Web Only / Features » August 15, 2016
“The fix is in”: How the Blair Government Helped U.K. Companies Profit From the Iraq War
Declassified documents from the lead-up to war show oil, gas and other corporations scrambling to capitalize on Iraq.
Representatives of BP and other oil companies met with members of the British government several times to stress Iraq’s importance to their operations, and express their concern that businesses from other countries were getting preferential seats at the table over British companies.
Back in 2011, Hillary Clinton famously told a gathering of government officials and business leaders that it was “time for the United States to start thinking of Iraq as a business opportunity.” Documents that were released as part of the U.K.’s Chilcot Report show that long before she had given out this advice—and before the war had even begun—U.K. Prime Minister Tony Blair’s government had taken on this mindset with gusto, fighting to make sure British companies benefited from the potential riches involved in Iraq’s postwar reconstruction.
Along with the report itself, a 12-volume behind-the-scenes overview of Britain’s path to war released last month, the hundreds of secret documents and internal memos that have been released alongside it show U.K. officials lobbying to make sure British companies did not miss out on the business opportunities offered by the war, while privately acknowledging the disastrous optics of doing so. Facing pressure from an anxious business community keen to take advantage of the potential spoils of war, the Blair government successfully pushed to make sure British companies had a seat at the table.
According to the report, as early as September 2002—at a time when the Blair government was still publicly insisting it was not set on war with Iraq, even as it had privately committed itself to regime change—David Manning, the prime minister’s foreign policy advisor, commissioned a report from the Foreign and Commonwealth Office (FCO) outlining what a post-Saddam Iraqi government would look like.
The FCO’s report outlined “overarching priorities for Iraq,” such as getting rid of the country’s (ultimately nonexistent) WMDs, as well as a number of “second order objectives,” which included “ensuring British companies benefit from any post-war reconstruction contracts.” A month later, in a telegram titled “Iraq: Dividing the Spoils,” the British ambassador to the United States questioned why this was only “second order,” instead terming it a “top priority” for post-Saddam planning.
“[The U.K.] will need to register with the Americans that, in the event of war, the U.K. will expect to get a generous share of reconstruction and oil contracts after Saddam’s defeat,” he wrote. “This did not happen in Kuwait after the Gulf War.”
It’s not surprising officials were so eager to capitalize on Iraq’s postwar reconstruction. As internal documents detailed, it was a potential bonanza for the private sector. “[T]he long term commercial opportunities in Iraq will be huge, as a generation of neglected infrastructure is replaced,” read one letter to Blair from Foreign Secretary Jack Straw and Secretary of State for Trade and Industry Patricia Hewitt.
Iraq’s oil-producing capacity was especially coveted. “With proved reserves of 112.5 billion barrels of oil (10.7 percent of world reserves) Iraq is second only to Saudi Arabia in terms of remaining oil reserves,” read another note to Manning from an unnamed junior official from Trade Partners UK (TPUK), a government department aimed at promoting British exports. The note also pointed out that the amount of yet-to-find reserves in Iraq “is unmatched anywhere in the world.”
Raising the Issue
Despite some officials’ obvious eagerness to get businesses involved, the Blair government needed prodding from the private sector. Over the months of late 2002 and early 2003, representatives of U.K. businesses repeatedly expressed to government officials their concern that they were going to be left behind when contracts were finally divvied out, and pressured the government to do more to ensure they wouldn’t be. In an October 2002 meeting with oil groups, the FCO’s Middle East director said the FCO was “determined to get a fair slice of the action for U.K. companies,” according to meeting minutes obtained by The Independent in 2011.
Over the next months, representatives of BP and other oil companies met with members of the British government several times to stress Iraq’s importance to their operations, and express their concern that businesses from other countries were getting preferential seats at the table over British companies. According to The Independent's documents, there were at least five such meetings between British officials and BP and Shell in late 2002.
And the U.K., which in the meantime was helping the U.S. plot regime change, had reason to believe it deserved special treatment: one British official learned Dick Cheney had told former Russian Prime Minister Yevgeny Primakov that the “bids of those countries which co-operated with the U.S. over Iraq would be looked at more sympathetically than those which did not.”
Even as they repeatedly sought to relay their concerns about being left out of Iraq to government officials, businesses publicly denied these efforts. Months later, on the eve of the war, both BP and Shell would deny they had met with officials to expressly talk about Iraq, saying that it only came up as one topic of conversation in the course of “normal meetings [they] attend from time to time.” “We have no strategic interest in Iraq,” BP insisted,
By November 2002, it’s evident the Blair government had begun to take these concerns seriously. Departments were “encouraged” to “engage those outside Government in prudent contingency planning … particularly in the oil sector”—but only if “such contact is discreet.” Much of the discussions around Iraqi reconstruction revolved around securing a “level playing field” for British companies—a phrase that came up over and over again in communications sent within the Blair government.
On November 15, the ambassador to the United States, Christopher Meyer, sent Manning a letter about the situation, stating that oil companies “brought in at an early stage will have a natural advantage,” and noting intelligence that suggested the Pentagon had already awarded a contract to Kellogg, Brown and Root (KBR), a subsidiary of Halliburton. This, as the Chilcot Report notes, was likely the $1.9 million contract KBR received to develop a plan for repairing Iraq’s oil infrastructure. (KBR was eventually awarded a $7 billion contract a week before the invasion—the largest no-bid contract in U.S. history).
Meyer believed Blair would have to personally raise the issue with Bush, which would be a “delicate matter.” He suggested talking points for Blair to do so. Blair should point out that the Iraqi economy would have to be restarted after Saddam’s fall, which the country’s oil industry was central to, wrote Meyer. He should also tell Bush that the U.K. had “energy majors” with the “skills and resources to help,” and express his “hope” that British companies would be invited to discussions about Iraq’s oil. This was, according to Meyer, “the least that we should do”—after all, because the U.K. had been “too squeamish and slow off the mark,” the United States grabbed the “lion’s share” of oil contracts in Kuwait in 1991 while the U.K. “did badly.”
Although it’s unclear if Blair ever raised the issue with Bush, other officials certainly did with their counterparts. In December of that year, Manning reported to Blair that he brought the matter up with Condoleezza Rice over dinner—namely, he had said he hoped British energy companies would be “treated fairly and not overlooked” if Saddam was removed and energy concessions were given out.
“She commented that it would be particularly unjust if those energy companies who had observed the sanctions regime since the Gulf War were not among the beneficiaries in a post-Saddam Iraq,” he wrote. “She knew UK companies belonged in this category.”
British officials privately acknowledged the potential for such lobbying efforts to backfire, not just on the U.K. but on the entire war effort. At the time, and since, suspicions abounded that the war was really about securing Western control of Iraq’s oil reserves rather than removing Saddam’s supposed WMDs and freeing the Iraqi people. Both Bush and Blair had to deny such accusations in the lead-up to the war.
A November 29 note from TPUK to Manning stated: “It would be inappropriate for HMG [Her Majesty’s Government] to enter into discussions about any future carve-up of the Iraqi oil industry, not least because it would suggest that our objectives on Iraq are other than to see the effective dismantlement of Saddam Hussein’s regime.” In case it wasn’t clear how important this point was, this passage was bolded. (Despite this, it also stated that the U.K. should take action to ensure “a level playing field” for British businesses.)
Baroness Liz Symons, the Minister of State for trade and investment, also wrote to Blair that avoiding overt public support for British businesses “has been the right approach bearing in mind that we have been making the case publicly that this conflict is about WMD not oil (as many have unfairly claimed).” But, she warned, “the pressure from businesses is building.”
The documents make clear just how much pressure businesses began putting on the Blair government. A February 2003 minute from TPUK to Symons notes that while up to that point “most of our meetings have involved only internal players and have been relatively low key” so as to “avoid giving undue prominence to the commercial aspects of HMG’s handling of the crisis,” planning had entered a new phase. “We expect to be approached directly by firms seeking confidential discussions on early access to Iraq,” it stated.
The minute outlines the various types of assistance British companies were likely to need from the government, which included advice on how to best do business in a post-Saddam Iraq and help with positioning themselves to obtain reconstruction contracts. The memory of Kuwait reared its head again, with the TPUK reporting companies’ concern that they would be left out in the cold once more, as in 1991. British companies, the minute warned, “are likely to react badly to countries not actively engaged in the [Iraq War] coalition securing reconstruction business.” Symons was also informed that TPUK officials believed the Blair government was “not extracting sufficient commercial advantage from our support for the US, in terms of business opportunities for UK companies.”
Symons struck a similar note when she wrote to Straw and Hewitt around the same time in 2003. “More and more individuals and companies are approaching me and TPUK about the issue of post-conflict resolution in Iraq,” she wrote. This included Standard Chartered Bank (which was part of a 13-bank group that was selected to run the Trade Bank of Iraq in August 2003, which financed imports and exports in the country) and the British Consultants and Contractors Bureau (a trade organization-cum-lobbying-firm for the consulting industry, now named British Expertise), which expressed “serious concern that insufficient action appears to be happening at a political level to safeguard UK interests” in a post-Saddam Iraq. “I fear that some of our business community believe we are not engaged,” she wrote. “[T]he time is right to be more on the front foot.”
In keeping with this, British officials continued to lobby U.S. policymakers right up to the start of the war. Mike O’Brien, a minister of FCO, visited Washington a mere week before the launch of the war to discuss post-conflict issues, stressing that British companies needed “a fair crack of the whip” to compete for contracts.
The persistence of both the British government and businesses paid off. While British companies couldn’t compete for primary contracts under U.S. law, the head of the United States Agency for International Development (USAID)—the department which helped administer Iraq’s reconstruction—assured British officials that they were more than welcome to bid on subcontracting work with the sufficient clearances. O’Brien went on to send him a list of “trustworthy” companies, according to the report.
The Blair government got its confirmation of this after the war began. After one official at the British Embassy followed up on these meetings, an unnamed USAID official confirmed that the Office of Reconstruction and Humanitarian Assistance (ORHA), which was to act as a temporary government once Saddam was ousted, had been informed that the U.K. needed to be included in the assessment of subcontracts. “The fix is in,” the official said. In May, Blair was informed that the United States “regard [sic] UK companies as leading contenders for sub-contract work.”
While U.S. companies were indeed favored over foreign ones, the “fix” paid off for several British corporations. Engineering firm Amec, in partnership with an American company, won a $1 billion water and sewage contract, as well as a contract for $500 million worth of electricity projects. Development firm Crown Agents won a $7 million reconstruction deal, while three more British companies won lucrative contracts the following years.
It’s in subsequent years, however, that British companies have really done well for themselves. In 2008, Shell and BP were two of a number of companies (all Western) that won no-bid contracts for work on Iraq’s oil fields. In 2009, BP signed a 20-year contract to manage Iraq’s Rumaila oil field, which at one point accounted for nearly half of Iraq’s oil output.
Lobbying by the British didn’t end once the war began. The Blair government continued to work on behalf of British companies to ensure they benefitted from the rebuilding of Iraq, talking up British companies’ expertise in vital sectors of the Iraqi economy to Bush administration officials.
Early on in the war, however, officials seemed almost deflated that more British companies hadn’t capitalized on the government’s efforts. Straw and Hewitt noted in a letter to Blair in May that while more than 800 British companies had registered their interest in Iraq with TPUK, around 5 percent of the 3,500 companies who had registered as subcontractors for American construction and civil engineering company Bechtel—the recipient of one of the biggest U.S. contracts for Iraq—were British. Straw and Hewitt floated the idea of securing “firmer political guarantees from the U.S.,” but ultimately determined that now that the government had “create[d] a favorable political atmosphere” for British companies, it was up to them to make the most of the opportunity.
Even so, the Blair government helped out where it could. In June 2003, Straw wrote to Blair explaining that one of Britain’s biggest engineering firms, Siemens U.K.—the British branch of German industrial giant Siemens—had its bid to supply the cities of Baghdad and Basra with electricity “stalled in Washington by counter-lobbying by GE.” Hewitt was “keen for you to lobby the President on behalf” of the company, Straw wrote.
Straw advised Blair in a separate letter sent the same day to forcefully bring up the issue of contracts when he spoke with Bush. “[T]he US are completely ruthless on favouring US companies, and will not help UK companies unless you play hardball with Bush,” he wrote. The following day, Blair talked about the matter with Bush, while Hewitt raised the issue a month later with Paul Bremer, head of the Coalition Provisional Authority (CPA), formerly the OHRA, that was in charge of Iraq.
The lobbying effort was successful. Siemens representatives told British Embassy officials in Washington the following month that there had been “a favorable change in CPA attitudes to their participation in the power sector, which they attribute to HMG teamwork on their behalf.” Siemens U.K. ultimately secured a contract worth $95 million to develop a power station in Iraq, as well as $50 million more worth of subcontracts.
One Department of Trade and Industry official called the Siemens turnaround a “success story” that indicated “the level of political support which may be needed to unblock the US system, and the level of determination to get business success in Iraq.” But more than that, it was also a good indicator of the lengths the British government put in to advocate for the welfare of a private corporation. Helping Siemens secure its contract was no mere side-issue—it was a matter pursued at the very highest level of government.
Government advocacy for British companies was no doubt motivated by any number of factors, not least of which would be the presumed benefits that would filter down to the British economy. However, as one report on the U.K.’s “oil and gas strategy” for Iraq sent to Blair in July 2005 laid out, Iraq’s oil sector was also viewed as crucial to British energy security. “The UK’s economic well being depends on secure oil and gas supplies at affordable prices,” the report reads. “Sustainable increases in Iraqi oil and gas production would make a large contribution to global energy security.”
The Iraq War, and the furious scramble for contracts which both preceded it and continued throughout, shows the confluence of private and public interests on a scale rarely seen. While the idea of Iraq as simply a war for oil may be reductive, the Chilcot Report and its accompanying documents show that money and financial interests lined many layers of the path to the Iraq War.
Perhaps more importantly, however, is what these documents reveal about the relationship between government and business. Government officials are meant to be public servants, yet officials in the Blair government appeared most attentive towards business concerns, ready to bend over backwards to satisfy the whims of corporations, alleviate their concerns and avoid their displeasure. It’s a stark contrast to the Blair government’s dismissal of unprecedented public opposition to the war, and should make us reconsider who our officials’ real constituents are.
Branko Marcetic is a regular contributor to In These Times. He hails from Auckland, New Zealand, where he received his Masters in American history, a fact that continues to puzzle everyone who meets him. You can follow him on Twitter at @BMarchetich or email him at [email protected]