Bush Crony Full-Employment Act of 2003

Evelyn Pringle January 25, 2005

Josh Marshall writes a column for The Hill, a Congressional newspaper. Josh says that every big new piece of legislation needs a catchy title to set it apart, and he came up with a good title for the $87 billion allocated for rebuilding Iraq. ''The Bush Crony Full-Employment Act of 2003.'' I like that, its very fitting.

Who is Joe Allbaugh?

Anybody remember Joe Allbaugh? He was part of the inner circle in Bush's 2000 presidential campaign, along with Karl Rove and Karen Hughes. In January 2001, when Bush took over the White House, he put Allbaugh in charge of the Federal Emergency Management Agency (FEMA), which dispenses disaster money and loans after hurricanes, floods and fires.

I think Joe missed his calling. He should be a fortune teller, because somehow he knew a couple of weeks before Bush declared war on Iraq, that he should quit his government job and go into the business of helping wealthy clients secure Iraqi reconstruction contracts.

Of course Joe didn't say that at the time. When he announced his resignation from FEMA on March 1, 2003 he said, "Now I am going to take the opportunity to spend some time with my wife and children." Well his family could not have enjoyed too much quality with Joe because in a matter of weeks he opened a new firm called New Bridge Strategies.

True to form, with the press seemingly unwilling to publicize the war profiteering aspects of the war in Iraq, the formation of New Bridge basically went unnoticed by the American public and only briefly showed up in the headlines.

It deserved public attention because of the Republican heavyweights on its board that were linked to one or the other Bush administrations or to the family itself. The members not only included Allbaugh, but also Ed Rogers and Lanny Griffith, former George H W Bush aids.

The president of the company is John Howland, and Jamal Daniel, (business partners of first brother Neil Bush), is a principal.

Josh Marshall says New Bridge is actually an outgrowth of Haley Barbour’s lobbying firm, Barbour Griffith & Rogers (BGR). Josh says he came to this conclusion after he learned that both firms were located in the same office space. And also because Griffith is the CEO of New Bridge and Rogers is the vice president. Sounds to me like he reached the right conclusion.

Others agree. "The bottom line on New Bridge is that it appears to be very closely linked to BGR, which has many overlapping ties to the highest levels of the Republican Party," said Thomas Ferguson, a campaign finance expert at the University of Massachusetts, the Oct 15, 2004 Village Voice reports.

So here's the setup. Bush’s main man Joe, quits FEMA to spend time with his family, right before the bombs start falling in Iraq. He then moves into the offices of one of the biggest and most politically connected GOP lobbying firms in Washington and starts advertising services to clients who want to win reconstruction contracts in Iraq. How could it possibly get any sweeter than this?

Allbaugh Has A Big Heart

According to the Oct 6, 2003 New York Times, Allbaugh "is here to tell you that his new company, which advises clients on how to get business in Iraq, is not trading on his White House connections. The Iraqis need assistance ... and he can help."

Although its connections to the administration may not have received much attention in the media, the company itself was not shy about advertising its contacts. Its web site as much as brags about the company's links to Bush, by specifically pointing out that Allbaugh was "chief of staff to then-Gov. Bush of Texas and was the national campaign manager for the Bush-Cheney 2000 presidential campaign."

It says New Bridge is "a unique company that was created specifically with the aim of assisting clients to evaluate and take advantage of business opportunities in the Middle East following the conclusion of the U.S.-led war in Iraq." I'm surprised that the site doesn't have a blinking neon sign saying AKA war profiteering.

Initially, it said, "the opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in Washington, D.C., and on the ground in Iraq." But someone must have warned Allbaugh that that particular sentence was a little over the top because that particular phrasing has since been changed on the web site.

Allbaugh himself, didn't seem to give his ties to the administration a second thought. According to a Sept 30, 2003 article in Mother Jones, he claimed, "It's beneficial to clients that I know who the players are and I know who the decision makers are." Apparently he forgot to mention that because of all these friends in high places, he has insider knowledge of how much money the government will spend and when it will become available.

Middle East specialist, Richard Murphy, claims Iraqis will view the situation differently, and was quick to point out that the Bush ties to New Bridge would only validate what was already suspected. "In the Middle East, it will be received as confirming the weary cynicism prevailing in the area about US intentions in launching the attack on Iraq in the first place," said Murphy.

Allbaugh denied having any improper motives. "The stories I've seen have been couched as if people are trying to game the system, and that's not what we're about," he said. "We are trying to help Iraq become a capitalist country, and a leader throughout the Middle East. Iraqis themselves are asking for help," wrote the New York Times.

That's funny, I thought the Iraqis said they wanted us to get the hell out of their country and leave them alone. I wonder why I never knew that they had asked Joe to help.

Joe seems baffled that anyone would question his assertion about wanting to help the poor Iraqis. "We fought a war, we displaced a horrible, horrible regime, and as a part of that we have an obligation to help Iraqis," he said. "We can't just leave in the middle of the night."

He gets downright defensive if you question his business practices. On Oct 6, 2003, he told a New York Times reporter, "Because my friend is president of the United States, I'm supposed to check out of life?"

To that I would say no, of course you don't have to check out of life Joe. But you also don't quit your government job before the president even admits he's taking the country to war, set up shop and start advertising to get contracts for work in a country that you somehow know we're about to destroy.

Another Funnel - Diligence Security Company

It's clear that BGR was instrumental in bringing other companies into New Bridge's fold, including Diligence, a security firm set up by former US and British intelligence officers.

On Oct 6, 2003, Allbaugh told the NYTs, that "As part of his package for clients ... he offered security in the form of yet another new company, Diligence Iraq, which worked hand-in-hand with New Bridge. New Bridge is a minority partner in Diligence Iraq, which is just opening up in Baghdad. Mike Baker, the head of Diligence Iraq, serves as an advisory board member of New Bridge."

In other words, explained the Times, "if your company wants to send over three people from New York to investigate business opportunities in Baghdad, Mr. Baker will secure the way in: a three-car convoy of armed S.U.V.'s driving 90 miles an hour, to avoid bandits, in an eight-hour-plus streak across the desert from the border of Jordan or Kuwait," it said.

BGR provided the initial funding for Diligence, according to Nick Day, a co-founder of the firm. Like New Bridge, it was given office space at BGR's Washington office. BGR also provided the firm's advisory board. Many of the names on the Diligence board, including the Carlyle Group's Ed Mathias, match the names on the board of New Bridge.

And with a closer look, the web of this grand war profiteering scheme just keeps getting more and more entwined. In return for finding an investor for Diligence in Iraq, New Bridge got a minority shareholding in the firm.

According to a June 22, 2004 article on Corporate Watch, Diligence, is now headed by Richard Burt, former US Ambassador to Germany and a consultant in the Carlyle Group (which also has George Bush Sr, John Major and James Baker on its payroll). Whitley Bruner, formerly head of the CIA Baghdad station, is now director of the Iraq branch of Diligence.

And guess what? The deputy chairman of Diligence is none other than Joe Allbaugh.

Objections to Cronyism and Privatization

Is it any wonder that critics are questioning the propriety of the reconstruction effort? "I'm appalled that the war is being used by people close to the Bush Administration to make money for themselves," Democratic Rep Henry Waxman said. "At a time when we're asking young men and women to make perhaps the ultimate sacrifice, it's just unseemly."

On Sept 30, 2003, while the reconstruction bill was being debated in the Senate, Sen John Edwards explained why he was against giving Bush the $87 billion. "This is an administration of the insiders, for the insiders, and by the insiders. Learning that George Bush's campaign manager, Joe Allbaugh, has started his own consulting firm to profit from the war in Iraq proves this point,” Edwards said. “First, Vice President Cheney's Halliburton receives more than $2 billion in Iraq reconstruction contracts and now this.”

Edwards said, “It is an outrage and disrespectful to the young men and women who are serving in Iraq today. President Bush should start addressing this credibility gap by calling on Joe Allbaugh and his friends to stop using their influence to secure government contracts in Iraq, and by agreeing to an independent oversight panel to ensure that contracts in Iraq are administered fairly.”

"In this enormously expensive mission, the American people ought to be assured that any dollar we spend there is for the rebuilding of Iraq, and not just the building of profit for the president's friends and political supporters," he said.

On Oct 14, 2003, Edwards said he would vote against $87 billion because Bush had failed to outline a credible long-term plan for rebuilding the country, failed to persuade allies to help shoulder the costs, and failed to stop sweetheart deals for politically-connected companies.

"We used to talk about this money as a blank check. Well, now we know it's not really a blank check. We know the president is writing it out to Joe Allbaugh and Halliburton, and it's all endorsed by Vice President Cheney," Edwards said.

Always Close By - Bush Family Funnel

True to form, if there's a tax dollar to be skimmed off a business deal a Bush family funnel will be there to grab it. This time its First Brother Neil Bush. On Dec 11, 2003, The Financial Times of London reported that, "Two businessmen instrumental in setting up New Bridge Strategies, a well-connected Washington firm designed to help clients win contracts in Iraq, have previously used an association with Neil, the younger brother of President Bush, to seek business in the Middle East."

That would be New Bridge president John Howland and Jamal Daniel, a principal. As it turns out, Neil landed a $60,000 a year consultant contract, for which according to his testimony in a divorce deposition, he is required to take phone messages for about 3 hours a week.

However, Neil is being far too modest about his consultant work. According to the Times, he is doing much more than answering phones. Three people contacted by the Financial Times said they have seen letters written by Neil that recommend business ventures promoted by New Bridges in the Middle East. So in a nutshell, Neil is being paid an annual fee to "help companies secure contracts in Iraq," the Times reports.

Bush Sends Bremer To Privatize Iraq

According to a Sept 2004 article in Harper's Magazine by Naomi Klein, "before the fires from the “shock and awe” military onslaught were even extinguished, Bremer unleashed his shock therapy, pushing through more wrenching changes in one sweltering summer than the International Monetary Fund has managed to enact over three decades in Latin America.”

In his first major act on the job, Bremer "fired 500,000 state workers, most of them soldiers, but also doctors, nurses, teachers, publishers, and printers. Next, he flung open the country’s borders to absolutely unrestricted imports: no tariffs, no duties, no inspections, no taxes. Iraq, Bremer declared was “open for business,” says Harper.

Before the war, Iraq’s non-oil-related economy consisted of 200 state-owned companies, that produced everything from cement to paper to washing machines. In June, Bremer attended an economic summit in Jordan and announced that the firms would be privatized immediately. “Getting inefficient state enterprises into private hands,” he said, “is essential for Iraq’s economic recovery," according to Harpers.

In September, to entice investors to buy the state-owned companies, Bremer enacted a new set of laws. For example, Order 37 lowered Iraq’s corporate tax rate from roughly 40% to a flat 15%. Order 39 allowed foreign companies to own 100% of Iraqi assets outside of the natural-resource sector.

Investors could take 100% of the profits they made in Iraq out of the country. They would not be required to reinvest and would not be taxed. Under Order 39, they could sign leases and contracts that would last for forty years. Order 40 welcomed foreign banks to Iraq under the same favorable terms, said Harpers.

At first, privatization seemed likely. For as Harper's notes, "Iraqis, reeling from violence both military and economic, were far too busy staying alive to mount a political response to Bremer’s campaign. Worrying about the privatization of the sewage system was an unimaginable luxury with half the population lacking access to clean drinking water; the debate over the flat tax would have to wait until the lights were back on," it said.

By fall, rebuilding trade shows were being held all over the place. The Economist described Iraq under Bremer as “a capitalist dream,” and a flurry of new consulting firms were launched promising to help companies get access to the Iraqi market, their boards of directors stacked with well-connected Republicans, Harper's said.

The most prominent was New Bridge and it was absolutely jubilant over the potential opportunities in Iraq. “Getting the rights to distribute Procter & Gamble products can be a gold mine,” one of the company’s partners enthused. “One well-stocked 7-Eleven could knock out thirty Iraqi stores; a Wal-Mart could take over the country,” Harper quoted.

Iraq seemed like a gold mine. There were rumors that a McDonald’s would be opening, funding was almost in place for a Starwood luxury hotel, and General Motors was planning to build a factory. On the financial side, HSBC would have branches all over the country, Citigroup was preparing to offer loans guaranteed against future sales of Iraqi oil, and the bell was going to ring on a New York style stock exchange in Baghdad any day, said Harpers.

However none of that came to pass. For good reason. Klein explained that Bremer's illegal changes to Iraqi law may have made the country the most friendly in the world to corporations, but they were the least useful to Iraqi workers suffering an unemployment rate over 60%.

During the past year and a half, the whole world has watched as the Iraqis refused to hand over their country to Bremer and the plan for privatization went right down the tubes.

Bush cronies who drooled at the prospect of making mega-bucks in Iraq are no longer drooling. According to Harper's, "New Bridge Strategies, the company that had gushed about how “a Wal-Mart could take over the country,” is sounding distinctly humbled. “McDonald’s is not opening anytime soon,” company partner Ed Rogers told the Washington Post. Neither is Wal-Mart."

What Happens To Iraq Now?

God only knows what will happen to Iraq now. The Financial Times has called it “the most dangerous place in the world in which to do business.” Harper's described the mess created by the Bush gang: "It’s quite an accomplishment: in trying to design the best place in the world to do business, the neocons have managed to create the worst, the most eloquent indictment yet of the guiding logic behind deregulated free markets."

But don't worry about old Joe. Things may not have went as planned in Iraq, but he's branching out and finding other ways to cash in on the war. According to the Sept 30, 2004 Fairfield County Weekly, Allbaugh started yet another consulting company with Andrew Lundquist, the former director of Dick Cheney's secretive energy policy task force. The firm's first client? Lockheed Martin, one of the country's largest defense contractors.

Never fear, if there's an opportunity for profiteering, a Bush funnel will be there.