The Profits of War: Reconstruction in Iraq

Pre-War Planning

In the months prior to the invasion, as the White House sold the war to the public, the Pentagon was laying the foundation for this historic preemptive strike. According to Bob Woodward’s book, Plan of Attack, President Bush instructed Donald Rumsfeld to begin working on a war strategy for Iraq approximately 72 days after 9/11. Rumsfeld then immediately ordered now retired Gen. Tommy Franks to develop a plan to invade Iraq and remove Saddam Hussein.

"Rumsfeld and Franks work out a deal essentially where Franks can spend any money he needs. And so he starts building runways and pipelines and doing all the preparations in Kuwait, specifically to make war possible," said Woodward, in an interview with CBS news regarding his book.

"[It] gets to a point where in…the end of July 2002, they need $700 million, a large amount of money for all these tasks. And the president approves it. But Congress doesn’t know and it is done. They get the money from a supplemental appropriation for the Afghan War, which Congress has approved," said Woodward.

In addition to the construction efforts in Kuwait, preparations for the war included negotiations over the number of troops to involve in the mission, how to proceed with an invasion and the establishment of allies. In military terms, Phase I (preparations for combat), Phase II (initial operations), and Phase III (combat) were covered. Phase IV, post-combat operations such as reconstruction, was essentially non-existent.

According to James Risen, the New York Times national security correspondent and author of State of War, post-war planning was delegated to the Pentagon rather than the State Department, who had been studying the issue for a year. In his book, Risen states that Rumsfeld was averse to the idea of nation building and planned on quickly turning Iraq over to a provisional government built around Ahmed Chalabi, a wealthy Iraqi exile surrounded by controversy. However, the president rejected the idea with the desire of having the Iraqi people elect their own government.

"Once Bush quashed the Pentagon’s plans, the administration failed to develop any acceptable alternative," states Risen.

As a result, the Iraq war began without a well-developed plan for how to end it.

The Invasion

On March 19, 2003 America commenced the initial bombing campaign of Iraq (a country approximately twice the size of Idaho, with a population of 24 million according to the CIA World Fact Book). In the first two days of bombing at least 60 cruise missiles were fired into Baghdad and other strategically important areas, destroying key pieces of Iraq’s infrastructure. Ground troops entered the country on March 20. By April 9, Baghdad had fallen.

President Bush declared an end to major combat operations on May 1, 2003. Yet, the mission was far from accomplished. Rebuilding Iraq and establishing a viable government was still to be addressed. Within the first few months of war the U.S. Agency for International Development (USAID) and the Department of Defense awarded dozens of reconstruction contracts worth billions. Among the awardees were Kellogg, Brown and Root, a Halliburton subsidiary and Bechtel Group, a San Francisco based engineering and construction firm. Other companies that received some of the first and most lucrative contracts were: Perini Corp., Washington Group International and Fluor Intercontinental.

The first committee formed to oversee the reconstruction effort was the Office of Reconstruction and Humanitarian Assistance (ORHA), led by Jay Garner who had been involved in humanitarian efforts in Northern Iraq after the first Gulf War. Garner, who began drafting plans for post-Saddam Iraq in early January, arrived in Baghdad at the end of April 2003. His objectives included food delivery, emergency assistance, reestablishing electricity and other basic services, reshaping the Iraqi military, safeguarding Iraq’s infrastructure and uncovering weapons of mass destruction. One of Garner’s most vital objectives was to retain the Iraqi army to utilize it in the reconstruction process as well as to avoid massive unemployment.

Unfortunately, L. Paul Bremer III, who was appointed to lead the newly formed Coalition Provisional Authority (CPO), which ORHA was dissolved into, replaced Garner. Upon his arrival Bremer began a process of "De-Baathification" of the Iraqi army. The Baath party was Saddam Hussein’s former political party. According to The Council on Foreign Relations, Bremer made two "sweeping" orders: one outlawed the Baath party and dismissed all senior officials from their posts; the other dissolved Iraq’s 500,000-member military and intelligence services. Bremer’s actions crippled the reconstruction effort and made it impossible for American troops to withdraw from Iraq. The stage was set for a long, violent and expensive occupation.

The Occupation

As Iraq descended into chaos, rather than committing more troops to the region, the Department of Defense enlisted private military contractors (PMC’s) to provide additional security, peacekeeping, combat and military training support for the "coalition." In December 2003, an investigation by The Guardian Unlimited discovered that PMC’s represented the second largest contingent of ground forces in Iraq, outnumbering all but the U.S. Military.

"This is a trend that is growing and Iraq is the high point of the trend. This is a sea change in the way we prosecute warfare," Peter Singer, a security analyst for the Brookings Institution, told The Guardian.

The War was effectively being privatized in both the military and civilian sectors of the reconstruction effort. To the ire of Britain and other coalition partners, the beneficiaries of the privatization were almost unanimously American companies. In fact, the top ten most lucrative contracts were awarded to American companies according to "Windfalls of War," a report produced by The Center for Public Integrity (CPI).

The CPI also discovered that many of the companies that were awarded contracts to rebuild Iraq and Afghanistan were major campaign donors to President Bush with deep roots in the government and the military. The report, which focused on more than 70 U.S. companies and individual contractors involved in the reconstruction, found that the companies and contractors had donated more than $500,000 to the president’s 2000 campaign, more than they gave collectively to any other politician over the past dozen years.

Kellogg, Brown and Root (subsidiary of Halliburton), The Vinnell Corporation (subsidiary of Northrop Grumman) and Bechtel Group are a few of the companies with the most partisan donations, intricate connections and, as it happens, the most lucrative Iraq contracts.

Halliburton received approximately $11.4 billion in contracts from the government to secure and rebuild Iraq’s oil infrastructure. Vice President Cheney was CEO of Halliburton from 1995 – 2000 and continues to collect deferred compensation from the company. Although he has denied having any "retained ties," according to his financial disclosure forms he earned $192,852 in deferred compensation in 2004. His stock options in the company also rose from $241,498 to more than $8 million between Oct. 2004 and Oct. 2005 according to a report released by Democratic Senator, Frank Lautenburg. Lawrence Eagleburger, former secretary of state under George H.W. Bush also sits on the company’s board. Ninety-five percent of Halliburton’s campaign donations go to Republican candidates and they have contributed approximately $17,000 to President Bush according to

The Vinnell Corporation was awarded a $48 million contract to train the new Iraqi Army. Vinnell Corp. is led by a number of former military veterans. Thomas Fintel, Vinnell’s president and CEO served 27 years in the army earning the rank of colonel. The CPI found that Vinnell contributed $8.7 million to various political campaigns between 1990 and 2002, the second largest sum of any contracted company working in Iraq. General Electric donated the most at $8.8 million.

The Bechtel Group received contracts worth approximately $2.9 billion to repair Iraq’s utilities, roads, schools, sewers and hospitals. Bechtel has a number of government ties. Currently, George P. Schultz, former Treasury secretary under Nixon and secretary of state for Reagan sits on the company’s board. Bechtel donated $6,250 to President Bush’s campaign and $1.3 million to various other campaigns, 59 percent of which went to republican candidates.

Perini Corp., Washington Group International and Fluor have also received a combined amount of approximately $10 billion in contractual agreements. Beyond the partisan donations and government connections, fraud, inappropriate contract negotiations and over-billing have run rampant throughout the reconstruction effort. Representative Henry Waxman (D-CA), recently released an analysis of Halliburton’s performance, which states the company routinely and intentionally overcharged the government for its services in Iraq. Two former employees of Halliburton said much the same thing in 2004.

In another case, Robert J. Stein, a former Defense Department contract official pleaded guilty to conspiracy, bribery, money laundering and unlawful possession of machine guns. Stein indicated six other Americans in the fraud, including five U.S. army officers. Custer Battles, a Virginia based contractor was found guilty of defrauding the Coalition Provisional Authority of millions of dollars. A federal jury ordered the company to reimburse the government for its losses.

Even more damning than the rampant cronyism and fraudulent activity already illuminated, is the lack of real progress on the ground in Iraq. Kidnappings and violence rack the country, Baghdad gets only 4 hours of electricity a day, approximately 13 million fewer Iraqis than before the war have drinkable water, 70 percent of the population is unemployed and in a country awash in oil people have to wait in line for up to 12 hours to fill their gas tank. Furthermore, Parsons, a construction company contracted to rebuild and renovate Iraq’s health-care system has run out of money and will fail to complete 120 of the 142 clinics it began building if it doesn’t get emergency money from either the U.S military or foreign donors, according to a report by Ellen Knickmeyer of The Washington Post. Still, all these issues are only a precursor to a bigger problem.

At the end of 2006, the $18.4 billion that has been allocated to Iraq’s reconstruction will run out according to Knickmeyer’s report. The result could be an explosion in the number of incomplete projects, which would have dire consequences for the already suffering Iraqi people.

Ultimately, the reconstruction process that is so vital to Iraq’s future may be at risk of failing. What effect this could have on the occupying forces in the country is unknown. President Bush has continually said that as Iraqi forces stand up, American forces will stand down. Yet he also recently admitted that Iraq is an issue future presidents will have to deal with. In either case, one fact remains: the road to a sovereign, peaceful Iraq is long and full of obstacles.

As the U.S.-led coalition proceeds into the fourth year of war with Iraq, what was originally hoped to be a brief and cheap conflict has turned into an arduous and expensive occupation. It has cost the lives of more than 2,500 coalition service members. A study by the Lancet Report says over 100,000 Iraqi civilians have died as a result of the war. The monetary cost of the conflict is estimated at $270.5 billion to $2 trillion.

It seems the initial expectations of what a war in Iraq would entail were formed around the notions that money is infinite and democracy exportable. What may soon be discovered is that the American economy has its limits and democracy is as finite as oil.


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