{"id":195592,"date":"2021-09-27T12:00:53","date_gmt":"2021-09-27T11:00:53","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=195592"},"modified":"2025-01-10T15:08:30","modified_gmt":"2025-01-10T15:08:30","slug":"the-profits-of-war-how-corporations-won-the-war-on-terror","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2021\/09\/the-profits-of-war-how-corporations-won-the-war-on-terror\/","title":{"rendered":"The Profits of War: How Corporations Won the War on Terror"},"content":{"rendered":"

How U.S. Corporations Cashed in on the Post-9\/11 Pentagon Spending Surge<\/em><\/p>\n

21 Sep 2021 – <\/em>The costs and consequences of America\u2019s twenty-first-century wars have by now been well-documented \u2014 a staggering $8 trillion in expenditures and more than 380,000 civilian deaths, as calculated<\/a> by Brown University\u2019s Costs of War project. The question of who has benefited most from such an orgy of military spending has, unfortunately, received far less attention.<\/p>\n

Corporations large and small have left the financial feast of that post-9\/11 surge in military spending with genuinely staggering sums in hand. After all, Pentagon spending has totaled an almost unimaginable $14 trillion-plus<\/a> since the start of the Afghan War in 2001, up to one-half<\/a> of which (catch a breath here) went directly to defense contractors.<\/p>\n

\u201cThe Purse is Now Open\u201d: The Post-9\/11 Flood of Military Contracts<\/strong><\/p>\n

The political climate created by the Global War on Terror, or GWOT, as Bush administration officials quickly dubbed<\/a> it, set the stage for humongous increases in the Pentagon budget. In the first year after the 9\/11 attacks and the invasion of Afghanistan, defense spending rose<\/a> by more than 10% and that was just the beginning. It would, in fact, increase annually for the next decade, which was unprecedented in American history. The Pentagon budget peaked<\/a> in 2010 at the highest level since World War II \u2014 over $800 billion, substantially more<\/a> than the country spent on its forces at the height of the Korean or Vietnam Wars or during President Ronald Reagan\u2019s vaunted military buildup of the 1980s.<\/p>\n

And in the new political climate sparked by the reaction to the 9\/11 attacks, those increases reached well beyond expenditures specifically tied to fighting the wars in Iraq and Afghanistan. As Harry Stonecipher, then vice president of Boeing, told<\/a> the Wall Street Journal <\/em>in an October 2001 interview, \u201cThe purse is now open\u2026 [A]ny member of Congress who doesn\u2019t vote for the funds we need to defend this country will be looking for a new job after next November.\u201d<\/p>\n

Stonecipher\u2019s prophesy of rapidly rising Pentagon budgets proved correct. And it\u2019s never ended. The Biden administration is anything but an exception. Its latest proposal for spending on the Pentagon and related defense work like nuclear warhead development at the Department of Energy topped $753 billion<\/a> for FY2022. And not to be outdone, the House and Senate Armed Services Committees have already voted to add roughly $24 billion<\/a> to that staggering sum.<\/p>\n

Who Benefitted?<\/strong><\/u><\/p>\n

The benefits of the post-9\/11 surge in Pentagon spending have been distributed in a highly concentrated fashion. More than one-third<\/a> of all contracts now go to just five major weapons companies \u2014 Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman. Those five received more than $166 billion<\/a> in such contracts in fiscal year 2020 alone. To put such a figure in perspective, the $75 billion in Pentagon contracts awarded to Lockheed Martin that year was significantly more than one and one-half times the entire 2020 budget for the State Department and the Agency for International Development, which together totaled $44 billion<\/a>.<\/p>\n

While it\u2019s true that the biggest financial beneficiaries of the post-9\/11 military spending surge were those five weapons contractors, they were anything but the only ones to cash in. Companies benefiting from the buildup of the past 20 years also included logistics and construction firms like Kellogg, Brown & Root (KBR) and Bechtel, as well as armed private security contractors like Blackwater and Dyncorp. The Congressional Research Service estimates that in FY2020 the spending for contractors of all kinds had grown to $420 billion<\/a>, or well over half of the total Pentagon budget. Companies in all three categories noted above took advantage of \u201cwartime\u201d conditions \u2014 in which both speed of delivery and less rigorous oversight came to be considered the norms \u2014 to overcharge the government or even engage in outright fraud.<\/p>\n

The best-known reconstruction and logistics contractor in Iraq and Afghanistan was Halliburton, through its KBR subsidiary. At the start of both the wars in Afghanistan and Iraq, Halliburton was the recipient<\/a> of the Pentagon\u2019s Logistics Civil Augmentation Program contracts. Those open-ended arrangements involved coordinating support functions for troops in the field, including setting up military bases, maintaining equipment, and providing food and laundry services. By 2008, the company had received more than $30 billion<\/a> for such work.<\/p>\n

Halliburton\u2019s role would prove controversial indeed, reeking as it did of self-dealing and blatant corruption. The notion of privatizing<\/a> military-support services was first initiated in the early 1990s by Dick Cheney when he was secretary of defense in the George H.W. Bush administration and Halliburton got the contract<\/a> to figure out how to do it. I suspect you won\u2019t be surprised to learn that Cheney then went on to serve<\/a> as the CEO of Halliburton until he became vice president under George W. Bush in 2001. His journey was a (if not the<\/em>) classic case of that revolving door between the Pentagon and the defense industry, now used<\/a> by so many government officials and generals or admirals, with all the obvious conflicts-of-interest it entails.<\/p>\n

Once it secured its billions for work in Iraq, Halliburton proceeded to vastly overcharge the Pentagon for basic services, even while doing shoddy work<\/a> that put U.S. troops at risk \u2014 and it would prove to be anything but alone in such activities.<\/p>\n

Starting in 2004, a year into the Iraq War, the Special Inspector General for Iraq Reconstruction<\/a>, a congressionally mandated body designed to root out waste, fraud, and abuse, along with Congressional watchdogs<\/a> like Representative Henry Waxman (D-CA), exposed scores of examples of overcharging, faulty construction, and outright theft by contractors engaged in the \u201crebuilding\u201d of that country. Again, you undoubtedly won\u2019t be surprised to find out that relatively few companies suffered significant financial or criminal consequences for what can only be described as striking war profiteering. The congressional Commission on Wartime Contracting in Iraq and Afghanistan estimated that, as of 2011, waste, fraud, and abuse in the two war zones had already totaled<\/a> $31 billion to $60 billion.<\/p>\n

A case in point was the International Oil Trading Company, which received<\/a> contracts worth $2.7 billion from the Pentagon\u2019s Defense Logistics Agency to provide fuel for U.S. operations in Iraq. An investigation<\/a> by Congressman Waxman, chair of the House Government Oversight and Reform Committee, found that the firm had routinely overcharged the Pentagon for the fuel it shipped into Iraq, making more than $200 million in profits on oil sales of $1.4 billion during the period from 2004 to 2008. More than a third of those funds went to its owner, Harry Sargeant III, who also served as the finance chairman of the Florida Republican Party. Waxman summarized<\/a> the situation this way: \u201cThe documents show that Mr. Sargeant\u2019s company took advantage of U.S. taxpayers. His company had the only license to transport fuel through Jordan, so he could get away with charging exorbitant prices. I\u2019ve never seen another situation like this.\u201d<\/p>\n

A particularly egregious case of shoddy work with tragic human consequences involved the electrocution of at least 18 military personnel at several bases in Iraq from 2004 on. This happened thanks to faulty electrical installations, some done by KBR and its subcontractors. An investigation by the Pentagon\u2019s Inspector General found<\/a> that commanders in the field had \u201cfailed to ensure that renovations\u2026 had been properly done, the Army did not set standards for jobs or contractors, and KBR did not ground electrical equipment it installed at the facility.\u201d<\/p>\n

The Afghan \u201creconstruction\u201d process was similarly replete with examples of fraud, waste, and abuse. These included a U.S.-appointed economic task force that spent $43 million<\/a> constructing a gas station essentially in the middle of nowhere that would never be used, another $150 million<\/a> on lavish living quarters for U.S. economic advisors, and $3 million<\/a> for Afghan police patrol boats that would prove similarly useless.<\/p>\n

Perhaps most disturbingly, a congressional investigation found<\/a> that a significant portion of $2 billion worth of transportation contracts issued to U.S. and Afghan firms ended up as kickbacks to warlords and police officials or as payments to the Taliban to allow large convoys of trucks to pass through areas they controlled, sometimes as much as $1,500 per truck, or up to half a million dollars for each 300-truck convoy. In 2009, Secretary of State Hillary Clinton stated<\/a> that \u201cone of the major sources of funding for the Taliban is the protection money\u201d paid from just such transportation contracts.<\/p>\n

A Two-Decade Explosion of Corporate Profits<\/strong><\/p>\n

A second stream of revenue for corporations tied to those wars went to private security contractors, some of which guarded U.S. facilities or critical infrastructure like Iraqi oil pipelines.<\/p>\n

The most notorious of them was, of course, Blackwater, a number of whose employees were involved in a 2007 massacre<\/a> of 17 Iraqis in Baghdad\u2019s Nisour Square. They opened fire on civilians at a crowded intersection while guarding a U.S. Embassy convoy. The attack prompted ongoing legal and civil cases that continued into the Trump era, when several perpetrators of the massacre were pardoned<\/a> by the president.<\/p>\n

In the wake of those killings, Blackwater was rebranded<\/a> several times, first as XE Services and then as Academii, before eventually merging<\/a> with Triple Canopy, another private contracting firm. Blackwater founder Erik Prince then separated from the company, but he has since recruited<\/a> private mercenaries on behalf of the United Arab Emirates for deployment to the civil war in Libya in violation of a United Nations arms embargo. Prince also unsuccessfully proposed<\/a> to the Trump administration that he recruit a force of private contractors meant to be the backbone of the U.S. war effort in Afghanistan.<\/p>\n

Another task taken up by private firms Titan and CACI International was the interrogation<\/a> of Iraqi prisoners. Both companies<\/a> had interrogators and translators on the ground at Abu Ghraib prison in Iraq, a site where such prisoners were brutally tortured<\/a>.<\/p>\n

The number of personnel deployed and the revenues received by security and reconstruction contractors grew dramatically as the wars in Iraq and Afghanistan wore on. The Congressional Research Service estimated<\/a> that by March 2011 there were more contractor employees in Iraq and Afghanistan (155,000) than American uniformed military personnel (145,000). In its August 2011 final report, the Commission on Wartime Contracting in Iraq and Afghanistan put the figure even higher, stating<\/a> that \u201ccontractors represent more than half of the U.S. presence in the contingency operations in Iraq and Afghanistan, at times employing more than a quarter-million people.\u201d<\/p>\n

While an armed contractor who had served in the Marines could earn as much as $200,000<\/a> annually in Iraq, about three-quarters of the contractor work force there was made up of people from countries like Nepal or the Philippines, or Iraqi citizens. Poorly paid, at times they received as little as $3,000<\/a> per year. A 2017 analysis<\/a> by the Costs of War project documented \u201cabysmal labor conditions\u201d and major human rights abuses inflicted on foreign nationals working on U.S.-funded projects in Afghanistan, including false imprisonment, theft of wages, and deaths and injuries in areas of conflict.<\/p>\n

With the U.S. military in Iraq reduced to a relatively modest number<\/a> of armed \u201cadvisors\u201d and no American forces left in Afghanistan, such contractors are now seeking foreign clients. For example, a U.S. firm \u2014 Tier 1 Group, which was founded by a former employee of Blackwater \u2014 trained<\/a> four of the Saudi operatives involved in the murder of Saudi journalist and U.S. resident Jamal Khashoggi, an effort funded by the Saudi government. As the New York Times <\/em>noted<\/a> when it broke that story, \u201cSuch issues are likely to continue as American private military contractors increasingly look to foreign clients to shore up their business as the United States scales back overseas deployments after two decades of war.\u201d<\/p>\n

Add in one more factor to the two-decade \u201cwar on terror\u201d explosion of corporate profits. Overseas arms sales also rose sharply<\/a> in this era. The biggest and most controversial market for U.S. weaponry in recent years has been the Middle East, particularly sales to countries like Saudi Arabia and the United Arab Emirates, which have been involved in a devastating war in Yemen, as well as fueling conflicts elsewhere in the region.<\/p>\n

Donald Trump made the most noise about Middle East arms sales and their benefits to the U.S. economy. However, the giant weapons-producing corporations actually sold more weaponry to Saudi Arabia, on average, during the Obama administration, including three major offers in 2010 that totaled<\/a> more than $60 billion for combat aircraft, attack helicopters, armored vehicles, bombs, missiles, and guns \u2014 virtually an entire arsenal. Many of those systems were used by the Saudis in their intervention in Yemen, which has involved the killing of thousands<\/a> of civilians in indiscriminate air strikes and the imposition of a blockade that has contributed<\/a> substantially to the deaths of nearly a quarter of a million people to date.<\/p>\n

Forever War Profiteering?<\/strong><\/p>\n

Reining in the excess profits of weapons contractors and preventing waste, fraud, and abuse by private firms involved in supporting U.S. military operations will ultimately require reduced spending on war and on preparations for war. So far, unfortunately, Pentagon budgets only continue to rise and yet more money flows to the big five weapons firms.<\/p>\n

To alter this remarkably unvarying pattern, a new strategy is needed, one that increases the role of American diplomacy, while focusing on emerging and persistent non-military security challenges. \u201cNational security\u201d needs to be redefined not in terms of a new \u201ccold war\u201d with China, but to forefront crucial issues like pandemics and climate change.<\/p>\n

It\u2019s time to put a halt to the direct and indirect foreign military interventions the United States has carried out in Afghanistan, Iraq, Syria, Somalia, Yemen, and so many other places in this century. Otherwise, we\u2019re in for decades of more war profiteering by weapons contractors reaping massive profits with impunity.<\/p>\n

_____________________________________________________.<\/em><\/p>\n

\"\"<\/a><\/em>William D. Hartung is the director of the Arms and Security Project at the Center for International Policy and the author of <\/em>Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex<\/a>. <\/em>This piece is adapted from a new report he wrote for the Center for International Policy and the Costs of War Project at Brown University,<\/em> \u201cProfits of War: Corporate Beneficiaries of the post-9\/11 Pentagon Spending Surge<\/a>.\u201d<\/p>\n

Copyright 2019 William D. Hartung<\/em><\/p>\n

Go to Original \u2013 tomdispatch.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

21 Sep 2021 – The costs and consequences of America\u2019s twenty-first-century wars have by now been well-documented: a staggering $8 trillion. Who has benefited most from such an orgy of military spending has received far less attention, however. -How U.S. Corporations Cashed in on the Post-9\/11 Pentagon Spending Surge-<\/p>\n","protected":false},"author":4,"featured_media":186224,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[867,1161,1188,232,120,550,555,562,626,1126,260,1050,950,1105,780,769,91,86,112,109,2198,287,2060,2648,2649,1709,95,70,126,118,492,172,75],"class_list":["post-195592","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-militarism","tag-anglo-america","tag-arms-industry","tag-arms-race","tag-capitalism","tag-conflict","tag-corruption","tag-elites","tag-finance","tag-greed","tag-hegemony","tag-history","tag-imperialism","tag-invasion","tag-military-industrial-complex","tag-military-intervention","tag-military-supremacy","tag-nato","tag-occupation","tag-pentagon","tag-politics","tag-post-capitalism","tag-power","tag-profits","tag-space-command","tag-space-digital-military-branch","tag-space-weapons","tag-us-military","tag-usa","tag-violence","tag-war","tag-war-on-terror","tag-west","tag-world"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/195592","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=195592"}],"version-history":[{"count":1,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/195592\/revisions"}],"predecessor-version":[{"id":284697,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/195592\/revisions\/284697"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media\/186224"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=195592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=195592"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=195592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}