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Wednesday, February 11, 2004  

I'd like to draw your attention to an article in the New Yorker about the intertwining of Halliburton and the federal government (and Dick Cheney's role). I, among others, have long regarded this cozy relationship one of sophisticated and legal profiteering (see here, here, and here) and wondered why it wasn't causing more outrage. Even as I wondered why Congress wasn't passing more stringent anti-profiteering laws to protect the American taxpayer, Congress was busy weakening already existing ones.

Well, maybe I was asking the wrong question. In the New Yorker piece, writer Jane Mayer exposes other facets of the relationship which raise other, and possibly more politically tricky, questions.

Where's the oversight?
We take it for granted that our government serves us and that we have a right to exercise oversight. A major mechanism is transparency. But Halliburton, although it's conducting a number of actions with the federal government's imprimatur, is not subject to the laws of government. Writes Mayer:

Unlike government agencies, private contractors can resist Freedom of Information Act requests and are insulated from direct congressional oversight. Private companies ... can conceal details of their missions from public scrutiny in the name of protecting trade secrets. They are also largely exempt from salary caps and government ethics rules designed to protect policy from being polluted by politics.

Halliburton has already been accused of fraud. How do Americans discover the truth? It's not clear they can.

Why are government contractors able to lobby Congress?
It's not a shocker that government agencies aren't allowed to give money to politicians. Having the CIA dumping federal funds into the coffers of a powerful senator for favorable legislation would constitute corruption in nearly everyone's book. The same is true with government employees. Why then are government contractors like Halliburton and its employees allowed to do it? Mayer again:

Halliburton has no such constraints. The company made political contributions of more than seven hundred thousand dollars between 1999 and 2002, almost always to Republican candidates or causes. In 2000, it donated $17,677 to the Bush-Cheney campaign. Indeed, the seventy or so companies that have Iraq contracts have contributed more money to President Bush than they did to any other candidate during the past twelve years.

Does contracting make it too easy to conduct war?
The neocon hawks introduced the pre-emption doctrine 18 months ago. The military required to conduct optional wars would be vast, and the politics of drafting soldiers to fight them untenable. Solution? Hire out the work. Mayer:

There are some hundred and thirty-five thousand American troops in Iraq, but [retired Air Force colonel Sam] Gardiner estimated that there would be as many as three hundred thousand if not for private contractors. He said, "Think how much harder it would have been to get Congress, or the American public, to support those numbers."

Inadvertently, privatizing military operations has begun to drive foreign policy. One wonders who's on the hook if Iraq gets too messy and expensive and Congress turns off the spigot. Will Halliburton pack up and go home? What if it gets too dangerous to do business and Halliburton pulls out?

Should government contractors abide by US policy?
Despite the "God Bless America" goose-stepping that Republicans demanded in the build-up to the invasion, the very infrastructure they created under privatization had been supporting terrorist regimes. Why not? They're not beholden to the policies or even values of the US government. They're beholden only to stockbrokers and the bottom line.

The United States had concluded that Iraq, Libya, and Iran supported terrorism and had imposed strict sanctions on them. Yet during Cheney?s tenure at Halliburton the company did business in all three countries. In the case of Iraq, Halliburton legally evaded U.S. sanctions by conducting its oil-service business through foreign subsidiaries that had once been owned by Dresser. With Iran and Libya, Halliburton used its own subsidiaries. The use of foreign subsidiaries may have helped the company to avoid paying U.S. taxes.

Who's working for whom?
The most troubling aspect of privatization is that contracting isn't responsive to quick policy shifts. It's a slow, often speculative process. In order to be prepared to invade Iraq, the government was secretly negotiating with Halliburton--even while the President was publicly saying he had made no decision to invade. After the invasion, Congress discovered it didn't have oversight over the scope of the contract.

The Department of Defense?s decision to award Halliburton the seven-billion-dollar contract to restore Iraq?s oil industry was made under "emergency" conditions. The company was secretly hired to draw up plans for how it would deal with putting out oil-well fires, should they occur during the war. This planning began in the fall of 2002, around the time that Congress was debating whether to grant President Bush the authority to use force, and before the United Nations had fully debated the issue. In early March, 2003, the Army quietly awarded Halliburton a contract to execute those plans.

After months spent trying to obtain more information about the classified Halliburton deals, Representative Waxman's staff discovered that the original oil-well-fire contract entrusted Halliburton with a full restoration of the Iraqi oil industry. "We thought it was supposed to be a short-term, small contract, but now it turns out Halliburton is restoring the entire oil infrastructure in Iraq," Waxman said. The Defense Department?s only public acknowledgments of this wide-ranging deal had been two press releases announcing that it had asked Halliburton to prepare to help put out oil-well fires.

The enmeshment between the White House and the company was invisible to Congress, who was learning after the fact what the score was. In fact, the Halliburton contract was actually driving policy, not responding to it. Should the Congress have known this? Should Americans have understood this relationship?

The questions about profiteering are more complex than just making money. It's not surprising that Americans--who must surely assume that Halliburton's defrauding them--are inured to the idea. Corruption seems part of the cost of doing business these days, public or private. But they are still sensitive to the question of safety and security. Mayer's article is instructive because it points to the unintended--and perhaps far more inflammatory--consequences of privatizing the military.

posted by Jeff | 8:47 AM |
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