REBUILDING IRAQ: Problems and Questions

July 23, 2011

An overview that gives special attention to Iraq's oil industry, and suggestions for discussion and study of Iraq's future and the US's leadership and credibility.

To the Teacher: The student reading below provides an overview of a number of issues and questions about rebuilding Iraq and gives special attention to its vital oil industry. Following the reading are suggestions for discussion as well as for continuing student study of Iraq's future and the U.S.'s leadership and credibility.


Student Reading:

How Shall Iraq Be Reconstructed?

For a month U.S. bombs and missiles rained down on Iraq's towns and cities. The damage was immense. The homes of ordinary Iraqis as well as some of Saddam Hussein's palaces lie in ruins. Public facilities—power plants, telephone exchanges, sewage systems, electrical grids, roads, airports—are damaged or destroyed. So are vital oil pipelines and oil production offices. After the Hussein regime collapsed, some Iraqis looted offices, hospitals and museums. Several weeks after the end of combat many Iraqis had no jobs, no way to support themselves, and little access to basic services— water, power, telephones.

Even before the attacks ended, the U.S. Agency for International Development (USAID) and the Army Corps of Engineers had awarded contracts to American companies to rebuild Iraq. They included: Bechtel to reopen an Iraqi port and to repair or rebuild other facilities (worth up to $680 million) and Kellogg Brown & Root, a subsidiary of Halliburton, to fight oil well fires, repair damage to facilities, and to control oil operations, including oil distribution (worth up to $7 billion). It will take billions just to repair Iraq's oil export facilities, the major source of income for the country, and to rebuild its power plants, whose operation depends on oil.

The U.S. Department of Defense has said, "Iraq's oil is vitally important to the future of the Iraqi people. The department estimates the potential income for the Iraqi people from oil at $20 to $30 billion a year." But oil income will probably not rise to such levels for some time. First comes the huge task of repairing war damage, supplying parts and modern technology, and correcting years of mismanagement. Iraq's proven oil reserves are second only to Saudi Arabia: 112 billion barrels. Iraq may have as much as 200 billion barrels more in fields waiting for development. The U.S. has appointed two Iraqis who served in Saddam Hussein's government to lead the oil industry. Philip J. Carroll, a former chief executive of the American unit of Royal Dutch/Shell, will be chairman of an advisory board that will provide oversight.

"Iraq's oil belongs to the Iraqi people," President Bush has said repeatedly. His press secretary Ari Fleischer has been specific: "The only interest the United States has in the region is furthering cause of peace and stability, not in [Iraq's] ability to generate oil." And Iraq's new, U.S.-appointed oil minister, Thamir Ghadhban, says "we are committed 100 percent that Iraqi oil and hydrocarbons [such as natural gas] are for the Iraqi people." (New York Times, 5/4/03)

What will it cost to occupy and rebuild Iraq? According to a study by the Council on Foreign Relations, about $20 billion a year (New York Times, 4/7/03) but it could run much more. For how long? No one is sure. Who will pay? Another big question that can't be answered for certain. Probably the American taxpayer with maybe something in the future from Iraq's oil revenues.

But these are only a few of the questions that are arising now that the U.S. is in control of Iraq. Why did the Bush administration offer contracts, with no bidding, to American companies only? The U.S. says that such companies as Bechtel and Halliburton have a great deal of experience in reconstruction projects, already had security clearances, and could do the work speedily. Bechtel worked on the Trans-Alaska pipeline and a major tunnel and highway project in Boston. Halliburton's Kellogg Brown and Root worked on the Guantanomo Bay prison compound in Cuba and on numerous power, transportation, and oil projects. And the chief contractors will probably hire subcontractors from elsewhere in the world for more than half of the money to be spent.

But political and business leaders from Britain, America's ally in the Iraq war, are angry that U.S. companies monopolize the reconstruction contracts. Some U.S. Congress members feel the same way and have requested the U.S. General Accounting Office to investigate whether the contracts were handled properly and without favored treatment.

George Shultz, Secretary of State in the Republican administration of President Reagan, has long been associated with Bechtel and was its CEO at one time; he also headed a pro-war group with close ties to President Bush. Vice President Dick Cheney was the CEO of Halliburton from 1995 until mid-2000. Both companies have been criticized for cost overruns — Bechtel for more than $1 billion of such extra costs on its Boston project and Halliburton on several projects. A report released in June by Public Citizen, Global Exchange and CorpWatch details charges about Bechtel's record of environmental destruction and disregard for human rights in such places as New Guinea, Mexico, Bolivia and Iraq. Halliburton has also gotten around U.S. prohibitions since the 1980s on doing business with Iraq, Iran, and Libya, all nations the U.S. accused of supporting terror, by setting up subsidiaries in places like the Cayman Islands. Critics say the two companies' no-bid contracts leave an impression of profit-making by companies with ties to the President. This, they argue, undermines President Bush's insistence that the war was motivated primarily by the need to eliminate Iraq's weapons of mass destruction.

One such critic, Thomas D. Thacher II, the head of a firm that monitored the clean-up process at ground zero in Manhattan for the Federal Emergency Management Agency and New York City, says, "Any time you have an emergency response driven by time, the opportunity for fraud, waste, and abuse is huge. And when the opportunity is that great, it will occur." (New York Times, 3/23/03) Jo Nickolls of Oxfam, a nonprofit organization doing humanitarian and development work around the world, says the work of reconstruction should be done by Iraqis for the benefit of Iraq and "not for commercial corporations appointed by the U.S...."

In May the Security Council of the United Nations gave the U.S. and Britain legal authority over Iraq's political development and its potentially billions of dollars in oil revenues. The UN and international financial organizations such as the World Bank will have representatives on an advisory board to oversee Iraq's reconstruction. How soon will Iraq's oil industry be in full operation? That remains uncertain. Oil production has increased since the end of the war, especially in the south. But poor maintenance in the past and, in the north, widespread continued looting and sabotage have made progress very slow and difficult.

Rebuilding Iraq poses many problems. Often the needed experienced people to deal with them are not available. One New York Times review of these issues states: "In the weeks after the end of the war American military officers in their 20s and 30s were ordered to oversee efforts to repair power plants, open banks, pick up trash, reopen schools, purify drinking water and form town councils. Many openly admitted they had no idea what they were doing." ( 7/13/03)

Legally, the United Nations now has authority over Iraqi oil. That dates from the end of the Gulf War in 1991 when the UN imposed economic sanctions on Iraq and banned its oil sales to force Saddam Hussein to disarm. Later, when complaints grew that the health of the Iraqi people was being jeopardized because of the sanctions, the UN authorized an "oil-for-food" program, which is still in effect. It gave the UN the legal authority (also still in effect) to approve oil sales and put the proceeds into a UN-controlled account that can be used to buy food for Iraqis. But the Bush administration has asserted that it intends to keep the UN from any decision-making about Iraq's oil assets. How will this conflict be settled?

Christopher Flavin, president of the World Watch Institute, says that to ease suspicions about U.S. motives, the U.S. needs to support the creation of an international board through the United Nations to oversee "a strong and transparent oil economy in Iraq." This UN board should also supervise a "broad distribution of revenues" for Iraq's schools, transportation systems, hospitals, and the like.

Deposed Iraqi President Saddam Hussein awarded billions in contracts to French, Russian, and Chinese companies to develop some of Iraq's potential oil fields. All these nations opposed the U.S. attack on Iraq. The Iraqi government of Saddam Hussein also owed $60 to $100 billion to France, Russia, and other countries. Will a U.S.-backed Iraqi government void those contracts and award them to American companies? If so, what would that say about Bush administration claims that the war had nothing to do with oil? Will a new Iraqi government cancel its debts, saying they were made by a repressive, dictatorial regime? Or will it work for a sharp reduction of these obligations? If so, how will it pay even the reduced amounts?

In addition to these Iraqi debts, Iraq still owes billions to victims of its attack on Kuwait in 1990. Will a new Iraqi government honor these debts? If so, how will it pay them?

Iraq is already an oil-rich country. It is likely to become even richer. But it has immediate reconstruction requirements. Its people need clean water (the absence of it has caused a cholera outbreak in Basra), jobs, functioning schools and hospitals, garbage collection, and public security. The U.S. now bears the major responsibility for meeting Iraqi needs in a fair and reasonable way. And that is likely to cost American taxpayers a lot of money.

How much money remains unclear, as is the amount of time U.S. troops will stay in Iraq. Both Republican and Democratic senators have criticized the Bush administration's planning for the postwar period. Richard Lugar, an Indiana Republican who heads the Senate Foreign Relations Committee, said, "The planning for peace was much less developed than the planning for war," adding that the physical and political reconstruction of Iraq would take at least five years.

To fund the American military presence in Iraq, Defense Secretary Donald Rumsfeld in July nearly doubled estimated military costs to almost $1 billion a week. That does not include the cost of running Iraq's government and rebuilding, which could be another $1 billion a month. "We're dealing with a country that can really finance its own reconstruction, and relatively soon," Deputy Defense Secretary Paul Wolfowitz told the Senate a week after the invasion started in March. Now Paul Bremer, the American civilian administrator in Iraq, says, "It's not going to be self-financing." He also says that over the next four years "staggering" sums would be needed to improve water and electric power systems. It is unclear where such sums will come from.

On August 8 the White House released a report that President Bush said showed the U.S. was making "good progress" in Iraq but that he recognized "we've got a lot more work to do." The report stated that most of Iraq was calm and that "only in isolated areas are there still attacks." It said that Iraq's water supply was back to pre-war levels, that electricity was more stable and that the rehabilitation of more than 100 schools was in progress.

The report did not mention an August terrorist car-bomb attack on the Jordanian Embassy in Baghdad that killed at least 17 and wounded dozens more or that 56 American soldiers had been killed and hundreds more wounded since the President declared major combat over. (As of the end of August more American soldiers had died since May 1, when President Bush declared major combat operations over than had died during the war itself.) Nor did it mention that American forces have killed hundreds of Iraqis, including many innocent bystanders, that there are 15 to 20 attacks daily on coalition forces, that the Baghdad International Airport remains closed to commercial airplanes because American commanders fear they might be shot down, that crime in Baghdad (whose population is 20 percent of Iraq's people)— murders, kidnappings and robberies—continues at a very high rate, that drivers on the road between Baghdad and Amman, Jordan were frequently attacked and robbed, that Baghdad has electrical power for less than half of each day.

Two days after the release of the report, crowds rioted for several days against British troops in a Basra protest against the lack of electricity and fuel, which has resulted in part from looting and sabotage. Seven soldiers were killed and 21 injured.

On August 19 a suicide bomber drove a cement mixer loaded with explosives into the side of United Nations headquarters in Baghdad, killing 23, including top officials, and wounding at least 100 others. The purpose of the attack seemed to be to demonstrate that the U.S. cannot maintain security, that even relief organizations will not be safe in Iraq.

On August 29 a car bomb explosion in Najaf outside the holiest Shiite shrine killed 82, including the most prominent Shiite cleric cooperating with American forces, Ayatollah Muhammad Bakr al-Hakim. Scores more were wounded. Once again the source of the attack was unclear. But al-Hakim was hated by Saddam Hussein loyalists as well as by rival Shiite clerics.

The commander of allied forces in Iraq, General John P. Abizaid, described in mid-July the almost daily attacks on American troops as "a classical guerrilla-style campaign" and said additional troops might be required. The U.S. has been working to get more support from such countries as France, Germany, Russia and India that opposed the war and will not participate without United Nations authorization. The Bush administration has so far received military support only from countries that supported the war, but these countries have only small numbers of troops to provide. By the end of August there were discussions in the UN about the possibility of a UN force in Iraq under U.S. command.


Since these lessons were prepared there has been further news about weapons of mass destruction and links between Iraq and Al Qaeda that is summarized below:

On July 14 President Bush explained why the U.S. invaded Iraq: "The larger point is, and fundamental question is: Did Saddam Hussein have a weapons program? And the answer is, absolutely. And we gave him a chance to allow the inspectors in, and he wouldn't let them in. And therefore after a reasonable request, we decided to remove him from power." In fact, the UN inspectors were in Iraq for months and were removed only when President Bush ordered American forces to attack.

By the end of August 2003, American inspection teams had examined many possible sites and interviewed Iraqi scientists but had found no weapons of mass destruction. Two tractor-trailer trucks the Bush administration claimed were mobile biological weapons labs are now believed by engineering experts from the Defense Intelligence Agency to have been used to produce hydrogen for weather balloons.

The reason that many people are skeptical of American claims is that a number of them have proved to be false. For example, President Bush and Secretary of State Colin Powell claimed that Iraq tried to buy uranium from Niger to build a nuclear weapon. Mohamed ElBaradei, the UN's chief inspector for nuclear weapons, investigated and denounced this claim as based on documents that were obviously forged. What is even worse,Nicholas Kristof, in an op-ed article for the New York Times (5/6/03), points to evidence that the President and the Secretary knewthis but continued to cite the claim anyway.The evidence includes a February 2002 fact-finding trip to Niger by a Bush administration investigator, Joseph Wilson, who reported there was no basis to the report on nuclear materials. Yet, President Bush in his January 28, 2003 State of the Union address declared, "The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa." This statement helped to fuel a heated controversy over administration claims that Iraq had weapons of mass destruction and criticisms that it exaggerated and misrepresented what it knew.

Another Bush administration claim was that it had damning testimony from a defector, General Hussein Kamal, who was in charge of Iraq's weapons program. What the President and Vice President did not say was that "The full record of Hussein Kamel's inteview with the inspectors reveals, however, that he also said that Iraq's stockpile of chemical and biological warheads, which were manufactured before the 1991 Gulf War, had been destroyed." (Seymour Hersh, The New Yorker, (5/12/03)

Links between Iraq and Al Qaeda: In his speech before the United Nations on February 6, 2003, Colin Powell stated that there is "a potentially sinister nexus between Iraq and the Al Qaeda network." He presented information about Abu Mussab al-Zarqawi who, he claimed, was "an associate and collaborator of Osama bin Laden" and operating a "terror network" in Iraq in cooperation with Ansar al-Islam, a dissident Kurdish Islamic militant group located in the north of the country. The Secretary gave a lengthy description of the al-Zarqawi's presumed activities that included terrorist plots in European countries and links to Saddam Hussein. What he did not give was proof of these claims. Even U.S. intelligence officials admit the evidence is "somewhat circumstantial." (ABC, 2/24/03) And former Senator Bob Kerry, who served on the Senate Intelligence Committee and was a strong supporter of the President's decision to overthrow Saddam Hussein, said, speaking of the administration's hawks, they "were willing to allow a majority of Americans to incorrectly conclude that the invasion of Iraq had something to do with the World Trade Center....It was the weakest and most misleading argument we could use. It appears that they have the intelligence. The problem is, they didn't like the conclusions." (The New Yorker, 5/12/03)

A February 2003 poll showed that 72 percent of Americans believed it likely that Saddam Hussein was personally involved in 9/11, a belief for which there is no evidence.

For discussion

Consider first any student questions on the reading, then review major issues and questions. What do we know about each? What don't we know?

  • the naming of American companies to handle reconstruction: reactions, questions and costs
  • Iraq's oil: its volume and worth, UN authority, existing contracts
  • Iraq's debts
  • Bush administration policies and critics


The leadership and credibility of the United States are on the line in Iraq. How will it handle each of the following:

1. The rebuilding of Iraq

2. The restoration and future of Iraq's oil industry

3. The creation of a new Iraqi government

4. Bush administration charges that Iraq had weapons of mass destruction.

5. Bush administration charges of links between Iraq and Al Qaeda.

This reading deals with the first two issues. Please also see "Iraq and the United States: The Road to War."

You might want to have students follow developments in Iraq over an extended period. A possible approach:

  • Divide the class into five groups and assign one of the issues listed above to each.
  • Have students follow reports on their issue regularly in a specific news source*.
  • Provide 15 minutes each week for meetings in which each member of a group can share findings.
  • Provide additional time for students in each group, on a rotating basis, to summarize those findings for the class and for any further discussion.

*Assign a diverse set of news sources in each group. For example:

  • a local newspaper
  • a mainstream TV news source, network or cable
  • an alternative news source (e.g., WBAI,, or magazines like The Nation)
  • an Arab news source (see ((navigator)), and the American-Arab Anti-Discrimination Committee— for suggestions).

This lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email them to: