Inter Press Network

Thursday, July 22, 2004

Death toll of U.S. forces in Iraq reaches 900

07-21) 04:17 PDT
BAGHDAD, Iraq (AP) --
A roadside bomb exploded north of Baghdad early Wednesday, killing one U.S. 1st Infantry Division soldier and bringing to 900 the number of U.S. soldiers killed in Iraq since the beginning of military operations in March 2003.
Maj. Neal O'Brien of the 1st Infantry Division said the most recent soldier killed was on patrol in a Bradley fighting vehicle in Duluiyah, 45 miles north of Baghdad, when the bomb detonated shortly after midnight Wednesday. On Tuesday, two U.S. Marines and two U.S. soldiers were killed in action in Anbar Province, a Sunni-dominated area west of Baghdad.
A count by The Associated Press put the number of American soldiers killed since the war began at 900. Counts of the number of U.S. service members killed in Iraq vary, with some already exceeding the 900 figure.
The Pentagon's latest casualty update, released Tuesday, put the death toll at 893 service members, plus two civilian Defense Department employees. There have been five military personnel reported killed since the last Pentagon update. 


The Economics of Innocent Fraud: Truth for Corporate power is the driving force behind US foreign policy - and the slaughter in Iraq

Mass slaughter has become the ultimate civilized achievement

Book review by Mufti A. Hasan

Prof Galbraith’s latest work -  The Economics of Innocent Fraud: Truth for our time - is a must read for anyone having a few nagging doubts about what the American public is being told every day by financial publications and politicians. He clarifies the meaning of terms which have been thoroughly garbled by propagandists during the last few decades. Garbling, or "spinning" as it is now known, is a fancy kind of lying "misdirection" or "misinformation" intended to convince people of something that is false, or to gain acceptance for what people would otherwise reject.
The central premise of the book is that a series of false beliefs ("frauds") have long been perpetuated among the American people about how our society operates. These beliefs have nothing to do with reality, yet they persist because they benefit the most advantaged members of society. But Galbraith doesn't believe this deception is entirely by malice. He reasons that most of those who benefit from these frauds are "innocent." They have merely adopted a version of the truth that is most convenient for them, which he maintains is simply human nature. He also points out that Corporations are managed by gigantic bureaucracies, which are little different from government bureaucracies. He tells us that capitalists are still capitalists, no matter how disguised by words and image-makers:
“Let's begin with capitalism, a word that has gone largely out of fashion. The approved reference now is to the market system. This shift minimizes-indeed, deletes-the role of wealth in the economic and social system. And it sheds the adverse connotation going back to Marx. Instead of the owners of capital or their attendants in control, we have the admirably impersonal role of market forces. It would be hard to think of a change in terminology more in the interest of those to whom money accords power. They have now a functional anonymity.
“But most of the people who use the new designation-economists, in particular- are innocent as to the effect. They see nothing wrong with their bland, descriptive terminology. They pay no attention to the important question: Whether money- wealth-accords a special power. (It does.) Thus the term innocent fraud.
“The fraud also conceals a major change in the role of money in the modern economy. Money, we once agreed, gave the owner, the capitalist, the controlling power in the enterprise. So it still does in small businesses. But in all large firms the decisive power now lies with a bureaucracy that controls, but does not own, the requisite capital. This bureaucracy is what the business schools teach their students to navigate, and it is where their graduates go. But bureaucratic motivation and power are outside the central subject of economics. We have corporate management, but we do not study its internal dynamics or explain why certain behaviors are rewarded with money and power. These omissions are another manifestation of fraud. Perhaps it is not entirely innocent. It evades the often unpleasant facts of bureaucratic structure, internal competition, personal advancement, and much else.
“This innocent or not-so-innocent fraud masks an important factor in the distribution of income: At the highest levels of the corporate bureaucracy, compensation is set by those who receive it. This inescapable fact fits badly into accepted economic theory, so it is put aside. In the textbooks, there is no bureaucratic aspiration, no reward for bureaucratic achievement, no bureaucratic enhancement by merger and acquisition, and no personally established compensation. Bypassing all of this is not a wholly innocent fraud.”
Galbraith notes that there is damn little difference between "public" and "private" enterprise in the United States. This is not because of the overweening and unwelcome encroachments of the government; rather, it is the private sphere which has moved into the White House:
“A more comprehensive fraud dominates scholarly economic and political thought. That is the presumption of a market economy separate from the state. Most economists concede a stabilizing role to the state, even those who urgently seek an escape from reality by assigning a masterful and benign role to Alan Greenspan and the central bank. And all but the most doctrinaire accept the need for regulation and legal restraint by the state. But few economists take note of the co-optation by private enterprise of what are commonly deemed to be functions of the state. This is hidden by the everyday reference to the public and private sectors, one of our clearest examples of innocent fraud.
“Take the common outcry about corporate welfare. Here the private firm, as it is called, receives a public subsidy for its product or service. But what is called corporate welfare is a minor detail. Far more important is the full-fledged takeover by private industry of public decision-making and government spending.
“The clearest case is the weapons industry. Given the industry's command of the Congress and the Pentagon, the defense firms create the demand for weaponry prescribe the technological development of our defense system, and supply the needed funds-the defense budget. There is no novelty here. This is the military-industrial complex, a characterization that goes safely back to Dwight D. Eisenhower.
“Any notion of a separation between the public and a private sector-between industry and government-is here plainly ludicrous. Nonetheless, the absorption of public functions by the arms industry is ignored in all everyday and most scholarly economic and political _expression. And what is so ignored is in some measure sanctioned. I hesitate here to speak of innocent fraud; it is far from being socially benign.”
The most disturbing assertion Galbraith makes in this book concerns the influence that corporations have on Pentagon decisions. The fundamental fact of American life in the 21st century, according to Galbraith, is that we live in a corporate system whose deepest foundations lie in corporate executives' lust for unrestrained power and self-enrichment.Most citizens, he writes, think that U.S. weapons purchases are logically debated and analyzed before decisions are made. This is utterly untrue, because the arms industry itself controls military spending, Galbraith asserts. Corporations have invaded the Pentagon and have become its "primary influence" on "foreign policy, military commitment, and ultimately, military action. War." Galbraith contends that the weapons industries actually endorse international hostilities because of the enormous profits they stand to gain, and that they "accord legitimacy and even heroic virtue to devastation and death" simply because it's good business.
“In 2003, close to half the total US government discretionary expenditure was used for military purposes. A large part was for weapons procurement or development. Nuclear-powered submarines run to billions of dollars, individual planes to tens of millions each. Such expenditure is not the result of detached analysis. From the relevant industrial firms come proposed designs for new weapons, and to them are awarded production and profit. In an impressive flow of influence and command, the weapons industry accords valued employment, management pay and profit in its political constituency, and indirectly it is a treasured source of political funds. The gratitude and the promise of political help go to Washington and to the defence budget. And to foreign policy or, as in Vietnam and Iraq, to war. That the private sector moves to a dominant public-sector role is apparent….. Defense and weapons development are motivating forces in foreign policy. For some years, there has also been recognized corporate control of the Treasury. And of environmental policy.”
“Civilization has made great strides over the centuries in science, healthcare, the arts and most, if not all, economic well-being. But it has also given a privileged position to the development of weapons and the threat and reality of war. Mass slaughter has become the ultimate civilized achievement,” Galbraith emphasizes.
Another fraud, Galbraith says, is that the word "work" is used to describe two very different things. First there is the enjoyable, prestigious, well-paying work of the favored classes. And then there is the disagreeable, boring, tiring work performed by those at the bottom of our economy. The most enjoyable jobs have the best pay, yet they are usually performed by people who don't really need the money. By contrast, he writes, those with the most unpleasant jobs receive the smallest rewards, even though they have greater need.The Economics of Innocent Fraud is an important book at an important time. If there was ever a moment when we needed calm wisdom and insight, it's now. With the nation facing war, economic recession and corporate scandals of mind-boggling proportions -- while multi-million dollar public relation campaigns blur the line between truth and falsity -- Americans could surely use someone with integrity to step in and tell us what the hell is going on.

The Economics of Innocent Fraud: Truth for Our Time, by JK Galbraith, published by Allen Lane.
July 19, 2004 



By John Hanchette
Niagara Falls Reporter 
OLEAN -- More disturbing news from Iraq: Now United Nations auditors are complaining the Bush administration is holding back information concerning more than $1 billion in reconstruction contracts awarded to several well-connected American firms without competitive bidding.
The complaints come from the International Advisory and Monitoring Board -- a bookkeeping creation of the UN Security Council that includes members from the International Monetary Fund and the World Bank. The board was set up to make sure Iraq's oil revenue would be handled in proper fashion throughout the American occupation.
The audit in question only covers the start of the war to the end of last year, and is being conducted by one of the global accounting giants, the firm KPMG, whose auditors bitched just before last weekend that repeated routine requests for internal files relating to more than $10 billion in Iraq's oil proceeds since the war began have been stiff-armed by the Pentagon and White House. One of these internal audits includes three no-bid contracts worth a total $1.4 billion awarded to the Texas oil services behemoth Halliburton, the company Vice President Dick Cheney ran before stepping down to join Bush the Younger's year 2000 presidential campaign ticket. (Cheney still receives almost $1 million annually as part of his severance contract.)
One of the Halliburton contracts provided for importing and distributing fuels to keep Iraq going during the occupation and rebuilding -- and is the subject of other fiscal probes after complaints the huge firm was gouging by over-pricing the gas and oil. That contract was paid for out of Iraqi oil revenues.
KPMG says the initial $10 billion in Iraqi oil proceeds seems to have been properly deposited in the American-run Development Fund for Iraq, but it can't tell how the money is being spent. No evidence of fraud is reported, but KPMG beefed about lax bookkeeping, little financial control over key Iraqi ministries, duplicate salary payments to some Iraqi government employees, the bartering of Iraqi crude oil for Syrian electricity, and the continued lack of oil-pumping meters on Iraqi export shipping platforms despite repeated UN requests for such devices -- a failure that may have led to "an unknown quantity of oil smuggled out of Iraq following the war."
The Pentagon refused to say much about all this except to insist the American-run Coalition Provisional Authority (CPA) was doing the best it could in a "very challenging environment." Pentagon spokesman Lt. Commander Flex Plexico (one of my all-time favorite government names) said the CPA had made "every effort to bring sound management transparency and oversight to the Development Fund for Iraq while at the same time improving the quality of life for the Iraqi people."
Another KPMG audit covering the start of this year up until June 28, when the CPA relinquished power to an interim and hand-picked Iraqi government, is being conducted. The interim government, in order to keep track of the spending of oil revenues in the future, has created a Board of Supreme Audit, but the head of it -- a man said to have ample fiscal skills -- was assassinated in recent weeks. The auditors said they will continue to ask for all the Bush administration's no-bid contracts paid for with Iraqi oil income.
While the KPMG auditors also complained about lack of access to other no-bid contracts for rebuilding Iraq, and while the American public seems only dimly aware such goodies were handed out, the identities of some of the favored firms are well-known.
Even some of the rebuild-Iraq contracts handed out by the Bush administration after competitive bidding are controversial.
Bechtel Corp. is a San Francisco-based company with solid connections to the Bush White House. President Ronald Reagan's former Secretary of State George Shultz is on the board and senior vice president Jack Sheehan is a member of the Defense Policy Board, which advises Defense Secretary Donald Rumsfeld. Bechtel was awarded a $680 million contract from the United States Agency for International Development to rehabilitate Iraq's power, water and sewage systems and rebuild its only port. The bidding process was somewhat secretive and open only to a select group of American corporations.
The Center for Responsive Politics in Washington reports that the six firms allowed to bid on the contract contributed $3.6 million to American politicians in the three previous years -- two-thirds of it to Republicans, and that Bechtel contributed $1.3 million of the total. Bechtel has been criticized by some Iraqis for failing to provide drinkable water that meets even the questionable potability standards of Saddam Hussein's regime.
All of which is to note there is now an iron-clad, unbreakable and ultimately unhealthy bond between the American military and private industry.
Even before the Iraqi war, the Pentagon was spending about 8 percent of its overall budget -- at least $30 billion -- on private military companies. Gone is the familiar World War II template of our self-sufficient Armed Forces defending our shores and beleaguered friends in distant lands without much outside help. With the downsizing of the American military came a quiet Pentagon reaction: outsourcing every thinkable job to the private sector.
KP duty and laundry detail in Afghanistan and Iraq? Private contractors.
Uniformed, ramrod-tall recruiter in full dress? Replaced in at least 60 American cities by casually clothed private sector headhunters.
Beetle Bailey mowing the lawn and throwing garbage bags on an Army base? Inaccurate portrayal. Now it's a private "landscaper" and civilian "sanitation engineer."
The Pentagon pays private companies as much as $4 billion a year for war fighting exercises. A publicly-traded firm called Cubic recently brought in Bosnian refugees from around the United States to Fort Polk so they could recreate their gruesome experiences for American soldiers participating in war games.
At the end of last year, there were about 10,000 private contractor workers on the ground in Iraq -- outnumbering the second-largest contingent of Coalition troops, the British with 9,900.
Even the Pentagon manual on dealing with private contractors was written by a private contractor.
The Pentagon (and Bush administration) excuses all this by contending the downsized military, already stretched unbelievably thin, has to be left to do the actual fighting -- so these ancillary jobs and programs are better handled by civilians. The numbers are surprising. Thirteen years ago in the Gulf War, when Bush the Elder sent Saddam scurrying back to Baghdad, active duty troops in the Army numbered 711,000. Today that number is about 485,000 -- a reduction of almost a third.
None of this civilian element in the military is new in concept. Private contractors hauled food wagons in the Civil War. In Vietnam, more than 3,000 DynCorps workers serviced Huey helicopters. As recently as five years ago, a Halliburton subsidiary was making almost $3 billion by providing water, meals, mail and laundry for 20,000 American troops in the Balkans.
Private companies pursuing military goals goes back at least four centuries. In the early 1600s, Holland established the Dutch East India Company to free up trade routes, fight the British fleet, and prosecute a protracted war of independence against powerful Spain and Portugal. It fought several wars on its own. At its peak, it boasted 40 ships of war and 10,000 professional soldiers.
Same for the famed British East India Company. The original Queen Elizabeth chartered it on the last day of 1600. Its focus was mainly on India, where the firm quickly acquired almost all auxiliary governmental and military functions. It established huge trade monopolies, once employed the pirate Captain Kidd, put Napoleon into exile, and its flag inspired our Stars and Stripes.
So while history may yawn at civilian help in military pursuits, what is currently astounding in the American experience is the scale of this privatization. Perhaps this is what President Dwight D. Eisenhower had in mind way back when I was a college freshman, watching his farewell address on TV in January of 1961. Although the speech drew little attention at the time, it was pretty surprising.
Here was Ike, a president who quadrupled defense spending, the World War II commander in the European theater and a military leader all his life -- sometimes lumped in accolade with Winston Churchill as a savior of the western world from Hitler -- warning sternly against the dangers of a vast military-industrial complex he could see in our near future.
It showed amazing prescience, but the address totally confused the American media, so they generally ignored the speech. In it, Eisenhower warned of "grave implications" to the "very structure of our society" if our military meshes inextricably with the private sector. "In the councils of government," Ike intoned, "we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist."
Somewhere, Ike is ruefully shaking his head. These concerns are drawing new voice.
Dan Briody is author of the book "The Iron Triangle: Inside the Secret World of the Carlyle Group" -- an investment entity that he calls "the model example of the nearly seamless connection between the Bush administration, self-enrichment and companies who receive big government defense contracts."
Bush the Elder, his former Secretary of State James Baker, and former Defense Secretary Frank Carlucci are longtime "consultants" to the Carlyle firm. The book, published last year, opens with a reference to the Eisenhower farewell speech. Briody, in a recent Internet interview on, termed Ike's warning "exactly what we're seeing today."
He claimed, "We're seeing a very tight-knit group of companies and private military contractors that are virtually indistinguishable from various administrations and the political infrastructure of Washington, D.C. -- so much so that it's not clear whose interests we're acting on when we go to war."
If the White House of Bush the Younger disagrees, it could do a lot to diminish such doubt by complying with the requests of UN auditors. 

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Published on  July 20 2004  in the Niagara Falls