As Bechtel Goes

By Paul Krugman
The New York Times

Friday 03 November 2006

Bechtel, the giant engineering company, is leaving Iraq. Its mission - to rebuild power, water and sewage plants - wasn't accomplished: Baghdad received less than six hours a day of electricity last month, and much of Iraq's population lives with untreated sewage and without clean water. But Bechtel, having received $2.3 billion of taxpayers' money and having lost the lives of 52 employees, has come to the end of its last government contract.

As Bechtel goes, so goes the whole reconstruction effort. Whatever our leaders may say about their determination to stay the course complete the mission, when it comes to rebuilding Iraq they've already cut and run. The $21 billion allocated for reconstruction over the last three years has been spent, much of it on security rather than its intended purpose, and there's no more money in the pipeline.

The failure of reconstruction in Iraq raises three questions. First, how much did that failure contribute to the overall failure of the war? Second, how was it that America, the great can-do nation, in this case couldn't and didn't? Finally, if we've given up on rebuilding Iraq, what are our troops dying for?

There's no definitive way to answer the first question. You can make a good case that the invasion of Iraq was doomed no matter what, because we never had enough military manpower to provide security. But the lack of electricity and clean water did a lot to dissipate any initial good will the Iraqis may have felt toward the occupation. And Iraqis are well aware that the billions squandered by American contractors included a lot of Iraqi oil revenue as well as U.S. taxpayers' dollars.

Consider the symbolism of Iraq's new police academy, which Stuart Bowen, the special inspector general for Iraq reconstruction, has called "the most essential civil security project in the country." It was built at a cost of $75 million by Parsons Corporation, which received a total of about $1 billion for Iraq reconstruction projects. But the academy was so badly built that feces and urine leak from the ceilings in the student barracks.

Think about it. We want the Iraqis to stand up so we can stand down. But if they do stand up, we'll dump excrement on their heads.

As for how this could have happened, that's easy: major contractors believed, correctly, that their political connections insulated them from accountability. Halliburton and other companies with huge Iraq contracts were basically in the same position as Donald Rumsfeld: they were so closely identified with President Bush and, especially, Vice President Cheney that firing or even disciplining them would have been seen as an admission of personal failure on the part of top elected officials.

As a result, the administration and its allies in Congress fought accountability all the way. Administration officials have made repeated backdoor efforts to close the office of Mr. Bowen, whose job is to oversee the use of reconstruction money. Just this past May, with the failed reconstruction already winding down, the White House arranged for the last $1.5 billion of reconstruction money to be placed outside Mr. Bowen's jurisdiction. And now, finally, Congress has passed a bill whose provisions include the complete elimination of his agency next October.

The bottom line is that those charged with rebuilding Iraq had no incentive to do the job right, so they didn't.

You can see, by the way, why a Democratic takeover of the House, if it happens next week, would be such a pivotal event: suddenly, committee chairmen with subpoena power would be in a position to investigate where all the Iraq money went.

But that's all in the past. What about the future?

Back in June, after a photo-op trip to Iraq, Mr. Bush said something I agree with. "You can measure progress in megawatts of electricity delivered," he declared. "You can measure progress in terms of oil sold on the market on behalf of the Iraqi people." But what those measures actually show is the absence of progress. By any material measure, Iraqis are worse off than they were under Saddam.

And we're not planning to do anything about it: the U.S.-led reconstruction effort in Iraq is basically over. I don't know whether the administration is afraid to ask U.S. voters for more money, or simply considers the situation hopeless. Either way, the United States has accepted defeat on reconstruction.

Yet Americans are still fighting and dying in Iraq. For what?



Go to Original

For One California Profiteer, Iraq is Going Great
By Sarah Anderson
AlterNet

Thursday 02 November 2006

"War is hell," Gen. William Tecumseh Sherman once stated. This Civil War giant clearly did not hold stock in a major defense contractor.

For soldiers on the frontlines in Iraq, Sherman's words might still resonate. But for defense executives and their shareholders, the open-ended "War on Terror" has been anything but hell for the bottom line.

A look at the San Francisco-based URS Corp., a major provider of Pentagon engineering and equipment repair services, can help illustrate this hell-only-for-some reality.

URS recently ran a help-wanted ad for experienced mechanics to work in Iraq. The ad made the job sound only slightly less brutal than Sherman's March.

"Extreme danger, stress, physical hardships, and possible field living conditions are associated with this position," the ad read. "You should expect to work 12 hour days, seven days a week."

For mechanics who agree to these terms, URS offers $80,000 a year. Meanwhile, company CEO Martin Koffel made 180 times that amount last year in his somewhat less hazardous office environs on San Francisco's Montgomery Street.

The pay gap stretches even wider between Koffel and soldiers on the battlefield. Army privates made about $25,000 last year, extra combat pay and housing allowances included.

Koffel and URS are booming. One big reason: Equipment under war-time stress, as URS officials happily report, wears out five times as fast as equipment in peacetime. In all, the defense contracts that URS has snared have brought in over $1 billion in each of the three years since the Iraq invasion, compared to only a few hundred million in 2002.

URS stock, not surprisingly, is worth nearly five times what it was before the war started.

These stock gains have bloated CEO Koffel's personal bottom line. Last year, he cashed in more than $10 million worth of stock options, bringing his total compensation to $14.4 million.

In his good fortune, Koffel hardly stands alone, according to a study from the Institute for Policy Studies and United for a Fair Economy (PDF). According to the report, CEOs at the top 34 publicly held defense contractors have doubled their averaged pay during the four years since the "War on Terror" began.

The highest-paid defense executive - George David, the CEO of helicopter maker United Technologies - has hauled in more than $200 million total over the past four years. The CEO of another company laden with Pentagon contracts, Health Net's Jay Gellert, has seen his pay leap over 1,000 percent during the post-9/11 period.

Health Net, thanks to Pentagon outsourcing, provides lucrative managed care services for military personnel and their families. The company is currently crowing about particularly strong demand for its mental health counseling services.

Some would argue that as long as defense executives keep their shareholders happy we shouldn't begrudge them their millions in compensation. But such excessive pay levels during wartime actually imperil our nation. War requires shared sacrifice, not personal aggrandizement. What kind of message do those on the front lines get when they see defense industry executives strike it fabulously rich year after year?

Massive payoffs for defense executives also muddy our nation's policymaking waters. We are creating, with these incredibly excessive rewards, an incentive for powerful, often politically connected corporate leaders to want to continue the war in Iraq - or to start new ones.

So what should we do? For starters, we can overhaul government procurement standards. Current U.S. laws already deny government contracts to companies that discriminate against women and people of color. Why should we let our tax dollars subsidize war profiteering?

Congress could put an end to this by requiring that all defense contractors restrain executive pay to reasonable levels during wartime. This restraint wouldn't need to be a fixed dollar cap. Procurement rules could instead deny defense contracts to companies that pay their top executives more than 20 times what their lowest-paid worker receives.

Today, unlike in William Tecumseh Sherman's day, we are fighting battles far from home, in Baghdad and Fallujah, not Atlanta and Gettysburg. But we shouldn't let these great distances from the hell of war blind us to this most basic of democratic truths: In times of war, no one ought to get rich off someone else's sacrifice.

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Sarah Anderson is a Fellow of the Institute for Policy Studies and a coauthor of the report "Executive Excess 2006: Defense and Oil Executives Cash in on Conflict," published by IPS and United for a Fair Economy.