How to get on in the new Iraq
There are two ways to look at the installation of James Baker, his father’s former secretary of state, in George W. Bush’s White House. Either the president has finally found a temporary assignment attractive enough to persuade his old retainer to come and rescue him from his Middle East hot seat. Or, as the new special envoy in charge of reducing Iraq’s $120 million debt, Baker has found a job that meets his need for a White House cap while he continues private conversations over oil and gas deals in Eurasia. Or both.
You never know with Baker, who may be representing his law firm, Baker Botts, which represents Halliburton; or Baker Hughes, the oil services company that was promised the second tier of oil-field restoration contracts in Iraq after Halliburton’s engineering and construction subsidiary KBR; or the Carlyle Group, the Washington-based global investment firm, of which Baker is senior counsellor. Carlyle is where former top government officials come to roost alongside powerful business leaders, to raise funds and identify takeover targets; a giant hedge fund, if you will, with offices in 12 countries, managing $17.5 billion in assets, mostly in the areas of energy, aerospace and defence.
In any event, the job of Iraq debt emissary cuts close enough to Baker’s business interests for him to have renounced his partnership share of fees in ‘client matters’ with both Carlyle and Baker Botts should they conflict with his official duties. It’s a standard move in such assignments, and irrelevant to the inestimable long-term value for a company like Carlyle of the contacts Baker has established. With his drop-the-debt tour, he has woven an astonishing web covering much of the world: a network of pledges, confirmed at the highest reaches of power. Public attention, however, was swiftly drawn to Paul Wolfowitz’s petulant reminder, issued on the day Baker’s appointment was announced, that Russia, France and Germany had forfeited their access to America’s $18.6 billion in reconstruction contracts. ‘It’s understandable that the Bush team wouldn’t rush to give reconstruction contracts to France, Germany and Russia,’ Thomas Friedman grumbled in the New York Times, ‘but why shove that in their faces while we’re asking them to forgive Iraq’s debts?’ Or was the Wolfowitz directive a bargaining chip placed on the table as part of Baker’s negotiating strategy? Are the two wings of the American eagle, each bending to catch a different breeze, beating in tandem?
In the days before the tour, there was widespread agreement among journalists that Baker had been embarrassed by Wolfowitz, in part because the liberal media are fascinated by the radical right and all too susceptible to the takeover theory: the notion that an alien ideology is subverting the government’s good sense. Various commentators – Joshua Micah Marshall, Jim Lobe and Paul Krugman among them – agreed that Baker had been crossed, with Krugman adding that, when he issued the reminder, Wolfowitz’s hopes of becoming secretary of state in a second Bush term took a nosedive. Marshall wondered whether we are ‘trying to get retribution toward these countries by stiffing them on the contracts’, or ‘trying to come to some sort of agreement . . . to refinance and restructure Iraq’s mammoth foreign debt’? As if these goals, so close to the bad guy/good guy pulse of American diplomacy, were in conflict.
Lobe saw the problem as a continuation of the battle between neocons and realists going back to 1992, when Wolfowitz and Scooter Libby, now Cheney’s chief of staff, co-authored the Defense Department Guidance that so alarmed then secretary of state Baker, not to mention the first President Bush, that only Cheney’s promise to overhaul the text – he was then defense secretary – saved the authors’ jobs. In Lobe’s view, Baker, like other realists, was ‘deeply sceptical, not to say incredulous, about neo-conservative ambitions to "remake the face of the Middle East” by exporting democracy’. He was Big Oil, and would see radical change in the region as ‘unacceptably risky and destabilising’.