Not many bucks for our bangs
Tony Blair may be George Bush's most reliable comrade in the war on terror, but, says Andrew Gilligan, British firms aren't getting much reconstruction work in Iraq Down at the New Connaught Rooms in London's Covent Garden, the anti-war movement is making a heart-warming return to truly over-thetop form. 'Twenty suited "executives" wearing pig masks will gorge themselves in a trough of blood-stained banknotes.' froths a press release from Voices In The Wilderness. The event is to 'symbolise the corporate feeding frenzy taking place at the conference "Iraq Procurement 2004: Meet The Buyers".'
One can, of course, sympathise with the demonstrators. So many others have been muscling in on the anti-war market lately, you can't help imagining that the core, dreadlocked element must feel a little left out. Who needs students blowing whistles when you've got 52 former Foreign Office diplomats, five national newspapers, Grand Ayatollah Ali al-Sistani and half the population of Fallujah? Yet however much the protesters might see this week's conference as the perfect demo opportunity, the ideal symbol of fat-cat exploitation of Iraq, it was, in fact, nothing of the sort.
Far from being a 'corporate feeding frenzy', the reconstruction of Iraq has, for British companies, turned out so far to be rather more of a McDonald's Kiddie Meal. Very few banknotes, bloodstained or otherwise, have yet made their way into British pockets. For the slightly anxious, sometimes slightly confused businessmen wandering around the Connaught Rooms this week, the complaint is not that rapacious British capitalists are feeding at the Iraqi trough — it's that they can't even get into the farmyard.
'The Americans have got it completely sewn up,' said one delegate. 'We are getting carved out of contracts, even in the sectors we control.' In Basra, part of the British zone, P&O was denied a contract for the rebuilding of the port — even though it was the British army which liberated it. The Coalition Provisional Authority's programme management office in Baghdad, which awards the contracts over the whole of occupied Iraq, is staffed almost entirely by Americans and is run as an outpost of the US government.
Mike O'Brien, the Foreign Office minister, has described the rebuilding of Iraq as 'the biggest reconstruction effort ever undertaken in the world, probably over and above even the Marshall Plan.' He also promised, last November, that British companies 'stand to secure a big share' of the work. So far, at least, this has turned out to be yet another of those British government claims about Iraq that doesn't bear close examination. Only two really substantial deals have been awarded to British prime contractors, both in the most recent tranches of work announced. By the most generous estimates, UK firms have won only about 15 per cent, by value, of the contracts so far awarded — with the actual percentage likely to work out lower still, since some of the British winners are in multinational joint ventures, and subcontracting will also take a bite. In classic New Labour fashion, we now learn that as Mr O'Brien and his officials were issuing their reassuring promises about British businesses' rosy future, they were writing each other worried memos about the Brits' failure to win any work and making repeated trips to Washington to plead for more crumbs.
In some ways, it is surprising that British companies have managed even as much as they have. Would-be British fat-cats seeking a share of the reconstruction cream must run the extraordinary gauntlet of the US Federal Acquisition Rules, 10,000 pages of bureaucratic demands, any one of which can instantly scupper a promising deal. Contractors must, for instance, use US aircraft to transport staff and equipment to the war zone, even though no US airlines actually fly from Britain to the Middle East, and the only civil carrier into Iraq itself is Jordanian. (To comply with this rule, some British companies have found themselves travelling from London to Iraq via the United States, with a US civilian carrier westwards across the Atlantic and then the US air force straight back in the opposite direction.) Contracts with the defence department require that all equipment is bought from US sources except, for some reason, lawyers' wigs, ballbearings and lifeboat survival systems. Every dollar spent has to be accounted for in ways that may satisfy the US Congress, but are far in excess of the accounting standards required for normal commercial transactions.
Not that any of this stopped the US government awarding Halliburton, former employer of the Vice-President, Dick Cheney, a contract totalling up to $7 billion for renovating Iraq's oil industry, without competition, without any open tender and at rates which have now been shown to be grossly inflated. Indeed, a report by the Pentagon's inspector-general determined that of 24 contracts let for Iraq between February and August 2003, ten were 'inappropriately awarded', firm contract requirements were not established on eight, 13 involved 'little or no government surveillance', and there were no 'determinations of price reasonableness' on 22. All the contract beneficiaries were American.
There is, of course, a perfectly fair explanation for all this favouritism. The vast majority of Iraqi reconstruction so far has been paid for by the US taxpayer, as indeed was the war itself. Britain played rather less than a 15 per cent role in the military operations. The British government may be obliged to tender openly throughout the EU for its public work projects, but America has no such tiresome rules. British business organisations have started to advise their clients to give up on the American-funded work and focus their efforts on the contracts to be awarded by the World Bank, with a potential $30 billion of international donations to spend, and by the Iraqis themselves.
Even here, however, the playing-field has often been subtly skewed in favour of Team America. Ali Mosawi, a British businessman, runs a firm called Bevan Medical, which represents a well-known British pharmaceutical company in Iraq. The Iraqi ministry of health, like most of its counterparts in the West, orders drugs from a list called a formulary. Before the war, according to Mr Mosawi, the Iraqi formulary listed 3.000 drugs, including Accolate, an anti-asthmatic and one of his client's most popular products. Since the war, he says, the Americans now running the health ministry have 'rationalised' the formulary, cutting the number of approved drugs in half, dropping many British and European drugs from the list, but keeping all the American ones on it. Accolate's US rival, Singular, is now the main asthma drug bought by the ministry of health, a deal worth up to $10 million a year. The Americans changed the formulary without asking the hospitals,' says Mr Mosawi. 'It is an example of the way they are doing things without consultation and with US interests at heart. We took our case to the British government. They were helpful, but they ended up saying that it was an American decision and there was nothing we could do about it.'
Once again, as has been humiliatingly shown over the post-war planning, the military conduct of the coalition, and the fate of the Middle East peace process, Britain's role as number one friend to George W. Bush has proved of distinctly limited practical value. They might like us in Washington — but when it comes to business, and especially when it comes to the spending of taxpayer's dollars, we're still foreigners.
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