Dec. 12th, 2003

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I knew there was something I liked about that man.
James Baker sets off to negotiate Iraqi debt forgiveness with our estranged allies. And at that very moment the deputy secretary of defense releases a "Determination and Findings" on reconstruction contracts that not only excludes those allies from bidding, but does so with highly offensive language. What's going on?

Maybe I'm giving Paul Wolfowitz too much credit, but I don't think this was mere incompetence. I think the administration's hard-liners are deliberately sabotaging reconciliation.

Surely this wasn't just about reserving contracts for administration cronies. Yes, Halliburton is profiteering in Iraq Ñ will apologists finally concede the point, now that a Pentagon audit finds overcharging? And reports suggest a scandal in Bechtel's vaunted school-repair program.

But I've always found claims that profiteering was the motive for the Iraq war - as opposed to a fringe benefit - as implausible as claims that the war was about fighting terrorism. There are deeper motives here.

Mr. Wolfowitz's official rationale for the contract policy is astonishingly cynical: "Limiting competition for prime contracts will encourage the expansion of international cooperation in Iraq and in future efforts" - future efforts? - and "should encourage the continued cooperation of coalition members." Translation: we can bribe other nations to send troops.

But I doubt whether even Mr. Wolfowitz believes that. The last year, from the failure to get U.N. approval for the war to the retreat over the steel tariff, has been one long lesson in the limits of U.S. economic leverage. Mr. Wolfowitz knows as well as the rest of us that allies who could really provide useful help won't be swayed by a few lucrative contracts.

If the contracts don't provide useful leverage, however, why torpedo a potential reconciliation between America and its allies? Perhaps because Mr. Wolfowitz's faction doesn't want such a reconciliation.

These are tough times for the architects of the "Bush doctrine" of unilateralism and preventive war. Dick Cheney, Donald Rumsfeld and their fellow Project for a New American Century alumni viewed Iraq as a pilot project, one that would validate their views and clear the way for further regime changes. (Hence Mr. Wolfowitz's line about "future efforts.")

Instead, the venture has turned sour - and many insiders see Mr. Baker's mission as part of an effort by veterans of the first Bush administration to extricate George W. Bush from the hard-liners' clutches. If the mission collapses amid acrimony over contracts, that's a good thing from the hard-liners' point of view.

Bear in mind that there is plenty of evidence of policy freebooting by administration hawks, such as the clandestine meetings last summer between Pentagon officials working for Douglas Feith, under secretary of defense for policy and planning - and a key player in the misrepresentation of the Iraqi threat - and Iranians of dubious repute. Remember also that blowups by the hard-liners, just when the conciliators seem to be getting somewhere, have been a pattern...

woops

Dec. 12th, 2003 07:12 am
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the Washington Post editorial page hops off the bus.

Probably not for long, but how often does that happen, really?
YES, OF COURSE, President Bush's latest initiative on Iraq is arrogant and self-defeating. But that's not the most remarkable aspect of his decision to exclude companies from a number of countries that are important U.S. allies from bidding on reconstruction contracts. After all, a spiteful unilateralism has characterized the administration's handling of postwar Iraq all along, and it's an important reason why the United States must now face daunting military and political challenges nearly on its own. What's really strange about the administration's latest slap at Germany, France, Canada and other countries it seems intent on treating as adversaries is that it reverses at a stroke months of patient efforts by that same administration to overcome the divisions its Iraq policy created.

...When told yesterday that Mr. Schroeder believed Mr. Bush's contract decision might violate international law, the president responded with a sarcastic gibe: "International law? I better call my lawyer." Like other puerile taunts delivered by administration officials, the president's words will merely serve to further erode support for his policies in countries that historically have stood with the United States.

...

Mr. Bush and his Pentagon hawks may believe they are meting out just punishment to countries that have opposed the mission in Iraq. But there will be little cost to Germany, France, Canada or Russia. Instead, the real price will be paid by Iraqis and the American soldiers and civilians trying to help them. They will have to continue an uphill struggle to stabilize and rebuild Iraq without substantial support from many of the world's richest and most powerful nations. Efforts to repair U.S. relations with Europe and sinking American prestige around the world will be set back once again. And what will Mr. Bush have gained? Better ask his lawyer.
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Stolen in toto from TBogg. Of course, inside of a dog, it's too dark to read.
When it comes to President, which candidate is truly unelectable?

Lieberman.....unelectable

Moseley-Braun.......unelectable

Kucinich.........unelectable

Sharpton......unelectable

Bill Clinton can't run, so that would make him........unelectable

Jennifer Granholm wasn't born here. That would make her ....unelectable.

Same for Arnold. He's also.......unelectable.

Must be hard to be unelectable.
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So why did the Bush administration push HUD Secretary Martinez overboard to run for Senate in Florida?

Well, Martinez is a cuban emigre with a history of throwing himself behind the anti-Castro policies of the conservative emigre community in Florida.

Perhaps Mr. Rove thinks they're going to need a favorite son candidate down there to overcome the backlash from this:
As U.S. and Central American leaders sat down Monday to continue negotiations for a new free trade pact, a local sugar grower felt anxious and afraid.

Key players fear the U.S. sugar industry may be sacrificed in the agreement, which would tie the U.S. economy with smaller ones in five Central American countries.

"You've got to remember the U.S. trade representative's job is to negotiate a trade deal and I just hope they don't trade away the American sugar farmers just to get a trade deal," said Robert Coker, a vice president with U.S. Sugar Corp. in Clewiston.

Not everyone is sympathetic. There are groups working to make sure sugar is left on the table in this week's negotiations -- including Florida environmentalists, who are concerned about the industry's impact on the Everglades.

Producers of other U.S. agricultural commodities, such as pork, are also lining up against the sugar industry in this battle. They fear if sugar is excluded from negotiations this week, they won't get more access to the Central American markets. Sugar is a priority for many of the countries involved in negotiating the regional agreement.

meet the Fanjul family )
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Mark Kleiman may have winkled out why we're union busting in Iraq - the unions oppose our plans to free the iraqi people of their assets
In an Oct. 8 phone press conference, Thomas Foley, director for private sector development for the CPA, announced a list of the first Iraqi state enterprises to be sold, including cement and fertilizer plants, phosphate and sulfur mines, pharmaceutical factories and the country's airline. On Sept. 19, the CPA published Order No. 39, which permits 100 percent foreign ownership of businesses -- except for the oil industry -- and allows the transfer of profits outside the country.

Iraqi workers fear privatization will bring massive layoffs. "I'll have to fire 1,500 (of the refinery's 3,000) workers," says Dathar Al-Kashab, manager of the Al Daura oil refinery. "In America, when a company lays people off, there's unemployment insurance and they won't die from hunger. If I dismiss employees now, I'm killing them and their families."

At the refinery, as in most factories, those with jobs work 11- and 13-hour shifts. Al Daura workers earn $60 a month. They have no safety shoes, goggles, masks or other protective gear. The IFTU helped the refinery's workers organize a union and elect its leaders. In Basra, workers have formed a central labor council and mounted demonstrations. The Workers Unions and Councils group has helped workers elect committees in the State Leather Industry plant, the largest shoe factory in the Middle East, and the Mamoun Vegetable Oil enterprise, among others.

When these new unions try to talk with the plant managers, however, they're told that a 1987 law forbids workers in state-owned enterprises (where the majority of Iraqis work) from forming unions. The CPA still enforces this Saddam-era law. Another order issued by the CPA on June 6 threatens that anyone who "incites civil disorder" will be detained as a prisoner of war under the Geneva Convention.

While unions are being suppressed, international conferences in Washington and London take place every week, at which Iraqi assets are put on sale to private buyers. At one recent conference, ExxonMobil, Delta Airlines and the American Hospital Group all expressed interest in various Iraqi enterprises.

Workers fear new foreign owners will cut labor costs through layoffs. Resistance at the work site has been made illegal by laws banning unions and by the arrest of their leaders.

Muhsen Mull Ali, an IFTU leader who spent two long stints in prison for organizing unions, both before and during Saddam's reign, says U.S. actions against unions won't deter him. "Our responsibility is to oppose privatization as much as possible, and fight for the welfare of our workers."

feh

Dec. 12th, 2003 10:18 am
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Howard Dean would be "eviscerated" by President Bush's re-election team next year if Dean emerges as the Democratic Party's nominee for the White House, chiefly because of the former Vermont governor's "enormous deficit" of experience in national security and military affairs, Senator John F. Kerry said yesterday. These comments are the strongest Kerry has made in conveying that Dean would lose to Bush, an argument that has become a tacit theme of Kerry's own candidacy as he struggles to surmount Dean's double-digit lead in New Hampshire polls before the primary there Jan. 27...

If I were Senator Kerry, I suspect I would probably try to avoid the subjects of gutlessness and deficits, but that's just me.

Please, people, do try to remember that Pyrrhus actually lost.
Pyrrhus inherited the throne of Epirus in Northern Greece around 306 B.C.E., and as a young man proved himself on the battlefield again and again. Pyrrhus apparently had great strategic skills, but he also had the reputation of not knowing when to stop. In 281 he went to Italy and defeated the Romans at Heraclea and Asculum, but suffered bitterly heavy losses. The devastation led to his famous statement, "One more such victory and I am lost" -- hence the term "Pyrrhic victory" for any victory so costly as to be ruinous.

I really don't think this is our best model for the primaries.
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On the one hand, they like the way we're thinking about excluding "old Europe" and Canada
The Howard Government has endorsed the US ban on awarding reconstruction contracts to countries that opposed the Iraq war and urged Australian firms to bid for the lucrative work.

In Washington, President George Bush also defended his policy of barring France, Germany, Russia and others from bidding for $18.6 billion in Iraqi reconstruction projects.

"The taxpayers understand why it makes sense for countries that risk lives to participate in the contracts in Iraq," Mr Bush told reporters after a cabinet meeting at the White House.

"It's very simple... coalition folks risk their lives, and, therefore, the contracting is going to reflect that."

Foreign Minister Alexander Downer said that France, Russia and Germany opposed the policy that liberated Iraq and had refused to support its rehabilitation, so it was not unreasonable to bar them from US-funded contracts...

On the other hand, screw us.
Foreign Affairs Minister Alexander Downer's office yesterday refused to say whether the US had also asked Australia to wipe Iraq's debt, but said officials were locked in multilateral negotiations over the outstanding millions.

"There is a debt owed to Australia, including the Commonwealth Government and wheat growers, and it all relates to the export of food items, mainly wheat, before the first Gulf War," Mr Downer's spokesman, Chris Kenny, said.

Australian wheat and other exports to Iraq between the 1991 war and the 2003 war have already been paid for under the UN-administered oil for food program.

Mr Kenny said the pre-1991 outstanding debt would not be waived by Australia and that the US had no ability to ask it be waived.

"There are multilateral discussions going on over this; we are in the preliminary stages of discussions," he said.

Asked if the US had specifically asked Australia to forget the debt, Mr Kenny said: "We were part of the action to get rid of Saddam Hussein. We've had this dispute with Iraq over debt for many, many years, prior to the removal of Saddam Hussein.

"It's not for anybody else to ask us to do anything.

"We believe that money should be paid to Australia."

Great strategery, guys.

molly

Dec. 12th, 2003 11:03 am
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who I love
Jack A. Blum, a Washington lawyer and expert in money-laundering and other forms of tax evasion, wrote the following for an academic conference held earlier this year at the University of Texas at Austin:

"Corporate managers have spent the last century developing tools for avoiding regulation and taxation. They brag that acts of tax avoidance are part of corporate productivity. For them, each dollar of tax not paid because of their machinations is the added value they bring to a company. Tax avoidance is a profit center. Avoidance of regulation and supervision is an equally high priority. Corporate contributions and the personal contributions of senior corporate managers have funded anti-regulatory think tanks and anti-regulatory scholarship. Political contributions have turned theory into reality."

Blum points out that the tools used to avoid taxes and regulation -- shell subsidiaries, partnerships and joint ventures, foreign subsidiaries, special-purpose entities and sophisticated transfer pricing techniques -- have long been in use, but "the difference is that when they were first used, their purpose was to avoid state regulation and hide from state law enforcement."

Today, Blum says, "the techniques are being used to beat what is left of federal taxation and regulation. Corporations have turned international borders into barriers that block national level taxation and regulation. The international community has failed to produce effective machinery for cooperation in the areas of regulation and taxation, and as a consequence, the social control of corporate behavior stops at the border."

The social control of corporate behavior also stops with this administration...

yeow.

Dec. 12th, 2003 11:07 am
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we'd all like to think we'd do this, but this guy did
A Time magazine reporter suffered severe shrapnel wounds and lost his hand when he tried to throw away a grenade tossed into a Humvee he was riding in with a Time photographer and two U.S. soldiers, colleagues said Thursday.

TIME SENIOR correspondent Michael Weisskopf and contributing photographer James Nachtwey were traveling with a U.S. Army patrol in Baghdad Wednesday night when the attack occurred, a statement from Time managing editor Jim Kelly said.

Time would not offer details on the incident. But a memo sent to Weisskopf’s former colleagues at The Washington Post said he picked up the grenade and tossed it out of the Humvee. It exploded, blowing off his hand and wounding him in the chest and arms. The memo said Nachtwey received shrapnel wounds that were not as serious.

“According to people he works with at Time, he picked up the grenade and tossed it out, losing his right hand in the process while saving four lives,” the memo said...
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and I do hate to see a grown subject beg
The United States government is paying the Halliburton Company an average of $2.64 a gallon to import gasoline and other fuel to Iraq from Kuwait, more than twice what others are paying to truck in Kuwaiti fuel, government documents show.

Halliburton, which has the exclusive United States contract to import fuel into Iraq, subcontracts the work to a Kuwaiti firm, government officials said. But Halliburton gets 26 cents a gallon for its overhead and fee, according to documents from the Army Corps of Engineers.

The cost of the imported fuel first came to public attention in October when two senior Democrats in Congress criticized Halliburton, the huge Houston-based oil-field services company, for "inflating gasoline prices at a great cost to American taxpayers." At the time, it was estimated that Halliburton was charging the United States government and Iraq's oil-for-food program an average of about $1.60 a gallon for fuel available for 71 cents wholesale.

But a breakdown of fuel costs, contained in Army Corps documents recently provided to Democratic Congressional investigators and shared with The New York Times, shows that Halliburton is charging $2.64 for a gallon of fuel it imports from Kuwait and $1.24 per gallon for fuel from Turkey.

A spokeswoman for Halliburton, Wendy Hall, defended the company's pricing. "It is expensive to purchase, ship, and deliver fuel into a wartime situation, especially when you are limited by short-duration contracting," she said. She said the company's Kellogg Brown & Root unit, which administers the contract, must work in a "hazardous" and "hostile environment," and that its profit on the contract is small.

The price of fuel sold in Iraq, set by the government, is 5 cents to 15 cents a gallon. The price is a political issue, and has not been raised to avoid another hardship for Iraqis.

The Iraqi state oil company and the Pentagon's Defense Energy Support Center import fuel from Kuwait for less than half of Halliburton's price, the records show.

...

A company's profits on the transport and sale of gasoline are usually razor-thin, with companies losing contracts if they overbid by half a penny a gallon. Independent experts who reviewed Halliburton's percentage of its gas importation contract said the company's 26-cent charge per gallon of gas from Kuwait appeared to be extremely high.

"I have never seen anything like this in my life," said Phil Verleger, a California oil economist and the president of the consulting firm PK Verleger LLC. "That's a monopoly premium - that's the only term to describe it. Every logistical firm or oil subsidiary in the United States and Europe would salivate to have that sort of contract."

In March, Halliburton was awarded a no-competition contract to repair Iraq's oil industry, and it has already received more than $1.4 billion in work. That award has been the focus of Congressional scrutiny in part because Vice President Dick Cheney is Halliburton's former chief executive officer. As part of its contract, Halliburton began importing fuel in the spring when gasoline was in short supply in large Iraqi cities.

The government's accounting shows that Halliburton paid its Kuwait subcontractor $1.17 a gallon, when it was selling for 71 cents a gallon wholesale in the Middle East.

In addition, Halliburton is paying $1.21 a gallon to transport the fuel an estimated 400 miles from Kuwait to Iraq, the documents show. It is paying 22 cents a gallon to transport gas into Iraq from Turkey.


The 26 cents a gallon it keeps includes a 2-cent fee and 24 cents for "mark-up costs," the documents show. The mark-up portion is intended to cover the overhead for administering the contract.

Ms. Hall of Halliburton said it was "misleading" for the corps to call it a mark-up. "This simply means overhead costs, which includes the general and administrative costs like light bulbs, paper and employees," she said. "These costs are specifically allowable under the contract with the Corps of Engineers, are defined by detailed regulations, and are scrutinized and approved by U.S. government auditors."

In recent weeks, the costs of importing fuel from Kuwait have risen. Figures provided recently to Congressional investigators by the corps show that Halliburton was charging as much as $3.06 per gallon for fuel from Kuwait in late November.

If the corps concludes that Halliburton has successfully administered the gas contract, it could be paid an additional 5 percent of the total value of the gas it imported.

Halliburton's Kuwait subcontractor was hired in May. Halliburton and the Army Corps of Engineers refused to identify the company, citing security reasons. Aides to Representative Henry A. Waxman, the California Democrat who has been a critic of the fuel contract, said government officials had identified it as the Altanmia Commercial Marketing Company. Several independent petroleum experts in the Middle East and the United States said they had not heard of Altanmia.

Copies of the Army Corps documents were given to Mr. Waxman's office, which provided them to The Times.

Iraqi's state oil company, SOMO, pays 96 cents a gallon to bring in gas, which includes the cost of gasoline and transportation costs, the aides to Mr. Waxman said. The gasoline transported by SOMO Ñ and by Halliburton's subcontractor Ñ are delivered to the same depots in Iraq and often use the same military escorts.

The Pentagon's Defense Energy Support Center pays $1.08 to $1.19 per gallon for the gas it imports from Kuwait, Congressional aides said. That includes the price of the gas and its transportation costs.

The money for Halliburton's gas contract has come principally from the United Nations oil-for-food program, though some of the costs have been borne by American taxpayers. In the appropriations bill signed by Mr. Bush last month, taxpayers will subsidize all gas importation costs beginning early next year.

Alrighty then. )
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I'm not sure this is the kind of track record we were looking for in a contractor
...The other case of overcharging involved the supply of mess halls, and the Pentagon said it had found evidence that KBR may have overestimated the cost of catering by $67m.

Investigators at the Defence Contract Audit Agency are now examining all aspects of financial controls and subcontracting arrangements by KBR in Iraq, with around 20 auditors having been assigned to the job.

In a statement, David Lesar, the chief executive of Halliburton, said: "We welcome a thorough review of any and all of our government contracts."

Mr Lesar defended the company's performance, and said that the questions were "a normal part of the audit process and not a condemnation of KBR processes".

However, Democrats - who have criticised the lack of competition for contracts in Iraq - were quick to lay into the Bush administration.

"We've recently learned what many Americans have suspected for a long time - special interest contributor Halliburton is overcharging the American taxpayers," Howard Dean, the Democratic presidential contender, told the Washington Post.

"Now this president is preventing entire nations from bidding on contracts in Iraq so that his campaign contributors can continue to overcharge the American taxpayers."

Mr Dean was referring to a White House decision earlier this week to block firms from countries opposed to the conflict in Iraq from bidding for contracts, worth $18.6bn, to rebuild the country.

The move caused predictable outrage in the countries affected, which include France, Germany and Russia. However, companies from Britain and Italy - which were coalition partners - are eligible for contracts.

Kofi Annan, the UN secretary general, has urged the administration to reverse the decision, which he called "unfortunate", and the EU has raised the possibility that the US move violates World Trade Organisation rules.

The discovery that Halliburton could have overcharged the US government is certain to add to the arguments raging over Iraq's reconstruction. Halliburton has been under intense scrutiny ever since it was awarded a no-bid contract to provide billions of dollars in services in Iraq.

Critics of the Bush administration say that Halliburton has benefited from White House patronage, because the company is a big donor to Republican party coffers.

It gave $708,770 in political contributions between 1999 and 2002, with 95% of that going to Republicans. Administration officials counter that few companies have the resources and expertise to carry out the work needed.

Mr Cheney, a former defence secretary under the first Bush administration, stepped down as chief executive officer of Halliburton when he became Mr Bush's running mate in 2000.

He has said that he played no role in contracts for his former company, of which he became head in 1995.

KBR was first criticised in the summer by Congress for charging high rates to bring petrol into Iraq from Kuwait, but there have been accusations of overcharging before.

Last year, the firm paid $2m in fines to settle charges of inflating prices for repairs and maintenance at Fort Ord, California.

In 1997 and 2000, the General Accounting Office, the congressional watchdog, found that KBR had billed the army for questionable expenses on its support contracts for operations in the Balkans.

Those reviews cited instances such as charging $85.90 per sheet of plywood actually costing $14.06, and billing the army for cleaning some offices up to four times per day.
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Uncle Procrustes (because he's the procrustiest!) points out that one reason Wolfowitz might not be too anxious to see Baker successfully accomplish debt relief for Iraq is that Wolfowitz himself failed dismally to accomplish it back when it was his job.

Ah, the grownups.
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but hell, we have lots of soldiers just lying around, right?
The United Nations may be forced to abandon its two-year effort to stabilize Afghanistan because of rising violence blamed on the resurgent Taliban, its top official here warned Friday in an interview with The Associated Press.

Lakhdar Brahimi said his team could not continue its work unless security improves. He called for more foreign troops to halt attacks that have killed at least 11 aid workers across the south and east since March.

"Countries that are committed to supporting Afghanistan cannot kid themselves and cannot go on expecting us to work in unacceptable security conditions," Brahimi said.

"They seem to think that our presence is important here. Well, if they do, they have got to make sure that the conditions for us to be here are there," he said. "If not, we will go away."

...
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Orcinus tells us that the antediluvian rotewhiner may have gotten himself in a peck of trouble this time.

Instead of the usual generic "liberal appeasers," this time he recommended the death of a specific liberal appeaser, and gave out his home address and contact information.

The FBI is apparently involved now.

Have fun, brave boy.
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