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Date Posted: 23:16:03 10/03/03 Fri
Author: Weird_Enigma
Author Host/IP: 172.142.96.5
Subject: Cronyism mars Iraq rebuilding

Cronyism mars Iraq rebuilding
Profiteering made easy by administration's coziness with business
PAUL KRUGMAN
New York Times

It's official: The administration that once scorned nation-building now says it's engaged in a modern version of the Marshall Plan. But Iraq isn't postwar Europe, and George W. Bush definitely isn't Harry Truman. While Truman led this country in what Churchill called the "most unsordid act in history," stories about Iraqi reconstruction keep getting more sordid.

Cronyism is an important factor in our Iraqi debacle. It's not just that reconstruction is much more expensive than it should be. Cronyism is warping policy: By treating contracts as prizes to be handed to their friends, administration officials are delaying Iraq's recovery, with potentially catastrophic consequences.

It's rarely mentioned nowadays, but at the time of the Marshall Plan, Americans were very concerned about profiteering in the name of patriotism. To get congressional approval, Truman had to provide assurances the plan would not become a boondoggle. Funds were administered by an agency independent of the White House, and Marshall promised that priorities would be determined by Europeans, not Americans.

Fortunately, Truman's assurances were credible; he had risen to prominence as a crusader against war profiteering, which he considered treason.

Iraq's reconstruction, by contrast, remains firmly under White House control. And this is an administration of, by and for crony capitalists. To match this White House's blithe lack of concern about conflicts of interest, you have to go back to the Harding administration. That giant, no-bid contract given to Halliburton, the company that made Dick Cheney rich, was just what you'd expect.

Even as the situation in Iraq slides downhill, and the Iraqi Governing Council demands more autonomy and control, U.S. officials continue to block local initiatives and are still trying to keep the big contracts in the hands of you-know-who.

For example, in July two enterprising Middle Eastern firms started offering cell phone service in Baghdad. Since the collapse of Baghdad's phone system has been a major source of postwar problems, coalition authorities should have been pleased.

But no: The authorities promptly shut down the services. Cell service, they said, could be offered only by the winners in a bidding process -- one whose rules, revealed July 31, seemed carefully designed to shut out non-U.S. companies. (In the face of strenuous protests the rules were revised but still seem to favor the usual suspects.) Oddly, the announcement of the winners, originally scheduled for Sept. 5, keeps being delayed. Meanwhile, only Paul Bremer and his people have cell phones -- and, thanks to the baffling decision to give that contract to MCI, even those phones don't work well.

Then there's electricity. One reason Iraq still faces blackouts is that local experts and institutions were excluded from the repair business. The exclusive contract was given to Bechtel, whose Republican ties are almost as strong as Halliburton's.

Meanwhile, several companies with close ties to top administration officials have begun brazenly offering their services as facilitators for companies seeking Iraqi business.

There's a moral here: Optimists who expect the administration to get its Iraq policy on track are kidding themselves.

The cost of the occupation is exploding, and military experts warn that our army is dangerously overcommitted. Yet officials are still allowing reconstruction to languish, and the disaffection of the Iraqi public to grow, while they steer choice contracts to their friends. What makes you think they will ever change their ways?


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Paul Krugman is a columnist for The New York Times, 229 W. 43rd St., Room 943, New York, NY 10036.

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