Halliburton: a well-connected war profiteer
By Richard Becker
"War--what is it good for?" asked the
Vietnam-War-era anti-war anthem by the late Edwin Starr.
"Absolutely nothing" was the song's response.
Not if you're Halliburton, the Texas-based oil and military
services corporation whose former CEO--just coincidentally, of
course--happens to now be the vice-president of the United
States of America.
For Halliburton, like many other U.S. companies, war--and
the Iraq war in particular--is exceptionally profitable.
On Dec. 10 the New York Times reveal ed that Halliburton,
which has been award ed open-ended, no-bid contracts by the
Pentagon, was billing the federal government--the
taxpayers--$2.64 per gallon for gas imported into Iraq from
neighboring Kuwait.
This writer visited Iraq in 2000 and was struck by the fact
that gasoline, one of the few items in ample supply under the
U.S./United Nations sanctions regime, sold for a few pennies a
gallon. Iraq holds the second-biggest proven petroleum reserves
in the world.
Today, the price of fuel sold at gas stations or through the
informal economy in Iraq is four cents to 15 cents a gallon.
That is between one-twentieth and one-sixtieth the price that
Halliburton is charging U.S. taxpayers.
Why is gasoline being imported into one of the world's
biggest oil-producing countries? Much of Iraq's oil industry
was destroyed over the past 13 years by war and sanctions.
Since the U.S. occupation of Iraq began in April of this year,
Iraqi guerrilla forces have repeatedly attacked the
now-U.S.-controlled oil installations.
Even so, today the U.S. military is paying, for gasoline
trucked in from Kuwait, less than half what Halliburton is
charging. And the Iraqi state oil company is paying 96 cents a
gallon for the same imported gas. The U.S. colonial rulers have
kept the price below cost to prevent further inflaming the
already-high level of popular opposition to the occupation.
Halliburton spokesperson Wendy Hall explained the company's
$2.64-per-gallon price: "It is expensive to purchase, ship and
deliver fuel into a wartime situation." Hall said that at least
20 trucks had been damaged or destroyed, and several drivers
killed or wounded. Interestingly, these attacks had not been
previously reported in the corporate media.
However, all the imported gasoline coming from Kuwait is
being transported in the same manner--by truck--over the same
roads. So Halliburton's rationale for why its fuel is twice as
expensive doesn't hold water.
Halliburton: case study of a well-connected war
profiteer
Halliburton is the world's biggest oil services company. It
ranks 71st among the Fortune 500 biggest corporations. It has
oil drilling and maintenance operations all over the world,
including Angola, Algeria, Brazil, Nigeria, Bangladesh, Russia,
Central Asia and the Middle East.
In the early 1960s, Halliburton acquired Brown & Root,
one of the biggest military construction companies. Later it
acquired another big construction firm, Kellogg.
Brown & Root profited immensely in Vietnam, building
landing strips, roads, military bases and other infrastructure
for the U.S. war. Today, Kellogg, Brown & Root is the
subdivision of Halliburton that executes most of its military
contracts.
In January 2001, Dick Cheney, who was secretary of defense
during the first Gulf War, returned to Washington as George W.
Bush's vice president after five years as Halliburton's chief
executive officer. On Dec. 14 of the same year, Halliburton
subsidiary KBR was awarded a unique contract, which the
Pentagon called a "Logistics Civil Augmentation Program," or
LOGCAP.
The contract is described in Pentagon-speak as a
"cost-plus-award-fee, indefinite-delivery/indefinite-quantity
service." Translation: a contract that has no time, material or
dollar limits; guaranteed profits figured as a
percentage--usually 9 percent--are added onto the amount
spent.
In other words, the more that KBR spends, the more the
company makes in profits. This is a common feature of Pentagon
contracts.
Initially, the contract for the Navy is for five years; for
the Army it's a highly unusual 10 years. This makes KBR the
only private supplier of Army logistic services over the next
decade.
"It is close to unprecedented for the government to have
given so much of the solution to one contractor," is how
Professor Steven Spooner of George Washington University, who
specializes in federal contracting, describes the Halliburton
contract. (Boston Globe, Aug. 5, 2002)
The Pentagon did not consider any other bidders for LOGCAP.
This might seem a little surprising given that KBR and
Halliburton were under investigation for defrauding the
military on earlier contracts. To settle that case, KBR paid $2
million to the Army for work it billed but never carried out at
Fort Ord, Calif.
And that's just the tip of a gigantic iceberg. In February
1997, a General Account ing Office investigation revealed that,
for a project in Hungary, KBR was billing the Army at $85.98
per sheet for plywood that cost $14 in the United States. KBR's
estimate for the contract in 1996 was $191 million; by the next
year it had risen to $461 million. (Pratap Chatterjee, Corp
Watch, May 2002)
Under contract with the U.S. Navy, Halliburton was paid $37
million to build the 816 detention cells at Guantanamo Bay,
Cuba, for prisoners captured in Afghanistan.
Last spring, in the immediate aftermath of the invasion and
takeover of Iraq, Halliburton was awarded another open-ended,
no-competition contract to rebuild Iraq's oil industry.
Halliburton has already received $1.4 billion in payments.
While Iraqis and U.S. soldiers are killed and wounded daily,
and the cost of the occupation is more than $210 million per
day, the patrons of the Bush regime like Halliburton and
Bechtel are doing just fine.
Reprinted from the Dec. 25, 2003, issue of
Workers World newspaper
This article is copyright under a Creative
Commons License.
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