Privates On Parade
The creeping privatisation of the British Army
With Britain's armed forces now in the privatisation firing line, Jim Carey investigates how a huge US-based corporation with high level political connections is hoovering up lucrative government contracts in the UK.
There were no trumpet voluntaries heard on the parade grounds of the British army when the MoD announced its first corporately-employed soldiers in January 2001. The 80 'sponsored reserves' will train with the Territorial Army and operate beside regular soldiers in both peacetime and war. They will, however, owe their allegiance to the US-based corporation which employs them. The £300 million contract to provide 92 heavy equipment transporter vehicles, and the 'sponsored reserves' required to drive them, is the latest of a series of Private Finance Initiatives to affect Britain's armed forces. There is now over £1 billion worth of private involvement in the British military and a further £7 billion worth in the pipeline.
You might think the sell off of Britain's armed forces would stir at least a little debate amongst the blue blood press but with party political complicity now fully in favour of both privatisation and globalisation, there is only a conspicuous silence.
Britain's first private soldiers will be provided by a consortium headed by Halliburton, a huge US-based transnational corporation whose tentacular involvement in UK services, both civilian and military, has reached sizeable proportions. From nuclear installation to the UK's transport infrastructure.
Based in Dallas Texas, Halliburton commands a 100,000 workforce positioned in 120 countries. Its operations and those of its subsidiary, Brown and Root Services, have corporate fingers in a staggering variety of strategically vital global pies. From oil pipelines to defence, from road building to embassy security, from servicing armies and nuclear submarines to dismantling Russia's ballistic missiles.
SO BEGAN A NORTH/SOUTH STRUGGLE WHICH, ALTHOUGH FRUITLESSLY DEBATED IN PUBLIC BETWEEN LOCAL POLITICIANS, WAS IN FACT DECIDED BY A CORPORATE GRAPPLE
Halliburton's ability to penetrate global markets with such success has been amply facilitated by a well connected hierarchy adept at impressing its business credentials on foreign governments. Until stepping down last August to concentrate on the US presidential election, Halliburton's Chief Executive Officer and Chairman was none other than Dick Cheney, now US Vice President.
The Corporation he inherited had already made significant inroads into the UK in a fiercely fought battle for the lucrative contract to service Britain's nuclear submarine fleet. Assembled in the UK from parts purchased from the US, Britain's nuclear subs were previously serviced at both Plymouth and Rosyth. However, in order to cut costs the British government decided back in the eighties to concentrate all servicing in one port. The contract would be worth £1 billion over ten years. So began a north/south struggle which, although fruitlessly debated in public between local politicians, was in fact decided by a corporate grapple.
Back in 1985, all indications were that Rosyth would be chosen as the favoured location. Both areas had above average unemployment figures but, by all criteria of public safety, Rosyth was the better of the two locations. "If you were to undertake a similar venture for a civil nuclear plant then very certainly the accepted siting criteria just would not allow you to locate in a city with over 250,000 people," nuclear consultant John Large told SQUALL. Lord Younger, a senior member of the Conservative government at the time, boosted Rosyth's expectations by telling local MP's they had cause for high hopes. However, in the same year, management of the royal docks and naval base at Devonport in Plymouth were privatised and passed into the hands of Brown and Root, a business unit of Halliburton Co. Two years later, the management of Rosyth's naval base and dockyard were also privatised, passing into the hands of Babcock International. However, whereas Babcock are a relatively small corporation with an annual turnover wavering below £26 million, Halliburton are a huge transnational with consolidated annual revenues of $14.9 billion.
"I'M OFTEN ASKED WHY I LEFT POLITICS AND WENT TO HALLIBURTON AND I EXPLAIN THAT I REACHED THE POINT WHERE I WAS MEAN-SPIRITED, SHORT TEMPERED...... SO I WENT TO TEXAS AND JOINED THE PRIVATE SECTOR."
- Dick Cheney, now US Vice President.
Whilst local politicians continued to press the government for a firm decision, ministers assured Rosyth of its future by commencing a £500 million programme to build refit facilities at the Clyde dock. However Rosyth's local MP's began to get queasy when a leaked report published in the Sunday Times on Christmas Eve 1990 suggested the government's decision was to go against them. Alan Clark, Defence Procurement minister and MP for Plymouth Sutton at the time, raised Rosyth's worries to fever pitch by asserting on Plymouth Sound Radio that it was Rosyth "we want to close". As Secretary of State for Defence, Tom King tried to placate worries in the House of Commons in July 1991: "It is our plan to go ahead with the nuclear refitting at Rosyth. The honourable and learned Gentlemen will be aware that I referred to the £500 million investment plan. As he knows, the base work is already under way on the foundations and excavations."
However, when the Secretary of State for Defence, Malcolm Rifkind, announced the government's final decision in June 1993, the successful corporate bid belonged to Halliburton Brown and Root in Plymouth. Despite the fact that £125 million of public money had already been spent on preparing Rosyth, the huge hole dug to accommodate nuclear-refitting facilities was simply filled in.
The sole official reason given for the government's volte face was that Halliburton's bid was £65 million less than Babcock's. In reality, basing the decision solely on this criterion proved laughable when delays, cost reappraisals and redundancy payments wiped out this deficit several fold.
In 1997 the new Labour government carried on where the Tories had left off, selling Rosyth and Plymouth royal dockyards outright. The selling process cost the taxpayer a cool £8.5 million, even though the only bidders were the corporations managing the docks already. After preparing the two sites, organising the tendering process and paying redundancy money, the government came out of the sale with an overall loss of £9 million. Babcock International now owned Rosyth naval docks and Halliburton Brown and Root owned Devonport in Plymouth. The involvement of corporate lobbyists behind the scenes' can only be surmised, for the only public debate which occurred at the time concerned itself with local employment. This preoccupation served to obfuscate the real goings on as both corporations now employ considerably less staff than they did at the time.
"There's no doubt Dick travelled around the world and had an impact on our global business."
The appointment of Dick Cheney as Chairman and Chief Executive Officer of Halliburton in 1995 moved operations up several gears and dramatically increased the Corporation's penetration of world markets, including more defence contracts and a spate of transport deals in the UK.
As US Secretary of Defense under President George Bush from March 1989 to Jan 1993, Cheney oversaw the Gulf War. After leaving the White House he served on both the board of directors, and the Public Policy Committee, of the American Petroleum Institute. He joined Halliburton in 1995 and took up directorships on the board of both Proctor and Gamble and the Electronic Data Systems Corporation (EDS) which has run so many of the UK's public service databases with varying success.
At a speech given to the Institute of Petroleum in London in November 1999, Cheney told a doting audience: "I'm often asked why I left politics and went to Halliburton and I explain that I reached the point where I was mean-spirited, short tempered and intolerant of those who disagreed with me and they said, 'Hell you'd make a great CEO', so I went to Texas and joined the private sector." He also told his oil industry audience that they needed to work harder to influence international politics in favour of their industry, stirring them with the bizarre assertion that: "The oil industry is the only large industry whose leverage has not been all that effective in the political arena."
During his five years as CEO at Halliburton, Cheney certainly knew how to deploy leverage in the political arena, doubling political donations made by the Corporation. In his first year as CEO he struck a deal which would later influence the UK government to adopt a similar approach, by securing the private contract to service the US army in Bosnia with everything from catering to laundry.
In the five years before Cheney arrived, Halliburton had secured $1.2 billion worth of US government contracts. In the five years under his leadership, he nearly doubled that amount to $2.3 billion. In 1999 Halliburton began new contracts to service the US army in Bosnia, Kosovo, Macedonia and Hungary for another five year period, a deal estimated to be worth another $1.8 billion. Halliburton also won the contract to increase the security of 150 US embassies.
Cheney also used his political clout to persuade the US government to give credit guarantees to foreign companies so that they in turn could hire Halliburton's services. In the five years before Cheney's arrival at Halliburton, the Corporation had garnered $100 million of help in this way. During Cheney's stint at the helm, the Corporation persuaded government banks to up this amount to $1.5 billion. He also secured assistance from the World Bank. As Halliburton Brown and Root's president, Larry Pope, casually understated: "There's no doubt Dick traveled around the world and had an impact on our global business." Although Cheney was a member of several committees whose interest was to promote US interests abroad there was no doubt as to his personal motivation. His annual Halliburton salary weighed in at $1.28 million with stock options worth between $7.4 and $18.8 million depending on company performance. He also held a $45.5 million stake in the Corporation. Haliburton's business interests, which includes controversial oil deals in Nigeria, Burmah and - despite supposed US sanctions - with Libya, were often facilitated with help from US government officials across the world. A leaked cable from the US embassy in Angola to Secretary of State, Madeleine Albright, is revealing of the kind of assistance Cheney was able to seduce: "Our commercial officer literally camped out at the offices of the national oil company, petroleum ministry and central bank," says the cable, "unraveling snag after snag to obtain the transfer of funds. The bottom line: thousands of American jobs and a foot in the door for Halliburton to win even bigger contracts."
To assist him with this global gallivant, Cheney hired his former Chief of Staff at the US Defense Department, Dick Gribbin, as Halliburton's Vice President for Government Affairs. More deals followed including a myriad of major oil pipelines and a management contract at the atomic physics laboratory at Cern in Switzerland.
IN THE SAME YEAR AS HALLIBURTON TOOK OVER MANAGEMENT OF THE NAVAL DOCKS IN PLYMOUTH, THEY WERE FORCED TO PAY OUT $750 MILLION TO SETTLE MISMANAGEMENT CHARGES AT A NUCLEAR PROJECT IN TEXAS.
In Britain, following the success of capturing the UK's nuclear sub deal, Halliburton took control of a number of other contracts including Aircraft maintenance at RAF Valley in Anglesea and extensive interests in North Sea oil. As part of a heavyweight consortium they are also bidding for the £9 billion contract to provide air tankers to the RAF.
Halliburton has also made significant inroads into British transport, forming a major part of the consortium which secured Britain's first ever PFI contract. From 1996 Halliburton Brown and Root began a 30 year contract to design, build, finance and operate a 21km of the A1 between Alconbury and Peterborough and a 52 km section of the A417/419 linking the M4 and M5 near Gloucester.
Further transport interests include being a major part of the TubeRail, the consortium shortlisted to run the Jubilee, Northern and Piccadilly lines should the UK government succeed with its unpopular attempt to privatise the London tube system.
Given their commercial partiality in British transport, it is difficult to understand why Halliburton were given two more particular contracts by the UK government last year. In February 2000, they were awarded the £2.3 million contract to carry out a multi-modal study responsible for designing a long term strategy for orbital transport round London. Six months later in August, the Department of Transport, Environment and the Regions commissioned Halliburton to develop a comprehensive database of all transport surveys carried out nationally. It will be the first time a central database has been constructed to collate results from all national transport surveys. Why exactly a US corporation with direct commercial interests in transport should be paid by the UK government to collate valuable information and give 'impartial' advice is not clear.
Cheney stepped down as Halliburton's CEO in August 2000 to concentrate on his bid for the US Vice presidency. In the same month, Tony Pryor, the man who had overseen the successful privatisation of Plymouth's Devonport naval docks on behalf of Halliburton, received his reward with an appointment as Brown and Root's Chief Operating Officer for all of Europe and Africa. Pryor had been a former director of Hunting Brae plc, the company part owned by Brown and Root which had managed the UK's Atomic Weapons Establishment at Aldermaston. Hunting Brae lost the contract some years later after a farcical series of radioactive leaks and mishaps at the site. It wasn't the only blot on Halliburton Brown and Root's nuclear record. In the same year as the Corporation took over management of the naval docks in Plymouth, they were forced to pay out a staggering $750 million to settle mismanagement charges at a nuclear project in Texas.
On the very day that the MoD announced Halliburton would provide the British Army with its first private soldiers, the Secretary of State for Defence, Geoff Hoon, stood up before an audience of corporate defence companies to make a speech on globalisation: "In operation, as with equipment, this [globalisation] does not mean a loss of national sovereignty, or of national will; it means that we must exercise our national will through a more complicated and subtle international structure. The rules of the game have, therefore, changed." It's doubtful whether Plymouth residents, concerned at Halliburton's intention to store radioactive waste from old submarines in the middle of their city, consider the situation to be subtle. However, Halliburton have the full backing of the UK government.
In a press release trumpeting their military triumphs in Britain, Halliburton stated that "by outsourcing to private industry...Britain's MoD has been a bellweather for military trends". As any lexicon will tell you, 'bellweather' means 'a sheep that leads the herd'. It is transnationals like Halliburton which are now whistling the sheepdog.
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