War profiteering in Iraq

Some time ago, I wondered out loud in this space [*] how much money we might save from the multibillion-dollar reconstruction budget for Iraq if we let the Iraqis do the work instead of handing it out as pork to big American companies. A reader offers this snippet from NBC Nightly News, October 24, suggesting that the answer is “most of it.”

BRIAN WILLIAMS, anchor:

The struggle for Iraq’s future, of course, is not only about the military but about the money as well. The Bush administration is asking Congress to approve $20 billion for rebuilding Iraq, and today in Spain, the US got financial pledges from other nations as well, $13 billion, some of that in outright grants, most of it, though, in loans to Iraq.

Secretary of State Powell said he was pleased with today’s new commitments even though the amount raised so far still falls far short of the $56 billion the US and the World Bank say is needed there.

BRIAN WILLIAMS, anchor:

Something significant is being accomplished even before those billions make their way to Iraq however. NBC’s Kevin Tibbles saw how just a little bit of money and a whole lot of drive can go a long way.

KEVIN TIBBLES reporting:

The giant Sinjar cement plant in northern Iraq is up and running again, 665 workers back on the job. Written off at the end of the war, the aging plant was looted, inoperable, until General David Petraeus,

commander of the 101st Airborne, heard about it.

General DAVID PETRAEUS: We don’t have the word ‘no’ in our vocabulary.

TIBBLES: With many buildings in Iraq falling apart, fixing Sinjar was vital. But how? Army engineers determined that if contracted out, it would cost $23 million and take up to a year to rebuild this plant and get it up and running again. The 101st didn’t have the money or the patience to wait that long.

Brigadier General FRANK HELMICK (United States Army 101st Airborne Division): We would love to have a Mercedes Benz or a–a Cadillac, but what we need right now is adequacy, adequacy for the Iraqi people.

TIBBLES: So instead of spending millions on a contract, the 101st took just $10,000 of Saddam Hussein’s frozen assets and gave it to the

plant managers. Soldiers watched in amazement as the Iraqis cannibalized old machines for parts, fashioned new ones and got the factory running

again.

Unidentified Man: The future is wide for us.

TIBBLES: Sinjar now churns out 900 tons of concrete a day, just 25 percent of capacity, but a big first step, and generating $20,000 a day in profit. The 101st is using the same strategy throughout the north, from a sulfur plant and water pumping station to this derelict asphalt factory that even some Americans thought was hopeless.

Colonel BEN HODGES (United States Army 101st Airborne Division):

General Petraeus, he’d kick my butt every day to get down here and get some momentum going.

TIBBLES: All the projects are expected someday to eke out a profit while making Iraqis less dependent on foreign aid.

Colonel MIKE LINNINGTON (United States Army 101st Airborne Division):

Teach a man to fish, you feed him for a lifetime. And that’s really what this is about.

TIBBLES: A satisfying result, not from big American contract, but a little money and some old-fashioned Iraqi elbow grease. Kevin Tibbles, NBC News, Sinjar, northern Iraq

The story doesn’t even hint that there might be something wrong with a bid of $23 million to do a job that can be done somewhat less thoroughly for $10,000. (Anyone who suspects that the fact that NBC is owned by GE, which is a huge defense contractor, might have something to do with that omission is a lunatic left-wing conspiracy theorist.)

If I were one of the Senators who voted against the $87 billion, I’d be telling this story all the time. This little instance of potential fraud, waste, and abuse prevented by the lack of money doesn’t mean that voting against it was the right thing to do, but it’s more than a mere debating point. Once the big bucks start flowing down the pipeline, fewer Iraqis are going to get the chance to show what $10,000 can do.

Update The Washington Post explains how the military is able to avoid dealing with the paperwork that usually goes with Federal contracts to make these small awards. There’s a general observation to be made here: many, if not most, of the procedural requirements designed to prevent corruption cost more money than they save.

And of course those don’t actually prevent cronyism from delivering the big contracts to the big contributors. [*] Deregulate the government!

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com