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Own a Piece of Iraq: How U.S. Gvt. Officials Are Leaving Public Office To Cash In On Iraq

StoryOctober 02, 2003
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As President Bush asks U.S. taxpayers to cough up $87 billion for the reconstruction of Iraq, some of his closest allies have set up a new private business firm in Washington and Iraq to advise companies that want to do business in Iraq including companies who are seeking government contracts. [Includes transcript]

Click here to read to full transcript President Bush’s campaign manager in 2000, Joe Allbaugh, has set up a new private business firm in Washington and Iraq to advise companies that want to do business in Iraq including companies who are seeking government contracts.

Until March, Allbaugh served as the director of the Federal Emergency Management Agency and was Bush’s chief of staff when he was governor of Texas. Other directors of the new firm called New Bridge Strategies include Edward Rogers Jr. and Lanny Griffith, two lobbyists who were assistants to the first President George Bush and now have close ties to the White House.

The company Web site says the company was “created specifically with the aim of assisting clients to evaluate and take advantage of business opportunities in the Middle East following the conclusion of the U.S.-led war in Iraq.” The new company benefited from a decision by the U.S.-appointed Iraqi Governing Council that allows foreign companies to establish 100 percent ownership of businesses in Iraq.

Other Washington insiders who are working in Iraq are former Defense Secretary William Cohen, former Senate Majority Leader George Mitchell and former House Majority Leader Dick Armey.


AMY GOODMAN: We’re joined by Michael Scherer who has written the article, K-street on the Tigris for Mother Jones. Welcome to Democracy Now!

MICHAEL SCHERER: Thanks for having me.

AMY GOODMAN: Well, can you just go through this list of names, start with Joe Albaugh and what is happening in Iraq right now? I guess you could say they’re getting a piece of Iraq.

MICHAEL SCHERER: Well, Joe was Bush’s campaign manager in 2000 then appointed to head the Federal Emergency Management Agency. He left that this Spring just few weeks before the war in Iraq began. And he founded this group, New Bridge Strategies, it’s one of literally dozens. Almost all of the big lobby houses here in Washington D.C. and the big law firms have separate Iraq reconstruction practices they set up. The important thing to realize here is that they’re not just going after the business most people think of when they think of reconstruction business in Iraq. Meaning the Bechtels and Halliburtons, the big contracts. They’re working for companies that want to do everything under the sun in Iraq. They want to sell cars, tractors, credit cards, hotels, shampoo, security services, there was just a posting I think today or yesterday on the coalition provisional authority website for mechanical pencils they need 1200 mechanical pencils and 2400 ball-point pens.

So, the opportunity in Iraq is really enormous. The business community in general is excited about the long term prospect. So, what these guys’ companies like Albaugh’s and George Mitchell’s and William Cohen’s lobby shop is selling is access to the people who are setting this policy and then understanding of how to best set up — how to best sell their services both in Iraq and to the U.S. government here who is running the show there.

AMY GOODMAN: Perhaps we can call them the three profiteers, Armey and Albaugh as well as former Defense Secretary William Cohen. It is bipartisan, of course, because you have Senate Majority Leader, George Mitchell, Democrat, and well Defense Secretary William Cohen was under Clinton, but he was a Republican.

MICHAEL SCHERER: Lobbying is bipartisan. The lobbyists in Washington, a good chunk of them are former Clinton officials. They’re just as excited about this business opportunity as the Republicans. Albaugh boasts of having good connections and it’s likely that he has better connections than some of the Clinton officials to the Pentagon now. Just because of the position he had. But the agricultural department, for instance, there’s two former one former Agricultural Department official for the Bush administration then a Clinton National Security official who are lobbying the Agriculture Department for a piece of the money that’s going to be spent on feeding the Iraqi people. Before the 1991 Gulf War Iraq was a major destination for U.S. agricultural products, 23% of U.S. rice production, a million tons of American wheat a year. So it’s a huge billion dollar market that the big Agra business firms are excited to get back into right now.

AMY GOODMAN: Paul Krugman did a column this week where he talked about Middle Eastern businessman who had gone to set up a cell phone company and the U.S. military in Iraq stopped them.

MICHAEL SCHERER: That’s one of the criticisms. In some ways lobbying for this sort of work makes a lot of sense. One of the biggest criticisms of it is that these companies may be having some sort of influence on the policy that’s being set. If these are totally fair and open bidding procedures and if the Iraqi people are totally behind them then there’s nothing wrong with it. I mean, if American company can provide the best service, the best price to the Iraqi people then this makes sense. If the American company and American lobbyists are influencing how the policy is set then it becomes problematic because then it may not be in the best interest of the Iraqi people.

The cell phone contract has been one of the most contentious of the Iraq reconstruction contracts. It’s the first big contract to come out of the coalition provisional authority. The U.S. stopped what were essentially rogue cell phone operators from operating then set up international process where they said we’re going to bid two or three different contracts for new cell phone towers. The criticism came because of the way they structured the deal. They made a bunch of rules that appeared to favor certain types of companies. They said, first you cannot be primarily a government owned company and apply for this contract which cut out most of the regional cell phone suppliers. Most of the Arab countries in the region that had cell phone plans, the companies that run the cell phones in this country have government interests, significant government interests. They said that you also had to be a company that had a number of contracts previous to this one. So that, also, took out a lot of the government operated or — specific countries which operated because they only have one contract for cell phone service. The United Arab Emirates, for example.

And then they also, after pressure from a California representative who was essentially working on behalf of Qualcomm allowed for bidders to apply with a Qualcomm brand cell phone technology which is different from all the other cell phone technology that is being used, now, in the Middle East, and raises a lot of questions about whether that sort of technology would do any good for the Iraqi people because if they leave the immediate cell phone tower region they wouldn’t be able to roam easily, because you can’t hook into other cell phone technologies. These are the sort of issues that are at play. Are these being made in the best interest of the Iraqi people or are they being made because lobbyists are well-connected and they can sell their clients’ products.

AMY GOODMAN: It’s interesting in Paul Krugman’s piece, he says only Paul Bremer and his piece have cell phones. Thanks to the baffling decision to give the contract to MCI even those phones don’t work very well. Aside from the fact that its management perpetrated history’s biggest accounting fraud, MCI has no experience in building cell networks.

MICHAEL SCHERER: It’s interesting to look at lot of the appointments that have been made.

AMY GOODMAN: You also have in the piece in “Washington Post” today, I offer a quote, “getting the rights to distribute proctor and gamble products would be a gold mine said one of the partners at New Bridge who did not want to be named. One wellstocked 7-Eleven could knock out 30 Iraqi stores, a Wal-Mart could take over the country,” he said.

MICHAEL SCHERER: That’s a great quote. When I was talking to some of these lobbyists, they said what we need to do to get credit card debt into Iraq because if people have credit card debt they’re more worried about paying off their TV than killing the guy next door. There is is this attitude among lot of American business among some of these law firms that if you get a free market capitalist society in there, it will be good both for the Iraqi people because you get them in debt to some extent, you get them with all these new products that American companies are selling, and you obviously when fit the American companies.

AMY GOODMAN: I want to thank you very much, Michael Sherer for being with us. His piece is in Mother Jones magazine it’s called “K-street on the Tigris: own a piece of Iraq.”

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