K Street on the Tigris

Washington insiders are lining up to help corporate clients cash in on rebuilding Iraq, whether the Iraqis like it or not.

Illustration: <a href="http://www.ritterillustration.net/" target="new">John Ritter</a>

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The man who ran President Bush’s last campaign has a new job, but he won’t be checking poll numbers or arranging fundraisers. Instead, Joe Allbaugh, who left the Bush administration just weeks before the White House launched the war on Iraq, has opened up a lobbying firm with offices in Baghdad.

“It’s beneficial to clients that I know who the players are and I know who the decision makers are,” says Allbaugh, who was national campaign manager for Bush-Cheney 2000 and then became director of the Federal Emergency Management Agency. This summer, Allbaugh joined with Ed Rogers, a former White House aide to Bush’s father, to found New Bridge Strategies, a lobbying firm that connects Western businesses with the American and Iraqi power brokers overseeing the reconstruction. The firm has already attracted companies looking to sell Iraq everything from new phone lines to catering services.

Allbaugh is not the only former official pitching his expertise to companies eager to cash in on the reconstruction of Iraq. The total cost of rebuilding the country is estimated at between $100 billion and $500 billion, with potential business opportunities reaching far beyond the much-publicized contracts held by Bechtel and Halliburton. “What you see on the surface is not really what is going on,” says Timothy Mills, a partner at Patton Boggs, one of several K Street firms that have launched a practice dedicated to Iraq. Mills advises clients to look beyond the continuing violence in Iraq and toward the long-term payoff for multinational corporations. “Western companies, if they make the right connections early enough,” he says, “have the potential of being swept into the mainstream of Iraqi commerce.”

At least for now, those connections begin stateside. “The way to Baghdad is through Washington,” says Bart Fisher, a lawyer at the firm Dorsey & Whitney and co-founder of the U.S. Iraq Business Council. And it’s not only Bush administration alumni who are seeking to get in on the game. For example, Clinton-era Defense Secretary William Cohen, a critic of Bush’s foreign policy, has also begun marketing himself as an expert on reconstruction; his firm includes his former Pentagon deputy, Paul R.S. Gebhard, who also worked for Defense Secretary Donald Rumsfeld. In September, Cohen helped Nour USA, which was founded a few months earlier with the express purpose of winning contracts in Iraq, land an $80 million security contract for Iraq’s oil fields. Building on that success, Cohen has teamed with former Senate Majority Leader George Mitchell and former House Majority Leader Dick Armey, both of whom work at the K Street powerhouse Piper Rudnick, to form an “Iraq Task Force”; according to Piper’s website, the task force offers clients access to “relevant decision makers in the United States and the region.” Among the group’s first clients is General Motors, which has retained Piper lobbyist John Zentay, a former Senate representative from the U.S. Agency for International Development (USAID), which oversees most Iraq reconstruction contracts. “We have to keep close liaison with the U.S. government to have ingress there,” explains Chris Preuss, the Washington spokesman for General Motors, which has already begun selling vehicles to aid agencies in Baghdad.

Other lobbying firms are scrambling to compete for business in Iraq. General Anthony C. Zinni, who headed the Pentagon’s Central Command during the Clinton administration, has signed up as an adviser at the firm Akin Gump. And former House Speaker Bob Livingston’s firm, the Livingston Group, has hired Mohammed Odeh Al-Rehaief — the Iraqi lawyer who helped with the rescue of Jessica Lynch — to advise clients seeking contracts in Iraq.

What worries critics is that without a democratic Iraqi government in place, key decisions about the country’s future are being made by officials in Washington and Baghdad who work without much public scrutiny — but with plenty of input from companies that pay to get access. “There is, right now, a plain conflict of interest between the perceived interest of many Western business contractors and the people of Iraq,” says Jeremy Carver, chief international lawyer at the London-based law firm Clifford Chance, which worked on reconstruction efforts in Kosovo and Kuwait. With minimal public comment, for instance, the U.S. government has begun the privatization of Iraq’s 192 state-owned businesses, a process Rumsfeld publicly endorsed in May. In July, the consulting firm BearingPoint won an $80 million USAID contract that included drawing up a “Comprehensive Privatization Plan” in Iraq; President Bush has appointed a campaign fundraiser and former Harvard Business School classmate, banker Tom Foley, to oversee the process.

“There is a wide concern that the rules that are required by American standards are being sidestepped,” says Isam al-Khafaji, an Iraqi exile who recently resigned in protest from a group advising the Pentagon on reconstruction efforts. He had accepted the job, he says, under the impression that U.S. officials would “work with Iraq’s ministries, not as ministers.”

Many lobbyists have been operating on the opposite assumption. At the Department of Agriculture, for example, a flood of lawyers and former government officials has been working the hallways, seeking markets in Iraq for everything from grain to excess chicken parts. (Before the 1991 Gulf War put an end to U.S. exports to Iraq, the country had purchased 23 percent of U.S. rice production and a million tons of American wheat each year.) Agribusiness giant Angliss International has hired Clayton Yeutter, who served as secretary of Agriculture in the first Bush administration and now works for the lobbying firm Hogan & Hartson, to troll for new business in Iraq. Food distributor Atlas Holdings has hired Hogan lobbyist Robert Kyle, a former national security and trade official in the Clinton White House. “It’s certainly a growth industry,” says one USDA official working on Iraqi reconstruction. “Everyone is looking at this from a short-term perspective.”

In some instances, corporate pressure has already had an impact — by helping determine, for example, the outline of one of the largest contracts handed out by the American governing authority in Baghdad, for a set of wireless phone towers worth as much as $200 million. This summer, the U.S. authority allowed bidders for the contract to use a wireless system licensed by the California firm Qualcomm, even though every other Middle East cell-phone company uses a rival technology. The bid specifications also placed limits on government ownership and required international experience, shutting out many of the Middle East’s mobile-phone providers.

These decisions followed lobbying on behalf of Qualcomm by Rep. Darrell Issa, a California Republican who declared that any gift of technology to the Iraqis should “also benefit the American people and the American economy.” But the authority’s action could also increase Iraqis’ cell-phone bills down the road, notes Bernt Ostergaard, a telecom analyst at Forrester Research. “You are really not listening to what the people of Iraq need,” he says, “but what the people in California need.”

In a move with greater implications for Iraq’s future, a group of about 20 multinational corporations — including Bechtel and Halliburton — has been lobbying for a financing plan that would set aside some $15 billion in future Iraqi oil revenues to pay for current rebuilding expenses. The group has secured Washington’s endorsement for the plan and is now lobbying the U.S.-appointed Iraqi governing council, according to its lobbyist, former congressional staffer Edmund Rice.

As the Bush administration faces increasing pressure to improve the situation in Iraq, the scramble for contracts is likely to intensify. William Tucker, who served as a White House counsel for President Reagan, recently traveled to Baghdad on behalf of several clients, making use of his longtime friendship with Peter McPherson, another former Reagan staffer, who is the authority’s top official in charge of overseeing the Iraqi economy. Companies without connections in the region — or at the Pentagon — simply can’t hope to compete, says Tucker. “They don’t have a clue.”


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