Profiting from War: the post-war reconstruction bonanza in Iraq

John de Boer (GLOCOM Platform)

The EU Commissioner for External Affairs, Chris Patten, remarked on Tuesday (11 March) that, "the EU could withhold help in rebuilding Iraq after a war if the conflict didn't have UN approval" ("EU threat to Iraq Reconstruction", CNN, 12 March). Although this may sound like a dagger in US plans to rebuild Iraq, the truth is that the US never counted on EU aid in the first place. While the EU stresses the primacy of a UN based resolution, the US is likely to ignore international law and launch an attack supported by a Coalition of the Wanting. This coalition, made up of countries that are willing to kill or let kill for a stake in the reconstruction of Iraq, ultimately advocates a solution to the "threat" posed by Saddam Hussein that undermines UN authority. In effect and in contrast to one of its long-standing foreign policy principles, Japan is abandoning the UN and is now one of the wanting.

On 7 March, Japan's Vice Foreign Minister Toshimitsu Motegi reiterated what Prime Minister Koizumi has been saying all along, that, "Japan will take the lead in Iraq's post-war reconstruction process" (Kanako Takahara, "Japan backs revised UN resolution against Iraq", Japan Times, 9 March).

In light of the tremendous challenges associated with such an endeavor, why would Japan want to do such a thing? The answer includes, but is not limited to, oil (see Review #85: "What 'fuels' Japan's support for US plans in Iraq?", 2/25/'03).

The reconstruction of Iraq is largely viewed as "the most ambitious rebuilding project since the aftermath of World War II" (Peter Slevia and Mike Allen, "Companies selected to bid on Iraq's Reconstruction", Washington Post, 11 March). Analysts indicate that reconstruction could involve an investment of anywhere between $10-200 billion in a span of two or three years (Mark Tran, "Building Block", Guardian, 11 March). The Deputy US Defense Secretary Paul Wolfwitz has mentioned the figures of $10-100 billion (Jane Bennett, BBC, 11 March). Regardless of the exact value, post-war Iraq represents an "unprecedented reconstruction bonanza" for engineering firms world-wide (James Arnold, "The business of rebuilding war zones", BBC, 11 March 2003).

A row over the bonanza already began last week as USAid contacted five large US construction and engineering firms to bid for reconstruction contracts in Iraq worth $900 million (The Guardian, BBC, Washington Post). The fear among competing British companies is that the US will "hog" the most lucrative contracts. Upon hearing this news, the spokesman of Britain's largest manufacturing union (Amicus) questioned, "why should Britain have to share the blood in war but British companies not be allowed to share in the economic upturn afterwards?" (Mark Tran, Guardian, 11 March). According to James Arnold of the BBC, "the tidal wave of cash has sharpened appetites among corporate contractors" (BBC, 11 March). In this context, there is no reason why we should think that Japanese firms and government officials are any different.

The five US companies invited to bid on the $900 million contract for preliminary work in Iraq are Halliburton (Kellogg Brown and Root), Bechtel, Fluor, the Louis Berger Group and the Parsons Group. All of these corporations have close ties with the oil industry, the Bush administration and some have profited heavily from war and its aftermath. Kellogg Brown and Root (KBR) received over $2 bn to maintain US bases in Bosina and Kosovo. KBR and the Louis Berger Group built harbors, roads, bridges, airports and military bases during the Vietnam War (Danny Penman, "Who's rebuilding Iraq?", Guardian, 11 March). According to Mark Tran, the winning company of the Iraqi bid could expect to make a profit of $80 million over two months. This is just the first in an avalanche of cash that will likely flow into Iraq and eventually translate into huge profits down the road. As Steven Schooner (Prof. George Washington University) pointed out to Tran, "these companies are going to become brand names in Iraq. That's huge".

Firms from countries that have refused to be in the Coalition of the Wanting are likely to suffer. Recent news articles indicate that the US plans a complete and absolute occupation of Iraq, which will eventually transform the Iraqi government into a puppet regime. Senior US defense officials have come out to state that the US plans to offer jobs to Iraqi soldiers and pay the salaries of over 2 million civil servants after the war (Judith Miller, "After a war, jobs and pay for soldiers and citizens", New York Times, 12 March; "US to use Iraq regular army to rebuild country", Reuters, 11 March; Patrick E. Tyler, "To rebuild Iraq, time and billions are needed", New York Times, 12 March). Although the money for this will likely come from frozen Iraqi assets or Iraqi oil revenues, they will be dispensed by US authorities, rendering the entire Iraqi government, administration and armed forces subservient to US demands. By most measures this would be equivalent to a bribe, particularly considering that billions of dollars worth of oil industry, infrastructure and service contracts will be up for grabs in post-war Iraq.

Judging from Jay Garner's (director of the Pentagon's Office of Reconstruction and Humanitarian Assistance in Iraq) portfolio, every aspect of the Iraqi administration will be in US hands. UPI reports that Garner, who will be the civil administration coordinator, will oversee "the political side of reconstruction, public health, law enforcement, agriculture, banking, education, indigenous media, labor, commerce, immigration, foreign affairs, economic development and the justice system" (Pamela Hess, "US will pay Iraqi government salaries", UPI, 11 March). If Japan, or any country, wants to play a "leading part" in the reconstruction of Iraq she must go through the US civil administrator first and then, of course, accept the decision of Iraqi civil servants who are paid by the US.

For those who still believe that this war aims to "liberate" the Iraqi people, let us turn to John O'Sullivan's (the editor and chief of UPI) article published on 11 March where he commented that this was exactly how the British ruled the Gulf for two centuries. "British colonial power hid behind the veil of local authority" in a system where the British made the decisions and the local sheiks took the responsibility ("Governing post-war Iraq", UPI, 11 March).

The facts are out in the open for everyone to see and it is important that we not be fooled by "generous" offers made by the Japanese government to "assist" in the reconstruction of Iraq. When Japanese politicians state that they desire to "lead" in rebuilding Iraq, they also mean that they want their companies to profit from Iraq's destruction and the post-war bonanza. This could indeed explain Japan's abandonment of its pro-UN foreign policy and the spirit of its pacific constitution in favor of resolution by force.