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USA: Bechtel to Get Richer in Post-War Iraq

by Aaron Davis and Dana HullSan Jose Mercury News
March 25th, 2003

Bechtel raised the Bay Bridge and assembled the Hoover Dam. The San Francisco company extinguished the oil well fires in Kuwait and dug tunnels for the Bay Area Rapid Transit system. Its workers have laid 50,000 miles of pipeline and built 17,000 miles of roadway in 140 countries.

But Bechtel may soon be best known -- and most hated -- for the nation it hopes to soon rebuild following the U.S.-led war: Iraq.

Anti-war protesters in San Francisco have swarmed the Beale Street entrance to the company's headquarters several times during the past week, including Monday. The construction behemoth, they said, represents the next phase of the U.S. war machine.

Bechtel is one of only six major U.S. construction companies -- each politically connected and facing assorted controversies around the globe -- positioned to win as much as $900 million of first-round contracts from the U.S. government to repair roads, bridges, hospitals, schools and mosques once the bombing stops. The early contracts would give Bechtel and others a prime position to win $25 billion to $100 billion in contracts over the entire reconstruction, experts say.

The Bush administration hand-picked the bidding companies, fast-tracked the contracts and sealed all related bidding documents under emergency rules. The administration said the six companies were chosen because they are the only ones that have employees with the needed security clearances and the proven ability to operate in war zones. A standard, open bidding process could take six months or more -- "too long" -- officials said.

"The companies that were invited to bid are the ones with proven track records," said Luke Zahner, spokesman for the U.S. Agency for International Development, which will divvy out the contracts. "There are very specific provisions being followed to make this bidding fair."

One contract awarded

On Monday, USAID announced its first contract for work in Iraq: $4.8 million to Stevedoring Services of America to manage the Iraqi port of Umm Qasr and ensure that urgent food assistance and materials flow smoothly through the seaport.

But critics are screaming foul over the process, which excluded any foreign companies from winning contracts.

Opponents argue that the United States is effectively "stealing" Iraqi oil by dictating how the defeated nation spends its oil profits on reconstruction after the war and only allowing U.S. companies to profit.

"There was no advertising, the solicitations were distributed in secret and they were only U.S. firms," said Steven L. Schooner, co-director of the Government Procurement Law Program at George Washington University Law School in Washington. "If you were one of the firms that was solicited, you're in great shape."

On Thursday and Friday last week, scores of protesters chanted, "Bechtel's hands are full of blood!" in front of small coffins meant to represent dead Iraqi children. The company's employees drank coffee on the sidewalk and waited for police officers to arrest and haul the protesters away.

Don't blame us

Numerous Bechtel employees declined to comment about the protests, and those that did speak wouldn't give their names.

"Just because we get the contracts doesn't mean we initiated the war," said one Bechtel employee who was stuck outside during Thursday's demonstration and was nervous about being able to meet a deadline. "I'm not in favor of the war either, but all of this protesting isn't helping."

Bechtel spokesman Jonathan Marshall said the protests have been an inconvenience but nothing more.

"I don't understand why the possibility of rebuilding schools and hospitals should be considered immoral or a crime," Marshall said. "If we get work like that, we would be proud to enhance the safety and lives of those in Iraq. I think the protesters have got the wrong target."

While Bechtel and others appear entirely qualified to do the work in Iraq, the bidding process still smells funny, said Steven Weiss, spokesman for the Center for Responsive Politics.

Political donations

The center calculated that the construction companies involved in the bidding have given a combined $2.8 million in campaign contributions since 1999. Bechtel gave the most, $1.3 million.

The conflict of interest that stands out the most, Weiss said, is the connection that another of the six bidders, Halliburton, has to the administration.

Vice President Dick Cheney served as chief executive of the Houston company for five years before giving up his post to work on Bush's campaign.

"You can't beat Halliburton's connections -- that's as powerful as you can dream of," Weiss said.

George Shultz, secretary of state under President Reagan and Bush's father, now sits on Bechtel's board of directors.

In some ways, Bechtel has always relied on powerful friends for its biggest projects.

Founded in 1898 by Warren Bechtel, who left his family's Kansas farm to work on the railroad, W.A. Bechtel & Co. was born in Oakland and ranked as the West's largest construction company a few years later.

In 1931, Bechtel helped found the consortium that built the Hoover Dam. Later, President Eisenhower and King Faisal of Saudi Arabia would help the company build worldwide dominance.

Building a whole town

Bechtel's Jubail project in Saudi Arabia, begun in 1976, raised an entire industrial port city on the Persian Gulf -- one of 20 towns and cities the company has nearly built from scratch worldwide.

The San Francisco protesters paint a different picture of Bechtel -- one of a greedy, exploitative company.

In the spring of 2000, impoverished residents in the Bolivian city of Cochabamba protested after a company partially owned by Bechtel as much as tripled residents' water bills. A 17-year-old boy was shot and killed in the protesting that ensued, and Bechtel pulled out of Bolivia in April 2000. The company is now suing the Bolivian government for $25 million to compensate for the loss of future profits and the assets it was forced to leave behind.

"Due to Bechtel's price increases, people in Bolivia had to choose between water and food, or water and housing," said Antonia Juhasz, project director at the International Forum on Globalization in San Francisco, who traveled to Cochabamba. "Bechtel has proven time and again that it has no concern for the social, environmental or human costs of its operations."

Bechtel

Arguably the largest construction company in the United States, Bechtel is one of six companies nationwide invited by the Bush administration to bid on the first $900 million of reconstruction projects in Iraq.

  • Headquarters: San Francisco
  • Ownership: Privately owned by the Bechtel family, which founded the company in 1898 and still runs it
  • Employees: 50,000
  • 2001 sales: $13.4 billion
  • Notable board member: Former Secretary of State George Shultz
  • Notable projects: The Bay Bridge, Bay Area Rapid Transit system, Hoover Dam and cleanup of the Three Mile Island and Chernobyl nuclear power plant disasters. Current work in the Middle East includes a natural gas project in Egypt and $1.7 billion aluminum smelter in Bahrain.
  • Previous experience in Iraq: Worked on cleanup after the 1991 Persian Gulf War, including coordinating a force of 10,000 workers that extinguished oil well fires in Kuwait and helping get Kuwaiti oil production back on track. Nearly 100 Bechtel employees were taken captive by Iraq before the war but released before bombing began under an undisclosed arrangement.

Source: Bechtel, Mercury News research





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