Wednesday, March 12, 2003

For those of you who don't think this thing is about money, consider this, Joe Brennan ran the numbers on the street value of Iraqi oil reserves. He places the number at $36 trillion. It's not the oil, per se; it's the MONEY. My numbers have Joe's being modest, and I see it at more than $40 trillion.

And for those of us who subscribe to a Modernist pogram, there is more subject matter than there is time to write, right now. But, I know, Modernism is bad or something like that. (There's always been more subject matter than we know what to do with it, tho.)

Okay, I think I might start blogging about that in the future. In the meantime...

US firms set for postwar contracts

Danny Penman and agencies
Tuesday March 11, 2003

The American government is on the verge of awarding construction contracts worth hundreds of millions of dollars to rebuild Iraq once Saddam Hussein is deposed.

Halliburton, one of the companies in the running for the deals, was headed by the US vice-president Dick Cheney between 1995 and 2000. Halliburton has already been awarded a lucrative contract, worth hundreds of millions of dollars, to resurrect the Iraqi oilfields if there is a war.

Other companies have strong ties to the US administration, including the construction giant Bechtel, the Fluor Corporation, and the Louis Berger Group, which is presently involved in the reconstruction of Afghanistan. Both Bechtel and the Fluor Corporation undertake construction and project management work for the US government.

Only US companies are on the shortlist of five. The US agency for international development (USAID) defended the narrow shortlist.

A spokeswoman said: "Because of the urgent circumstances and the unique nature of this work, USAID will undertake a limited selection process that expedites the review and selection of contractors for these projects."

The spokeswoman said that it was a policy of USAID to use US companies for projects funded by the American taxpayer. Non-US companies were free, through their governments, to organise their own business, she said.

The winning company would get about $900m to repair Iraqi health services, ports, airports, schools and other educational institutions.

Sources at the companies said the invitation was unusual in that USAID did not ask them to set a price for defined services but rather asked them to say what they could do for $900m. However, the winning company could expect to make a profit of about $80m from the deal.

All five bidders have submitted their proposals or are preparing to do so after USAID "quietly" sent out a detailed request soliciting proposals from the likely bidders.

According to the Wall Street Journal, the Iraq reconstruction plan will require contractors to fulfill various tasks, including reopening at least half of the "economically important roads and bridges" - about 1,500 miles of roadway - within 18 months.

The contractors will also be asked to repair 15% of Iraq's high-voltage electricity grid, renovate several thousand schools and deliver 550 emergency generators within two months.

Construction industry executives said the handful of firms are competing fiercely in part because they believe it could provide an inside track to postwar business opportunities. The most highly sought-after prizes are oil industry contracts.

The US government is believed to be wary of any backlash against an invasion and is preparing plans for a "hearts and minds" operation that will swing into place as soon as the country is occupied. The government is mindful of the long term benefits of feeding hungry Iraqis, delivering clean water, and paying teachers and health workers.

"It's a sensitive topic because we still haven't gone to war," one industry executive told the Wall Street Journal. "But these companies are really in a position to win something out of this geopolitical situation."

It remains unclear whether Iraqis, Americans or an international consortium will manage the oil industry during an early post-conflict period.

Steven Schooner, a George Washington University law professor, said many billions of dollars are at stake. He estimated that $900m would barely last six months given the scope of the projects the administration has sketched out.

"The most sophisticated firms that come in first, and establish good will with the locals obviously will reap huge benefits down the road," said Mr Schooner.

"These are going to become brand names in Iraq. That's huge."

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