Vol. 29 No. 17 · 6 September 2007

Burn Rate

Ed Harriman writes about making money and losing ground in Iraq

3372 words

As General David Petraeus, the US commander in Iraq, prepares to report to Congress on 15 September on the success of George Bush’s ‘surge’, Bush himself is trying hard to talk it up and to discredit the policy of withdrawal. In a speech on 22 August to the Veterans of Foreign Wars National Convention, he resorted to the new and risky strategy of using the example of the US withdrawal from Vietnam to support his position on Iraq. ‘Then as now, people argued the real problem was America’s presence,’ he said, but ‘one unmistakeable legacy of Vietnam is that the price of America’s withdrawal was paid by millions of innocent citizens.’ He went on to stress, as he often does, that withdrawal would be seen as victory by al-Qaida, and that ‘unlike in Vietnam … this enemy will follow us home.’ In July, in a press conference convened to allow him to put his spin on the ‘interim report’ just published by the White House’s National Security Council (NSC), he also tried to sell the war in Iraq as a Manichean struggle against al-Qaida. ‘We can’t let al-Qaida gain safe haven inside of Iraq. My attitude is we ought to defeat them there so we don’t have to face them here … So on my orders, good men and women are now fighting the terrorists on the front lines in Iraq.’ The 30,000 extra US troops sent to Iraq as part of Bush’s ‘surge’ bring the total number there to 165,000.

The NSC report assessed the Iraqi government’s success – or otherwise – in reaching 18 ‘benchmarks’ laid down this spring by Congress as conditions for continued appropriations for the war, which, according to the Congressional Research Service, now costs – the so-called ‘burn rate’ – $10 billion a month, up $2 billion a month from the end of last year. ‘Our strategy,’ Bush said, ‘is built on a premise that progress on security will pave the way for political progress … And so the strategy was, move in more troops to cause the violence to abate.’ But the violence hasn’t abated, and the other ‘successes’ Bush has been pointing to are equally illusory. Bush said in July that the Iraqi government had provided the three brigades it ‘promised for operations in and around Baghdad’ during the surge. He didn’t say, as the NSC admitted in its report, that these brigades, which were supposed to be new, were in fact cobbled together from other units. Nor did he mention the sectarianism that even the NSC accepts is crippling Iraqi forces. As the NSC puts it, ‘there remains a negative political influence at a variety of levels with evidence of sectarian behaviour.’ The Iraqi police are not ‘providing even-handed enforcement of the law … Senior officials responsible for abuse continue to hold positions of responsibility.’ And sectarian militias continue to hold sway in many neighbourhoods. The NSC concluded that there was no point in even discussing a general amnesty or general disarmament and, amazingly, admitted that al-Qaida ‘may not account for most of the violence in Iraq’.

The much trumpeted economic ‘reconstruction’ of Iraq is no more of a success. The most recent quarterly report to Congress of the US Special Inspector General for Iraq Reconstruction (Sigir), released in late July, found that almost all the American money set aside to rebuild Iraq – more than $21 billion appropriated by Congress four years ago – has been spent. So too has some $20 billion of the Iraqis’ own money handed out by Paul Bremer, Bush’s proconsul in Baghdad during the first year of the occupation. Much of the money was used to pay for American goods and services and never reached Iraq. Much of the rest disappeared and has never been properly accounted for.* Despite the vast amount of money spent, Sigir found that Baghdad still only receives ‘an average of 8.1 hours of power per day’ and that fewer than one in three homes and businesses in the city are connected to the water mains. In Basra, which is nominally policed by the British, ‘potable water must still be purchased’ and ‘in Kirkuk and Samarra streets and alleyways are used for open drainage. In Fallujah raw sewage spills out onto the streets.’ Fewer than half of the homes in Najaf and about half of those in Basra are connected to municipal sewage pipes. Of the 142 primary health centres that were to be the centrepiece of the American ‘reconstruction’ of Iraq’s medical service, Sigir reports that ‘only eight are currently open.’ Sigir inspectors examined the new pipeline carrying oil under the Tigris in northern Iraq, and found evidence that the pipe is smaller than the one ordered, despite the $200 million paid to US firms to repair it. Iraq’s power stations are running below half capacity, largely because crude and heavy fuel oil is being used in the new gas turbine generators, which, as the Government Accountability Office (GAO) told Congress, clogs them up and ruins them. In June, Sigir discovered, two of the six steam turbines at Baghdad’s Doura power station were out of action: one because of poor maintenance; the other because it had been cannibalised for spare parts.

Also in July, Sigir began publishing a series of what it describes as ‘forensic audits’ of the major reconstruction contracts awarded to American firms in Iraq. The first, about Bechtel, illustrates just how nicely these firms have done. Of Bechtel’s 24 sewage, water treatment and electricity projects, only 11, as Sigir puts it, have ‘clearly met their original objectives’. Sigir discovered that, despite this, Bechtel has been quick to submit its invoices, amounting to some $1.3 billion, and that they have been paid promptly by the US Agency for International Development (USAID) in Baghdad, within the ten days stipulated in Bechtel’s contract. ‘It appeared,’ the Sigir report continues, that USAID ‘did not perform a detailed analysis of the costs being incurred because of the limited time available for review’. Sigir also says that Bechtel charged more than 40 per cent of the contract value as ‘support costs’, and claimed $250 million in ‘a large miscellaneous category’ under the heading ‘Other’.

There is no suggestion of corrupt practices here. Rather, it’s the treatment American corporations often enjoy from the US government. But pity the poor Iraqis, who have seen a king’s ransom shovelled into Bechtel’s coffers in the name of ‘reconstruction’ of their basic utilities. In the meantime, the US Embassy in Baghdad has casually looted the American reconstruction budget in order to pay for the war. The first raid took place a few months after Bremer left, in autumn 2004. The budget for rebuilding Iraq’s damaged and decrepit electricity network was cut by 20 per cent, water and sewage by half: in all $1.8 billion was transferred to public order and security budgets. Sigir reports that, ‘as of January 2006, reprogramming had resulted in more than $5.5 billion in realignments’ of funds. Last year Brigadier-General William McCoy, head of the US Army Corp of Engineers, told the Washington Post: ‘The US never intended to completely rebuild Iraq … This was just supposed to be a jump-start.’ Exactly what this entails is clear from the new Sigir report, which declares that the US Embassy ‘is unilaterally transferring projects to Iraq’ without the government of Iraq’s consent. This gets them off the embassy’s books, and means that the Iraqi government is left to pay the escalating costs for repairs and maintenance of ‘US-constructed projects’.

The money Congress approved last year for ‘Iraqi relief and reconstruction’ is divided in two. Of the $1.5 billion in the Economic Support Fund, nearly $1 billion has been funnelled through the State Department to the Corps of Engineers. Most of it has gone to what are called Provincial Reconstruction Teams. Ten of these ‘civilian-military’ teams, Sigir reports, are now ‘embedded within brigade combat teams’, with a ‘primary mission of supporting counterinsurgency operations’. As Sigir explains, ‘though referred to under the umbrella term, reconstruction, the PRT mission encompasses not only capacity development [of Iraqi local government] but also counterinsurgency and stability operations.’ The other new fund, some $700 million for this year alone, is for what is called the Commanders Emergency Response Program (CERP), which American officers are supposed to use to pay for local projects in their ‘battle space’. The money, as a report by the Congressional Research Service explains, is ‘available to pacify the local population where PRTs reside’. The US Army and Marine Corps Counterinsurgency Field Manual calls this ‘Money as a Weapons System’. Yet few people, aside from David Petraeus, who is one of the authors of the Counterinsurgency Field Manual, know exactly where the money goes. Petraeus gets a monthly classified report on the programme’s ‘effects’. Congress has not asked for detailed accounts, and Sigir found that ‘there is no mechanism in place to specifically measure the outputs and outcomes of CERP-funded projects.’

What the Provincial Reconstruction Teams actually do is also something of a mystery. The White House issued a fact sheet in July describing some of their achievements: ‘a new business information centre’, ‘renovation of a market complex’, an ‘economic development office’ and identifying ‘eight “model communities” through which the PRTs will encourage local participation in government and increased security by establishing training and assistance programmes’. Yet Sigir’s July report states that ‘there is no linkage between the monthly reports generated by the PRTs and what the PRTs are expected to accomplish.’ It also finds that the US Embassy in Baghdad is ‘still not in a position to assess what the PRTs are individually or collectively accomplishing’. Both programmes are functionally very similar to the slush funds used to buy local support during the Vietnam War.

George Bush is heavily promoting the PRTs. ‘These teams bring together military and civilian experts to help local Iraqi communities pursue reconciliation, strengthen moderates and speed the transition to Iraqi self-reliance,’ he said in June. The NSC is more explicit in its July report. These small bands of political operatives, it says, ‘are charged with supporting moderate elements against extremists in their areas of responsibility and launching projects that have an immediate impact in areas cleared of terrorists and insurgents’. The plan was to set up 25 PRTs, each with four core members – ‘team leader, senior development specialist, civil affairs officer and bilingual-bicultural adviser’ – in Iraq’s provincial centres, with an overall budget of $3 billion for the next two years. According to the White House fact sheet, the team members are supposed to include ‘American diplomats, military officers, development experts and other specialists’. But Sigir reports that the US Embassy ‘has not been able to fill critical staff vacancies to establish continuity of leadership’: in other words, few volunteer and many leave. The Congressional Research Service said in June that ‘about 129 new PRT posts are going to be temporarily occupied by military personnel.’

It’s easy to see why. For most of the thousand or so US Embassy staff holed up in the Green Zone, almost all of Iraq is a ‘no go zone’. Basra and Mosul are out of bounds; and, as Sigir noted earlier this year, Americans can’t even visit the Iraqi ministries of finance, the interior and electricity, for fear of reprisals against those who work there. The PRT teams are similarly hampered: they can’t travel outside US military bases, Sigir says, without at least ‘three armoured vehicles and eight “shooters”’. The former PRT team leader in Diyala province, Kiki Munshi, testified to Congress in February that her PRT was ‘totally dependent on the military for our life support, safety and daily working environment’, and that the American commander in the region largely determined what her team could and couldn’t do. Basra is too dangerous altogether. Britain’s single reconstruction team there fled to Kuwait ‘because of escalating violence’.

The PRTs are central to the Bush administration’s long-term plans to remain in Iraq after combat troops have withdrawn. ‘The mission of the PRTs is a four-year effort,’ Sigir reports, aimed at establishing heavily armed, well-funded enclaves of American civilian counterinsurgency experts in Iraq’s provincial cities who will be able to bypass the Iraqi national government and directly ‘advise’ local officials. US Embassy officials, according to Sigir, have been discussing the possibility that some PRTs may be converted into consulates once the war is over.

But American troops can’t leave until Iraqi forces are trained and equipped, and this isn’t going according to plan either. Equipping the Iraqi army was at first left to the Iraqis; but the defence minister, Hazem Shaalan, and his team proved incapable of the task. They bought twenty-year-old Soviet helicopters that didn’t fly, trucks that broke down, armoured cars that didn’t stop bullets, defective hand grenades and other military junk. Whether Shaalan and his cronies were incompetent or massively corrupt – around $1.2 billion dollars in suspect contracts was involved – may never be decided in court. What’s certain is that the Iraqi forces were left with neither the equipment nor the morale to take up the US ‘anti-terrorist’ fight.

The situation has not improved. In a series of reports, the most recent of which was issued in August, the US Government Accountability Office has found that after almost $20 billion of American money has been spent, the Iraqi army still cannot arm itself, collect intelligence, transport or supply combat units, provide medical cover or even communicate with its units without massive US help. Millions of dollars’ worth of weapons have gone missing and GAO inspectors and Sigir auditors have repeatedly found high levels of corruption among Iraqi officers. Many Iraqis join the army because it is the only paid work they can find. When their units are posted outside home territory, up to half of them go absent without leave.

The GAO’s most significant complaint, however, is that the Pentagon still refuses to give it meaningful figures about Iraqi troop numbers, their training and combat readiness. The Armed Services Committee of the House of Representatives has the same complaint. Its Oversight and Investigations Subcommittee published a report on 27 June which concluded that ‘after three months of studying the US effort to develop the Iraqi Security Forces, we cannot assess the operational capability of these forces. We are actually left with more questions than answers.’ As regards the police, the GAO couldn’t find out ‘how many of the coalition-trained police the Iraqi Ministry of the Interior still employs’, although 180,000 seem to get paid. Nearly half of some units are absent without leave, and many of the rest – including senior police commanders – are members of largely Shia, sectarian militias. ‘There have been numerous accusations that the national police are functioning as death squads, committing murder, torture and kidnapping,’ Sigir reported in July. American advisers told Sigir inspectors that they have been trying to get the Ministry of the Interior to store biometric data on its employees and computerise their personnel files. But the ministry refuses, US advisers say, because of ‘the increased transparency it would provide’.

Lately, some of the most damning criticism of the occupation forces has been directed against the British. A recent report by the International Crisis Group, whose trustees include Chris Patten, George Soros and Zbigniew Brzezinski, entitled ‘Where Is Iraq Heading? Lessons from Basra’, suggests that ‘the British appear to have given up on the idea of establishing a functioning state capable of equitably redistributing wealth and resources, imposing respect for the rule of law and instituting a genuine and accountable democracy.’ Instead, Basra’s current leaders act more ‘as criminal gangs than political parties’. The ICG concludes that southern Iraq could soon resemble a ‘small failed state’.

To admit officially that all of Iraq is ‘a failed state’ would be the kiss of death for US policy. Yet that’s what the ICG foresees:

The lessons are clear. First, the answer to Iraq’s horrific violence cannot be an illusory military surge that aims to bolster the existing political structure and treats the dominant political parties as partners. Second, violence is not solely the result of al-Qaida-type terrorism or sectarian hostility, however costly both evidently are. Third, as Basra clearly shows, violence has become a routine means of social interaction utilised by political actors doubling as militiamen who seek to increase their share of power and resources.

The report ends: ‘It is high time that Washington and London acknowledge that their so-called Iraqi partners, far from building a new state, are tirelessly working to tear it down.’

For well over a year Iraq has had the reputation of being the most corrupt regime in the Middle East. It’s getting worse. Judge Radhi al-Radhi, who heads Iraq’s Commission on Public Integrity, says his staff are currently investigating $11 billion in questionable payments. But Iraqi ministers and officials are unlikely to go to prison, or even face trial. The prime minister, Nouri al-Maliki, is entitled to – and does – exempt cabinet ministers from prosecution; they, in turn, exempt their officials. The director of Sigir, Stuart Bowen, calls this the ‘get out of jail free card’. The two most senior Iraqi ministers so far charged with corruption – to the tune of about $4 billion – are now living safely in the US and UK. Because they both have dual nationality – one is US/Iraqi, the other UK/Iraqi – they cannot be extradited. Iraq’s auditors and judges continue to be intimidated or murdered.

Aside from looting their ministry budgets, Iraq’s officials and politicians, with criminal help, siphon their country’s oil direct from the pipelines. The State Department estimates that up to a third of Iraq’s refined fuels either end up on the black market or are smuggled out of the country and sold privately. The Pentagon reports that ‘as much as 70 per cent of the fuel processed at Bayji’ – one of Iraq’s biggest refineries – ‘was lost to the black market, possibly as much as $2 billion a year.’ In a July report the GAO found that the meters installed at the country’s main oil terminal outside Basra earlier this year – intended to measure exports – are still not working properly.

There is, however, one aspect of the situation from which Bush can derive some satisfaction. Despite the reports, and despite all their carping, most members of Congress have not questioned the tens of thousands of US troops and huge military bases that Bush says will be left in Iraq long after US combat units are withdrawn. The Baker-Hamilton Iraq Study Group endorsed the idea of this massive and enduring American presence in its report published last December. ‘Well,’ Bush said in July,

there’s a lot of discussion about a scenario in which our troop posture would be to guard the territorial integrity of the country of Iraq, to embed and train, to help the Iraqi security forces deal with violent elements in their society, as well as keep enough Special Forces there to chase down al-Qaida. As a matter of fact, that is something that I’ve spoken in public about, said that’s a position I’d like to see us in.

This position is buttressed by US strategic interests in securing rights to exploit Iraq’s untapped oil reserves and supporting a government in Baghdad that can sign and honour binding long-term contracts with Western – preferably American – firms. It would take a brave member of Congress to challenge US interests anywhere, as Bush knows.

Asking General Petraeus and Ryan Crocker, the US Ambassador in Baghdad, whom Petraeus describes as his ‘political wing man’, to report to Congress about ‘progress’ in Iraq is a bit like asking schoolboys to write their own reports. Bush claimed in his speech to the American veterans that the US is ‘giving families in liberated Iraqi cities a look at a decent and hopeful life’. According to the UN, more than 2.2 million Iraqis out of a population of 27 million have fled their country, most of them to Syria and Jordan, and another 1.9 million have been internally displaced. Approximately 50,000 are fleeing their homes every month. I’ve looked on the White House website at all of Bush’s press conferences and speeches since the surge intensified in June. He hasn’t mentioned the refugees once.

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Vol. 29 No. 18 · 20 September 2007

Ed Harriman (LRB, 6 September) offers a highly selective and distorted account of a recent audit by the Special Inspector General for Iraq (SIGIR). He unfairly implies that Bechtel earned a ‘king’s ransom’ for questionable and unaudited reconstruction work in that country. The vast majority of payments to Bechtel by the US Agency for International Development were passed through to Iraqi and other subcontractors or reimbursed our documented costs. All of our costs were closely scrutinised by the Defense Contract Audit Agency, as noted in the Sigir report. In fact, according to Sigir, the agency questioned only .02 per cent of Bechtel’s invoices.

Harriman implies that Bechtel racked up unconscionable ‘support costs’, neglecting to cite Sigir’s conclusion that Bechtel’s ‘support-cost percentage is in line with the support costs incurred by other major contractors – both in Iraq and in the United States’. Finally, Harriman notes Sigir’s finding that only 11 of 24 projects in our Phase II contract ‘clearly met their original objectives’. He fails to cite Sigir’s explanation that ‘the scope of work and funds available changed over time.’ Security threats and changing government priorities – including the ‘reprogramming’ of funds to boost military programmes, which cut our original budget by half a billion dollars – led USAID to modify many of our original assignments. As any responsible contractor would, Bechtel went on to meet USAID’s revised objectives.

USAID stated in its addendum to the Sigir report: ‘Bechtel performed exemplary work that was responsive and cost-effective to the US Government and the American taxpayer.’

Jonathan Marshall
Bechtel Corporation, San Francisco

Vol. 29 No. 19 · 4 October 2007

Impressed by Oona King’s success in being elected to one of Labour’s safest parliamentary seats and contriving to lose it to a new micro-party a few years later, I briefly considered going to her talk at the LRB shop last month. How kind, then, of your editorial team to place the advertisement in the middle of an excellent article about the ongoing disaster in Iraq as a reminder to your readers of how this almost unique feat was achieved, saving us the trouble of having to come along to ask Oona King about it in person (LRB, 6 September).

Rory MacQueen
London N16

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