Cheney oil deal link fuels war critics

The Australian, May 09, 2003

CRITICS of the Iraq war seized on revelations yesterday that a Texas company once run by US Vice-President Dick Cheney has been given the authority to run the Iraqi oil fields.

A subsidiary of Halliburton, which was headed by Mr Cheney for five years until 2000, was handed a much larger role in post-war Iraq than previously believed. The contract, which the company won from the US Government without having to bid against any rivals, was initially described as for fighting fires at Iraq's oil wells. But it emerged yesterday that the company, KBR (Kellogg, Brown & Root), has also been contracted to operate pumps and distribute oil a much more direct, lucrative and politically sensitive role.

Democrats called for all the facts about the contract to be disclosed, threatening deep embarrassment for the White House on one of the most sensitive aspects of the Iraq war and its aftermath. Many in the Muslim world saw the war as a battle for Iraq's oil a view widely shared in Europe but strenuously denied by Britain and the US.

Henry Waxman, a Democrat congressman from California, raised the details of Halliburton's contract after receiving a letter from the US Army Corps of Engineers, which awarded the contract. The corps wrote to Mr Waxman saying the contract included extinguishing fires and the "operation of facilities and distribution of products".

For pumping the oil from Iraq's oil fields and importing petrol and propane from Turkey and other countries, Halliburton will receive $US24 million ($A38 million), raising to $US77 million the amount it has received since being awarded the contract in March, said Scott Saunders, a spokesman for the Corps of Engineers. Mr Saunders said the Halliburton subsidiary was pumping 125,000 barrels of oil a day, far short of demand, which is expected to reach 400,000 barrels a day this northern summer.

Mr Waxman stopped short of accusing the corps of deliberately misleading the public when the original contract was announced, but said: "I am concerned the administration's reluctance to provide complete information about this and other Iraqi contracts has denied Congress and the public important information."

He said the revelations were at odds with Mr Bush's claim that Iraq's oil belongs to the Iraqi people. "Only now, over five weeks after the contract was first disclosed, are members of Congress and the public learning that Halliburton may be asked to pump and distribute Iraqi oil under the contract".

The deal was among the early contracts given by Washington to US companies to kickstart the reconstruction of Iraq. Nine contracts handed out by the US aid agency were open to bids, but only from US companies. The oil contract was given to KBR without a bidding process. The contract could be worth up to $US7 billion for up to two years, although the corps has stressed that this figure was based on a worst-case scenario of oil-well fires. Mr Saunders insisted Halliburton would not export any Iraqi oil under its contract. But when a second, competitive contract was awarded within the next four to nine months, he said, the winning US bidder might be allowed to export Iraqi oil for a limited time.

US officials distanced the White House from the oil contract. Bush spokesman Ari Fleischer said it was "not a White House issue", and questioned Mr Waxman's motives. "He never met a Republican he didn't want to investigate."

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