The Lincoln Plawg - the blog with footnotes

Politics and law from a British perspective (hence Politics LAW BloG): ''People who like this sort of thing...'' as the Great Man said

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Thursday, December 11, 2003

The shock-horror on Iraqi reconstruction is - or should be - fooling no one

Now, the most cursory glance at the archives here for the first few months of the year will show a distinct lack of diffidence when it comes to Bush-bashing. When justified.

So it's not exactly a starry-eyed neocon adulator of 43 who is saying that the furore over the exclusion of France, Germany and Russia from prime contracting opportunities in Iraq is plain dumb. Beyond the accepted margin of political hyperbole. It's just sad.

And insulting to the intelligence of the audience - the suckers, that is, like you and me.

To suggest, as the Guardian today does, that
The snub appears to have stunned German officials
implies a degree of credulity among German officials, or Guardian hacks, or both, that scarcely accords with their ability to tie their own shoelaces! (For the avoidance of doubt, I'm assuming they can tie their own: from the deluge of similar stories, I hope their mothers are standing by!)

From the moment that the troops went into Iraq, it was always assumed that the prime contractors would be American because the reconstruction effort was to be paid for with US tax dollars.

Fortunately, in tracking down evidence as to the expectations raised or not raised in the those early days, we have a crib-sheet with links to sources.

For example, in the House version of HR 1559, the war appropriations bill, §3002 provided that
None of the funds made available in the Act for reconstruction efforts in Iraq may be used to procure goods or services from any entity that includes information on a response to a Request for Proposal (RFP) that indicates that such entity is organized under the laws of France, Germany, the Russian Federation, or Syria.

The amendment passed on a voice vote. It did not form part of the bill as enacted (as PL 108-11) - but it could scarcely have added to any illusions the surrender-monkeys might have entertained that they were likely to be offered prime-contractor goodies in Iraq.

Even our glorious British allies were being cold shouldered, at the very moment that UK troops were being shot at in theatre: Observer April 13.

If the British were being excluded, how could the Germans have ever thought they were in with a chance?

And even as the initial contracts for the post-war clean-up were being let, USG was making the position clear (London Times March 27):
THE Bush Administration said yesterday that postwar reconstruction contracts for Iraq worth $1.9 billion (£1.2 billion) would go to American firms.

Half of the rebuilding work, however, will be open to subcontractors from around the world. The winning prime contractors, to be announced by the end of the month, will pick the subcontractors.

USAid, the US Agency for International Development, is planning to spend $2.4 billion (£1.5 billion) in Iraq, $1.9 billion of it on rebuilding infrastructure such as roads, bridges and water treatment and power plants. The remaining $500 million will go on humanitarian aid.

"Federal law requires us to use American companies (as prime contractors) for competitive bids," Andrew Natsios, the agency administrator, said.

And the concern in Washington was about which US firms would get the contracts (WaPo April 9).

If France and Germany thought they had any leverage over contracting, a likely time for demands to have been made was when the US were pressing for the post-conquest UN Security Council Resolution. So far as I can see, no such quid pro quo was demanded for support for the resolution (BBC May 22)

Of course, it is possible that, having begun with a clear intention to exclude France and Germany from prime-contractor status, USG at some stage relented. I can see not evidence that this has happened.

There have been differences between France-Germany and USG over the involvement of the UN in running Iraq, and in the speed and method of transfer of power to the Iraqis [1]. But the US contracts don't seem to have been a lever in either issue.

The kiss-and-make-up meeting between Schroeder and Bush on September 24 (mentioned in my piece yesterday) does not seem to have discussed the issue - certainly, the transcript of the press statements does not suggest that the topic was broached.

Yet, we're meant to believe that, at some moment between the time the invasion kicked off and the Wolfowitz memo was released, USG raised a legitimate expectation that Germany (as an example) might get a prime-contractor contract. In such a way as to justify its government being stunned to be kept out.

As at present advised, it's complete bollocks.

And both sides know it. It's a mild form of wag-the-dog action: Yank-bashing and Kraut-bashing are both attractive to a certain element, and fill the policy void with political empty calories.

(Schroeder won re-election last year with a campaign with a distinct anti-US flavour . The Germans as an object of politically motivated artificial hate in the US I discussed yesterday.)

The limits to the available measures of escalation - assuming, which I doubt, that escalation is a druther for either side - is shown by the steel tariffs affair.

My suspicion is that the contracts dispute is misdirection and displacement activity, on the part of USG, at least. The plain fact is - my August 27 piece links back to several from the immediate post-war period - that, economically, the sums do not add up: the cash flows (net of investment requirements) thrown off by the oil industry in the medium term will likely be small, Iraqi debt remains huge.

Most of the debt will never be recovered; the requirement is to allocate the loss and otherwise arrange matters so as to minimise the bad example inevitably set for the future. Which is, amongst other things, incredibly hard work, compared with transatlantic name-calling.

(On can legitimately question the timing of the memo - just as James Baker is due to go round with the hat amongst Iraq's creditors. Perhaps it was a little pre-emptive warfare from the DOD against the Old Enemy way down in Foggy Bottom. Or a set-up for Wolfowitz - who is rumoured to be on the way out and might be thought to need a little encouragement.

Such questions don't affect the fundamentals, as outlined above.)

  1. Guardian pieces: May 23, July 18, September 6, September 8, September 10

    Now, of course, the old saying applies that absence of proof is not proof of absence. Were I one of the smug bastards with Nexis, I could be a little more definite.


A suggestion I've heard from a guy on the BBC radio is that the Wolfowitz memo is part of a cunning plan to give USG room for manoeuvre in the debt forgiveness negotiations: creditors like France would forgive debt in exchange for contracts.

Perhaps. But does that, for example, fix the legal requirement that prime contractors be US firms?

The statutory trail seems to wind like this (the grownup - Ha! - media naturally are prevented by guild rules from passing out references to their suckers - oops!, readers):
  • A sum of $18.649 billion is provided for
    security, relief, rehabilitation and reconstruction in Iraq
    in an (unnumbered) section of HR 3289 entitled IRAQ RELIEF AND RECONSTRUCTION FUND (INCLUDING TRANSFERS OF FUNDS).

  • This section starts with the words
    For necessary expenses to carry out the purposes of the Foreign Assistance Act of 1961:
    the FAA is now Title 32, Chapter 22 of the US Code.

  • Chapter 22 includes a section (§2354) which provides that procurement may be made
    only in the United States, the recipient country, or developing countries
    save for exceptional circumstances, which don't, at first blush, seem to fit Germany in the Iraq case.

I'm not clear how the law distinguishes main contractors from subcontractors - perhaps it only applies to the former.

There is also, whilst of the subject of law, the question of treaty obligations to consider: Reuters (December 12) highlight
the World Trade Organisation's Agreement on Government Procurement
to which the US, France and Germany are signatories.

The Agreement [1] says, it seems, that procurement
...should not be prepared, adopted or applied to foreign or domestic products and services and to foreign or domestic suppliers so as to afford protection to domestic products or services or domestic suppliers and should not discriminate among foreign products or services or among foreign suppliers.

The piece quotes two exceptions to the rule which don't immediately seem applicable to the Iraq case.

(How is this obligation squared with the Buy America Act? I've found nothing useful online on the interaction between the two. They seem at first sight incompatible over most of the procurement field.)

Bush's briefing today was relaxed to the point of narcoleptic on the subject.

  1. Text of all the GATT/WTO agreements here; WTO Procurement page here.


I find a copy (PDF) of the famous memo (via Command Post) on the site of an organisation variously described on its homepage as:
  • Iraq Infrastructure Reconstruction Office, and

  • Iraq Program Management Office

The memo cites a couple of laws (41 USC 253 and 10 USC 2304) which look as if they come from general procurement statutes - there is no reference in the memo to Title 32, Chapter 22 in general or 32 USC 2354 in particular.

On opening up procurement to foreign entities in, and only in, coalition member states, the memo says (para 6):
Coalition partners share in the US vision of a free and stable Iraq. The limitation of sources to prime contractors from those countries should encourage the continued cooperation of coalition members.

My suspicion is that this is a half-hearted attempt to shoehorn the arrangement into the exception in the WTO procurement agreement relating to defence (Article 23(1)) which says
Nothing in this Agreement shall be construed to prevent any Party from taking any action...which it considers necessary for the protection of its essential security interests relating to...procurement indispensable for national security or for national defence purposes.

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