Eager United States companies are queuing up for a piece of what could be billions of dollars of work in rebuilding Iraq.
Questions remain about the United Nations’s role after the war; how Iraq’s oil income will be used; and whether countries other than the US will help finance reconstruction.
Some experts say the cost of repairing infrastructure could run to $100-billion — too much for the US to monopolise, even if it wanted to.
The reconstruction plan is already being billed as the most ambitious since the Marshall Plan in Europe after World War II. The United States Army Corps of Engineers (USACE) is wasting no time: it’s already awarded a number potentially lucrative contracts.Â
Three contingency contracts have been awarded by the USACE totalling $300-million. Perini Corporation of Framingham, Massachusetts, Fluor Corporation, based in Aliso Viejo, California, and Washington Group International, of Boise Idaho, will repair roads and bridges, replace damaged windows and doors, and build military barracks.
Halliburton has also been awarded a contract for repairing the oil fields potentially worth a whopping $7-billion over two years.
Contract information released by the USACE also shows Halliburton, through subsidiary Kellogg Brown & Root, stands to make 7% of the value of the contract, as much as $490-million.
This has sparked a rumpus among other bidders and drawn criticism that politically connected firms will profit handsomely. US Vice-President Dick Cheney was Halliburton’s chief executive for five years.
General Robert Flowers responded to criticism by saying the $7-billion figure was based on a worst-case scenario of massive damage to the oil fields. Just nine wells were torched, compared to the 647 during the 1991 Gulf War. So far, the US government has ordered $50,3-million of work under the contract.
The oil industry’s influence with the Bush administration, which includes a number of former oil executives, has been a hot subject since, and this contract has intensified scrutiny of that relationship.
But the biggest prize is a wide-ranging $600-million reconstruction contract from USAid that is still up in the air. The winning bidder will do the early work of rebuilding Iraq’s essential infrastructure including the airports, water and power systems, roads, hospitals and schools.Â
Companies invited to bid include the world’s biggest engineering and construction firms, some of which played important roles in reconstruction of the Balkans, Kuwait and Afghanistan. They include the closely held Bechtel Group of San Francisco; Parsons Corporation of Pasadena, California; and again Fluor. Louis Berger Group of East Orange, New Jersey, has also been named as a potential contractor. The winner will most likely award sub-contracts for the removal of explosives, security, and architecture and design.
British companies also hope to win up to 20% of that business. The British Consultants and Construction Bureau, heading industry efforts to obtain Iraq contracts, believes Britain’s role in the war should give its firms pride of place.
After months of diplomatic animosity, the Europeans doubt they will be allowed to play much of a role. They say it will be some time before Washington forgives their leaders’ anti-war stance — especially now that money is to be made.
The US House of Representatives attached a provision to its $80-billion spending bill for the Iraq war prohibiting German, French, Russian or Syrian bidders from landing US-financed contracts.
However, hundreds more companies from a host of nations will get a piece of the action through partnerships, alliances and subcontracting arrangements.
Much of the heavy lifting will be subcontracted to companies in the region. In Turkey, Jordan and Egypt, suppliers of steel, cement and other construction essentials are already negotiating for business.
Last week USAid awarded two contracts worth a combined $10-million. One valued at $7,9-million went to RTI International of North Carolina, which will repair local government institutions and increase women’s role in politics.
The other went to a Washington consulting firm Creative Associates International, which received an initial payment of $2-million to fix a school system hampered by sporadic enrolment, poor supplies and a Saddam-centred curriculum.
The agency also awarded a whopping $4,8-million deal for managing Umm Qasr Port to Stevedoring Services of America and a $7-million contract for USAid personnel support to International Resources Group.
Telecommunications companies are also jockeying for a piece of a potentially big project — rebuilding Iraq’s communications system virtually from scratch.
The Iraqi system was a mess even before the war, with fewer than three phones per 100 people.
Experts say the quickest solution will be wireless systems. They estimate a nationwide cellphone system could be installed in 18 months for about $200-million. The most likely beneficiary is Motorola, the biggest US maker of wireless infrastructure using GSM technology.Â
The bidding is expected to begin soon, but it remains unclear if non-US telecoms giants like Nokia of Finland will be eligible under subcontracts.