Welfare for Dictators

By Roston, Aram | Newsweek, July 11, 2011 | Go to article overview

Welfare for Dictators


Roston, Aram, Newsweek


Byline: Aram Roston

A NEWSWEEK investigation reveals how Pentagon billions are flowing to strongmen in the Middle East.

Officially, the U.S. does not pay other governments for rights to military bases. The logic is straightforward: funneling money to the treasuries of foreign dictators cannot form the foundation of genuine strategic alliances. Yet, to fight wars in Iraq and Afghanistan while staring down the mullahs in Iran, over the last decade the Pentagon has come to rely in an unprecedented way on a web of bases across the Middle East. And a NEWSWEEK investigation of Pentagon contracting practices in Abu Dhabi, Kuwait, and Bahrain has uncovered more than $14 billion paid mostly in sole-source contracts to companies controlled by ruling families across the Persian Gulf. The revelation raises a fundamental question: are U.S. taxpayer dollars enriching the ruling potentates of friendly regimes just as the youthful protesters and the Arab Spring have brought a new push for democracy across the region?

Take a look at Abu Dhabi. The wealthiest of the United Arab Emirates, it hosts a U.S. Air Force base at Al Dhafra, which is a vital refueling hub in the region. As is the case in most Gulf states, Abu Dhabi is ruled by a single family that dominates both government and business. Here it is the Nahyan family, and the emir is 63-year-old Sheik Khalifa bin Zayed Al Nahyan, who is known for his interest in camel racing, is worth $15 billion, and controls the country's national oil company, ADNOC. As it turns out, every drop of fuel America buys for its planes at Al Dhafra--more than 200 million gallons a year, costing $5.2 billion since 2005--is purchased from the Al Nahyan--controlled ADNOC.

Yet, according to contract documents, that money has bypassed the competitive bidding process that is supposed to accompany any -purchase--of firearms, flak jackets, or fuel--by the Pentagon.

In Abu Dhabi, "we may be essentially buying our presence," says Alexander Cooley, a professor at Barnard College who studies U.S. basing strategy. The U.S. regularly pays rents to foreign landowners, but those payments are separate from base rights, which are government-to-government agreements. On bases, Cooley says, "there is a quid pro quo that is tacit."

Nearly three decades ago, after a spree of spending scandals--there was a $436 hammer and a toilet seat that cost $640--Congress passed the 1984 Competition in Contracting Act requiring competitive bidding. The principle is simple: competition drives down prices and increases quality. According to Charles Tiefer, a member of the federal Commission on Wartime Contracting, "The law mandates competition with very limited exceptions."

Abu Dhabi has exploited one of those exemptions brilliantly. Five years ago, at the height of the Iraq War, an American fuel contractor based in Florida called IOTC challenged a $500 million sole-source contract teed up for ADNOC. The award "must be open to full competition," a contract lawyer, Ronald Uscher, wrote in a protest letter to the federal Government Accountability Office. The Pentagon fought back, citing what it said was U.A.E. law, but IOTC's lawyer says the military "was unable to produce any such law or decree. …

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