Iraq Contractors Spending Heavy on Private Armies, Armor

by William Fisher

(IPS) NEW YORK -- Somewhere between Halliburton and CARE, there is a cadre of contractors trying to help Iraq establish a working, private-sector economy.

But the cost of securing their safety is frustrating many, as some firms report spending 25-30 percent of their contract revenues on armored cars and small private armies.

These consultants have been hired for such tasks as: helping Iraqis create jobs by promoting enterpreneurism, improving agricultural and manufacturing efficiency, privatizing loss-making state-owned firms, stimulating investment, developing information technology skills, and encouraging an independent judiciary and greater transparency in business and government.

Those efforts follow a blueprint established by the previous governing authority, the Coalition Provisional Authority (CPA), set up by Washington soon after it led the invasion of Iraq in March 2003. The CPA passed laws to transform the nation's socialist economy into a free-market system, in the process, critics say, making the country ripe for the picking by western economic interests.

One of those profiting is Texas-based Halliburton Inc, formerly run by Vice President Dick Cheney, which pulled in billions of dollars in no-bid contracts to help rebuild Iraq soon after the invasion.

The U.S. government, principally the U.S. Agency for International Development (USAID), is spending some $3.3 billion annually on contracts with firms hired to guide the transformation. But the companies are finding it increasingly frustrating to get anything done.

Based on email interviews with people whose companies are working in agriculture, economic development, governance and program evaluation, IPS has learned that the major problem they face is security.

Although spending nearly one-third of their contract revenues on armored cars, bodyguards and other safety measures, some contractors are constantly at risk, often unable to move around the country to work with the people they have been hired to help, and frequently forced to leave Iraq for certain periods for the relative safety of Jordan or Kuwait.

"I think it is almost impossible to do good work there right now, but the optimist in me hopes that will change," said a senior executive for one contracting firm involved in municipal governance programs. Said another: "There is really very little getting done in Iraq these days, for obvious reasons."

Like almost all the people contacted for this article, they spoke on condition on anonymity.

One contractor described her company's elaborate security set-up. "We had to hire a militia -- 80 Kurdish 'pesh merghas' -- to protect us. These are mountain fighters from the north of Iraq who were trained by U.S. and British paramilitary during the time of the (United Nations economic) sanctions" during the regime of former President Saddam Hussein.

"Each fighter has an AK-47, many of them have pistols, grenades and RPGs (rocket-propelled grenades), and none of them would hesitate to use their weapons," she added.

But the "rules of engagement" have changed as the resistance became more intense. Says the head of one program, "In April, when the Mehdi Brigade revolted in the south and overran some compounds of American contractors, we told our fighters that if a mob threatened the compound they should shoot to maim -- wound people as necessary, but do not kill."

"Now, the situation is quite different, and our fighters will shoot to kill."

Travelling has also become a far more serious problem -- limiting consultants' opportunities to work with their Iraqi clients.

"When I go outside the compound in Baghdad," says one agricultural consultant, "I have two cars and eight guards, all heavily armed. The cars are low profile. I sit in the back in the middle, squeezed in between two guards, and in the front seat are a driver and guard."

"The second car, filled with guards, follows directly behind my car. This is what Mrs Hassan of CARE did not have. Her lightly or unarmed guard and driver could not overpower the people who abducted her. We have known for some time that women are considered high-value targets for kidnapping, and it is a shame she did not assume that she was a potential target."

Margaret Hassan, a British-Iraqi who had worked in Iraq for 30 years, was kidnapped by insurgents in October and presumed murdered in November after a video was released showing a woman being shot in the head.

Finding skilled consultants presents a mixed picture in a nation where U.S.-led forces have intensified their assaults in cities such as Fallujah and Ramadi in response to a growing number of suicide bombings and other attacks from insurgents trying to delay elections scheduled for January.

Despite the considerable risks, some contractors are finding no shortage of Americans eager to work in Iraq, as well as many local experts. Most of them appear to like their work and many non-Iraqis return for additional assignments.

But other consulting firms have a different experience. "It has become very difficult to recruit skilled American consultants during these last few months," says one representative. "This does not negate the statement that there are many highly skilled consultants there, and that many of them return. But there is a greatly diminished number willing to go under current conditions."

However, probably because of their relatively low profiles, these kinds of firms do not appear to have difficulty finding Iraqi subcontractors or staff members, while many Iraqi employees of companies involved in visible reconstruction work have been threatened, kidnapped and murdered.

Asks one consultant rhetorically: "How I can possibly like my job? There are days when I love it, and days when I am frustrated. It is compelling and the people are great."

"Every consultant I have had wants to return to Baghdad. Today, one of my good consultants returned with great delight for his fourth trip to Baghdad. And there are plenty of others like him, just as crazy as I am."

But some firms with experience in Iraq have declined to bid a second time as prime contractors, since those companies are responsible for costly security arrangements.

According to one major consulting firm: "We have taken the position that in the long run we want to work in Iraq. But last May, as conditions started to deteriorate, we predicted they would continue to worsen. We were correct."

"Until security and operating conditions improve we will not be a prime bidder on any contract. And we will only bid as a subcontractor if we are relatively confident that the prime contractor has an effective security apparatus."

Unlike these consulting firms, many not-for-profit humanitarian aid groups have left Iraq. "Of the dozens of international (aid) organizations that entered Iraq in 2003, fewer than 10 remain," wrote Tiziana Dearing, executive director of the Hauser Center for Non-profit Organizations at Harvard's Kennedy School of Government, in the 'Boston Globe' on Nov. 27.

"CARE withdrew its operations from Iraq earlier this month. The perception is fading that relief is independent, neutral and exclusively for humanitarian ends," she added.

Few consulting firms have left Iraq for good. Most say they are managing to get their work done, though usually far more slowly than they planned.

Says one agricultural consultant: "For the first time in a year we closed our Baghdad office last week, just before the Fallujah assault, and placed our local staff on administrative leave. We work through email with staff from their homes, and even with the conflict going on now they are able to conduct a reduced level of business."

Typical of the major projects being carried out by consulting firms is USAID's 20-million-dollar Economic Governance contract with Bearing Point, Inc, a giant consulting firm headquartered in McLean, in the state of Virginia.

The three-year contract is designed to assist in reforming tax, fiscal and customs policies as well as developing a monetary policy acceptable to the International Monetary Fund (IMF) by building the capacity of Iraq's Central Bank.

USAID is aware of the difficulties of working in Iraq's hostile environment, USAID Assistant Administrator for Asia and the Near East Jim Kunder told a press briefing in Washington last week.

"There is insecurity, indisputably, in the central part of the country, in what is called the Sunni Triangle ... in the Shia areas and in the Kurdish areas, which is 80 percent of the country, there is relative stability ... sometimes you have ... an incident one month, and then for six months everything will be fine."

"So you just make adjustments and you're flexible in terms of timing; you withdraw for a week and then you come back the next week if things calm down," added Kunder.

Despite these difficulties, USAID Administrator Andrew Natsios points to solid achievements. He told the same briefing, "There are 400 to 500 expatriates working through the contractors and grantees that we are providing money to who are working across the country. And there are thousands and thousands of Iraqis working for these companies."

One major contractor acknowledges, "there indeed is a lot of good going on in Iraq, but the fact that I cannot go to Baghdad because I might get my head cut off by a Zarqawi terrorist is not made better because Texas A&M brought in 1,000 pounds of wheat seed."