Afghanistan and Iraq: Wars Americans Want to Forget, Part 2 Iraq

Written by Elliott Morss, Morss Global Finance

Introduction

Most Americans want to put the Afghanistan and Iraq wars behind them and “bring the troops home”. But these wars have had great human and financial costs to both the US and the countries invaded. And these costs continue to accumulate – more deaths, more instability, and more military expenditures. These wars should not be forgotten. And there are important lessons we should learn from them. In this 2-part series, I provide detail on what has happened and what the US will leave behind. Part One on Afghanistan can be found here.

Iraq

In Afghanistan there was, at least at the outset, a legitimate case for “going in” – to get Bin Laden. Not so in Iraq. The alleged reason – weapons of mass destruction – was clearly fabricated by a group now closely associated with the American Enterprise Institute (Bolton, Cheney, Kagan, Perle, Wolfowitz). The most plausible reason for them wanting to invade Iraq was its oilfields – they believed that US control of Iraqi oil justified the invasion. They also knew they could not sell that justification to the American public – hence the cooked up “weapons of mass destruction” claim.

We today see the outcome of this costly and foolish war:

• 4,488 US Deaths;
• Approximately 180,000 Iraqi deaths with almost 70% being civilians;
• The $212 billion “reconstruction” effort was largely a failure with most of that money spent on security or lost to waste and fraud;
• Total war costs to be paid by US taxpayer: more than $2 trillion.  
• US control of Iraq oilfields? Nope.
• Perhaps most important, the balance of power between Iran – Shiite and Iraq (under Saddam) – Sunni has now been broken. With Saddam removed, Iran’s sphere of influence now runs through Iraq to Lebanon.

Tactical Mistakes: No Post-Invasion Plan

Equally amazing: there was no plan on what to do after the invasion. The result was complete anarchy with looting and destruction on a grand scale that most Iraqis blamed on the Americans. The complete US incompetence is set forth in Charles Ferguson’s excellent documentary on the Iraqi war – No End In Sight. It showed how many of the decisions that had to be made were disastrous. Such things as telling the military they no longer had jobs and thereby creating a large, well-armed, angry cadré on the streets.

Corruption, Fraud and Sheer Incompetence

The Afghan experience illustrates the fact that whenever the government tries to spend large sums of money quickly, most will not be well spent. And the chaos of war makes the problems more severe. Just as with Afghanistan, a Special Inspector General was appointed to look into how money was spent in Iraq – The Special Inspector General for Iraq Reconstruction (SIGIR). SIGIR reached peak operations in FY 2009 with 142 people on staff, including 42 audit and 36 investigative professionals. Total U.S. and Iraqi reconstruction funding under SIGIR’s oversight stood at $75.67 billion. Among other things, SIGIR launched 639 investigations with 42 arrests, 112 indictments and 90 convictions.

Details from SIGIR Reports

When huge amounts of money are being spent/wasted, it is easy to lose sight of just how egregious each case was. Consequently, I have gone back into the SIGIR reports for specific examples of the corruption, fraud, and sheer incompetence.

1. Basrah Children’s Hospital, Basrah, Iraq: The project began in July 2004, and was originally scheduled to be completed by December 2005, at a cost of $50 million. In 2009, work was still ongoing; the estimated total cost had increased to almost $166 million (323% cost overrun). The hospital was not expected to be fully functional until 2011. Because of the delays, the end result would not be the state-of-the-art medical facility envisioned at project inception.
2. Between 2004 and 2009, the US State Department’s Bureau of Democracy, Human Rights, and Labor (DRL) made 12 grants for a combined value of $248 million. The grants were made to two US NGOs for “democracy-building” activities in Iraq: the International Republican Institute (IRI) – John McCain Chairman and the National Democratic Institute (NDI) – founded by Madeleine Albright. Of the $114 million in grants that SIGIR examined, almost 60% was spent on security and overhead costs—even though both organizations located themselves in Erbil, probably the safest city in Iraq. State Department officials could not provide documentation showing whether the IRI and NDI grants were meeting their goals.
3. Philip Bloom was hired as a comptroller for the Coalition Provisional Authority (CPA) in South Central Iraq despite being a convicted felon. CPA received more than $20 billion for redevelopment of Iraq. In November 2005, Bloom and Robert Stein (a contractor) were arrested, convicted and imprisoned for fraud. Stein rigged bids affecting 20 construction contracts. Bloom received more than $8.6 million in fraudulent contract kickbacks. In return, he provided multiple co-conspirators—including an Army colonel and two lieutenant colonels—payments of more than $1 million in cash, expensive vehicles, airline tickets, computers, and jewelry.
4. The Al-Sumelat Water Supply Project was awarded $743,650 in February 2005, to design and construct a pipeline that would carry potable water from an existing main to several communities. A June contractor report and a PCA study indicated that the project was 100% complete. In addition, an Iraqi employee reported that the pipeline had been pressure tested and had all the components required by the contract. However, an SIGIR inspection team visited the site and found that the “completed” project was merely a long ditch, containing mostly unconnected pipes.
5. In March 2004, Parsons was awarded $243 million to construct and equip 150 primary healthcare centers across Iraq by December 2005. By 2006, 6 of the centers were complete even though $186 million had been spent. Eventually, 133 centers were completed at a cost of about $345 million or about $102 million more than originally estimated.
6. 6. The Pipeline River Crossing, Al Fatah, Iraq – After ignoring a geologist’s warning, almost $76 million was wasted by attempting to repair a set of damaged oil and gas pipelines by rerouting the pipelines under the Tigris River. Drilling through the loose, sandy soil beneath the river proved to be impossible, and the project was abandoned in August 2004.
7. DynCorp got a $1.8 billion contract from the US Department of State. State issued a $152 million task order to support 500 police trainers for an initial 3-month period and to construct 6 camps for the training program. $43.8 million was spent for the manufacture and temporary storage of residential camp trailers that were never used. Another $36.4 million went for weapons, armored vehicles, body armor, and communications equipment that could not be accounted for. State had not validated the accuracy of invoices it had received from DynCorp and, as a result, did not know what it received for approximately $1.2 billion in expenditures. A full audit of all DynCorp invoices on the contract led to the recovery of $600 million in unsupported charges. Overall, $2.5 billion in U.S. funds was deemed vulnerable to waste and fraud.
8. Overcharges were commonly used to earn money illegally. The U.S. Army’s contracting office lacked sufficient experienced personnel to review invoices, leaving the U.S. government vulnerable to undetected overcharges. For example, a package of 10 common hardware washers should have cost $1.22 after the allowable markup, but the contractor charged $196.50 for each package. Another example, an Anham subcontractor charged $900 for a control switch valued at $7.05 and $3,000 for a circuit breaker valued at $94.47. In conducting a limited review of incurred costs, SIGIR questioned almost 39% of the costs ($4.4 million) reviewed, either because the costs were not properly documented or because they did not appear to be fair and reasonable.
9. The US Department of Defense financial and management controls left it unable to properly account for $8.7 billion of funds it received for reconstruction activities. A SIGIR audit estimated that at least $8 billion in U.S. funds was wasted in Iraq.

Conclusions

A recent study reports that taken together, the Iraq and Afghanistan conflicts will end up costing somewhere between $4 and $6 trillion. This includes long-term medical care and disability compensation for service members, veterans and families, military replenishment and social and economic costs.

To put this in perspective, the US spends $72 billion annually on its food stamp program (SNAP). Agreement on this amount took place after extensive hearings where it was claimed some of the food went to people who should not get it. Where were the Congressional hearings on how the hundreds of billions of dollars “disappeared” in our two most recent wars?

What do I draw from these two “war” articles? One conclusion:

To prevent such foolish wars in the future, the US should reinstate military conscription. The US should bring back the draft. Why? Because only then will people with power and influence weigh in and say “wait a minute, if my kid is going to war, there better be a damn good reason for it.” Right now, US wars are a side show for most Americans with solders drawn from low income families doing “the work”.

Think back to perhaps the US’s most foolish war – Vietnam. Mao wanted US recognition because it did not want to be dependent on Russia. John Foster Dulles said no, you are communist. Ho Chi Minh asked for US recognition, pointing out they had been invaded by China 11 times. Dulles again said no, you are communist. Before we gave up and left, 58,000 American had died and a million Vietnamese had been killed.

Why did the US finally leave? Because the well-off kids who were to be drafted and their parents got involved and put up a stink. The US needs to bring back the draft so in the future, wars that the US enters will not be “side shows” some special interest groups cooked up. The draft will guarantee that the influential and well-educated US families have a stake in war decisions.