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Shadow Over the Oil Fields

The administration's no-bid contract with a Halliburton subsidiary gives the impression of a grab of Iraqi resources for American business.

May 08, 2003

The Bush administration is becoming its own enemy in Iraq. Secretary of State Colin L. Powell, White House spokesman Ari Fleischer and other top-ranking officials have clearly stated that the country's oil fields will belong to Iraqis. But a May 2 letter from the Army Corps of Engineers to Rep. Henry A. Waxman (D-Los Angeles) indicates that it has awarded a no-bid contract to a subsidiary of Halliburton Co. called KBR to run the oil fields until August -- and maybe longer.

The administration has revealed as little about the contract as possible, a withholding of information that is compounded by Vice President Dick Cheney's long-standing ties to Halliburton. The contract was issued March 8 but not disclosed until March 24. Then the corps revealed April 8 that the contract was worth up to $7 billion.

All along, the administration has left the impression that the no-bid contract was only for extinguishing oil wells and repairs. And Halliburton gave no indication that it was doing anything more than putting out oil fires. Now the corps is indicating that the company will basically operate the oil fields. It also says the "best estimate" for awarding a new contract is "approximately the end of August" but the current contract could last until January 2004. The corps is also preparing a new, long-term contract for operating the fields. Why? Aren't the Iraqis supposed to do this themselves? Shouldn't they at least be the ones to cobble together the contracts?

The administration's failure to be forthright about the bid is creating the impression of impropriety. KBR may indeed be the best company to work on the oil fields, but the no-bid contract didn't give anyone else a chance to present their capabilities. What's more, the company has a history of overcharging the government. In 1997, the General Accounting Office found that the firm had billed the Army for questionable expenses. Last year, KBR paid $2 million in fines to resolve fraud claims over work at a military base.

Now the Halliburton subsidiary is being rewarded with potential control over Iraqi oil fields. The administration may be guilty of cronyism or nothing more than having murky plans for Iraq. Either way, it needs to quickly resolve the impression that it's grabbing Iraq's oil fields for American companies.

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