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ISSUE LIBRARY: Military Industrial Complex
Bechtel: Profiting from Destruction

Why the Corporate Invasion of Iraq Must be Stopped

By CorpWatch, Global Exchange, Public Citizen
Collaborative Report
June 5, 2003

Read full report on this Oilweb CD-ROM (PDF)


Introduction and Executive Summary

On March 20 and 21, 2003, two days after the U.S.-led invasion of Iraq, the people of San Francisco organized a massive protest to shutdown the world headquarters of the Bechtel Corporation. Many Americans may be unaware of the connection between the Bechtel Corporation and the U.S.-led war in Iraq. Bechtel employees like George Shultz not only used their political influence to help bring this war about, but key Bechtel board members and employees with advisory positions to the Bush administration helped ensure that Bechtel would receive one of the most lucrative contracts for rebuilding what they had helped to destroy.

On April 17, Bechtel received one of the first and largest of the rebuilding contracts in Iraq. Worth $680 million over 18 months, the contract includes the rebuilding, repair and/or assessment of virtually every significant element of Iraq's infrastructure, from power generation facilities to electrical grids to the municipal water and sewage systems. The contract was granted in backroom deals without open and transparent bidding processes and the content remains hidden behind a veil of secrecy. The contract has not been publicly disclosed to American taxpayers, who will be paying the majority of the bill. While there is no doubt that Bechtel has experience in these areas, it is an experience from which the people of Iraq should be spared.

War profiteering and political cronyism is just part of this story.

This report provides case studies from Bechtel's history of operating in the water, nuclear, energy and public works sectors. These case studies reveal a legacy of unsustainable and destructive practices that have reaped permanent human, environmental and community devastation around the globe. Letters from "Bechtel affected communities" included here provide first-hand descriptions of these impacts, from Bolivia to Native American lands in Nevada. The report reveals a 100-year history spent capitalizing on the most brutal technologies, reaping immense profits and ignoring the social and environmental costs.

With Bechtel's new contract in Iraq, the opportunity for expansion throughout the region would be further advanced by a recently announced Bush Administration plan for a U.S.-Middle East Free Trade Area by 2013. Bechtel even had a role in this, with Riley P. Bechtel, the chairman and CEO, appointed in February to the President's Export Council - President Bush's advisory committee on international trade. Such an agreement would make the corporate invasion of the entire region a reality, and Bechtel, as usual, would be in the lead.

Two wars and over a decade of sanctions have crippled Iraq's infrastructure. It is imperative that the humanitarian needs of the Iraqi people - particularly the right to self-determination - take precedence in the rebuilding effort. Bechtel should be held accountable for its past and current destructive practices rather than made more profitable by being entrusted with Iraq's most valuable public resources and reconstruction. U.S. assistance should support Iraqi organizations and businesses, rather than provide lucrative contracts to promote U.S. business interests and expand U.S. markets in Iraq.

The military invasion of Iraq must not be followed by a corporate invasion.


Contents

Part 1: Doing Business with Dictators: Bechtel's History in Iraq

As detailed in this report, Bechtel profited from the Hussein regime, and would have made a great deal more if they had had their way. From 1983 to 1988, Iraqi warplanes dropped between 13,000 and 19,500 chemical bombs on the people of Iraq and Iran. During this same time period, Bechtel and its allies in the Reagan Administration aggressively lobbied the Iraqi government to sign a contract with Bechtel to build an oil pipeline from Iraq to the Gulf of Aqaba in Jordan. Bechtel not only ignored the monumental humanitarian atrocities perpetrated by their Iraqi business associates, they took steps to ensure that their business deal would not be harmed by an official U.S. government condemnation of the Iraqi crimes. Bechtel also consulted in the construction of a petrochemical plant for Hussein that many fear was used by Iraq to build chemical weapons. There are even charges that Bechtel helped Iraq produce conventional arms. Bechtel profited off of the Hussein regime while they could. When the relationship soured, their employees and associates helped influence the decision to invade the country. Allowing this corporation to then profit from Iraqi reconstruction is immoral and unacceptable.

Part 2. The Revolving Door: Bechtel's Friends in High Places

The Bechtel family made its fortune by perfecting the art of the revolving door. Bechtel has used its intimate relationships with Republican Administrations past and present to alter not only its own, but all of our destinies. Bechtel's use of these connections has most recently played out in their role as both instigators (through their board members and executives) and as profiteers of the war in Iraq. Some current examples of insider influence include: CEO Riley Bechtel, who is on the President's Export Council, which advises the President on trade issues; Bechtel senior counsel and board member, George Shultz, who is chairman of the advisory board of the Committee for the Liberation of Iraq, which has close ties to the White House; General (Ret.) Jack Sheehan, senior vice president at Bechtel, who is a member of the influential Defense Policy Board; Daniel Chao, another Bechtel senior vice president, who serves on the advisory board of the U.S. Export-Import Bank and Ross J. Connelly, a 21-year veteran of Bechtel Group, who is the executive vice president and chief operating officer for the U.S. Overseas Private Investment Corporation. More of an "open" than a "revolving" door, Bechtel uses these cozy relationships to the detriment of people and the planet.

Part 3. Bechtel Brings Water Woes around the World

If Bechtel's contract in Iraq is extended to include "distribution of water," just as Halliburton's was for oil, the people of Iraq have much to fear. Bechtel is one of the top-ten water privatization firms in the world. After privatizing the water system in Cochabamba, Bolivia, a subsidiary of Bechtel made water so expensive that many were forced to do without. The government met public protests with deadly police force. Bechtel waited. Finally, the Bolivian government canceled Bechtel's contract. The company responded with a $25 million lawsuit for lost profits. This is but one such case study provided in this report that draws on community struggles against Bechtel from San Francisco, California to Sophia, Bulgaria. Each case demonstrates Bechtel's extreme disregard for the rights of its workers and the rights of communities to have access to affordable water.

Part 4. Bechtel and Nuclear Nightmares

Starting with the Manhattan Project that developed the atomic bomb and engineering the first reactor to generate electricity, Bechtel has been heavily involved in both commercial and military nuclear activities. These have included some of the most notable nuclear mishaps in U.S. history, from California's San Onofre reactor installed backwards, to the botched clean up of Three Mile Island. Now, while the legacy of environmental contamination and worker exposures continue to threaten public health and safety, Bechtel is finding ways to profit from the radioactive mess its projects have created.

Part 5. Bechtel and Public Works: A History of Taxpayer Abuse

Bechtel is being entrusted with millions of dollars of U.S. taxpayer and/or Iraqi oil dollars in the reconstruction effort in Iraq. As detailed throughout this report, however, Bechtel has proven that it has little regard for the rights of taxpayers to protect their resources against Bechtel's abuses. In one particularly egregious example, Bechtel is the corporation behind the most costly civil engineering undertaking in U.S. history, the Boston Central Artery tunnel project, known as the "Big Dig." Bechtel originally estimated the federally-funded project at $2.5 billion in 1985. The cost has reached $14.6 billion and appears to be rising still. Congress has investigated this mass abuse of taxpayer money on charges of extreme mismanagement and blind profiteering. Bechtel's history of worker abuses goes back as far as the construction of the Hoover Dam in the 1930s. The company is quoted as bluntly stating at the time, "they will work under our conditions, or they will not work at all." Labor conditions were so horrendous that the Department of Labor charged Bechtel with 70,000 separate violations and fined the company $350,000 (Bechtel had the fine reduced to $100,000). Bechtel's disregard for the human rights of workers remains a constant point of contention in its projects throughout the world.

Part 6. Bechtel and Unsustainable Energy

Bechtel has played a major role in construction for the fossil fuel economy and the mining industry. As the environmental costs of our fossil fuel addictions become clearer, and the limits of our natural resource base loom closer, Bechtel must be held responsible for the role it has played in moving our country toward further dependency on unsustainable energy practices. Bechtel boasts on its website of its involvement in more than 350 fossil-fuel power plants. It has built a vast network of oil pipelines in the U.S., Canada, the Middle East, Eastern Europe and Colombia. Bechtel is also involved in mining operations in Chile, Papua New Guinea, and other places where toxic waste has polluted land, water and caused deaths among the local population.

Conclusions and Recommendations

The Bechtel Corporation has a shameful track record of reaping human, environmental and financial devastation in communities throughout the world-from Boston to Bulgaria to Bolivia. Rather than being rewarded for such behavior with control over many of Iraq's most valuable public resources, Bechtel should be held accountable for its past and current destructive practices and condemned by citizens of the world. If anything resembling ethical, transparent and accountable practices had prevailed in the contract decision-making process - such as open bidding practices, full public disclosure of the bidding documents, ensuring the corporation has a satisfactory record of integrity and business ethics - the Bechtel Corporation would certainly be excluded from business activities in Iraq. This section makes concrete recommendations to stop the Bush Administration from doling out contracts to undeserving firms with which it has close ties, including Bechtel and Halliburton.

PDF Version of Report Bechtel: Profiting From Destruction
 

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