The War Profiteers:
How Are Weapons Manufacturers Faring in the War?
by Frida Berrigan

Published on Tuesday, December 18, 2001
By Common Dreams

“Afghanistan hasn’t had a direct impact on sales yet.” Peter Simmons, Spokesman for Lockheed Martin’s Marietta, Georgia plane Companies like General Electric and IBM, which cashed in on the tragedy of September 11th through tax breaks in the Economic Stimulus Bill, have drawn the ire of fiscal conservatives and progressive corporate watchdogs alike. But scant attention has been paid to the biggest war profiteers, the weapons manufacturers and the Pentagon.
Congress is debating a Bush administration defense budget of $343.2 billion, an increase of $32.6 billion over last year. This increase would mean that military spending would account for more than half of all discretionary spending (money that Congress must allocate each year).

This is good news to the weapons industry and while pink slips and hiring freezes are spreading like an epidemic from sector to sector, the top weapons manufacturers are awaiting new orders, holding job fairs, planning Initial Public Offerings, raising new capital and gaining new attention on the stock market.

As Loren Thompson, a defense analyst with the Lexington Institute, remarked “the whole mind set of military spending changed on Sept. 11. The most fundamental thing about defense spending is that threats drive defense spending. It’s now going to be easier to fund almost anything.”

So, what better time to be Lockheed Martin, Raytheon, Northrop Grumman or even the beleaguered Boeing? The war in Afghanistan is an unequivocal success- despite friendly fire incidents, bombing accidents, mounting civilian casualties and the recent crash of a $280 million B-1 bomber- and the Bush administration is already listing new countries targeted for military action, with Somalia, Yemen and Iraq topping the list. It is a good time to be in the war business.

“For a long time*[the defense industry] just didn’t seem like a sexy area that has a lot of legs to it,” said a partner at one options trading firm. Well look again, because these former “wallflowers” are ready to go. Responding to investor interest, stock exchanges are thinking about creating a new Defense Index. The American Stock Exchange has its 15- stock index up and running, Philadelphia and Chicago are not far behind.

That is music to the ears of weapons manufacturers. And they have not wasted any time capitalizing on Congress’ new generosity. As a lobbyist for a major defense contractor boasted, “There are 150 programs on Capitol Hill that we are actively working.”

Congress is still working out the wrinkles of their versions of the military budgets, but weapons manufacturers and their supporters are confident that it will be big. “With the [Bush] administration, we’ll see a rebuilding of the military to bring it back to where it was eight years ago,” said defense analyst Paul Nisbet. “We’ll see a considerable appreciation in defense stocks, as we saw in the Reagan years.”

NORTHROP GRUMMAN

This Los Angeles-based company manufacturers planes and bombers dropping munitions on Afghanistan, including the B-2 bomber, the F-14 fighter. The company also makes the much-praised unmanned Global Hawk. The $10 million per copy Global Hawk has been deployed to Afghanistan despite the fact that it had not completed its testing requirements.

The company boasts that it has the capability to “meet current and emerging national defense needs, including anti-terrorism and homeland security.” And analysts like Loren Thompson agree, “the most immediate hardware demand that this crisis will generate is for intelligence gathering and command and control. Those are Northrop’s strengths.”

In addition to its planes and bombers, the company’s Maryland based Electronic Systems division makes high tech systems like the Airborne Warning and Control Systems (AWACS), a control center and a huge radar disc mounted atop a Boeing 707, which serves “as the airborne nerve center for a military air campaign.” Northrop Grumman is also responsible for ALQ-15 jamming device, used to protect jets from enemy radar-guided missiles. As David Steigman, senior defense analyst for the Teal Group, boasts, “Northrop Grumman’s role is supplying the command control communications and the intelligence surveillance systems to find the bad guys and bop them in the head.”

When Wall Street opened again on September 17, 2001, Northrop Grumman was ready to bob those bad guys and its stock had risen 16% to $94 a share in anticipation of the coming war. Two days after bombing in Afghanistan began; Northrop Grumman’s stock had reached a three-year high of $107.60 a share on the New York Stock Exchange. The future looks bright and the company has job openings from more than 1,000 employees. According to a recent article in the financial magazine Barrons, Northrop Grumman is now seeking $2 billion in loans and equity investment to expand business opportunities and acquisitions.

It doesn’t hurt that Northrop Grumman has friends in high places, like Secretary of the Air Force James Roche, former Northrop Grumman Electronics Systems chief. Since September 11th, Roche has emphasized the need for more spending on intelligence systems, specifically mentioning Northrop Grumman’s AWACS plane. Not content to rest on its laurels, the company is lobbying Congress for a $300 million to upgrade the $1.3 billion B-2 Stealth Bomber, which has successfully completed bombings run in Afghanistan.

RAYTHEON

The Lexington, MA based company is best known for its Tomahawk missile. About 100 of these million dollar land-attack cruise missiles have been lobbed at Afghanistan from U.S. Navy ships since October 7th, fifty in the opening salvo alone.

Orders for Tomahawk missiles are already coming in from allies like Britain, which signed a contract for 48 Tomahawk missiles in a $87 million deal (TK date). And Raytheon is confident that significant Pentagon orders will follow. As David Polk, Raytheon spokesman, proudly said, “we are prepared to meet the urgent needs of our customers.”

Raytheon also makes the “bunker buster” GBU- 28, a 5,000-pound bomb and missiles like the TOW, Maverick and Javelin, all being used in Operation Enduring Freedom. In addition to missiles, Raytheon also builds sensors and radars used on unmanned and manned reconnaissance airplanes used extensively in Afghanistan. This diversity is part of what makes Raytheon the biggest stock percentage gainer since the war began; on September 10th the company’s stock stood at $26.85, now it is holding at about $32.80. Raytheon is looking to hire 1,400 new college graduates this year.

The company has been raising money recently. In mid-October, the company doubled its equity sales program with a major offering. The company raised about $1 billion by selling 29 million shares. Raytheon says the money will be used to reduce debt and for general corporate purposes.

In the never ending quest for more contracts, Raytheon has been pushing its agenda on Capitol Hill; $677 million to work on the next generation of Patriot cruise missiles and an undisclosed amount to upgrade Tomahawk cruise missiles.

LOCKHEED MARTIN

Lockheed Martin is the world’s largest weapons contractor, a major player in the areas of nuclear weapons and ballistic missile defense. The company was recently awarded the world’s largest weapons contract ever, a $200 billion deal to build the Joint Strike Fighter, a “next-generation” combat jet that eventually will replace aircraft used by the Navy, Air Force and Marine Corps.

Lockheed Martin did not win the contract on force of personality alone, or fighter plane design. During the calendar year 2000, Lockheed Martin spent more than $9.8 million lobbying members of Congress and the Clinton administration, more than double the $4.2 million the company spent during 1999. Among the company’s newest lobbyists: Haley Barbour, the former chairman of the Republican National Committee. During the 1999-2000 election cycle, Lockheed Martin contributed just over $2.7 million in soft money, PAC and individual contributions to federal candidates and parties. More than two-thirds of that money went to Republicans. Lockheed Martin spends more on lobbying Congress than any of its competitors, spending a whopping $9.7 million last year. Only General Electric and Philip Morris reported more lobbying expenses last year.

Since September 11th, the weapons giant has been steaming along. Stock prices rose almost $10, from $39.39 on September 10th to a high of $48.11 on November 12th , the stock is now steady above $46. Lockheed Martin makes the ubiquitous F-16 fighter plane, the Hellfire missile, “bunker buster” munitions and the massive C-130 transport plane. The F-16 plant in Ft. Worth, Texas expects to hire as many as 1,200 factory workers to increase production. They have more than 200 orders to fill from foreign governments for 1999-2000.

As the largest military contractor, Lockheed Martin has a lot of jobs in the pipeline. The company wants to go highest tech with its “combat Internet system,” a rugged handheld computer, that will put a “dot-com face on the modern battlefield.” The company is hiring in Silicon Valley, looking to replace “Rosie the Riveter” with “Suzie the Software Programmer.” A recent Lockheed Martin job fair attracted 1,300 applicants for 290 new positions in the company’s missile defense division. Even while Lockheed Martin celebrates its JSF successful, it is trying to shore up support for an additional $3.9 billion for development the F-22 Raptor.

BOEING

The Chicago-based Boeing Company, manufacturer of commercial and military aircraft, has not had an easy time since September 11th. While other weapons manufacturers are picking up new orders for weapons, Boeing announced the lay off of 39,000 workers in its commercial aircraft division.

On the military side, despite losing of the coveted Joint Strike Fighter contract, Boeing has a lot to be grateful for. Boeing’s JDAM (joint direct attack munitions) is the most widely used smart bomb in the war. The JDAM kit fits over a “dumb” missile and coverts it into a satellite-guided weapon using movable fins and a satellite positioning system. According to Pentagon spokeswoman Victoria Clarke, of the 12,000 bombs the U.S. has dropped on Afghanistan, 7,200 (about 60%) were precision-guided. Of these, 4,600 were Boeing’s Joint Direct Attack Munitions. The rest were laser-guided bombs or satellite-guided Raytheon Co. Tomahawk cruise missiles. But there was a downside, the precision JDAMs have repeatedly missed their targets; crashing into a residential neighborhood near the Kabul airport on October 12th and killing at least 10 civilians, falling off target and killing three American soldiers on December 5th, and wounding five Special Forces soldiers a week earlier. The Pentagon maintains there is no problem with the weapon, and insists it will continue to use it.

Since the United States began bombing Afghanistan, Boeing has received two separate orders for more than 1,074 JDAMs, to be delivered by December 2001 and March 2002. Boeing spokesman Robert Algarotti said the company expects to receive an additional contract soon. “We don’t have anything officially from the government yet, but we are expecting a new order to come in and we’ll be producing them faster than we have before.” As David Baker, retired Air Force General now with Schwab Washington research, said approvingly, “Boeing has taken a thrashing, but their military sector is pounding away like a Ferrari on all cylinders.”

JDAMs and Ferraris notwithstanding, the Pentagon’s award of the Joint Strike Fighter contract to rival Lockheed Martin was a major setback for Boeing. Panicked about commercial losses and military snubs, Boeing has dispatched an army of lobbyists to Washington and their wish list is a mile long and more expensive. Boeing is looking for Congress’ help in the form of approval for:

Air Force purchase of 60 Boeing C-17 cargo aircraft under a special “commercial” provision that removes financial oversight;
Air Force leasing of 100 Boeing 767 planes to be converted into surveillance planes and mobile command centers for the military;
Protection from billions in potential liability claims stemming from the 9-11 attacks;
Measures to encourage Lockheed Martin to share its Joint Strike Fighter contract.

These proposals make sense if the goal is saving Boeing, but they make neither military nor financial sense.

The C-17 Globemaster is Boeing’s jumbo military transport plane, which performed high altitude food drops in Afghanistan. As recently as March 2001, Boeing tried unsuccessfully to make the plane available to commercial buyers. This time around it seems the company is capitalizing on widespread sympathy for its commercial losses, but the proposal is still a bad ideal. Selling the military planes as though they were commercial would allow the Air Force to bypass important pricing oversight. In addition, the $232 million per copy C-17s aren’t all they promised to be. A General Accounting Office report found that Boeing’s failure to rigorously test the C-17 before production resulted in increased costs of more than $2 billion to the program.

The plan to lease 100 converted Boeing 767 air-refueling aircraft for a period of 10 years is a big rip-off for taxpayers too. The Office of Management and Budget estimates that the lease plan would cost $22 billion, while purchasing the aircraft outright would cost just over $15 billion-that is a difference of $7 billion that Boeing can pocket. The aircraft is even less of a bargain when the $600 million cost of modifying existing hangers to house the plane is taken into account.

Some officials at the Congressional Budget Office and in the House and Senate budget committees oppose the leasing plan, contending it is a scam that adds to the long-term costs. “This would be a first,” said G. William Hoagland, minority staff director on the Senate Budget Committee, of Boeing’s plan. “We’ve got to maintain some discipline. This just isn’t the time to be adding in this way.”

But, cool heads like Mr. Hoagland’s might have a hard time prevailing, given Boeing’s political weight. The 767 plan goes before a House-Senate conference committee next week and Boeing has a lot of well-connected and important people looking out for its interests. John M. Shalikashvili, retired Chairman of the Joint Chiefs of Staff is on the Boeing board. Former Deputy Secretary of Defense, Rudy de Leon heads Boeing’s Washington office. After September 11th Boeing beefed up its political connections by hiring former Senator Bennett Johnson (D-LA) and former Rep. Bill Paxon (R-NY). Former Ambassador Thomas Pickering, Boeing’s senior vice president for international relations since January, uses his forty years of experience to generate business for Boeing with foreign governments and corporations.

Also on the Boeing agenda is more money for its portfolio of major contracts. Boeing is currently working on more than a dozen contracts– including the expensive F/A-18 fighter jet, the crash prone V-22 Osprey tilt-rotor aircraft, the AH-64 Apache Longbow helicopter and the Airborne Laser for the Pentagon’s Ballistic Missile Defense Organization– that account for well over $10 billion in the 2002 Pentagon budget alone.

Frida Berrigan is a Research Associate at the World Policy Institute

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Democrats Focus On Halliburton
By Paul Kane and Ben Pershing
Roll Call

Wednesday 10 September 2003

Senate Leaders Promise Scrutiny of “War Profiteering”

Congressional Democrats this week launched a renewed attack on the White House’s connections to the Halliburton Co., warning that the energy concern once headed by Vice President Cheney must not benefit from “excessive profiteering” from the rebuilding of Iraq.
Democrats are trying to distinguish between the politically necessary funding of U.S. troops and ongoing military efforts in Iraq, pegged at more than $65 billion, and the proposal for more than $20 billion in reconstruction efforts, a price tag that even some key Republicans have questioned.

“We need a plan to ensure that Halliburton and other corporations like Halliburton are not in a position to profiteer on whatever money goes into Iraq,” Senate Minority Leader Tom Daschle (D-S.D.) said Tuesday, promising relatively smooth sailing for the military portion of funds in the more than $87 billion supplemental appropriation request.

But Daschle and Sen. Robert Byrd (D-W.Va.), ranking member of the Appropriations Committee, spelled out their intention to put up a fight over the reconstruction funds, particularly if any of that money is slated to end up in contracts for Halliburton, the company for which Cheney served as CEO before becoming President Bush’s vice presidential nominee three years ago. Democrats have long questioned Halliburton’s ties to the administration, using the firm to attack Cheney’s personal wealth, the adminstration’s approach to energy legislation and the Pentagon’s outsourcing program for many of its most basic functions in overseas work.

Democratic aides circulated reports showing that Cheney’s former firm had drawn more than $1.7 billion in contracts from the war in Iraq and was set to rake in hundreds of millions more dollars in no-bid contracts with the U.S. Army Corps of Engineers.

“I have seen questions in the press with respect to procedures in that regard, and I think we have to ask some questions,” said Byrd, who used an Armed Services hearing Tuesday to grill Deputy Defense Secretary Paul Wolfowitz about Halliburton’s role in the post-war reconstruction.

“These are areas which we should have questions about, and we ought to look into them,” Byrd said.

Responding to Byrd’s questioning, Wolfowitz said the Pentagon wanted to get critical services in Iraq, particularly the electricity infrastructure, running as quickly as possible and implied that the need for secrecy in pre-war planning led to the awarding of some of the no-bid contracts. However, with the traditional phase of the war over, Wolfowitz indicated that the administration should generally go with a competitive process for reconstruction contracts.

“I am quite certain the basic principle’s got to be competitive bidding,” he said.

In addition to wanting a more detailed plan for securing the peace and getting more international support for the effort, Daschle said the administration needed to “guarantee that Halliburton, and other corporations like that, aren’t just going to take these funds and with excessive profiteering run off like bandits without any competitive opportunities, without any insurance that there’s transparency.”

On the House side, Appropriations Committee staffers and Republican leadership aides received Office of Management and Budget briefings on Monday, but no timetable will be set for moving the supplemental until it receives complete details on the package from the Bush administration.

House Appropriations Chairman Bill Young (R-Fla.) discussed the measure with OMB Director Josh Bolton on Sunday, but Young has not yet decided when his committee will take up the measure. There is also no consensus yet on whether the supplemental will move as a freestanding measure or as part of another spending bill.

As with the last Iraq supplemental, Young and House leaders want to keep the bill relatively free of earmarks.

“We’d like to move it quick and clean,” said Young spokesman John Scofield, predicting that the supplemental would be a less likely target for earmarks because there are so many other fiscal 2004 spending bills still moving through the system.

Minority Whip Steny Hoyer (D-Md.) echoed comments from Daschle and Byrd, saying Democrats will support additional funding for the Iraqi conflict, but warned that some Democrats may suffer from sticker shock.

“What a huge miscalculation the administration made in terms of the cost of winning the peace,” Hoyer said of the $87 billion. “Not only in terms of money but in terms of the risk to our forces and personnel.”

House Republican leaders plan to give particular scrutiny to the request for an estimated $21 billion in nonmilitary reconstruction funding.

“We’ll be looking carefully to make sure it’s justified,” said a Republican leadership aide.

That portion of the supplemental could also be the spark for a small-scale panel turf war.

Since early August, House International Relations Chairman Henry Hyde (R-Ill.) has been circulating drafts of the Iraqi Liberation Act of 2003, an authorizing bill for the next year of reconstruction activities.

While his predecessor as International Relations chairman, ex-Rep. Ben Gilman (R-N.Y.), rarely bothered with authorization bills, Hyde has tried to reassert the panel’s clout rather than simply allow the Appropriations Committee to set policy.

A scheduled full committee markup of the measure has been postponed, as Hyde awaits details from the administration. It is also unclear whether the House GOP leadership would ever bring an authorizing bill to the floor, though Hyde could try to attach the measure’s language to an appropriations bill if he doesn’t get his own up-or-down vote.

In the Senate, Byrd and Sen. Edward Kennedy (D-Mass.) are planning to push for the reconstruction portion of the bill, including $800 million for Afghanistan, to be peeled off of the supplemental and put into a bill overseen by the foreign operations appropriations subcommittee.

And, seizing on the continuing economic stagnation domestically, Democrats are trying to use the reconstruction of Iraq to hit the Bush administration on what they consider underfunded priorities at home - a risky strategy that brought an immediate rebuke from Senate Appropriations Chairman Ted Stevens (R-Alaska).

“They can’t beat us over the head for increasing the deficit and demand more money at the same time,” Stevens said.

But Democrats feel they can use the issue to gain leverage on two fronts, whacking Bush and Cheney for their connections to a big energy company and accusing the administration of essentially giving away money to its friends as opposed to needed domestic priorities.

“If we’re going to say we have to provide these other funds with an urgency for Iraq, there has to be an equal urgency for the kinds of things that we care about here at home,” Daschle said.

Daschle, however, declined to spell out the Democrats’ specific strategy, declining to say whether he would push to have the reconstruction funds peeled off and whether there would be specific amendments for domestic spending to the supplemental.

“It’s too early to know just what legislative strategy we may employ,” he said.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

War Critics Zero In on Pentagon Office
By Jim Lobe
Inter Press Service News Agency
Tuesday 05 August 2003

WASHINGTON - On most days, the Pentagon’s ‘Early Bird’, a daily compilation of news articles on defence-related issues mostly from the U.S. and British press, does not shy from reprinting hard-hitting stories and columns critical of the Defence Department’s top leadership.
But few could help notice last week that the ‘Bird’ omitted an opinion piece distributed by the Knight-Ridder news agency by a senior Pentagon Middle East specialist, Air Force Lt. Col. Karen Kwiatkowski, who worked in the office of Under Secretary of Defence for Policy Douglas Feith until her retirement in April.

“What I saw was aberrant, pervasive and contrary to good order and discipline,” Kwiatkowski wrote. “If one is seeking the answers to why peculiar bits of ‘intelligence’ found sanctity in a presidential speech, or why the post-Saddam (Hussein) occupation (in Iraq) has been distinguished by confusion and false steps, one need look no further than the process inside the Office of the Secretary of Defence” (OSD).

Kwiatkowski went on to charge that the operations she witnessed during her tenure in Feith’s office, and particularly those of an ad hoc group known as the Office of Special Plans (OSP), constituted “a subversion of constitutional limits on executive power and a co-optation through deceit of a large segment of the Congress”.

Kwiatkowski’s charges, which tend to confirm reports and impressions offered to the press by retired officers from other intelligence agencies and their still-active but anonymous former colleagues, are likely to make her a prime witness when Congress reconvenes in September for hearings on the manipulation of intelligence to justify war against Iraq.

According to Kwiatkowski, the same operation that allegedly cooked the intelligence also was responsible for the administration’s failure to anticipate the problems that now dog the U.S. occupation in Iraq, or, in her more colourful words, that have placed 150,000 U.S. troops in “the world’s nastiest rat’s nest, without a nation-building plan, without significant international support and without an exit plan”.

Kwiatkowski’s comments echo the worst fears of some lawmakers, who have begun looking into the OSP’s role in the administration’s mistaken assumptions in Iraq. Some are even comparing it to the off-the-books operation run from the National Security Council (NSC) during Reagan administration that later resulted in the “Iran-Contra” scandal.

“That office was charged with collecting, vetting, disseminating intelligence completely outside the normal intelligence apparatus,” Rep. David Obey, a senior Democrat in the House of Representatives, said last month.

“In fact, it appears that the information collected by this office was in some instances not even shared with the established intelligence agencies and in numerous instances was passed on to the National Security Council and the president without having been vetted with anyone other than (the secretary of defence)”.

Actually, little is known about OSP, which was originally created by Pentagon chief Donald Rumsfeld and his top deputy, Paul Wolfowitz, to investigate possible links between Hussein and Osama bin Laden’s al-Qaeda terrorist group.

While only a dozen people officially worked in the office at its largest, scores of “consultants” were brought in on contract, many of them closely identified with the neo-conservative and pro-Likud views held by the Pentagon leadership.

There have been published reports that a similar informal group co-ordinated closely with the OSP from Israeli Prime Minister Ariel Sharon’s office, but these have not been confirmed.

Headed by a gung-ho former Navy officer, William Luti, and a scholarly national-security analyst, Abram Shulsky, OSP was given complete access to reams of raw intelligence produced by the U.S. intelligence community and became the preferred stop, when in town, for defectors handled by the Iraqi National Congress (INC), led by Ahmed Chalabi.

It also maintained close relations with the Defence Policy Board (DPB), which was then chaired by neo-conservative Richard Perle of the American Enterprise Institute (AEI), Feith’s mentor in the Reagan administration.

Perle and Feith, whose published views on Israeli policy echo the right-wing Likud party, co-authored a 1996 memo for then-Prime Minister Binyamin Netanyahu that argued that Hussein’s ouster in Iraq would enable Israel to transform the balance of power in the Middle East in its favour.

The DPB included some of Perle’s closest associates, including former Central Intelligence Agency (CIA) director James Woolsey and former Republican Speaker of the House Newt Gingrich, who played prominent roles in pushing the public case that Iraq represented an imminent threat to the United States and that its was closely tied to al-Qaeda and other terrorist networks.

In her article, Kwiatkowski wrote that OSP’s work was marked by three major characteristics:

First, career Pentagon analysts assigned to the Secretary’s office were generally excluded from “key areas of interest” to Feith, Wolfowitz, and Rumsfeld, notably Israel, Iraq, and Saudi Arabia. “In terms of Israel and Iraq, all primary staff work was conducted by political appointees, in the case of Israel, a desk officer appointee from the Washington Institute for Near Policy”, a think tank closely tied to the main pro-Israel lobby in Washington, the American Israel Public Affairs Committee (AIPAC).

Second, the same group of appointees tended to work with likeminded political appointees in other agencies, especially the State Department, the NSC, and Cheney’s office, rather than with those agencies’ career analysts or the CIA.

“I personally witnessed several cases of staff officers being told not to contact their counterparts at State or the National Security Council because that particular decision would be processed through a different channel,” Kwiatkowski wrote.

The CIA’s exclusion from this network could help explain why Cheney and his National Security Advisor, I. Lewis Libby, a long-time associate of Wolfowitz, frequently visited the agency, in what analysts widely regarded as pressure to conform to OSP assessments.

This exclusion of professional and independent opinions, both within the Pentagon and across government agencies — according to Kwiatkowski — resulted in “Groupthink”, a technical term defined as “reasoning or decision-making by a group, often characterised by uncritical acceptance of conformity to prevailing points of view”.

In this case, the prevailing points of view were presumably shaped by neo-conservatives like Feith, Wolfowitz and Perle, and the “intelligence” provided by the INC.

Kwiatkowski’s broadside coincides with the appearance in neo-conservative media outlets, notably the ‘Wall Street Journal’, of defences of Feith, who is widely seen here as the Pentagon’s most likely fall guy if it is forced to shoulder blame for bad intelligence and planning. The government of British Prime Minister Tony Blair has pressed Bush to fire Feith for several months, according to diplomatic sources.

In a lengthy defence published Tuesday, the associate editor of the Journal’s editorial page described Feith’s policy workshop as “the world’s most effective think tank”.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Common Dreams
Monday 04 August 2003
By David Morse

What was behind the Pentagon’s screwball scheme to establish an online futures market for acts of terrorism?
The $8 million betting parlor was scuttled only three days before its scheduled debut on August 1. Was it just a one-time fluke? If so, it raises questions about who is running the Pentagon. If it was part of a pattern, then it raises some serious questions about the Bush administration.

The announced purpose of the Policy Analysis Market, as it was known, was to harness the “anonymous forces of market capitalism” to predict the likelihood of acts of terrorism - much as commodity-trading speculates on the future price of coffee or pork bellies. The Pentagon’s justification was that “markets are extremely efficient, effective and timely aggregators of dispersed and even hidden information.”

But critics in the Senate raised moral, as well as tactical concerns, in pointing out the obvious. Not only were markets faulty predictors of the future (witness the last stock market bubble and its collapse), but if anonymous online traders could bet on the probability of various acts of terrorism in the Middle East - assassinations and coups - the setup was an invitation to mischief, including insider-trading by terrorists themselves. This may have been the Pentagon’s real intent all along: to use its cyber-surveillance capability to track buyers and sellers. But even as a long-term sting operation, it was ripe for abuse by speculators of every stripe.

“Can you imagine,” asked Senator Byron Dorgan of North Dakota, who helped blow the whistle in the Senate, “if another country set up a betting parlor so that people could go in - and is sponsored by the government itself - people could go in and bet on the assassination of an American political figure?”

The new toy was the latest brainstorm from its Defense Advanced Research Project Agency, DARPA, created to spearhead the War on Terrorism, and headed by the notorious John M. Poindexter. DARPA was trumpeted by Paul Wolfowitz, Deputy Secretary of Defense, as “brilliantly imaginative.”

The idea was anything but brilliant, of course. It was, as one Congressman put it, “unbelievably stupid.” A New York Times editorial called it “wacky,” and demanded Poindexter’s resignation, without asking how the idea had gotten past Wolfowitz. In response to the bipartisan outrage, Wolfowitz lost no time distancing himself from the project, suggesting that the brainstormers at DARPA “got too imaginative.”

The project was scuttled. Poindexter resigned. Heads of state in the Middle East can presumably sleep better. Was it a fluke? The facts suggest otherwise.

First, never mind that this is the same rear admiral John Poindexter who was indicted during the Reagan years for his role in the scheme by which arms were sold to Iran and the proceeds funneled to the right-wing rebels in Nicaragua. Never mind that Poindexter lied to Congress, and escaped a prison sentence on a technicality. Never mind, even, that the Bush administration put this same John Poindexter in charge of DARPA, where he concocted a plan for wholesale surveillance of U.S. citizens.

The problem goes far wider and deeper than Poindexter or his boss, Wolfowitz. Or Wolfowitz’s boss, Donald Rumsfeld. Or Condi Rice. Or even George W. Bush..

Poindexter’s follies are the quintessence of what this administration has been about from the beginning. This latest scheme simply exposes the tip of an ideological iceberg that is no less wacky or dangerous, but which has escaped such noisy condemnation because it floats in a sea of general acceptance. It is the ideology of privatization, carried to extreme.

At its most benign, this ideology rests on the very dubious assumption that every aspect of government, from elections to social institutions, to foreign policy, can be governed by the so-called free market. At its most vicious, it is simply monopoly capitalism masquerading as government: profoundly antidemocratic, as well as anti-competitive, with no thought beyond lining the pockets of the powerful.

The war on Iraq reflects this more vicious mode. The war was motivated by corporate greed, and sold with false advertising. Allies were bullied and bought. Underlying the administration’s steamroller approach was the arrogance of a monopoly. No alternatives would be considered. The largest-ever mass demonstrations around the world were brushed off like consumer complaints.

The Pentagon itself is run according to a more competitive model. Troops were delivered to Iraq in accordance with industry’s just-in-time standards of efficiency, with Donald Rumsfeld playing the role of a CEO downsizing the Pentagon as if it were a recent acquisition. Instead of the supplying the 240,000 or so troops requested by Pentagon brass, Rumsfeld delivered 170,000 - not enough to perform the many tasks of occupation

In both cases, the corporate model is flawed. Wholesale greed does not yield intelligent foreign policy. And a military occupation is not the same as a corporate takeover.

As the occupation grinds on, with more loss of American lives and political rumblings at home, the corporate brainstormers running the administration have resorted ever more desperately to the ploys one would expect from runaway capitalism - the placing of bounties on Saddam Hussein, dead or alive, the degrading attempt to buy the loyalty of former Iraqi army troops with hundred dollar bills. The cynicism of these devices, and the grumbling of our own troops, all convey the essential failure to secure a just peace for the Iraqi people. But that objective was missing all along.

The corporate model for the war is flawed in other ways as well. The Pentagon outsourced some of its manpower requirements to Mexican nationals who were willing to join the U.S. Army. But while this may blunt the political impact at home, it does not translate into lower wages - the Army being the Army, and not a multinational sweatshop. We are still spending $4 billion a month in Iraq. And Americans reading of mounting U.S. casualties might not notice how many surnames are Hispanic.

As for those fat, cost-plus contracts awarded to Halliburton and other politically connected U.S. firms for rebuilding Iraq’s infrastructure, they will cost U.S. taxpayers far more than would the services of European firms that are more competitive and better positioned geographically to do the job.

Which takes us to the essential fallacy so evident in the wacky betting parlor scheme. It is not just Poindexter’s folly; it is the bogus assumption that privatization translates into efficiency and that marketplace greed should govern human affairs.

David Morse is a journalist whose work has appeared in Esquire, The Nation, Japan Economic Journal, and elsewhere. He writes about the globalized economy and the impact of privatization on public policy.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Published on Monday, July 28, 2003
CommonDreams
by Heather Wokusch

Outspoken Pentagon advisor Richard Perle recently called for Iraq’s debt to be cancelled as a way of teaching banks about the “moral hazard of … lend[ing] to a vicious dictatorship.”
Fair enough. Other countries with “odious debt” incurred under nasty regimes may be granted debt forgiveness. Why not Iraq?

Why not indeed. A war profiteer like Perle lecturing on morality is doubtful enough, but who in today’s occupied Iraq will really profit from debt forgiveness, the Iraqi people or companies like Halliburton?

At stake is more than $184 billion of pending contracts and debts against Iraq, many of which transpired before the 1991 invasion of Kuwait. In other words, even deals inked when Saddam Hussein was considered a US ally could now be considered odious debt.

No small coincidence that the countries slated to lose most from an Iraqi write-off include Russia, France and Germany: Bush’s axis-of-just-as-evil for opposing the recent invasion of Iraq.

But taking Perle’s moral high ground for argument’s sake, consider that Chile’s Pinochet, Indonesia’s Suharto, South Korea’s Park Chung Hee, and yes, Iraq’s Hussein were all former recipients of White House largesse. So much for the US government steering clear of vicious dictators.

And of course, today’s “war on terror” has become a gold mine for brutal regimes of strategic US interest.

Take Uzbekistan. Despite an abysmal human rights record and corrupt government, the country received $500 million in US funding last year - $79 million specifically earmarked for “torture as a routine investigative technique.” Its proximity to Afghanistan and expanding US military presence guarantee ever more funding to back the savage Uzbek government, step up repression and no doubt create the kind of Islamic fundamentalism the US should be fighting in the first place.

And then there’s Pakistan. General Pervez Musharraf seized power in a 1999 coup, stifling opposition and rewriting the constitution to shore up his dubious power base - not exactly a model of democratic leadership. Regardless, Pentagon ally Musharraf just left Camp David with $3 billion in fresh US grants, for things like upping the nuclear war ante with India.

How ironic that dictatorships like Uzbekistan and Pakistan can cash in on the “war on terror,” while fledgling democracies defying Washington’s unilateral excesses are punished. The Bush administration’s recent rampage against the International Criminal Court (ICC) is a case in point: 64 countries receiving US military aid were forced to sign bilateral agreements exempting US troops from prosecution, or else risk losing the aid. The Bahamas, for instance, was warned funds would be withheld for paving and lighting an airport runway, and Caribbean states were told they could lose hurricane relief and rural dentistry benefits if they didn’t support Washington’s attack on the ICC.

In other words, the US government provides funding for “torture as a routine investigative technique” but not necessarily for hurricane relief. No wonder they hate us.

The White House is quick to point out that some countries have demonstrated loyalty to the Bush administration by sending peacekeeping troops to Iraq: Poland, Ukraine, Nicaragua, and El Salvador among others. Rarely mentioned, however, is the fact that US taxpayers will be funding this “coalition of the billing” to the tune of $250 million this year alone.

But who really benefits from massive cash infusions to Iraq, estimated to be costing US taxpayers $3.9 billion every month? And who would benefit from a hasty write-off of Iraq’s past debt?

There’s no doubt the country’s in chaos and needs help. Twelve years of debilitating sanctions have left the population and infrastructure ravaged, while the recent invasion and aftermath have left thousands dead and millions unemployed. Meanwhile, attacks against US service members grow more frequent and bloody every week.

But not everybody’s hurting. Halliburton, the Texan oil company tied to US vice president Dick Cheney, is making a killing on subsidiary contracts to Iraq, doing everything from repairing oil wells to providing housing for US troops. Corporate cronies will also benefit from Bush administration plans to privatize Iraq’s 100 state-owned firms, probably at fire sale prices.

No doubt the lack of financial transparency in today’s Iraq creates unprecedented opportunities. Some US firms have already been charged with bilking millions of dollars in bogus rebuilding contracts, while the integrity of the US-UK controlled fund slated to recover foreign Iraqi assets has been called into question.

Clearly, throwing more cash into this mess makes no sense. How long can US taxpayers shoulder the unilateral burden? What new dictators will be propped up? What assets and national resources will be privatized away from the Iraqi people without their consent? How long before they negate today’s agreements as odious?

Bottom line, until a stable government is in place, truly representative of the Iraqi people, there should be no debt cancellations - reschedulings or delayed payment allowances perhaps, but no write-offs. Same goes for privatizations. The Bush administration’s secretive, unilateral and unaccountable approach to finances is among our biggest moral hazards in Iraq.

Heather Wokusch is a free-lance writer. She can be reached via www.heatherwokusch.com

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