Global Policy Forum

Insiders Shape Postwar Iraq


By Andrew Zajac

Chicago Tribune
June 20, 2004

A little over a year ago, Stuart Bowen Jr. was lobbying for a company looking for work in the impending reconstruction of Iraq. A former longtime aide to President Bush, Bowen tapped administration contacts on behalf of URS Group, a consulting firm, and the company eventually landed contracts worth up to $30 million for overseeing Iraqi construction projects. Today, Bowen works for the Coalition Provisional Authority, the U.S.-led bureaucracy running Iraq. In his new job as inspector general, Bowen is the corruption watchdog over more than $20 billion of rebuilding, including the activities of URS, the company he represented.

In moving from the Republican inner circle to the CPA leadership team, Bowen traveled a well-worn path. Although many CPA posts have been held by career government civil servants, numerous crucial slots have been filled by officials with strong GOP or conservative pedigrees. Passed over, in some cases, were diplomats and foreign policy specialists with backgrounds in Middle East issues or nation-building. In less than two weeks, the CPA is scheduled to hand over power to an interim Iraqi government. The jobs of most of the authority's 1,200 employees will be eliminated or folded into a giant U.S. Embassy under construction in Baghdad. A few positions, like Bowen's fiscal oversight of the reconstruction effort, will be preserved.

It might be years before a final verdict is in on the CPA's stewardship of Iraq, and on whether the composition of the authority played a part in the outcome, for better or worse. Without question the coalition took on arduous and sometimes dangerous assignments. The difficult working conditions likely shrank the pool of talent willing to trade the comfortable routine of American life for months of austerity in a scorching desert climate amid a bloody insurgency.

But already even some supporters of the March 2003 invasion of Iraq say the occupation's troubled course and the country's uncertain prospects for stable self-rule can be traced at least in part to a leadership team that valued political credentials over foreign policy expertise. Occupation planners often selected "ideologues without international experience who see the world through blinders," said Peter Galbraith, a senior career diplomat and an adviser to the Iraqi Kurdish leadership. "I don't think the Iraq venture was doomed to fail," Galbraith said. "If we had had qualified people with time to plan and a coherent strategy, the situation . . . would certainly be better."

Defense Department officials in charge of reconstruction wanted leaders who shared their belief that a capitalist democracy could be quickly installed in the country, said Tim Carney, a retired diplomat who was the occupation's adviser to the Iraqi Ministry of Industry and Minerals in spring of 2003. Such a rosy outlook ruled out many seasoned State Department hands.

State, Defense Schism

"My understanding is that there was a vision in the Pentagon of Iraq moving quickly toward democracy, and many State Department people were perceived as believing that this was not possible," Carney said. As a result the Bush administration turned to officials who "were rather more conservative and Republican."

CPA spokesman Dan Senor did not respond to repeated requests for comment. The CPA also did not provide a list of its senior officials. But interviews, news reports and CPA records bear out Carney's assessment. Among those chosen for leadership roles was Michael Fleischer, the brother of Bush's former press secretary, Ari Fleischer. Michael Fleischer, 48, a businessman, has been in charge of reviving the Iraqi economy. His predecessor, Thomas Foley, 52, was a former business school colleague of Bush's and a fundraiser for his presidential campaign.

For much of the past year, the top health-care official in Iraq was James Haveman, 60, a former state health-care administrator who got his job through the intercession of his former boss, John Engler, the Republican former governor of Michigan. The former CPA housing adviser, Michael Karem, 57, is a former Reagan administration appointee to HUD who, though cleared of wrongdoing, resigned in 1982 after an influence-peddling investigation.

The top reformer of the Iraqi university system, John Agresto, 58, was a protege of Reagan-era education czar William Bennett. Among the earliest appointments was Haveman, who was a last-minute choice over Dr. Frederick Burkle, a well-known international public health specialist. Assigned to oversee the Iraqi Health Ministry, Haveman, a former director of the Michigan health department, was unknown to international relief agencies poised to help Iraqis in the aftermath of the invasion.

Burkle, a retired Navy officer, had served in Kuwait and northern Iraq during the 1991 Persian Gulf war, and also in Kosovo and Somalia. He had spent months planning the operation of a postwar Iraqi health system. But in late April 2003, weeks after the war began, he was suddenly informed that Haveman was going to be his boss. "I was told by State Department people that the decision to replace me was a political one," said Burkle, now retired.

Haveman, of Grand Rapids, Mich., is a social worker by training and does not have a medical degree, nor did he have any experience managing large-scale relief or reconstruction projects.

Engler Taps Shoulders

Engler, the former three-term governor of Michigan, said he brought Haveman to the attention of Defense Department officials around the time of the invasion when he learned they were looking for people to run a postwar occupation. "I argued that people with hands-on experience in state government would be really good choices," said Engler, adding that Haveman also has been active in a private humanitarian aid organization, International Aid, an evangelical Christian relief group based in Spring Lake, Mich.

Haveman said Iraq drew on his experience as a state agency leader, a board member for the relief group and a leader of Bethany Christian Services, a large adoption agency with a presence in 15 countries. "Everything I did in Iraq in some way I have done before," he said. Noting that he has visited 26 countries, Haveman said, "I've always been a multicultured guy." Haveman's appointment was announced in late April 2003, but he didn't land in Baghdad until June 7.

The late arrival hampered efforts by international aid groups to assist Iraqis who had endured the U.S. invasion and the widespread looting and violence that followed, said Richard Garfield, a professor of clinical international nursing at Columbia University and a consultant in Iraq to the World Health Organization and UNICEF. "What it meant was that the confusion that was already reigning was not overcome," Garfield said. The delayed arrival was "just working through the process of the bureaucracy," Haveman said. "It just takes a while."

Haveman said he has had successes in Iraq: The country did not suffer disease epidemics in the aftermath of the invasion; the looted Health Ministry headquarters in Baghdad has been refurbished; salaries for health-care workers have been boosted, and the supply of medicine and equipment within the Iraqi health system has increased. The CPA has budgeted nearly $1 billion in operating funds for the Health Ministry for the coming year, plus more than $700 million for new facilities and repair of existing clinics and hospitals. "It's all pointing in the right direction," Haveman said. "I think we made a difference."

But according to a former government contractor who clashed with him during the summer of 2003, Haveman refused to collect data about the finances of clinics and hospitals and about the health-care needs of Iraqis, leading to an enormous waste of money. "We were saying, `Let us go out and find out what's going on now,' and he said, `Why?' We're going to do away with it all anyway,'" recalled Mary Paterson, who headed a $40 million project to help the CPA train medical workers and overhaul the health-care system, which is based on a combination of public and private facilities.

In an effort to win over Iraqis, Haveman flooded the public side of the health system with money. But, according to Paterson, he ignored the private side, which supplied about half of Iraq's health care. The CPA could have delivered health care more efficiently if it maintained a funding balance, she said. Paterson, who holds a doctorate in health services and policy analysis and has worked on overseas development projects for 11 years, said she was forced off the Iraq health team at Haveman's insistence because "I wouldn't agree with the direction he was going."

"Same Miserable Conditions"

Despite the huge infusion of U.S. aid, Iraqis still struggle with decrepit health-care facilities and shortages of basic supplies, according to Nabil Amin, an Iraqi physician working in Baghdad with the World Health Organization. "What they did on paper was very, very good. They allocated huge amounts of money that were never there before," Amin said. But, he added, "the same miserable conditions that existed before the war exist now."

As with health care, the Iraqi economy is a blend of private and government-owned businesses. Since March, Michael Fleischer has had the job of nurturing much of the economy. Fleischer was in the Foreign Service for four years after college in the 1970s, serving in Washington and Africa. He also worked briefly on Capitol Hill and received a Harvard MBA. Fleischer describes himself as a turnaround specialist, but his recent business track record is modest.

He is on leave from the presidency of Bogen Communications International, a New Jersey-based maker and distributor of electronics equipment that has about $60 million in annual sales and has had an up-and-down financial performance in recent years. Earlier this year, Bogen delisted itself from the Nasdaq stock market and now trades only on the Pink Sheets, an electronic exchange with fewer public reporting requirements. Fleischer said Bogen delisted because most of the company stock is owned by a handful of investors and there is little trading activity in it.

Bogen lost money in two of the past six years, and Fleischer acknowledged that "we did struggle in some years." But, he added, "On the whole, the business is very satisfactory to the owners."

Saw "Noble Path"

Fleischer said he wanted to serve in Iraq because he believes Bush had embarked on "a noble path" in freeing and democratizing the country and he believed he had skills that would be helpful. He said that from his Foreign Service stint, he was already acquainted with Paul Bremer, the presidential envoy who heads the CPA. With an assist from his brother, Ari, who "got my resume to Bremer," Fleischer landed interviews that led to his appointment. Among Fleischer's key tasks was training more Iraqi businessmen in the ways of U.S.-style procurement so they can land part of the $18.4 billion in reconstruction aid the U.S. has earmarked for Iraq.

Competitive bidding "is a new world for the Iraqis," Fleischer said. Under Saddam Hussein, "it was all done by cronies. The only paradigm they know is cronyism. We are teaching them that there is an alternative system with built-in checks and built-in review." The broad goal, said Fleischer, is to nurture a system that is "friendly to a free market, friendly to private property rights and . . . limited government."

Fleischer succeeded Thomas Foley, a Connecticut businessman with multiple ties to Bush and other top-tier Republicans. A Harvard Business School contemporary of the president's, as well as a major campaign fundraiser, Foley was appointed by Bush to the board of the Kennedy Center for the Performing Arts in 2002. Foley's sister-in-law April Foley, who also was a Harvard colleague of Bush's, holds a presidential appointment as vice president of the Export-Import Bank.

Thomas Foley, who has no foreign policy experience, said that his business problem-solving skills qualified him for the Iraq post. Foley and Fleischer emphasized the need for Iraqis to strengthen the private sector and wean themselves from a system of government ownership of nearly 200 businesses employing hundreds of thousands of people. Their office has set up business loan programs, helped design laws for private property ownership, commercial transactions, bankruptcy and other business-related activity, and worked to drum up investment in private Iraqi business ventures.

In separate interviews, they offered a common observation about the reconstruction: Media coverage seems fixed on violence and other setbacks and does not sufficiently report progress. "I think there's a lot more good going on than we will ever get credit for," Fleischer said. It hasn't been for lack of effort by the coalition's office of strategic communications, which is dominated by former Republican staffers.

Since the CPA ramped up its operations last summer, Stratcom, as it is known, has churned out news releases about repairs, beautification projects, new construction, charitable donations, training programs and administrative milestones leading to the planned June 30 change in governance. In at least one case, the upbeat tone of a statement differed from the facts. On March 23, the CPA issued a news release claiming a dramatic advance in the struggle to lure private capital to Iraq.

Under a headline reading "Iraq Joint Venture Conference Attracts $Billions in Private Sector Investment," the CPA declared that a recent conference had "successfully attracted billions of dollars in private sector investment capital from international enterprises eager to invest in Iraq's burgeoning construction market." A few weeks later, CPA spokesman Brian Leventhal acknowledged that he could not identify any investment resulting from the conference and issued "a clarification." "The clarification on that was that the companies represented here have billions of dollars (in assets) globally and potentially could be investing billions of dollars in Iraq," Leventhal said.

Touting Successes

John Agresto, the senior adviser to the Higher Education Ministry, points to a string of successes on his watch. For instance, classes for the current academic year started on time, and the university system enrolled more than 90,000 first-year students, up from 60,000 in earlier years. "That's an amazing jump," he said.

Iraqi academics are learning how to make their own decisions after enduring years of top-down decision-making, Agresto said. But, he said, universities were badly damaged by postwar upheaval, and funding has not been sufficient to bring them up to standard. "Getting rid of Saddam was the best thing we've done in the last 100 years," Agresto said, adding, however, that routing a dictator has been overshadowed by the perception that "this is Bush's war." "Politics trumps humanitarianism," he charged.

Like many CPA advisers, Agresto had no background in Middle East affairs. The lack of it hampered his ability to work collaboratively with Iraqis, according to an Iraqi-American professor who assisted the Higher Education Ministry. "There was an attitude that we are there to teach Iraqis about democracy. . . . I've seen it in many senior advisers," said Yass Alkafaji, an associate professor of accounting at Northeastern Illinois University.

In fairness to Agresto, Alkafaji said, "he became more sensitized than many other advisers." When he was tapped for duty in Iraq, Agresto was running an educational consulting firm and serving as a scholar in residence at Wabash College in Crawfordsville, Ind. Before that, he was president of St. John's College in Santa Fe, a small liberal arts college that teaches a curriculum of the "Great Books" undergirding Western civilization. Agresto said his board members at St. John's included Joyce Rumsfeld, wife of Defense Secretary Donald Rumsfeld.

In the early 1980s, when Agresto and his then-boss, William Bennett, ran the National Endowment for the Humanities, they angered fellow academics by supporting President Ronald Reagan's budget cuts to the grant-dispensing agency and refused to follow affirmative action guidelines. A Middle East scholar who visited Iraq during the occupation said Agresto's politics got in the way when he was trying to round up help for Iraqi universities.

Stature Questioned

The Bush administration should have appointed a scholar or a bureaucrat with stronger Middle East credentials or greater stature among mainstream academics, said Keith Watenpaugh, assistant professor of Middle East history at LeMoyne College in Syracuse, N.Y. "This was about serving a very narrow, neoconservative Bush administration agenda," Watenpaugh said.

Agresto emphatically disagrees. Of those who see assisting Iraqis as anything other than straightforward humanitarianism, Agresto said, "I would say that they could go to hell." Agresto was not the only controversial Reagan-era official in the CPA. Earlier this year, Michael Karem, an attorney in Louisville and former deputy assistant secretary of the Department of Housing and Urban Development, was a top adviser to the Iraqi Housing and Construction Ministry.

After Karem resigned from HUD in 1982, his name surfaced in a late 1980s corruption investigation at the housing agency. Karem was never charged. But he was identified by federal investigators as one of several former HUD officials who cashed in on connections with their former agency by setting up consultancies and charging hefty fees for gaining approval of housing rehabilitation projects.

A senior HUD official convicted in the case, DuBois Gilliam, told a congressional committee in 1989 that Karem paid limousine bills for him and threw Kentucky Derby parties for HUD staff at his house, which "everybody referred to . . . as a home that HUD built." At the time, Karem denied paying the limo tab. Gilliam said he went out of his way to help Karem with inside information and other assistance, "because he was a former HUD official, No. 1, and No. 2, a fellow political brother . . . a member of the same party." Karem did not return several phone calls seeking comment.

New housing, like other reconstruction, is bringing a torrent of money into Iraq. Referred to by U.S. officials as "a gift from the American people," reconstruction aid also means huge opportunities for well-positioned contractors and is at the heart of multiple allegations of cronyism and corruption. Most prominently, Halliburton Co., the giant oil services and logistics firm formerly run by Vice President Dick Cheney, is by far the largest contractor in Iraq. The company has been accused of overcharges of more than $200 million--for gasoline and for troop meals that it did not provide.

Earlier this year, amid allegations of favoritism, the Defense Department withdrew an award of a contract to supply equipment for the Iraqi army worth at least $327 million to a company controlled by a close friend of Ahmad Chalabi. A key ally of Bush administration war hawks, Chalabi now is under investigation for leaking secrets to Iran. Ferreting out wrongdoing falls to the CPA's inspector general, Stuart Bowen, the Bush aide turned lobbyist.

Government agencies often pick non-partisan outsiders for this job, but Bowen has worked as an attorney for Bush from 1995 until 2003 and has been in the thick of several politically charged issues on his behalf. In 1996, Bowen argued in Texas courts that Bush should be allowed to overturn 130 years of tradition in a bureaucratic maneuver to permit quick appointment of a Republican court of appeals judge. In 1997, Bowen wrote a memo justifying the pending execution of David Wayne Spence, who went to his death partly on the strength of jailhouse "snitch" testimony and amid allegations of police misconduct.

Defending Actions

In both instances, Bowen said, he was just doing his job as a lawyer. "They were legal events," he said. "They were mischaracterized as political events." In the 2000 presidential election, Bowen worked for the Bush-Cheney legal team during the Florida recount.

One of his qualifications for the inspector general's post, Bowen said, is that for "2 3/4 years" before going to work for Bush, he was an assistant attorney general working for a Democratic attorney general in Texas. "I am firmly committed to the mandate" established by Congress in setting up inspector general oversight of Iraqi reconstruction spending, said Bowen, 46, who will continue to function as a contracts watchdog for at least six months after the CPA hands over power.

Bowen's job as inspector general includes monitoring the work of many contractors, including his former client, URS Group Inc. He brushed aside a question about whether his work for URS created a conflict of interest. He insisted that URS "wasn't a client of mine" because most work for the company was handled by another lawyer at Patton Boggs, his former law firm.

Federal lobbyist registration records list URS as a client of Patton Boggs and Bowen as one of three attorneys working on Iraqi reconstruction for the engineering consultants. Bowen said that his only work for URS consisted of arranging a meeting in April 2003 between the firm and Wendy Chamberlin, the USAID official in charge of Middle East programs. That was long before the details of reconstruction were known and before he knew he would be CPA inspector general, Bowen pointed out.

In March of this year, URS was awarded three contracts worth up to $60 million to oversee transportation, communications, health and justice projects in a joint venture with the Louis Berger Group of New Jersey, according to the CPA. URS officials could not be reached for comment. Berger Chairman Derish Wolff said fees will be split evenly between the firms.

GOP Loyalists Prominent in Rebuilding Iraq

Several key officials of the Coalition Provisional Authority had strong ties to top Republicans.

John Agresto, 58

Senior adviser to the Iraqi Ministry of Higher Education

  • Protege of Ronald Reagan's education czar William Bennett; Joyce Rumsfeld, wife of Defense Secretary, was on board of college he headed.
  • Stuart Bowen Jr., 46

    Inspector General, Coalition Provisional Authority

  • Former longtime aide to President Bush; now monitors more than $20 billion in reconstruction aid.
  • Michael Fleischer, 48

    Top economic adviser in Iraq

  • Brother of former White House press secretary Ari Fleischer; president of a New Jersey electronics equipment company.
  • Thomas Foley, 52

    Former top economic adviser in Iraq

  • Harvard Business School colleague of President Bush and a fundraiser for his campaign.
  • James Haveman, 60

    Oversaw the Iraqi Ministry of Health

  • One-time director of the Michigan health department; lacked reconstruction experience but got job with lobbying assist from former Michigan GOP governor.
  • Michael Karem, 57

    Former coalition housing adviser

  • Former Reagan campaign aide; investigated but never charged in late 1980s Department of Housing and Urban Development scandal.
  • Source: Tribune reporting

    Tribune foreign correspondent Christine Spolar contributed to this report.

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