Lobbyists hustle for reconstruction business in Baghdad

Mike Baker, a former covert operations officer for the CIA, is preparing for a trip to Baghdad. Baker will be going to the Iraqi capital in late August not to run black-bag jobs, but to pitch the services of Diligence, his intelligence and security-consulting firm. Diligence is allied with lobbyist Ed Rogers and former Federal Emergency Management Agency Director Joe Allbaugh in an effort to land contracts and do deals in Baghdad.

Rogers, vice chairman of the prominent K Street firm of Barbour Griffith & Rogers, and Allbaugh, who was national campaign manager for Bush-Cheney 2000, hooked up to create New Bridge Strategies. The two partners in New Bridge, a consultancy that's helping big construction and telecom companies land business deals in Iraq, are getting ready to open an office in Baghdad.

While American forces hunt for Saddam Hussein and continue the deadly work of patrolling the war-torn country, Washington players with political connections are chasing the money in Iraq. New Bridge, for example, is marketing Baker's security firm-which offers everything from bodyguards to advice on business risks-to U.S. and foreign companies that are beating down doors for a share of the lucrative reconstruction deals.

"Our approach is to have a presence on the ground, staffed by Iraqis and Americans, to pursue ventures on behalf of clients," says Rogers, vice chairman of New Bridge. Allbaugh, who is chaiman of New Bridge, Rogers, and their associates see enough promise that they may also deploy their own venture capital in reconstruction projects.

A small army of consultants and lobbyists has mobilized to gain leverage in postwar Iraq, a country with vast oil reserves and almost equally vast reconstruction needs. With the Coalition Provisional Authority led by L. Paul Bremer stepping up efforts to rebuild Iraq's infrastructure, Washington firms are continuously patrolling for new business opportunities.

Consider BKSH & Associates, the firm run by well-known GOP strategist Charlie Black. Over the past four years, BKSH has been boosting the interests of the Iraqi National Congress, whose leader, Ahmed Chalabi, was a key anti-Saddam opponent and now sits on the newly formed Iraqi Governing Council. Besides helping the INC-which has enjoyed extensive backing from the Pentagon but is quite controversial at the State Department and the CIA-BKSH has started to help open doors for such U.S. companies as AT&T, Cummins Engine, and Fluor that are seeking business in Iraq.

"Due to our past representation of the INC," says Black, "we know and have worked with a lot of people who will be in the provisional government. We have a number of clients who are interested in doing business in Iraq." Black adds that his firm is "strongly considering" opening an office in Baghdad.

Other Washington lobbyists and consultants are also eyeing opportunities for themselves and their clients. The law firm of Akin Gump Strauss Hauer & Feld recently signed up retired U.S. Gen. Anthony Zinni as a senior international adviser. Zinni, who was a special envoy to the Middle East for the Bush administration, will help some two dozen Akin Gump partners who are trolling for business in Iraq on behalf of multinational clients.

And in an interesting twist, some prominent Iraqi families that are interested in winning contracts from the U.S. government have contacted the Livingston Group, run by former House Appropriations Committee Chairman Bob Livingston, R-La., for help with American officials. Moreover, foreign companies in countries that were U.S. allies in the war are also pressing for Iraq work, including Shaheen Business Group, a Jordanian conglomerate that has hired Qorvis Communications, and a Ukrainian pipeline company that's getting help from former national security adviser Robert "Bud" McFarland.

All the deal-making, lobbying, and jockeying has only just begun. Official estimates on rebuilding Iraq don't exist, but the authoritative Council on Foreign Relations has projected reconstruction costs of $20 billion a year for several years.

Dozens of contracts have already been awarded to American and foreign firms. Several have gone to companies famous for their ties to Washington power brokers. One of the biggest winners was Bechtel, the international construction giant. In April, it landed a contract from the U.S. Agency for International Development valued at up to $680 million to help rebuild roads, power systems, water and sanitation facilities, and other parts of Iraq's damaged infrastructure.

Bechtel spokesman Howard Menaker says that so far, the company has handed out 49 subcontracts, 18 of them to Iraqi enterprises. "We're trying to let as much subcontracting work as possible to Iraqi firms," Menaker says.

The Pentagon has recently awarded more-specialized contracts to American firms that have expertise in defense and security work. Three such firms-Vinnell, Dyncorp, and Kroll- respectively have landed contracts to help form and train post-Saddam military, police, and paramilitary forces. Outside analysts say that all three firms are well wired in Washington.

"All these companies have very good connections and are filled with former government and military officials," notes P.W. Singer, a military analyst at the Brookings Institution and the author of Corporate Warriors, a new book that discusses the Pentagon's growing reliance on the private sector.

Currently, U.S. and foreign corporations are eyeing major contracts pending with American agencies. The Army Corps of Engineers, for instance, is soliciting bids that are due by the middle of August for two major oil-industry reconstruction projects that may be worth as much as $500 million each. The Corps decided to seek the bids after controversy flared up earlier this year over the decision to award a no-bid contract to KBR; KBR is a subsidiary of Texas-based Halliburton, the oil- services company that was headed for several years by Dick Cheney before he ran for vice president.

Further, several American and foreign telecom companies are hoping to land a mobile-telephone contract estimated to be worth tens of millions of dollars pending with the Coalition Provisional Authority.

Consultants see plenty more business on the horizon. Allbaugh says that the huge Bechtel contract "is a drop in the bucket for what will be needed for reconstruction of the country." The "potential is unlimited because of the country's needs," he adds. "We want to help not only Iraqis, but American companies and our government."

In June, Allbaugh and Rogers spent several days in Kuwait exploring business opportunities and recruiting some Americans and Iraqis to work with them. When Rogers and Baker travel to Baghdad later in August, they plan to take along several clients, including representatives of one telecom firm that's interested in the mobile-phone contract. New Bridge is also representing a large construction firm based in Cyprus that's expected to bid for the oil contract.

In the security area, New Bridge thinks it has found a winner in its partnership with Baker's firm, Diligence. That's because all the companies that are going into Iraq today must have their own guards to protect company personnel. Security concerns, says Allbaugh, are a "major component" for all companies operating in Iraq. "We have people with the expertise to fill that void."

Riva Levinson, a managing director at BKSH who has handled much of the media work promoting the INC in recent years, stresses that to be successful in Iraq, American firms must find local partners.

"The single most important thing that a U.S. company can do is to find Iraqi commercial partners," says Levinson, who was in Iraq for a couple of weeks in May helping the INC and expects to return in the fall. Levinson plans to act as a broker who can introduce clients to potential Iraqi partners. BKSH has already been helping its client Fluor, which plans to bid on at least one of the contracts to repair Iraq's oil infrastructure.

Meanwhile, Akin Gump is pursuing a different strategy. The firm, under the leadership of George Salem, pulled together a team of partners from its diverse energy, telecom, and international business practices-including some from its Saudi affiliate-to pursue opportunities in Iraq. Akin Gump partner Mark Medish, who was in the Treasury Department in the Clinton administration and served on the National Security Council, is helping Liberty Mobile Holdings. This small Delaware firm is seeking authorization from the Defense Department or the Coalition Provisional Authority to use the radio spectrum in Iraq to develop a wireless system. And Akin Gump partners, led by Sukhan Kim, are representing Korean firm Hyundai Construction, which is claiming about $1 billion for previous work that it did in Iraq under Saddam.

Akin Gump's new consultant, Zinni, is also expected to attract business. "Zinni can help corporate clients understand what the risks and opportunities are in Iraq and can help them design strategies to participate in economic reconstruction," Medish says.

Another K Street firm chasing Iraq business, the Livingston Group, garnered publicity earlier this year when it brought on Mohammed Odeh al-Rehaief, an Iraqi lawyer who helped in the rescue of U.S. Army Pvt. Jessica Lynch. Since al-Rehaief joined the firm as an associate, several wealthy Iraqis have contacted the Livingston Group about how to land business from U.S. authorities.

"We've been contacted by prominent families in Iraq who've asked for our help with U.S. contracts," says lobbyist Jim Pruitt of the Livingston Group, which also represents British and Chinese firms that are looking for Iraq deals in the areas of health care and electric power generation. "We're talking to them about partnerships with U.S. firms. We've not closed any deals yet, because we have enormous due-diligence challenges with regard to potential clients."

Despite these and other hurdles, the allure of Iraq deals should keep the Livingston Group and many other Washington hands busy for a long time to come.

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