programme, which in turn derive from pre-war oil revenues.18 The terms establishing the DFI required it to be ‘managed in a transparent manner for and on behalf of the Iraqi people.´19 Provisions in Resolution 1483 hold the DFI to high standards of transparency and accountability, and these clauses are reflected in the DFI´s founding regulations set out by the CPA. The fund is maintained on the books of the Central Bank of Iraq, but held by the US Federal Reserve Bank of New York. It receives 95 per cent of the proceeds of the sale of Iraqi oil and natural gas, with five per cent going to the UN´s Gulf War Compensation Fund.
The bodies responsible for approving spending and monitoring the use of the DFI are the Programme Review Board (PRB) and the International Advisory and Monitoring Board (IAMB). A third body, the Council for International Coordination (CIC) advises the PRB.
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THE PROGRAMME REVIEW BOARD
The Programme Review Board (PRB) recommends which projects should receive funding from the DFI for approval by the CPA administrator. The 21-member board works within the CPA´s Office of Management and Budget and reports directly to administrator Paul Bremer through his appointed PRB chair. Of 11 voting members, seven are American, one British, one Australian and one Iraqi (the Minister of Finance).
The eleventh member is the chair of the CIC, another expatriate. It does not appear that the Minister of Finance attended PRB meetings until some time after he was appointed in early September. Of the ten non-voting members, six are American CPA officials; the other four represent the World Bank, the International Monetary Fund (IMF), the Special Representative of the UN Secretary General for Iraq, and the International Advisory and Monitoring Board. Following PRB approval, funds are disbursed through the Ministry of Finance, which is then responsible for distributing money to all other ministries.20 According to the PRB´s founding regulations, it must operate transparently and is required both to publish and disseminate funding plans in Arabic, and to publish the minutes of all its formal sessions. Neither of these requirements has been met. Christian Aid has written to the Chair of the PRB and the CPA press office requesting an overview of DFI finances, but has received no response in either case.
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THE INTERNATIONAL ADVISORY AND MONITORING BOARD
United Nations Security Council Resolution 1483 that authorised how the DFI would be set up, also outlined the framework within which the International Advisory and Monitoring Board (IAMB) would oversee the use of DFI money so that it could hold the CPA to account and observe its activities on behalf of the UN Security Council. It was intended to guarantee the transparency of the DFI and to ensure that DFI funds were properly used, monitored and audited.
The IAMB was to be an independent body, with four voting representatives, from the UN, IMF, World Bank and Arab Fund for Social Development.
However, despite the framework set out in Resolution 1483, the CPA and the intended representatives of the IAMB could not agree on what power and responsibility the board would have. According to a UN diplomat involved in the negotiations, the CPA was trying to limit the authority of the IAMB to that of simply monitoring auditors chosen by the CPA without the power to more closely examine how funds were being used or accounted for.
Despite a major compromise proposed at the end of August by the four international bodies of the IAMB, by mid-October the impasse remained, with suggestions that the CPA was even less inclined to allow the IAMB significant autonomy or independence.
In the meantime, the CPA has been using Iraqi funds through the DFI without accounting for the money being used. It has effectively been operating outside its mandate.
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THE COUNCIL FOR INTERNATIONAL COORDINATION
The Council for International Coordination (CIC) advises the PRB on how the international community should assist Iraq´s recovery and the development of its economy. The CIC is made up of representatives from CPA countries along with other individuals appointed by the CPA administrator, Ambassador Paul Bremer.21 It is the main CPA body charged with organising the Madrid Donor´s Conference for Iraq.
The CIC is responsible for reviewing and coordinating proposals from different Iraqi ministry budgets, the UN, the World Bank and NGOs.22 CIC activities include raising funds from the international community, proposing specific projects for funding consideration, and, if requested by the PRB, making recommendations on disbursements from the DFI. If the UN establishes a trust fund for international donations for Iraq, it is expected that the CIC will try to coordinate spending between the UN trust fund and the DFI. It does not however have the overview function allocated to the IAMB.
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COALITION USE OF IRAQI FUNDS
WHERE HAS ALL THE MONEY GONE?
The CPA, through the DFI, receives and disburses billions of dollars of Iraqi funds, largely derived from pre- and post-war oil revenues.
A list of projects that have been allocated funds by the DFI totalling almost US$1 billion can now be found on the CPA website, and in late September the PRB posted partial minutes of eight of its twice-weekly meetings, to which another four have been recently added. However, it remains quite impossible to obtain an overview of DFI finances. This is true not only for an agency like Christian Aid, whose research is dependent on the goodwill or commitment to transparency of those we interview or to whom we write, but for senior diplomats trying to establish parameters for the policies of their governments.
Frustration and dissatisfaction with the DFI´s operation is extremely widespread.
A diplomat working at the UN interviewed by Christian Aid in early October said: ‘We have absolutely no idea how the money has been spent. We know that more than US$1 billion has already been transferred from the UN escrow Oil-for-Food account and we don´t know how this money has been spent, and this is Iraqi money.´ Such total lack of transparency of funds does not encourage international donors to put more money into reconstruction. ‘As long as there is no transparency mechanism [and] the IAMB is a priority in this context it is unlikely that there will be broad financial support from the international community, because we need to know how the money is spent,´ said the diplomat. ‘Contributions could be put in an independent fund, but everything is interlinked, so [in order] to know whether it is worth contributing to projects [we have to know about the Development Fund of Iraq].´23
As already reported, UNSC resolution 1483 of May 2003 approved the transfer of US$1 billion of OFF funds to the DFI.
Sources close to the coalition have told us that by mid-September Iraqi funds deposited overseas and expropriated for CPA use amounted to US$1,724 million of vested funds, plus seized funds of US$809 million. These funds had already been spent or committed, these sources reported, though more could be expected. A similar source told us that a further US$2.5 billion of OFF funds should become available for transfer to the DFI when the OFF ceases operations on 22 November. The DFI was said to have a credit balance of US$2,363 million as of 17 September, of which 51 per cent had been allocated for disbursement. The remaining 49 per cent was said to be the only uncommitted source of funds at that time and was expected to be drawn down rapidly.
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Based on this information, we can assume that Iraqi funds accruing to the DFI by the end of 2003 will be in the region of:
* Seized and vested funds US$2.5 billion
US government funds earmarked for relief and reconstruction activities are easier to track, and have included the Iraqi Relief and Reconstruction Fund (US$2,475 million) the Iraqi Freedom Fund (US$101million) and the Natural Resources Risk Remediation Fund (US$502 million). Virtually all of these amounts had been committed as of mid-September. The principal recipient of Iraqi Relief and Reconstruction Fund finance has been the US Agency for International Development (USAID), which received US$1,823 million.
Most USAID contracts, which included a US$1,033 million contract with Bechtel, a US$30 million contract with Bearing Point and a US$60m contract with RTI, were awarded on the basis of limited competition procedures, out of Washington. Such procedures have meant that not only is there no competitive process to ensure the lowest cost for the job, but Iraqi companies are denied the opportunity to benefit from contracts to reconstruct their own country.
Christian Aid partner IRAC expresses a view held by many in Iraq. ‘Priority for reconstruction contracts should be given to Iraqi companies. Such companies are available in areas of construction, refurbishment of schools and hospitals, road building, and water and sanitation. ´
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HOW ARE DEVELOPMENT FUNDS BEING USED?
TENDERS AND CONTRACTS
Many commentators have expressed concern over the handling of the contracts under which funds from the DFI have been disbursed. In addition to this, US government funds have been used to award contracts for reconstruction that have attracted widespread comment, particularly when it comes to the close relationship between the relevant US firms, such as Halliburton and Bechtel, and the US administration.
This is a concern to many Iraqis who are desperate for employment and the opportunity to contribute to reconstruction and benefit from the billions of dollars going towards development, much of which comes from their own country´s oil revenues. ‘The size of proposed investment for reconstruction in Iraq should in principle produce a dramatic increase in employment opportunity for ordinary Iraqis and go a long way towards stabilising security in the country. This will not happen unless there is control and limitation of the profits remitted by foreign companies.´24 Increasing concern has been expressed by both US congressmen and academic experts25 that handing reconstruction contracts to US firms at a higher cost hits both donors (in some cases the US or UK taxpayer) and Iraqis. In an open letter to the Director of the Office of Management and Budget, US congressman Henry Waxman pointed out that: ‘When inordinately expensive reconstruction projects are awarded to high-cost federal contractors with close political ties to the White House, the Administration can create a lose-lose situation: not only do US taxpayers vastly overpay for reconstruction services, but Iraqis are denied urgently needed employment opportunities. ´26
Principal concerns include:
extremely short tendering processes, which reduce the opportunities for genuine
The allocation of contracts using US government funds has received considerable publicity, but this is because a great deal of information about these contracts is in the public domain. When it comes to the even more worrying question of where Iraqi money has gone, there has been very little publicity because the information is virtually inaccessible.
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NO MORE OIL-FOR-FOOD SO OIL FOR WHAT?
What follows on from the OFF when it ends on 21 November remains a particular concern of Christian Aid and our partners. It raises the question of what framework will be used to ensure that Iraqi oil revenue benefits Iraqi people and particularly the poorest and most vulnerable.
Many Iraqis see the need for oil revenues to continue supporting vulnerable households.
‘Oil revenue needs to be used to improve and develop people´s household economy. At the moment, people from outside Iraq see the country as rich! But internally you will see that people´s household economy is very weak. ´27
The legacy of sanctions has left Iraq having to import half of its current food requirements. This means that maintenance of adequate food supplies in Iraq is a particularly pressing responsibility for the international community, and especially for the occupying authorities. In the near- to medium-term future, the market cannot replace the current food-distribution system. Iraq has long been a net importer of food, and food subsidies pre-dated the first Gulf war and the imposition of sanctions. The OFF programme helped to further institutionalise subsidised food distribution on which people have become extremely dependent, particularly since this period also witnessed declining agricultural production and growing impoverishment.
Current plans involve handing over the programme to the Iraqi Ministry of Trade (MOT) on 21 November, as laid out in UN Security Council Resolution 1483. Information on what will happen after the handover is limited. Distribution of food rations and humanitarian aid will be handled by the MOT, whose responsibility it was prior to the war.
Security concerns have forced the UN to limit its international staff on the ground and recent updates from the OFF programme have admitted that the UN is unable to produce a comprehensive exit strategy as planned on 21 October or to ensure a sufficient number of international staff will be in place in the northern governates for handover to occur.28 The current lack of security has meant that it is more important than ever that the CPA gives enough support to the UN in this handover process. ‘Unless the CPA increases most expeditiously the number of its personnel involved in the transfer process, the difficulties faced may become insurmountable, irrespective of the number of UN personnel in the three northern governates. ´29
What happens to the Oil-for-Food programme and the food-distribution system will be crucial not only to the welfare of millions of Iraqi households in the short term, but also for their well-being in the long term. The CPA, in coordination with the MOT, must publish its plans for the OFF programme to ensure Iraqis can read and comment on them.
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1. The Coalition Provisional Authority must urgently publish accounts of income and expenditure from Iraqi oil revenues and Iraq´s seized and vested assets.
2. The International Advisory and Monitoring Board for the Development Fund for Iraq must be set up immediately, and sufficient responsibility must be given to the body to ensure that it is able to hold the Coalition Provisional Authority accountable for revenues used.
3. The UK government must fulfill its commitment to make Iraq a case study for the Extractive Industries Transparency Initiative, which enjoins oil companies and the countries they deal with to be transparent about the use of oil revenues. The framework for doing this must be decided by a legitimate Iraqi government once it is in power, drawing on existing precedents. These include holding a percentage of revenues in trust for future generations, earmarking a percentage for regional development in oil-producing areas, and devoting revenues to education, health and social services, rural development, infrastructure and water management.
4. The Coalition Provisional Authority must work with the Iraqi Governing Council to construct a framework that sets out how the oil industry will be managed for the benefit of the Iraqi people. Iraq should adopt policies that ensure that a significant proportion of future oil revenues is earmarked, on a permanent basis, for the overall development of the country and the benefit of all sections of Iraqi society.
5. Iraqi involvement in decision making over, and management of, Development Fund for Iraq money should be increased as a matter of urgency. This should include additional Iraqi representation on the Programme Review Board.
6. The CPA must ensure a responsible handover of the Oil-for-Food programme in November, and must publish plans as to how the programme will continue. These plans must address how the CPA will use funds from oil revenues in the future in a way that winds down food distribution while avoiding the widespread hardship that too sudden an end to the programme would cause.
7. Countries represented at the Madrid donors´ conference should recognise the responsibility of the international community in the plight of Iraq and the limitations of oil revenues as an engine for reconstruction. However, donor countries must not divert aid funds to Iraq that have been earmarked for more underdeveloped countries.
8. In awarding contracts for reconstruction, the CPA must give preference to Iraqi businesses where possible, and ensure that Iraqis are employed where appropriate. Reconstruction should be seen and used as a major engine for addressing Iraq´s huge unemployment problem. Employment programmes should target the most vulnerable sections of the population.
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1 The morality of making Iraqis pay for the damage inflicted on them in two extremely destructive wars has received little debate. This is an important issue, though not our primary concern here.
2 World Bank and UN assessments have determined that Iraq needs US$36 billion for reconstruction of 14 sectors including health, education, water and electricity over the next four years. A separate US assessment has added an additional estimate of US$19 billion for the cost of reconstructing the oil industry and security. Making the total cost of reconstruction US$55 billion. UN/World Bank Joint Iraq Needs Assessments p55. http://lnweb18.worldbank.org/mna/mena.nsf/Attachments/Iraq+Joint+Needs+Assessment/$File/Joint+Needs+Assessm ent.pdf
3 As no oil-revenue figures are available, this figure has been calculated from details of the six-month contracts signed between SOMO and several international oil companies in July (See the Independent, 24 July 2003). Under the deal, Iraq would supply 645,000 barrels a day for export (except in July when production was at 450,000 barrels per day). This output was estimated to have been sold at recent world oil prices of around US$26 to US$28 a barrel.
4 Before the end of 2003, we calculate that a further US$2.5 billion of pre-war oil revenues will have been transferred from the UN Oil-for-Food escrow accounts, and another US$1.5 billion will have accrued from oil revenues. Sources for these figures are given later in the report.
5 The basis and source for this information is given later in the report.
6 Christian Aid is the official relief and development agency of 40 British and Irish churches, working where the need is greatest in more than 50 countries worldwide, helping poor communities regardless of religion. Christian Aid is also a key member of Action by Churches Together, a world alliance of church-based humanitarian agencies. Before the war this year Christian Aid´s programme in Iraq was confined to the autonomous Kurdish region of northern Iraq. Since 1992, Christian Aid has supported local NGOs there in a range of rehabilitation and development activities, and continues to do so. Since the war, Christian Aid has extended its operations to provide humanitarian support in the central and southern parts of the country, in fields including emergency relief, water supply and sanitation, seed banks and nurseries, landmine clearance, and community-needs assessment. As well as keeping in close touch with our Iraqi partners, several Christian Aid staff have visited Iraq since the war, spending time principally in Baghdad, Karbala, Basra, Kirkuk and the autonomous Kurdish governorates.
7 Christian Aid partner REACH
8 Christian Aid partner IRAC
9 Christian Aid partner IRAC
10 Dr Valerie Marcel, Senior Research Fellow on Sustainable Development at the Royal Institute of International Affairs, specialising in the politics of oil in the Middle East. Interview with Christian Aid.
11 Interview with Peter Kemp, editor of Oil Intelligence Weekly
12 See analysis in next section, which also sites sources. Much of this information is not in the public domain.
13 A detailed blueprint for this, which would have to be negotiated by an incoming Iraqi government, is beyond the scope of this paper. The Chad-Cameroon pipeline, where investments by Exxon-Mobil and the World Bank are permanently linked to freeing up revenues for development, is an encouraging precedent (see editorial, Financial Times, 8 October 2003). Policies adopted by a major producer such as Iraq could prove extremely influential.
14 US Congressman Henry Waxman Open letter to Director of Office for Management and Budget on 26 September. From Middle East Economic Survey, No 40, 6 October 2003.
15 Keynote speech by Tony Blair at EITI London Conference 17 June 2003.
16 Much of the detailed information here has come from Iraq Revenue Watch, a project of the Open Society Institute. We would like to thank Iraq Revenue Watch for its help and cooperation with our research.
17 Despite written requests to the CPA, it has not been possible to establish exactly which funds pass through the Development Fund for Iraq and which may be held elsewhere.
18 In practice, it seems that assets seized in the US have not been transferred to the DFI, but administered separately.
19 See UN Security Council Resolution 1483, http://news.bbc.co.uk/1/hi/world/middle_east/3012847.stm.
20 See CPA website, Ministry of Finance section, http://www.cpa-iraq.org/ministries/finance.html, and CPA Memorandum 4 on PRB Regulation 3, http://www.cpa-iraq.org/regulations/CPAMEM04_AND_APPENDICES.pdf.
21 The following governments are represented on the CIC: Poland, Australia, Italy, Denmark, the Czech Republic, the US, South Korea, Japan, Spain, the UK, Singapore, Jordan and Romania as well as an observer from the United Nations Office of the Humanitarian Coordinator for Iraq.
22 Paul Bremer, Remarks, Opening of the Council for International Coordination, 17 August 2003
23 From a conversation between Christian Aid and a UN diplomat.
24 Christian Aid partner IRAC
25 US Congressman Henry A Waxman (D Calif) and Dr Valerie Marcel, Senior Research Fellow on Sustainable Development at the Royal Institute of International Relations, specialising in the politics of oil in the Middle East.
26 US Congressman Henry Waxman. Open letter.
27 Christian Aid partner REACH.
28 UN briefing on the UN OIP 29/09/03 http://www.un.org/Depts/oip/background/latest/bvs030929.html.
29 UN progress report 17/09/03 http://www.un.org/Depts/oip/background/latest/bvs030917.html.
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This is fascinating in light of the costs for such operations if supplied by non-American companies.
Spending On Iraq Sets Off Gold Rush
Thursday 09 October 2003
Lawmakers Fear U.S. Is Losing Control of Funds
As the House today takes up President Bush's $87 billion spending request for Iraq and Afghanistan, the debate over the bill is increasingly focused not just on the amount of money but also on who will get it.
Of the $4 billion a month already being spent in Iraq, as much as a third is going to the private contractors who have flooded into the country, said Deborah D. Avant, a political scientist at George Washington University and an expert in the new breed of private military companies. The flow of money will increase greatly if Congress approves Bush's request.
Many of the services being sought -- including police training, crimes-against-humanity investigations and prison-construction expertise -- are highly specialized. Conditions are dangerous. Experts say American taxpayers can expect to pay a hefty premium to contractors in a classic seller's market.
Among the dozens of projects in the proposal is a State Department plan to spend $800 million to build a large training facility for a new Iraqi police force. Management fees alone would run $26 million a month, while 1,500 police trainers would cost $240,000 each per year, or $20,000 each per month. DynCorp of Reston is likely to get the contract.
"All I can say is it's mind-boggling," James Lyons, a former military subcontractor in Bosnia, said of the opportunities for private contractors. "People must be drooling."
Avant said that as many as 1 in 10 Americans deployed in Iraq and Kuwait -- perhaps 20,000 -- are contractors, a group larger than any of the military forces fielded there by Britain or other U.S. allies. Kellogg, Brown & Root, a subsidiary of Vice President Cheney's former firm, Houston-based Halliburton Corp., has an exclusive contract to rebuild Iraq's oil infrastructure. San Francisco-based Bechtel Corp. is the prime contractor for much of the infrastructure reconstruction.
The Iraqi gold rush has raised concerns on Capitol Hill that the administration may be losing control of the taxpayers' money. As the task of rebuilding shifts from government employees to for-profit contractors, members of Congress are worried that their oversight will diminish, cost controls will weaken and decisions about security, training and the shape of the new Iraqi government will be in the hands of people with financial stakes in the outcome. Avant calls it "the commercialization of foreign policy."
The Coalition Provisional Authority is bolstering its contracting operations to keep up with the flow of money from Washington, congressional aides said, but lawmakers still complain that the process of bidding out and awarding contracts and subcontracts needs to be far more transparent and organized.
"What we're seeing is waste and gold-plating that's enriching Halliburton and Bechtel while costing taxpayers billions of dollars and actually holding back the pace of reconstruction in Iraq," said Rep. Henry A. Waxman (D-Calif.), a leading critic of the administration's handling of Iraq. "We need greater transparency."
Driven by those concerns, the Senate last week added provisions to its version of the president's request that would increase penalties for war profiteering and demand a more open and competitive bidding system.
House Appropriations Committee Chairman C.W. Bill Young (R-Fla.) included a provision to limit noncompetitive bidding in the House version of the war-spending bill.
Dan Senor, a senior adviser to Coalition Provisional Authority administrator L. Paul Bremer, said such concerns are misplaced. He said competition among contractors would keep costs down.
"We are confident that there will be an enormous supply of contractors and subcontractors interested in these projects," he said. "That's what our experience has shown."
But Senor also emphasized that the authority's primary contracting concerns right now are speed and reducing the pressure on U.S. troops by replacing them with contractors wherever possible.
For example, Fairfax-based Vinnell Corp., a subsidiary of Northrop Grumman Corp., won a $48 million contract in July to begin training a new Iraqi army, a sum that would be dwarfed by the $164 million for military contract training contained in Bush's $87 billion request. Vinnell, in turn, subcontracted with Alexandria-based Military Professional Resources Inc. and several other companies.
Erinys, a British company with offices in the Middle East and South Africa, is guarding oil fields and pipelines that are in danger from saboteurs.
Custer Battles LLC, another Fairfax company, is providing security for Baghdad International Airport, guarding ground convoys and protecting other contractors with 250 employees who served in the U.S., Nepalese, British, French and Australian military, joined by 300 to 400 Iraqis, said Scott Custer, a principal of the firm. Those numbers, he said, are "expanding exponentially."
"Iraqi operations are now the majority of our business," Custer said yesterday.
Those contracts are only the beginning. Edwin E. Brockway, a manager in the defense and federal products division of the construction-equipment company Caterpillar Inc., said 500 to 600 of his company's machines are already in Iraq. He said he expects Caterpillar to receive many more orders for bulldozers and pipe layers as private companies win contracts to rebuild Iraq's sewer systems, water-purification plants and roads. The bulldozers used by soldiers in Iraq range in price from $100,000 to nearly $1 million, and the Army hires service companies to repair and maintain the equipment.
Engineered Support Systems Inc. estimated that the military is using 4,000 of its gigantic portable air conditioners and heaters in tents and portable shelters in Iraq. Each unit costs $11,000 and can heat or cool a few thousand square feet.
"The Army and Air Force have said, 'How many more can you build? How quickly can you build them?'" said Bruce Gibbens, director of field marketing for the St. Louis company.
Congressional aides from both parties point to the police-training program to illustrate their concerns. DynCorp, a subsidiary of California-based Computer Sciences Corp., landed the initial police-training contract this summer, a contract that is likely to expand greatly if all $800 million is approved. The State Department envisions establishing a training camp capable of handling 3,000 recruits and 1,000 trainers and support staff at any given time. The camp would turn out 35,000 Iraqi police officers in just two years.
DynCorp has begun recruiting 1,000 "police advisors" with at least 10 years of experience in law enforcement or corrections, an "unblemished background" and "excellent health." The draw? DynCorp plans to pay salaries as high as $153,600, with minimum pay of $75,076.92.
DynCorp declined to comment on the contract, referring calls to the State Department.
"The money is pretty good," said Doug Brooks, president of the International Peace Operations Association, an Alexandria-based trade group of private military companies. "But the risk is there, too."
Brooks said fears of price gouging are overblown. Erinys, the British firm guarding oil facilities, won its $30 million security contract by underbidding its competition by $10 million, he said.
"Yes, there are a lot of security companies there," he said. "But I know quite a few that are still waiting for contracts. If one company asks a gouging price, there's going to be another in line."
"There was no imminent threat. This was made up in Texas, announced in January to the Republican leadership that war was going to take place and was going to be good politically. This whole thing was a fraud."
Kennedy Says Iraq War Case a 'Fraud'
Associated Press: Thu Sep 18, 6:31 PM ET
By STEVE LeBLANC, Associated Press Writer
BOSTON - The case for going to war against Iraq was a fraud "made up in Texas" to give Republicans a political boost, Sen. Edward Kennedy said Thursday.
In an interview with The Associated Press, Kennedy also said the Bush administration has failed to account for nearly half of the $4 billion the war is costing each month. He said he believes much of the unaccounted-for money is being used to bribe foreign leaders to send in troops.
He called the Bush administration's current Iraq policy "adrift."
The White House declined to comment Thursday.
The Massachusetts Democrat also expressed doubts about how serious a threat Saddam Hussein posed to the United States in its battle against terrorism. He said administration officials relied on "distortion, misrepresentation, a selection of intelligence" to justify their case for war.
"There was no imminent threat. This was made up in Texas, announced in January to the Republican leadership that war was going to take place and was going to be good politically. This whole thing was a fraud," Kennedy said.
Kennedy said a recent report by the Congressional Budget Office showed that only about $2.5 billion of the $4 billion being spent monthly on the war can be accounted for by the Bush administration.
"My belief is this money is being shuffled all around to these political leaders in all parts of the world, bribing them to send in troops," he said.
Of the $87 billion in new money requested by President Bush for the war, Kennedy said the administration should be required to report back to the Congress to account for the spending.
"We want to support our troops because they didn't make the decision to go there ... but I don't think it should be open-ended. We ought to have a benchmark where the administration has to come back and give us a report," he added.
Kennedy said the focus on Iraq has drawn the nation's attention away from more direct threats, including al-Qaida, instability in Afghanistan or the nuclear ambitions of North Korea.
"I think all of those pose a threat to the security of the people of Massachusetts much more than the threat from Iraq," Kennedy said. "Terror has been put on the sidelines for the last 12 months."
Kennedy was one of 23 senators who voted last October against authorizing Bush to use military force to disarm Iraq.
Earlier this year, he supported a Democratic amendment that would have delayed most of the president's proposed tax cuts, and most spending increases, until the administration provided cost estimates for the Iraq war. The amendment failed.
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Subj: [snow-news] N&V More well-paid technology jobs moving to India
Date: 12/31/2003 11:22:51 PM Pacific Standard Time
NEWS AND VIEWS YOU DON'T HAVE TO LOSE:
Comment: Yesterday I published the following: The costs of food (up from 16%-25% in the last year). These are often excluded from measures of inflation, because they are considered "volatile", along with the cost of services such as health care (up 15%) and education (up 20%).
email@example.com says these numbers don't hold up. food prices up 4% for (this past) year.
Health care costs for U.S. employers increased 10.1% in 2003, compared
with 14.7% in 2002, according to a new study.
Comment: Yesterday I published the following Today, the "adjusted" unemployment rate, which has been squeezed out of as much meaning as conceivably possible, still hovers in the 6% range; if you factor in quality of employment) then the real numbers are probably closer to about 12%-15%.
firstname.lastname@example.org says I'm well versed in these numbers - its more like 9.5%
George A. Akerlof says:
He is a co-winner of the Nobel Prize in economic sciences and economics professor at the University of California, Berkeley
In the long term, a deficit of this magnitude is not manageable. We are moving into the period when, beginning around 2010, baby boomers are going to be retiring. That is going to put a severe strain on services like Medicare, Medicaid and Social Security. This is the time when we should be saving.
We actually do need a deficit in the short term to invigorate the economy - but certainly not the type of deficit we have now. A short-term tax benefit for the poor would actually be a reasonable stimulus. Then, the money would almost certainly be spent. But the current and future deficit is a lot less stimulatory than it could be.
Our administration is just throwing the money away. First, we should have fiscal stimulus that is sharply aimed at the current downturn. But this deficit continues far into the future, as the bulk of the tax cuts can be expected to continue indefinitely. The Administration is giving us red ink as far as the eye can see, and these permanent aspects outweigh the short-term stimulatory effects.
The rich don't need the money and are a lot less likely to spend it - they will primarily increase their savings. Remember that wealthier families have done extremely well in the US in the past twenty years, whereas poorer ones have done quite badly. So the redistributive effects of this administration's tax policy are going in the exactly wrong direction. The worst and most indefensible of those cuts are those in dividend taxation - this overwhelmingly helps very wealthy people.
The government is not really telling the truth to the American people. Past administrations from the time of Alexander Hamilton have on the average run responsible budgetary policies. What we have here is a form of looting.
I think this is the worst government the US has ever had in its more than 200 years of history. It has engaged in extraordinarily irresponsible policies not only in foreign and economic but also in social and environmental policy.
A 1978 survey found that among adult men whose fathers were in the bottom 25 percent of the population as ranked by social and economic status, 23 percent had made it into the top 25 percent.
The Business Week piece cites a new survey of today's adult men, which finds 10 percent made it to the top 25 percent.
US companies moving more jobs to India but quietly
US corporations are picking up the pace in shifting well-paid technology jobs to India, China and other low-cost centres, but they are keeping quiet for fear of a backlash, industry professionals said.
Morgan Stanley estimates the number of US jobs outsourced to India will double to about 150,000 in the next three years. Analysts predict as many as two million US white-collar jobs such as programmers, software engineers and applications designers will shift to low cost centers by 2014.
But the biggest companies looking to "offshoring" to cut costs, such as Microsoft Corp., International Business Machines Corp. and AT&T Wireless, are reluctant to attract attention for political reasons, observers said this week.
"The problem is that companies aren't sure if it's politically correct to talk about it," said Jack Trout, a principal of Trout & Partners, a marketing and strategy firm. "Nobody has come up with a way to spin it in a positive way."
This causes a problem for publicly traded companies, which would ordinarily brag about cost savings to investors. Instead, they send vague signals that they are opening up operations in India and China, but often decline to elaborate.
Moreover, on the threshold of a US presidential election year, job losses are a hot button issue. A company that highlighted a major job transfer could wind up in the campaign debate.
Multinationals find that when they trumpet expansion overseas, they cause problems at home. When Accenture Ltd. executives in India this month announced plans to double their staff to 10,000 next year, they triggered a flood of calls to the company's US offices about US job losses.
Offshoring companies "are paying Chinese wages and selling at US prices," said Alan Tonelson, of the US Business and Industrial Council, a trade group for small business. "They're not creating better living standards for America."
The US sales director for one of India's top computer services providers said his company has won business from customers such as Walt Disney Co., Time Warner Inc.'s CNN and the Fox division of News Corp. -- none of which want public disclosure.
In India, some technology companies have recently adopted lower profiles. Microsoft Corp. has been removing its name from minibuses used to ferry engineers on overnight shifts. Major Indian beneficiaries of US business such as Infosys Technologies Ltd., Wipro Ltd. and Satyam Computer Services Ltd. have stopped identifying new customers.
While there have been reports that IBM intends to ship 4,700 high-end jobs to India and China next year, they mark a rare instance when figures "have been reported in black and white," said Linda Guyer, president of Alliance zIBM, a union that has tried to organize IBM employees.
Those numbers were not released by IBM, but rather disclosed by the Wall Street Journal, which had obtained an internal memo. The company has declined to comment.
Guyer believes as many as 40,000 of IBM's 160,000 US jobs will be transferred overseas by 2005, a figure she says was gathered from phone calls by IBM employees.
Previously, IBM has pointed to a report by the McKinsey Global Institute that concludes the US economy ultimately will benefit. The report was commissioned by Nasscom, a group made up of Indian tech companies as well as IBM's Indian services unit -- showing an effort by those invested in offshoring to sway public opinion.
Recently, AT&T Wireless told the US Securities & Exchange Commission that it would lay off 1,900 employees this year. Communications Workers of America members obtained an internal memo prepared by Tata Consultancy Services of India that discussed how it would assume those US jobs.
Subsequently, AT&T Wireless officials acknowledged it was exploring the job shifts but didn't offer details.
While some companies, such as Electronic Data Systems Corp. , CAP Gemini Ernst & Young and Sapient Corp., acknowledge they shift jobs abroad to exploit cost advantages and around-the-clock work, IBM asserts that it is not moving jobs but creating new ones.
"It's a business strategy, period. You cut costs. You revamp. You look at what your mission statement says and try to turn a profit," said Sylvia Thomas, who was laid off by chipmaker Agere Systems Inc. after declining offers to relocate to headquarters in Allentown, Pennsylvania or to Singapore.
Quotations from the book Rich Media, Poor Democracy
"The United States spends a fortune on the military for no publicly debated or accepted reason. But it serves several important purposes to our economic elite, not the least of which is as a lucrative form of corporate welfare. Since no element of the economic elite is harmed by military spending, and nearly all of them benefit by having an empire to protect profit making worldwide, it rarely gets criticized - unlike federal spending on education or health care or environmental improvements. If a reporter pursued the story of why we are spending $300 billion on the military, he or she would appear to have an axe to grind and therefore to be unprofessional, since top official sources are not critical of the spending."
"By 1998, discounting home ownership, the top 10 percent of the population claimed 76 percent of the nation's net worth, and more than half of that is accounted for by the richest 1 percent. The bottom 60 percent has virtually no wealth, aside from some home ownership; by any standard the lowest 60 percent is economically insecure ..."
"In the crescendo of news media praise for the genius of contemporary capitalism, it is almost unthinkable to criticize the economy as deeply flawed. To do so would seemingly reveal one as a candidate for an honorary position in the Flat-Earth Society. The Washington Post has gone so far as to describe ours as a nearly "perfect economy.""
"The corruption of journalistic integrity is always bad, but it becomes obscene under conditions of extreme media concentration as now exist."
"Blue collar" crimes generate harsh sentences while "white collar" crime -almost always for vastly greater amounts of money - gets kid gloves treatment by comparison. In 2000, for example, a Texas man received sixteen years in prison for stealing a Snickers candy bar, while, at the same time, four executives at Hoffman-LaRoche Ltd. were found guilty of conspiring to suppress and eliminate competition in the vitamin industry, in what the Justice Department called perhaps the largest criminal antitrust conspiracy in history. The cost to consumers and public health is nearly immeasurable. The four executives were fined anywhere from $75,000 to $350,000 and they received prison terms ranging from three months all the way up to ... four months.'
"The corrupt nature of U.S. communication policy making continues on course. Vital decisions are made all the time concerning the future of our media system, but they are made behind closed doors to serve powerful special interests, with nonexistent public involvement and minuscule press coverage ... the commercial broadcasters have effectively stolen control of digital television from the American people, with the support of their well-paid politicians. The one sop thrown to the public, the Gore Commission, which was to recommend suit able public-interest requirements for commercial broadcasters in return for the free gift of some $50-100 billion of public property, was a farce."
"... the corporate media system ... generates a depoliticized society, one where the vast majority of people logically put little time or interest into social or political affairs."
"We are in precipitous times. The corporate media system is consolidating into the hands of fewer and fewer enormous firms at a rapid rate, providing a hypercommercialized fare suited to wealthy shareholders and advertisers, not citizens. At the same time, there is a budding movement for media reform which is part and parcel of a broader anti-corporate movement."
More quotes at http://www.bankindex.com/read.asp?ID=1213
By Jim Rarey <email@example.com>
May 17, 2002
ELITIST HANDS IN THE COOKIE JAR
In this writer's February 27th article this year, "Enronitis, A Communicable Disease" the following statement was made. "If the Enron practices are as widespread in other companies, as some believe, we may be seeing a domino effect with Enron and Global Crossing only the beginning."
At that time, only Enron and Global Crossing, along with their mutual auditor/consultant Arthur Andersen, were under the microscope of public and Security and Exchange Commission (SEC) scrutiny. At this writing there are at least thirty (and counting) companies that have admitted "accounting irregularities" and/or which are the subject of formal investigations by the SEC.
These disclosures should by no means be considered "voluntary mea culpas." The Federal Energy Regulatory Commission (FERC) along with the SEC seem to have awakened from a decades long slumber and are giving the perception of vigorously pursuing accounting irregularities and other questionable corporate practices. The FERC compiled a list of suspect practices gleaned from testimony by Arthur Anderson and Enron officials and sent out a questionnaire to 150 energy companies. The companies were required to answer, under penalty of perjury, whether or not they were engaging in any of those practices. Ergo, a flood of disclosures.
Wall Street analysts estimate that over one trillion dollars in the value of those companies stocks has vanished and that doesn't count the billions (perhaps hundreds of billions) of dollars in bonds for which an accounting is yet to be made. Enron has notified the SEC that it may have overstated its assets last year by as much as $24 billion and that its financial statements as far back as 1997 are not reliable. The company did not even attempt to file the required reports for the quarter ended in March.
The "problems" are not limited to energy producing and trading companies. Implicated in the scandals are retailers like K-Mart (a FBI criminal investigation), security analysts, brokerage houses, insurance companies, auditors and consultants, large investment banks and even bond rating services. Banks like CitiGroup, Credit Suisse First Boston and J. P. Morgan Chase find themselves victims of their own greed in participating in the scams as well as targets of lawsuits and investigations by hapless investors and regulatory agencies. It almost seems like a game of musical chairs where there were not enough chairs when the Ponzi schemes collapsed. Companies like Enron and Global Crossing, although in bankruptcy, ended up with most of the money for which an accounting has not yet been made.
The maze of sham transactions has set insiders against each other in a scramble to cut losses and point fingers. We are treated to the spectacle of a subsidiary of the Rockefeller controlled CitiGroup (Travelers Insurance) suing its own parent company for losses on transactions it insured between CitiGroup and Enron. CitiGroup is refusing to pay claiming it was misled.
Along with the regulatory agencies, corporate boards of directors seem to have been asleep at the switch. Some very powerful and well-connected directors are now claiming they were misled by company executives and/or auditing firms. Many are members of the premiere U.S. organization pushing world government, The Council on Foreign Relations (CFR). Others are associated with one of the CFR s many spin-offs or organizations controlled by CFR members i.e. The Trilateral Commission (TLC) and the Business Roundtable.
Boards of directors are not necessarily controlled by their chairmen. If the chairman himself does not fill the role, we usually find on the board someone from an investment bank or a high-powered law firm. What counts is who controls or influences the voting stock of the company.
So let's take a brief tour of some of those powerful men (and women) on boards of companies who were so easily "misled." We shall start and end with Enron. Enron's (former) Chairman and CEO, Ken Lay, was a close associate of both Bill Clinton and the George Bushes. He is a member of Rockefeller's Trilateral Commission
Wendy Gramm is a member of the audit committee of Enron s board. Just prior she was a Reagan appointee as chairman of the Commodity Futures Trading Commission, the powerful regulatory agency which oversees the nation's commodities and futures exchanges. Her husband is Senator Phil Gramm who sponsored legislation providing partial protection of professional firms like Arthur Andersen from class action suits. Gramm has decided not to run for reelection.
In our neighbor to the north a large bank got caught with huge losses when the Enron music stopped. The Canadian Imperial Bank of Commerce (CIBC) has on its board Lord (Conrad M.) Black. An unabashed globalist, Black on his official biography lists memberships in the Council on Foreign Relations and the Bilderbergers (evidently that s what they call themselves).
Canada's largest energy company EnCana, which engaged in sham "round trip" transactions with Reliant Energy lists on its board T. Don Macy. Macy is the former Chairman and President of Amoco Eurasia Petroleum Co. In 1996 he signed an oil development deal with the Azerbaijan government joining a consortium for exploitation of Caspian Sea oil. Amoco and Unocal control 55.5% of the consortium.
Returning to the U.S., Rockefeller controlled CitiGroup (including subsidiaries CitiBank and Traveler s Insurance) is a major player in the Enron scandal. Director Robert Rubin (CFR) is chairman of the firm's executive committee that runs the group between annual board meetings. Rubin is the former U.S. Secretary of Treasury and a former CEO of Goldman Sachs.
CitiGroup director C. Michael Armstrong (CFR) is chairman and CEO of AT&T Corporation. He is the former chairman and CEO of Hughes Electronics. During his tenure there, Hughes and Loral illegally furnished classified rocket technology to the Communist Chinese government.
Another CitiGroup director is John M. Deutch (CFR), former head of the CIA. Deutch resigned his CIA position after he was caught with unauthorized classified information on his laptop computer. He is also a director on the board of CMS Energy, which has admitted to sham transactions with several other energy companies.
CitiBank was caught laundering hundreds of millions of dollars in cocaine money through the private account of the brother of the Mexican president. The only consequence was the resignation of a vice president.
The Security and Exchange Commission (SEC) played a large role in enabling the Enron scams. Arthur Levitt, the New York Democrat fund-raiser was appointed chairman of the commission by Bill Clinton. During his tenure, the SEC granted Enron huge exemptions from security laws. Although Levitt claims he can t recall the exemptions, a former SEC regulator told Insight Magazine Levitt was involved in the decision. Experts say the exemptions allowed Enron to set up its sham offshore partnerships that played such a large role in the meltdown. Levitt is now a senior analyst for the Carlyle Group.
A book could (and probably should) be written about corporate governance through former government officials and titans of industry on corporate boards, of which most are committed globalists. Space considerations have only permitted a brief sampling of the phenomenon here.
No list would be complete without examining the connections of Herbert S. (Pug) Winokur, not exactly a household name. Winokur was chairman of the Enron finance committee. He is a former chairman and CEO of Dyncorp and currently chairs its compensation committee.
Catherine Austin Fitts has authored a devastating expose of Winokur and his influence. Fits is a former managing director of the Wall Street firm Dillon, Reed & Co., a former assistant secretary of HUD and president of the Hamilton Securities Group. The following information (some of it paraphrased) is from her expose titled, "Damage Control at Dyncorp Harm at Harvard."
Winokur (a Harvard graduate) is a director of the Harvard Corporation and Harvard Management Company. His investment firm, Capricorn Holdings, is a lead investor in Dyncorp.
Winokur claims he and other Enron directors were mislead by Arthur Anderson and Enron management and it legal counsel as to the true nature of its financial structure. Yet Highfields Capital which manages a large portion of Harvard s $19 billion endowment, reaped a quick profit of somewhere between $50-120 million through short sales (puts) of Enron stock. Fitts suspects insider trading.
In addition to its contracts with the CIA and State Department, Dyncorp manages, under contract, much of the financial data and other electronic records of the SEC, Department of Defense (DOD), Department of Justice (including the FBI), and the Dept. of Housing and Urban Development (HUD).
Between just two of those departments, DOD and HUD, over $3 trillion dollars cannot be accounted for by auditors since 1997. Fitts asks the question, "Could it have moved through the 300-plus subsidiaries that Enron operated in the Cayman Islands?"
And who are the auditors? Dyncorp, DOD and HUD all use Arthur Andersen. In a letter directed to Winokur, Fitts asks him how he can allow Dyncorp to continue to us Arthur Andersen while he claims the auditors misled (lied to) him at Enron.
In closing, Fitts laments (justifiably)," Still worse yet, while most activists are trumpeting the dog and pony show being given by Congress, the SEC and the General Accounting Office (GAO), full of blustery rhetoric and convenient outrage, what the government and Congress are really doing is giving the bad guys all the time they need to destroy evidence, transfer assets, and hide the money."
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Subj: [snowqueenanne] Euro/Dollar Oil
I am not enough of an economist to evaluate the validity of this analysis. If, however, it is true, it bodes very ill for the survival of our country in any form of which we could be proud.
Could this be the issue that might catalyze us to aggressively oppose the policies of our present government?
The Americans could live with Saddam until he started selling oil for euros
* * * * * *
GOOD AS GOLD
GOLD TURNS BLACK
In 1973, the Organization of Petroleum Exporting Countries (OPEC) quadrupled the price of oil but continued to accept only U.S. dollars in payment, so that the demand for dollars soared. From then on, the dollar was effectively backed by oil instead of gold-and the U.S. Government didn't even have to own the oil! Because dollars can buy OPEC oil, countries that need to import oil-i.e. most developed countries- will accept dollars as payment for their exports. Hence, everyone who needs to buy from those exporters will accept dollars as payment for other things, and so on, so that the dollar is the preferred global currency. To pay their bills, importers must have reserves of dollars. To prop up their currencies against speculative attacks, the central banks of all countries must have reserves of dollars. To get capital, poor countries must borrow dollars, and to service these debts they must export goods to obtain more dollars. About 2/3 of all currency reserves, more than 4/5 of all currency transactions, more than half of the world's exports, and all loans from the International Monetary Fund (IMF) are denominated in dollars. As these things create demand for the dollar and shore up its value, OPEC is the more willing to accept payment in dollars. So, the system is self-reinforcing.
The result is that America can export dollars, which cost nothing to produce, and receive real goods and services in return. As long as those dollars are spent outside America, they don't cause domestic inflation. And when they eventually find their way into foreign reserves, they can only be invested in American assets. This continuous flow of foreign investment (on the "capital account") props up the American real-estate market and stock market, and allows America to run a mammoth trade deficit (on the "current account") without devaluing the dollar.
America's imports now exceed its exports by almost 50% (or 5% of GDP) and its foreign debt is 60% of annual GDP. If OPEC were to abandon the dollar for some other currency, the whole process would slam into reverse. America could no longer export paper dollars for real goods and services. Corporations and central banks would sell their dollar reserves, causing the value of the dollar to plummet. The redemption of dollar reserves would force sales of the assets in which those dollars are invested, so that the American property and stock markets would crash. Other investors who have bought American property and stocks with borrowed money would declare themselves bankrupt, causing some American banks to collapse under the weight of bad debts. The newly liberated dollars could only be spent on American goods and services, which would begin to flow out of the country (reducing living standards), while the glut of do llars chasing these same goods and services would cause rampant domestic inflation. The flow of foreign investment would dry up, so that America could no longer run a trade deficit, but would have to export yet more goods and services to pay for its imports, and to service its massive foreign debt, and to accumulate reserves of the new global currency-whatever that currency might be.
EUROPE STRIKES BACK
In 1999, eleven member states of the European Union (EU) adopted the euro as a common accounting currency. Greece joined the Euro Zone a year later. On January 1, 2002, the twelve countries withdrew their old money from circulation, completing the biggest currency reform in history.
The Euro Zone already has a bigger share of world trade than the USA. In particular, it imports more oil than the USA and is the main trading partner of the Middle East. It offers higher interest rates than the USA, but does not have a huge foreign debt or trade deficit. These things inspire confidence in the euro. It was perhaps for that reason that in 2002, China started converting some of its currency reserves from dollars to euros, while North Korea abandoned the dollar and started using euros for trade. The strength of the euro also encourages expansion of the EU and puts pressure on current members Denmark, Sweden and the U.K. to join the Euro Zone. In December 2002, ten new countries were accepted for EU membership with effect from May 2004. This will create a common market of 450 million people, which will buy more than half of OPEC's oil.
In summary, the only argument for preferring dollars to euros is that dollars can buy oil. As that argument does not affect OPEC, it would make sense for OPEC to convert its reserves to euros by mid 2004. If OPEC were then to price its oil in euros, it would increase demand for the euro, causing a huge increase in the value of its new euro reserves. These possibilities are not discussed in the U.S. media.
The first OPEC member to show serious disloyalty to the dollar was Iran. Since 1999, Iran has been talking about pricing oil in euros. In January 2002, George W. Bush named Iran in his "axis of evil" although the country is experimenting with democracy-something that the USA, if true to its professed values, would want to reward and encourage.
Undeterred, Iran converted most of its currency reserves to euros during 2002, and a proposal to price Iran's oil in euros is being considered by the central bank and the parliament. Let us see whether the Americans find an excuse to topple Iran's fledgling democracy and to replace it with a dictatorship that just happens to prefer dollars to euros.
The second offender was Venezuela. In 2000, Venezuela's president Hugo Chavez called a conference on the future of fossil fuels and renewable energy. The report of the conference, delivered by Chavez to the OPEC summit in September 2000, recommended that OPEC set up a high-tech electronic barter system, so that members could trade oil for goods and services without the use of dollars or any other currency. The chief beneficiaries would be OPEC's poorer customers, who did not have large currency reserves. Chavez made 13 barter deals. In one of them, Cuba provided health services in Venezuelan villages. In April 2002, there was a coup against the twice-elected Chavez. The coup was welcomed by the Bush administration and by editorials in numerous American newspapers, but collapsed after two days, leaving evidence that the U.S. administration was behind it .
The third and most blatant offender was Iraq. In October 2000, Saddam decreed that Iraqi oil would be sold for euros instead of dollars, with effect from November 6. Soon afterwards, Saddam converted Iraq's entire $10 billion "oil for food" reserve fund from dollars to euros. These facts went unreported in the U.S. media.
George W. Bush assures us that Iraq's oil belongs to the Iraqi people. But any asset priced in dollars is at least partly an American asset because it adds to the demand for dollars, allowing America to export more dollars and receive more goods and services in return. So, the test of America's sincerity will be whether its new regime in Iraq continues to accept euros for oil.
Dr Gavin R. Putland
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Subj: [snow-news] DoD fights for freedom... from oversight
From Steven Aftergood's *Secrecy News*
PENTAGON SEEKS NEW EXEMPTIONS FROM OVERSIGHT
In the name of "transformation," the Department of Defense has advanced an audacious series of legislative proposals that would "substantially reduce congressional oversight and public accountability," four Democratic congressional leaders warned in a May 13 letter.
The Pentagon seeks the repeal of over 100 reporting and notification requirements, including essential and widely utilized reports on cost overruns, technical failures and schedule delays.
"In addition to the outright repeal of these reporting requirements, [the DoD proposal includes] a sunset provision that would eliminate all remaining Defense Department reports after five years," wrote Reps..
The only exception would be the Secretary of Defense's annual report to Congress. "Notably, Defense Secretary Rumsfeld failed to submit even this report in two out of the last three years."
The Pentagon also seeks wholesale changes in DoD employment policy that would enable it to waive existing statutory requirements while curtailing oversight of civil service laws. It further proposes significant exemptions from environmental laws. And it would collapse government spending on missile defense into a single budget line item.
"The Department's proposal would reduce oversight of the Missile Defense Agency's budget and give it unprecedented spending authority enjoyed by no other federal agency," the congressmen wrote.
See their May 13 letter to House Speaker Hastert and Minority Leader Pelosi here:
[A few excerpts from this long letter, signed by Reps. Waxman, Skelton, Obey and Spratt: "The Department routinely overpays contractors, and the General Accounting Office has reported that the Department is responsible for 9 of the 25 highest risk areas in the federal government, including decades-old financial problems, a proliferation of incompatible information systems, and flawed weapons acquisitions processes, to name a few. . . .
[T]he Department's proposal . . . would give unprecedented discretion to the Secretary of Defense to undo, in whole or in part, provisions adopted over the past century to ensure that our federal government does not become a patronage system. . . . [and] would reduce congressional oversight over one of DOD's most complex and controversial programs by collapsing $9.1 billion in annual missile defense allocations into a single budgetary line item. . . .
The common thread linking all of these provisions is an effort by the Department to substantially reduce congressional oversight and public accountability. Indeed, these proposals are part of a broader pattern by the Bush Administration to exempt itself from congressional scrutiny in general. . . .
Article 1, Section 9, Clause 7 of the Constitution (known as the Accountability Clause) states: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time." We feel it would be a dereliction of Congress' constitutional responsibilities to adopt these provisions because they would significantly curtail Congress' ability to monitor the spending of taxpayer dollars at the Defense Department. . . .
[U]nder this proposal . . . the Secretary would have authority . . . to take many of these actions 'at his sole, exclusive, and unreviewable discretion.' . . . Each new administration and each new Secretary of Defense would be free to rewrite at will the rules governing the careers of almost 700,000 civilian employees, with absolutely no consultation with Congress. . . .
In the absence of compelling urgency, it is premature at best to move another one-third of the federal workforce out of the existing personnel system before the results of the changes enacted at the Department of Homeland Security are clear. Moreover, the Defense Department's proposal goes far beyond the waivers granted to the Department of Homeland Security. . . .
[A]lthough Under Secretary of Defense David Chu has argued that the requested exemptions would make the Department into a more 'agile' force, he has failed to explain how the current system has hindered the Department's efforts to wage war in Iraq or anywhere else. . . .
[Last year] Congress required the Department, as part of the National Defense Authorization Act for Fiscal Year 2003, to develop a comprehensive plan for using existing training facilities, to conduct an assessment of current and future training range requirements, and to evaluate the adequacy of current resources to meet those requirements. The Act also required the Department to submit annual reports to Congress regarding these encroachment issues. In testimony last month on this issue, GAO reported that the Department has failed to comply with any of these congressional directives.
. . . [Under this proposal,] unless Congress were subsequently and affirmatively to require new reports, the Department of Defense - the nation's largest federal agency with an annual budget of nearly $400 billion - would submit only one annual report to Congress under this proposal. Notably, Defense Secretary Rumsfeld failed to submit even this report in two out of the last three years. . . . Unfortunately, the Department has a lengthy and consistent record of refusing to comply with specific congressional requests [for information about major Pentagon weapons systems.programs]. . . . The Department's proposal would reduce oversight of the Missile Defense Agency's budget and give it unprecedented spending authority enjoyed by no other federal agency. . . .
Since fiscal year 2000, defense spending has increased by one-third, from $300 billion to $400 billion a year. The Department is now proposing that this increase in resources be accompanied by unprecedented reductions in congressional oversight and public accountability, and in some cases unlimited increases in the powers of the Secretary of Defense. In these circumstances, we should be raising rather than lowering oversight."]
These DoD proposals "would not be in the interests of ensuring the financial transparency and oversight of billions of dollars in weapons systems development and acquisition," wrote Danielle Brian of the Project on Government Oversight, understating the matter in a May 2 letter to the House Armed Services Committee:
Thirty-five of the most important annual reports that the Pentagon proposes to eliminate were culled from the larger list and posted by Daniel Cornwall of the Alaska State Library along with his brief comments here (thanks to PM):
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[see /Oil Economics]
Subj: Next Stops in the Infinite War for Oil
Saudi Arabia, West Africa -- Next Stops in the Infinite War for Oil
by Michael C. Ruppert
© Copyright 2003, From The Wilderness Publications, www.copvcia.com. All Rights Reserved. May be reprinted, distributed or posted on an Internet web site for non-profit purposes only.
[Sometimes pointing out that one was right is not about ego. Sometimes it's about saying that if others had listened, a lot of lives might have been saved because things would have been handled differently. It is about saying that there are things that can be changed now to prevent that kind of damage from being carried forward... one more time.
On May 14 I watched Amy Goodman, producer and anchor of Pacifica Radio's "Democracy Now," appear on CNN discussing the bombings in Saudi Arabia and recently well-publicized statements by Senator Bob Graham -- former chair of the Senate intelligence committee --suggesting that the Bush administration was engaging in a cover-up of 9-11. It was a pyrrhic vindication for me. Make no mistake, Graham is nothing more than damage control as he describes what happened as "intelligence failures." He should not be trusted under any circumstances. But Goodman's repeated focus on the inconsistencies, deceptions and lies of 9/11 -- on CNN no less --was a bittersweet and ironic validation of positions I took on three Pacifica stations (WBAI, KPFA and KPFK) more than 18 months ago. I was labeled as: a money grubbing, conspiracy theorist; libelously as a fired ex-cop; and as an unstable mental case who did sloppy research by the likes of David Corn of The Nation, Norman Solomon, Larry Bensky, Sonali Kolhatkar and Marc Cooper.
Goodman has merely ignored my work. Yet, according to someone who gave it to her, she has had my tape "The Truth and Lies of 9-11" for many months. And she knows that what I was saying eighteen months ago is exactly what Graham is trying to spin now. I know this because many people who emailed her asking her to have me as a guest sent me copies. Gore Vidal has had the tape for quite a while too. Vidal used every one of the quotes from Zbigniew Brzezinski's book "The Grand Chessboard" which I brought to public light in the fall of 2001 in his own lengthy 9/11 article and conveniently forgot to mention the person who did the work or what he was trying to say. Now, a day late and a dollar short, the Lilly Livered Left has arrived on the scene with the brilliant observation, "Wait, we have to look at 9/11! We have to look at 9/11!"
This is so much more than "I told you so." The danger and power of a fascist empire in warp drive to control global oil reserves and crush opposition grows every day. This is all about the fact that the consequences arising from the peak and inevitable decline of world oil production are going to be the most cataclysmic events in human history. That realization is all too slowly dawning upon people who might be in a position to change the way this bloody game is being played. Richard Heinberg's new book "The Party's Over" and the diligent work of world-class oil experts like Colin Campbell of the Association for the Study of Peak Oil- www.peakoil.net - are finally making inroads into the collective consciousness of governments, business and activists.
But the herd always seems to be ten paces behind the Empire.
Having been vindicated so many times I point again to Saudi Arabia and also now to West Africa. Nine months ago FTW wrote that Saudi Arabia would likely be the next stop on the Empire's world tour after Iraq. Little noticed details of the recent bombings in Riyadh confirm it. And recent developments in Africa, especially Nigeria -the world's sixth largest oil producer - are sounding alarms that al Qaeda may be about to reveal an African face, including that of Osama bin Laden.
Every time my analysis is vindicated, every time an FTW prediction comes true, it is more affirmation that Peak Oil is real. And if Peak Oil is real, the consequences of it are going to devastate human civilization within our lifetimes. They are doing exactly that right now, today. It started on 9/11. It doesn't take a genius to read a map, just someone who is willing to look at it and choose the right road - the road less traveled. September 11th is the place where the empire remains vulnerable; there and with the criminal handling of taxpayer money and the continued looting of the Treasury. - MCR]
"On the eve of a U.S. invasion of Iraq the deployment of U.S. military personnel in the region is also a convenient placement of resources for what may be a one-two punch to take over a tottering kingdom that owns 25 percent of all the oil on the planet at the same time that Saddam Hussein is removed from power in a country that controls another 11 percent. Together, the two countries --which have not yet peaked in production capacity -- and which are the only two nations capable of an... increase in output possess 36 percent of the world's known oil...
And still the American people try to ignore the fact that the administration knew about, and could have prevented, the attacks of September 11th."
Saudi Arabia: The Sarajevo of the 21st Century Michael C. Ruppert From The Wilderness, Aug. 21, 2002
May 15, 2003, 2100 PDT (FTW) - The three bombings of expatriate compounds which took place in the Saudi Capital on Monday, May 12, signal more than a "resurgent" al Qaeda. That the CIA, the Bush family and Osama bin Laden have been cooperating and doing business for decades is now extremely well documented and part of the "9/11 cover-up" being alluded to by Bob Graham, the former chair of the Senate intelligence committee, in his public remarks. As The Financial Times reported in separate stories on May 13, the attacks signal the possible start of a campaign to overthrow the feeble Saudi monarchy and represent a serious challenge to the royal family. Quoting a senior western diplomat in the Saudi capital the FT reported, "This is a serious challenge to the al-Sauds. It is on the scale of the 1979 takeover of the Grand Mosque in Mecca." As FTW reported last August, Saudi King Fahd remains on life support on a private island off the coast of Spain while Crown Prince Abdullah and Prince Sultan jockey for position and are ready to fight for the throne the instant the King takes his last breath. Abdullah controls the Saudi National Guard and Sultan controls the army. Both are prepared to cater to elements of the population which largely sympathizes with al Qaeda, and which is highly fragmented, and which really likes neither of the billionaire princes.
FTW's previous reporting from last August indicated that the US was likely developing plans to destabilize Saudi Arabia, partition it, and occupy the world's largest oil fields shortly after it had successfully occupied Iraq. To read the full story please visit: http://www.fromthewilderness.com/free/ww3/082102_saudi_arabia_1.html
Meanwhile, in Nigeria, the world's sixth largest oil producer, and throughout western and equatorial Africa, continuing rebel violence is laying the groundwork for NATO and US military intervention. Both developments are in keeping with Dick Cheney's "war which will not end in our lifetimes," a war to control the last remaining oil reserves on the planet.
Saudi Arabia 2003
Al Qaeda has never been known to issue warnings about pending attacks. Yet according to an AP story on May 13, just twenty-four hours before the attacks occurred, an al Qaeda operative calling himself Abu Mohammed al-Ablaj sent an email to the London-based Arab magazine Al-Majalla stating that suicide attacks targeting the Saudi regime and American interests were pending. This made it certain that al Qaeda and Osama bin Laden would be identified as the perpetrators.
As the number of deaths from the highly coordinated and synchronized machine gun and car bomb suicide attacks of May 12 varied, few noticed that one of the targets was a compound occupied by the Vinnell Corporation - now a subsidiary of Northrop Grumman. Vinnell has an interesting history about which FTW has written before. Previously owned by the now-notorious Carlyle Group, Vinnell is perhaps the most elite paramilitary training company in the world and it has long been reported to have heavy ties to the CIA, even to the point of providing non-official cover (NOC) for CIA officers and agents. As we reported in October of 2000, Vinnell, along with DynCorp and MPRI, are the three largest and best-connected private mercenary operations in the world.
A Times of London story on May 14, headlined "Firm `Was Cover for CIA'" discussed Vinnell's spooky past, its longstanding military presence in the region and noted that the current attack was the second bombing Vinnell had suffered in eight years. It was actually the third bombing of Vinnell operations since 1991. The Times did not mention the fact that a Vinnell joint venture with Halliburton's Brown and Root (Vinnell, Brown and Root) had its Ankara office bombed shortly after the Gulf War by a Kurdish separatist group. Brown and Root and the Kurds have been repeatedly connected to heroin smuggling controlled by the CIA from as far back as 1977. (To learn more about the Vinnell Corp. please visit: http://www.fromthewilderness.com/free/ciadrugs/bush-cheney-drugs.html.)
Motives for these bombings might have varied as in the case of the 1991 bombing where Kurdish separatists - feeling betrayed (again) by the CIA - were seeking revenge after being left exposed and vulnerable at the end of the Gulf War.
What is interesting about the bombings is that they targeted the compound occupied by Vinnell employees at a time when most of them weren't there. An AP story on May 13, 2003, stated, "The seven Americans killed lived in a four-story building that was heavily damaged. Seventy Americans employed by the Vinnell Corp., a Virginia company with a contract to train Saudi military and civilian officials, lived in the building. By chance, 50 were away on a training exercise."
Recent dishonesties of the Bush administration including the use of forged documents about Iraqi uranium purchases, the failure to produce Saddam's weapons of mass destruction, and a host of 9/11 inconsistencies make carte blanche acceptance of official statements a bit difficult. Only one Vinnell victim, an African American, has been publicly identified as of this writing.
It would have been more accurate, however, to say that Vinnell was training the Saudi National Guard rather than the "military," which implies the Army. As we reported last August, the US is said to be favoring Prince Sultan who controls the Army. Conveniently, this attack undermines US ability to support the National Guard which belongs to 69-year-old Crown Prince Abdullah.
To state that these attacks are al Qaeda sponsored discloses the US's real intent. Al Qaeda is Osama bin Laden. And bin Laden, who has never been estranged from his family, which operates a multi-billion dollar corporation, does not and has never acted contrary to US interests. The Saudi Binladin Group owns a telecommunications company and operates more than 50 satellites used for cell and satellite phone transmissions. The Binladin Group has also engaged in joint construction ventures with both Halliburton and Enron. And the family maintains extremely close financial ties with the Saudi Royal banker Khaled bin Mahfouz, a player in the drug bank BCCI, and known to have provided heavy financial support to al Qaeda prior to 9/11.
Saudi Arabia is another classic example of how trickle-down economics doesn't work. The chances are good that the US would conveniently respond to a collapse of the Saudi monarchy in an operation which would see many of the al-Saud and Bin Laden family gratefully take their billions and watch as their country, which has only existed since the 1930s, be partitioned into several emirates or sultanates. They might safely and gratefully move into the eastern part of the country - where the oil is - under US protection and neatly dodge the wreckage they themselves have created in the rest of the country. Or they might move to Switzerland or Beverly Hills as the family of the Shah of Iran did in 1979. In recent years Saudi Arabia has become a debtor nation, borrowing money to finance social programs which remain under-funded due to declining oil revenues and corruption. The general population is violently anti-American and only tolerates the monarchy because they are afraid of it.
If bin Laden has signaled the time to attack the regime, and if we see one more serious attack in the coming weeks, the smart money says that the monarchy is finished and that the US will conveniently find it necessary to protect the oil fields. The recent move to take US military personnel out of the country was not to mollify Saudi public opinion. It was to take the fighter jets, bombers, tankers and sensitive communications gear to nearby bases in Qatar and Kuwait where a popular uprising couldn't reach them but where they could still quickly reach Saudi targets. And with the eventual partitioning of Saudi Arabia, the Muslim Holy cities of Mecca and Medina, far off in the west, would be safely separated from the oil, further weakening the linkage between the two in world opinion.
As a result of the bombing, Reuters reported on May 15 that as many as 60 FBI and CIA agents had arrived in-country to commence operations and assist Saudi security services with admitted shortcomings. Given the history of what happens in countries where CIA presence has rapidly grown as a result of crises, like Vietnam and Iran, it's time to start an office pool about how long the monarchy has to stay in power.
The war without end continues...
Nigeria and Africa
Before discussing developments in equatorial Africa it is essential to understand the oil picture there. There are no oil reserves anywhere which rival those of Saudi Arabia with approximately 250 billion barrels (Gb), or Iraq which has approximately 112 Gb. Current world consumption is approximately 1 Gb every twelve days and demand is increasing rapidly. The two critical factors are the accessibility of oil (both geologically and geographically) and how long it takes to get it to market. It takes about six weeks for oil from the Persian Gulf to reach an American gas tank yet it takes only about two weeks for oil from West Africa to make the same journey. Equally important, oil installations in West Africa are in direct and immediate reach of US naval forces from the Atlantic Ocean. There are no political or international coalitions which need to be massaged if intervention becomes necessary.
Nigeria, the world's sixth largest oil producer, passed its peak of production in 1979 and has estimated reserves of approximately 24 Gb. What makes Nigeria critical is the fact that it can function, with minimal investment, as a so-called "swing" producer. In the event of oil shortages there are wells, pipelines and refineries already in place and easily accessible which could accommodate a short-term increase in production to control prices or offset shortages. Shell, ChevronTexaco and TotalFinaElf have heavy investments in the country and until recently, maintained sizeable workforces there.
Recently the US has been exerting tremendous pressure on Nigeria to withdraw from OPEC and its strict production quotas by dangling the prospect of Imperially-funded prosperity in front of it. The appeal of African oil has drawn serious US government attention, even to the point of it sponsoring a January, 2002, Washington conference titled, "African Oil - A Priority for U.S. National Security and African Development." This was reported in The Petroleum Supply Monthly in December of 2002 and on the World Socialist Web Site in August of the same year.
Aside from Nigeria, the five biggest oil producers in Africa - in descending order are Algeria, Libya, Egypt and Angola. Angola alone is the ninth largest oil supplier to the U.S. The U.S. currently imports more oil from these six countries than it does from Saudi Arabia. Recent projections by the U.S. National Intelligence Council as reported in The Petroleum Supply Monthly estimate that the proportion of U.S. oil imports from sub-Saharan Africa will reach 25% by 2015.
I have not been surprised, therefore, as I have seen stories that revolts are brewing in the Central African Republic or that Al Qaeda has been linked to weapons shipments in West Africa where it has been reportedly seeking to relocate training bases. One report issued by the Voice of America (VOA), a CIA-connected international radio network, in November, 2002, has indicated that al Qaeda is quietly supporting nationalist and tribal insurgencies throughout West Africa.
I have previously reported that a reliable CIA source has been insisting that Osama bin Laden is comfortably living in Freetown, the capital of nearby Sierra Leone, for more than a year.
Elsewhere in the region there are signs of small to mid-sized discoveries which, while not affecting Peak Oil, are certainly keys to how Peak oil politics and economics will be played out. As reported by Wayne Madsen in the Online Journal on January 16, 2003, Western Sahara -- illegally occupied by Morocco in 1975 -- is now reporting significant finds, and U.S. oil companies like Kerr-McGhee, fronted by former Bush I Secretary of State and consummate oil man James Baker, are signing offshore exploration agreements with the Moroccan government. Baker and his law firm Baker-Potts turn up in every major oil development from Kazakhstan to the Balkans to Africa.
Clearly West Africa is vital to the Empire. The Times of London acknowledged this in a July 29, 2002, story headlined, "U.S. Presses Africa to turn on the tap of crude oil." Quoting Walter Kansteiner, U.S. Under Secretary of State for African Affairs, the Times reported, "African oil is of national strategic interest to us, and it will increase and become more important as we go forward."
A Timeline of Increasing Turmoil
* Nov. 13, 2002 - Stratfor, a private global intelligence service reports, "U.S. intelligence sources have floated a report that al Qaeda now might represent a threat to U.S. interests in West Africa. The report could indicate growing concern in Washington that sparsely populated and obscure countries in the region could be a serious weakness in the global fight against Islamic militancy."
In the meantime, strong support for al Qaeda and Osama bin Laden remains unaffected and generally unnoticed throughout the northern half of the African continent. And although there have been no press reports (other than Stratfor) describing the Nigerian rebels as being al Qaeda connected, I wouldn't want to bet that such a "discovery" will not be conveniently made when it comes time for the empire to take the oil.
It won't be long; maybe two years, maybe less. Saudi Arabia could go at any time. The map of Peak Oil doesn't always tell us when the empire will make its moves. But since 9/11 it has certainly told us where.[ Top of Page ]
Date: 5/16/03 2:47:11 PM Pacific Daylight Time
It was a bit of a disappointment that when Amy Goodman interviewed Gore Vidal last week, she never follow up on the discussion about the "Standown" issue when Vidal mentioned it. Instead, she cut short the conversation on that topic and went right to some irrelevant chatter about Vidal's family ties to Al Gore. As many of you who have been following the 9/11 issue of "Standown" know that this is really one of the more obbvious unanswered question about 9/11. I wonder why Goodman never talk about the Standown? I guess she is quite satisfied with Chip "john foster" Berlet's explaination -- a few months after 9/11/01 on Lord Bensky's Sunday Salon --about the reason being that no jets scrambled out of the East Coast because NORAD was concerned about the suburban folks complaining about the jet noise. Ironic that Lord Bensky would settled with Berlet's "recreational speculation" and never bother to find out the facts about the Standown issue.
Amy appears to have made an agreement to avoid discussion of some things.
She has turned what was an exploratory program into a platter of informational gnosheri dependent on how it looks to entice: one can't eat all of it, can't choose manner of serving, and anything really good will be kept to a minimum.
I'll agree with the first part and ad the Israel lobby to the taboos. She does present some very material but one suspects it must meet with the standards (i.e., approval) Noam Chomsky.
9/11 is a perfect example to show how bad the Pacifica Radio is in general, of course, and to be fair, i also would agree with Jeff's point about lack of coverage on Goodman's part on the AIPAC/Zionist issue as well.
I heard something on Flashpoint tonight that just made me sick to my stomach. A woman who Bernstein interviewed from the Middle East commented very strongly that Pacifica Radio is the only source for people to find out whats going on. I beg to differ with that tremendously. I haven't learned a damn thing from KPFA for a very long time. As a matter of fact, these days, i listen to KPFA like i listen to NPR -- gauge their disinformation and propaganda.
Robert B. Reich concludes that the stock market is up and but economy is slow - because The Bush tax cuts have delivered for Wall Street but done zilch for America's Main Streets. That neither the rest of the world's major economies nor America's own largest corporations depend on America's economy. From "Double Decoupling," 5/2/07
I'm spending my spare time these days debating supply-siders who are convinced that the record-breaking Dow proves the correctness of the Bush tax cuts.
Yes, the Dow did reach a record high last week. But the Commerce Department also reported that economic growth slowed to its weakest pace in four years. How can investors do so well while the real economy is doing so poorly? My supply-side friends don't have an answer, but I do.
It's because of two great decouplings that have occurred in recent years. First, the rest of the worlds' major economies have decoupled from the United States economy. China, India, Japan, and Europe are now such large markets they can grow briskly even as America slows.
Second, America's largest corporations have decoupled from the United States. Their overseas subsidiaries are booming even as their American operations stagnate. General Electric expects more than half its revenue this year to come from outside the United States for the first time. More than half of Boeing's new orders are from overseas. Ford is struggling in America but doing well in Europe.
In other words, the president's supply-side tax cuts are great for America's global investors, who have been investing their extra money around the world -- either in foreign companies or in global American-based ones.
But little or nothing is trickling down to average working Americans. Half of U.S. households do own some shares of stock, usually through their IRAs or 401-Ks. But the vast majority own less than $5,000 worth. Their equity is in their homes, whose values have slumped. They're paying far more for health insurance and fuel. And their wages haven't kept up.
Bottom line: The Bush tax cuts have delivered for Wall Street but done zilch for America's Main Streets.
Robert Reich is a Prospect co-founder. This column is adapted from Professor Reich's weekly commentary on American Public Radio's Marketplace. His website can be found here and his blog can be found here.
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