“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Wednesday, April 03, 2013

Disaster Capitalism: American nation building in Iraq and Afghanistan, could have worked except for the corruption. What caused the corruption? Read on:

Posted by Dilip Hiro at 8:14AM, April 02, 2013.
Follow TomDispatch on Twitter @TomDispatch.

America’s post-9/11 conflicts have been wars of corruption, a point surprisingly seldom made in the mainstream media. Keep in mind that George W. Bush’s administration was a monster of privatization. It had its own set of crony corporations, including HalliburtonKBRBechtel, and various oil companies, as well as a set of mercenary rent-a-gun outfits like Blackwater, DynCorp, and Triple Canopy that came into their own in this period.  It took the plunge into Iraq in March 2003, sweeping those corporations and an increasingly privatized military in with it.  In the process, Iraq would become an example not of the free market system, but of a particularly venal form of crony capitalism (or, as Naomi Klein has labeled it, “disaster capitalism”).
Add in another factor: in the wake of the 9/11 attacks, the Bush administration began pouring money into the Pentagon, into, that is, an organization whose budget has never been able to pass an audit.  There was so staggeringly much money to throw around then -- and hubris to spare as well.  Among the first acts of L. Paul Bremer III, the new American proconsul in Baghdad, was the disbanding of Saddam Hussein’s army (creating an unemployed potential insurgent class) and the closing down of a whole range of state enterprises along with the privatization of the economy (creating their unemployed foot soldiers).  All of this, in turn, paved the way for a bonanza of “reconstruction” contracts granted, of course, to the administration’s favorite corporations to rebuild the country.  There were slush funds aplenty; money went missing without anyone blinking; and American occupation officials reportedly “systematically looted” Iraqi funds.
In April 2003, when American troops entered Baghdad, it was already aflame and being looted by its own citizens.  As it turned out, the petty looters soon enough went home -- and then the real looting of the country began.  The occupiers, thanks to the U.N., fully controlled Iraq’s finances and no one at the U.N. or elsewhere had the slightest ability to exercise any real supervision over what the occupation regime did or how it spent Iraq’s money.  Via a document labeled “Order 17,” Bremer granted every foreigner connected to the occupation enterprise the full freedom of the land, not to be interfered with in any way by Iraqis or any Iraqi political or legal institution.  He gave them all, that is, an official get-out-of-jail-free card.
Who could be surprised, then, that the massive corporate attempt to rebuild Iraq would result in a plague of overbilling, remarkable amounts of shoddy or useless work, and a blown $60 billion “reconstruction” effort that would leave the country with massive unemployment and without reliable electricity, water, or sewage systems?  Could there be a sadder story of how war making and corruption were being wedded on a gigantic scale in an already fading new century?  As it turned out, the answer to that question was: yes.
Iraqi corruption was no anomaly of war, as TomDispatch regular Dilip Hiro makes clear today.  Just consider the way Washington turned the “liberation” of Afghanistan into another field day for corruption. Tom
The Great Afghan Corruption Scam 
How Operation Enduring Freedom Mutated into Operation Enduring Corruption
By Dilip Hiro
Washington has vociferously denounced Afghan corruption as a major obstacle to the U.S. mission in Afghanistan. This has been widely reported. Only one crucial element is missing from this routine censure: a credible explanation of why American nation-building failed there. No wonder. To do so, the U.S. would have to denounce itself.

Corruption in Afghanistan today is acute and permeates all sectors of society. In recent years, anecdotal evidence on the subject has been superseded by the studies of researchers, surveys by NGOs, and periodic reports by the United Nations Office on Drugs and Crime (UNODC). There is also the Corruption Perceptions Index of the Berlin-based Transparency International (TI). Last year, it bracketed Afghanistan with two other countries as the most corrupt on Earth.
None of these documents, however, refers to the single most important fact when it comes to corruption: that it’s Washington-based.  It is, in fact, rooted in the massive build-up of U.S. forces there from 2005 onward, the accompanying expansion of American forward operating bases, camps, and combat outposts from 29 in 2005 to nearly 400 five years later, and above all, the tsunami of cash that went with all of this.
Last month, when an Afghan court sentenced Sher Khan Farnood and Khalil Ullah Ferozi, the chairman and chief executive of the Kabul Bank, for looting its deposits in a gigantic Ponzi scheme, the event received some media attention. Typically, however, the critical role of the Americans in the bank’s murky past was missing in action.
Founded as a private company in 2004, the Kabul Bank was promptly hailed by American officials in Afghanistan as a linchpin in the country’s emerging free market economic order. In 2005, action followed words. The Pentagon, paymaster for the Afghan National Security Forces (ANSF), signed a contract with the bank to disperse the salaries of ANSF soldiers and policemen.
With that, the fledgling financial institution acquired an impressive cash flow. Moreover, such blatant American support generated confidence among better-off Afghans. Soon enough, they were lining up to deposit their money. Starting in 2006, the surging inflow of cash encouraged Farnood and Ferozi to begin skimming off depositors’ funds as unsecured loans to themselves through fake front companies. Thus was born the world’s largest banking scam (when calculated as a percentage of the country’s gross domestic product) with the U.S. Embassy in Kabul acting as its midwife.
How It All Happened
There exists a statistical connection between the sums expended by Washington in Afghanistan and worsening corruption in that hapless nation. It is to be found in the TI’s Corruption Index. In 2005, Afghanistan ranked 117th among the 158 countries surveyed. By 2007, as American greenbacks poured into the country, only two of 179 nations surpassed it in corruption. Since 2011, it has remained at the very bottom of that index.
What changed between 2005 and 2007? By the spring of 2006, the Taliban insurgency had already gained control of 20 districts in the southern part of the country and was challenging U.S. and NATO forces in the strategic Kandahar area. With a sectarian war by then raging in U.S.-occupied Iraq, Secretary of Defense Donald Rumsfeld felt that he could increase the American military presence in Afghanistan only marginally.

This started to change when Robert Gates took over at the Pentagon in December 2006. He began bolstering U.S. combat units there. As a result, forward operating bases multiplied, as did combat outposts and military camps. Building new sites or upgrading old ones on the double meant that the Pentagon started awarding contracts to local Afghan construction companies unaccustomed to handling such tasks quickly. They, in turn, subcontracted tasks out to those who greased their palms. With the infusion of ever more piles of Pentagon dollars, corruption only spread.
Later, each of these bases and outposts had to be supplied with food, water, fuel, and other necessities as well as war materials. In addition, the Pentagon accelerated its program of bolstering the nascent Afghan security forces by covering the full cost of training, equipping, and paying its personnel, as well as building bases and outposts for them. As a consequence, contracts to Afghan transport companies ballooned, as would contracts to Afghan private security outfits to protect the trucks hauling provisions and materials in that increasingly war-torn country.
So, of course, did the opportunities for graft.
Between 2005 and 2007, when American combat forces in Afghanistan doubled, the Pentagon’s budget for the Afghan War leaped from $17.2 billion to $34.9 billion annually. ANSF personnel also doubled, from 66,000 to 125,000 troops and policemen, though at a relatively marginal cost to the Pentagon. At $16,000 a year, the burden of maintaining an Afghan soldier was a paltry 2% of the $800,000 it cost to maintain his American counterpart.
In this period, opportunities for corruption rose exponentially. Why? In part, because the Pentagon was unable to protect the supply convoys of its Afghan contractors, something that would have required tens of thousands more U.S. troops. The distance between the main supply center at Bagram Air Base near the capital Kabul and the city of Kandahar in the Taliban-infested south was 300 miles; and the Taliban heartland in Helmand Province lay another 100 miles from Kandahar. Since Afghanistan lacks railroads, the only way to transport goods and people was to use the roads.
The Bagram-Kandahar highway was peppered with roadblocks, each manned by the armed fighters of the dominant warlord, who collected an arbitrary “transit tax.” The only way the transport companies could perform their job was by buying safe passage from the rulers of the highway and so parting with bribes of approximately $1,500 per truck between Bagram and Kandahar, and another $1,500 between Kandahar and Helmand.  All of this came from the cash the Pentagon was so profligately doling out.
The warlords and private security contractors, in turn, gave bribes to the Taliban for the safe passage of these convoys. In essence, therefore, the Pentagon was helping finance its enemy in order to distribute necessary supplies to its bases.  In addition, on “safe” roads, checkpoints were often manned by Afghan policemen, who extorted bribes by threatening to pass advance information about a convoy on to the Taliban.


  1. The video is nothing short of amazing. It is one thing to hear about corruption. The crime disappears in the overused word itself. You hear about the American money spent, but in Iraq, we seized $23 billion of Iraqi cash and stashed it in the fed in New York and then we airlifted it to Iraq by the ton.

    The Bush Administration put the Pentagon in charge under Paul Bremer and Iraq became a free fraud zone. (see the 9 minute mark).

    The 11 minute mark will make most of you sick.

    1. .

      I remember seeing pictures in the WaPo of pallets full of money being offloaded into warehouses.


  2. It should make every American angry about what has been done in our name and continues today.

  3. At 14:30 we get a view of the genius of George Bush and Paul Bremer.

  4. At 16 minutes you will see what we inflicted on the Iraqi healthcare system. You could not make this up if you tried.

  5. The 23.30 mark should have sent a whole bunch of people to jail. Did it?

  6. In the first corporate whistle-blower case to emerge from Iraq, a federal jury in Virginia yesterday found a contractor, Custer Battles L.L.C., guilty of defrauding the United States by filing grossly inflated invoices for work in the chaotic year after the Iraqi invasion.

    The civil case is expected to be the first of dozens under the Federal False Claims Act, which allows company insiders to bring suit on behalf of the government and share in damages awarded.

    Two former associates accused Custer Battles of faking invoices from shell companies to overcharge the coalition authority, then governing Iraq, by tens of millions of dollars. But the current trial concerned billing of just $3 million under one of several contracts the company garnered in the post-invasion scramble.

    After a three-week trial, the jury found that the entire $3 million was gained by fraud. According to the law, the company, which is based in McLean, Va., and its two owners and a former executive must now repay the government triple damages and also pay fines for 37 fraudulent acts.

    Of more than $10 million in damages and penalties, most will go to the federal treasury while the whistle-blowers will receive from 25 percent to 30 percent.

    "This reward won't make or break my life, but I'm pretty pleased," said one of the former associates, Robert J. Isakson, a construction subcontractor who brought the suit with William D. Baldwin, a former manager in Iraq for Custer Battles.

    "I went to the trouble because these guys are crooks," he said. "They defrauded the U.S. government and did it blatantly."

    Mr. Baldwin was also awarded $230,000 in damages because he was forced out of his job when he complained of illegal activity.

    In one of many examples described at the trial, the company filed a fake invoice saying it had spent $176,000 to build a helipad when it had actually spent $96,000.

    Lawyers for Scott Custer and Michael Battles, co-owners of the company, argued that any billing mistakes reflected the duress of war and that the company had billed fairly. The defense lawyers did not respond late yesterday to requests for comment.

    Alan Grayson, lead attorney for the plaintiffs, argued that the company had billed the coalition authority for $15 million under the disputed contract when it had actually spent only $7 million. Under the contract, to provide logistical support for the distribution of new currency in Iraq, the company was supposed to be reimbursed for actual costs plus a fee of 25 percent.

    The judge in the case, Judge T. S. Ellis III, of the Federal District Court in Alexandria, Va., had previously ruled that the False Claims Act applied only to bills paid directly from the American treasury. As a result, most of the payments to Custer Battles, from Iraqi funds, were not considered.

  7. The judge in the case, Judge T. S. Ellis III, of the Federal District Court in Alexandria, Va., had previously ruled that the False Claims Act applied only to bills paid directly from the American treasury. As a result, most of the payments to Custer Battles, from Iraqi funds, were not considered.

    1. Stealing from the US administered Iraqi funds, not against US law.

      Who you gonna call?

    2. Iraqi officials requested U.S. drones strikes near their border after al-Qaeda-linked jihadists ambushed a Syrian convoy in Iraq earlier this month, Qassim Abdul-Zahra and Diaa Hadid of the Associated Press report.

      The CIA is already collecting intelligence on the same militants in Syria for possible drone strikes, U.S. officials recently told Ken Dilanian and Brian Bennett of the Los Angeles Times.

      Micah Zenko, a research fellow at the Council of Foreign Relations, writes that “President Obama should also ask himself if the United States wants to open up a fifth front in its campaign of non-battlefield targeted killings, outside of Pakistan, Yemen, Somalia, and The Philippines."

      Syria would make that six. And as far as the U.S. State Department is concerned, the extremists on the border fall under the umbrella of al-Qaeda in Iraq (AQI), including those who killed 48 Syrian soldiers and eight Iraqis as well as the dominant Syrian rebel group Jabhat al-Nusra.

      Read more:

  8. It gets worse, go to the 35 minute mark and listen to the shock and awe at the New York Fed.

  9. Washington is incapable of correcting itself. At this time, there is no other mechanism to do it either. We are in year five of the Hope and Change presidency of Obama. There certainly does not seem to be any interest at all of meaningful change and by that I mean ending corruption let alone stopping it from expanding into one more war after another.

    1. As Ms Albright is reputed to have asked General Powell, ...

      Why have the whirled's grandest military if we cannot use it?
      To paraphrase.

      There is no defensive strategy that requires the US to outspend the rest of the whirled on military expenditures for decades on end. No, the US capability and capacities have been built an used for offense. Indeed, the US has promoted the idea of going on offense and claiming the subsequent attacks are defensive, for US.
      No other country need apply.

      The Iranians cannot preemptively strike US bases in Bahrain and Kuwait, and claim "Preemption" as a motive. But the US and it's proxies claim that "Right" to strike, militarily, in their dealings with Iran.

      Who you gonna call?

    2. When the "Whirled's Policeman" is as corrupt as a Chi-town cop.

  10. Blowing it in the wind

    The long, slow U-turn by BP away from alternative energy arched a little further yesterday when it put its American wind business up for sale.
    A decade-long £4.6 billion investment in wind, solar and hydrogen power was launched in 2005 under Lord Browne of Madingley, BP’s chief executive at that time. It retreated from solar power at the end of 2011, having closed its panel factories and shut its separate BP Alternative Energy headquarters in London.

    1. I don't think their heart was in it. :)

    2. Did they try to compete w/China making panels?

      Your panels for Iraqis sure woulda worked better than Centralized Corruption Power Inc.

      ...and families coulda defended their own turf instead of the massive theft and vandalism of the grid.

    3. "vandalism"
      Two bit, highly effective method for bringing down the Crony Capitalist Revolutionary Transformation of Iraq.

    4. But, doug, just yesterday you told US that there were no "Terrorist Attacks" during Bush Jr's term, but for the raid of 11SEP01.

      Now you tell US that terrorists were attacking US and it was a ...
      highly effective method for bringing down the Crony Capitalist Revolutionary Transformation of Iraq

      Wish you'd settle on a meme.

    5. The reference was to attacks on US Soil,
      "The Homeland"

    6. Wherever Old Glory flies, doug, is US soil.
      From Charleston, NC all the way to Fallujah, Iraq.

      Where the US military stands, that is our Homeland.

      Or J McCain could not have been a viable candidate for President. He was born in Panama, in a US military hospital. Considered a "Natural Born" US citizen he is.

    7. Right, Iraq is "The Homeland"
      ...for you, Bremmer, and Mr. Fix the Teacup, REPUBLICAN Colon Powell.
      aka the Asshole.

    8. (This belongs ahead of the comment above.)

      You distort my position on illegals, I correct you, you do it again.
      Rinse and repeat, ad-infinitum.

      Now you do exactly the same thing here:
      I corrected you and said I was refering to ATTACKS ON "THE HOMELAND"
      (in a previous thread, as I recall.)

      What is it about Logic and the English Language that you do not understand?

      ...imposing your "reality" on mine does not make it so.

  11. An American Pharaoh wants to show off his new pyramid - Who started this shit?

    On April 25, President Barack Obama will be united with his four living predecessors in Dallas for the opening of the George W. Bush Presidential Center at Southern Methodist University, officials confirmed Tuesday.

    According to White House deputy press secretary Josh Earnest, both Obama and First Lady Michelle Obama will be on hand when the 43rd President’s library and museum are dedicated. The last time all five met was in January 2009 before Obama was sworn in, in a meeting and lunch hosted by Bush in the Oval Office for the members of the “world’s most exclusive club.”

    1. The five Greatest Men of All Time.

      ...w/genuine credit given to 41 for his service.

      ...and Massive Condemnation for his re-animating of the reputation of our First Black President,
      William Jefferson Clinton.

  12. They out to come with a ready made dungeon.

  13. Who would have guessed?

    The first Presidential Library in the National Archives system was the Franklin D. Roosevelt Library in Hyde Park, New York, dedicated June 30, 1941.

    1. Obama's will outshine them all to the point of humiliation.

      I don't know, but I would hope Harry Truman's is more in keeping with his seeming Everyman's Way.

  14. Distress Sale

    Larry definitely knows how to invest.

    He's transforming Lanai, hope to visit before I die.

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  17. The reporter in that video, Ali Fadhil, wasn't he the doctor who helped found Iraq the Model? He then left the blog in disgust...

  18. Assalaam-Un-Alykum, this piece is beautiful and whilst reading the blog tears were streaming down my cheeks as I imagined myself back there again on that very day, when woman and children died and where hearts were shattered. The feeling I had then and was immense pain and sorrow, I feeling one can only gain when shedding years for the pain of the good people that died in Iraq.

  19. Suicide bombers disguised as soldiers have stormed an court in western Afghanistan, killing at least 44 people in an attempt to free Taliban fighters standing trial, officials say.

    At least nine fighters were also killed in Wednesday's attack, which occurred in Farah, the main town of Farah province.

    It was not immediately clear whether the accused men had escaped the court complex, although a hospital doctor said one prisoner was among those being treated for injuries.

    The multiple bomb-and-gun assault will raise further questions about the Afghans' ability to secure the country as NATO reduces its combat mission by the end of next year.

    "I can confirm that 34 civilians, six army and four policemen have been killed and 91 people, the majority of them civilians, have been injured," Najib Danish, interior ministry deputy spokesman, told AFP news agency.

  20. .

    Are we starting to see the effects of that $700 billion cut from Medicare to pay for Obamacare? Of the cave-in to the drug companies that were part of the negotiations? The shortsightedness of a Congress which can't negotiate in good faith and thus settles for the across the board cuts that define sequestration?

    Cancer clinics are turning away thousands of Medicare patients.

    But oncologists say the cut is unexpectedly damaging for cancer patients because of the way those treatments are covered.

    Medications for seniors are usually covered under the optional Medicare Part D, which includes private insurance. But because cancer drugs must be administered by a physician, they are among a handful of pharmaceuticals paid for by Part B, which covers doctor visits and is subject to the sequester cut.

    The federal government typically pays community oncologists for the average sales price of a chemotherapy drug, plus 6 percent to cover the cost of storing and administering the medication.

    Since oncologists cannot change the drug prices, they argue that the entire 2 percent cut will have to come out of that 6 percent overhead. That would make it more akin to a double-digit pay cut.

    “If you get cut on the service side, you can either absorb it or make do with fewer nurses,” said Ted Okon, director of the Community Oncology Alliance, which advocates for hundreds of cancer clinics nationwide. “This is a drug that we’re purchasing. The costs don’t change and you can’t do without it. There isn’t really wiggle room.”


    After an emergency meeting Tuesday, Vacirca’s clinics decided that they would no longer see one-third of their 16,000 Medicare patients.


  21. .

    And for those who actually thought we would see the cost reductions projected for Obamacare,

    In February, when CMS proposed new rate cuts within the program, insurance industry lobbyists rushed into action. Soon, 160 members of Congress from both parties sent letters asking the administration to back off. Now, instead of reducing payments to health insurers who provide seniors insurance through Medicare Advantage by 2.3 percent in 2014, the federal government will increase payments by 3.3 percent.

    America's Health Insurance Plans -- the nation's largest insurance lobbyist -- understandably hailed the reversal. So did Wall Street investors, who sent health insurance stocks soaring this week. But the news also bodes poorly for the financing of Obamacare.

    All of Obamacare's proposed cuts and industry-specific tax hikes are going to draw similar lobbying efforts from other power players -- such as hospitals, doctors and pharmaceutical companies -- that stand to lose if certain provisions go fully into effect. Just last month, the Senate voted 79-to-20 on a nonbinding measure to repeal the law's tax on medical device-makers after ferocious lobbying from the industry.

    Unfortunately for taxpayers, these special interests will not be lobbying to undo the trillions in new spending created by the law. The end result is that Obamacare is likely to be the budget buster its critics always feared.


    1. Nirvana!
      Free Healthcare for All!

      ...just like Rufus said.

  22. Replies
    1. .

      BIG SIS RESPONDS: We Buy Ammo in Bulk to 'Significantly Lower Costs'...

      My response is the same as when my wife tells me she spent $500 at Kohl's but actually saved me $700 due to the sale prices and discount card.


  23. Merciless Nuke Attack on US by North Korea.

    (The Missile makes it past the Sea of Japan)

    ...and hopefully, Japan.

  24. I feel so vulnerable here, 3,000 miles closer than you lucky stiffs.

  25. AUSTIN, Texas (CBS Houston) – "In response to perceived threats against the city from the North Korean government, officials in Austin have said they are willing to do whatever federal officials feel may be necessary to protect civilians.

    According to NK News, some text written on a map in the background of one image reads “U.S. Mainland Strike Plan,” and their digitally enhanced version of the image show missile strikes planned for areas surrounding Austin, as well as Washington D.C. and San Diego."


    How about chilling out and returning to reality?