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 Halliburton, KBR, Bechtel, 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