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Who really blew up the twin towers?

As the fifth anniversary of 9/11 nears, Christina Asquith finds academics querying the official version of events

Tuesday September 5, 2006
The Guardian

Shards of glass and dust from the World Trade Centre towers sit on Professor Steven Jones's desk at Brigham Young University in Utah. Evidence, he says, of the biggest cover-up in history - one too evil for most to believe, but one he has staked his academic career on exposing.

The attacks of September 11, Jones asserts, were an "inside job", puppeteered by the neoconservatives in the White House to justify the occupation of oil-rich Arab countries, inflate military spending and expand Israel.

"We don't believe that 19 hijackers and a few others in a cave in Afghanistan pulled this off acting alone," says Jones. "We challenge this official conspiracy theory and, by God, we're going to get to the bottom of this."

While this sinister spin strikes most American academics as absurd, Jones, a physics professor, is not alone. He is a member of 9/11 Scholars for Truth, a recently formed group of around 75 US professors determined to prove 9/11 was a hoax. In essays and journals, they are using their association with prominent universities to give a scholarly stamp to conspiracy theories long believed in parts of Europe and the Arab world, and gaining ground among Americans due to frustration with the Iraq war and opposition to President Bush's heavily hyped "war on terror".

Their iconoclastic positions have drawn wrath from rightwing radio shows and caused upheaval on campuses, triggering letters to newspapers, phone calls from parents and TV cameras in lecture halls.

In the Midwest, 61 legislators signed a petition calling for the dismissal of a University of Wisconsin assistant professor, Kevin Barrett, after he joined the 9/11 Scholars for Truth. Citing academic freedom, the university provost defended Barrett, albeit reluctantly.

A Scripps Howard/Ohio University poll taken during the summer indicates that Americans are increasingly suspicious of the government's explanation of the events of 9/11: 36% said it was "very likely" or "somewhat likely" that federal officials either participated in the attacks on the World Trade Centre and the Pentagon, or took no action to stop them, "because they wanted the United States to go to war in the Middle East".

For most of the world, the story of 9/11 begins at 8.45am on September 11 2001, when American Airlines flight 11 smashed into the North tower of the World Trade Centre. But, tumble down the rabbit hole with Jones, and the plotline begins a year earlier, in September 2000. A neoconservative group called Project for a New American Century, which included the defence secretary, Donald Rumsfeld, and the vice-president, Dick Cheney, brought out a report arguing for a global expansion of American military and economic supremacy, and for the US to transform itself into a "one-world superpower". The report warned that "the process of transformation, even if it brings revolutionary change, is likely to be a long one, absent some catastrophic and catalysing event - like a new Pearl Harbor".

Excuse for aggression

The group, in concert with about 20 others, orchestrated the attacks of 9/11 as an excuse for pre-emptive global aggression against Afghanistan, then Iraq and soon Iran, the academics say. And they insist that they have amassed a wealth of scientific data to prove it.

It is impossible, says Jones, for the towers to have collapsed from the collision of two aeroplanes, as jet fuel doesn't burn at temperatures hot enough to melt steel beams. The horizontal puffs of smoke - squibs - emitted during the collapse of the towers are indicative of controlled implosions on lower floors. The scholars have collected eyewitness accounts of flashes and loud explosions immediately before the fall.

The twin towers must, they say, have been brought down by explosives - hence the container of dust on Jones's desk, sent to him unsolicited by a woman living in lower Manhattan. He is using X-ray fluorescents to test it for explosive materials.

What's more, the nearby World Trade Centre 7 also collapsed later that afternoon. The building had not been hit by a plane, only damaged by fire. WTC 7 housed a clandestine CIA station, which the scholars believe was the command centre for the planning of 9/11.

"The planes were just a distraction," says Professor James Fetzer, 65, a recently retired philosopher of science at the University of Minnesota. "The evidence is so overwhelming, but most Americans don't have time to take a look at this."

But Jonathan Barnett, professor of fire protection engineering at the Worcester Polytechnic Institute in Massachusetts, calls such claims "bad science". Barnett was a member of the World Trade Centre Building Performance Study, one of the government groups that investigated the towers' collapse.

Reluctantly, he has familiarised himself with the scholars' claims - many of them have emailed him. Yes, it is unusual for a steel structure to collapse from fire, Barnett agrees. However, his group and others argue that the planes' impact weakened the structures and stripped off the fireproofing materials. That caused the top floors of both towers to collapse on to the floors below. "A big chunk of building falling down made the next floor fall down, and then they all came down like a deck of cards," Barnett says.

The collapse of WTC 7 was also unusual, he admits. However, firefighters do not usually let a fire rage unabated for seven hours as they did on the morning of September 11, because they had prioritised the rescue of victims. "The fact that you don't have evidence to support your theory doesn't mean that the other theory is true," Barnett says. "They just made it up out of the blue."

Since the attacks, the US government has issued three reports into the events of the day, all of which involved hundreds of professors, scientists and government officials. The 9/11 Commission, a bipartisan group, issued a 500-page, moment-by-moment investigation into the hijackers' movements, concluding that they were connected to Osama bin Laden. The National Institute of Standards and Technology, a government agency, filed 10,000 pages of reports examining the towers' collapse. And the Federal Emergency Management Agency weighed in, examining the response to the attacks.

"To plant bombs in three buildings with enough bomb materials and wiring? It's too huge a project and would require far too many people to keep it a secret afterwards," says Christopher Pyle, professor of constitutional law at Mt Holyoke College. "After every major crisis, like the assassinations of JFK or Martin Luther King, we've had conspiracy theorists who come up with plausible scenarios for gullible people. It's a waste of time."

But Barrett says the experts have been fooled by an "act of psychological conversion" not unlike the tactics CIA interrogators use on their victims. "People will disregard evidence if it causes their faith to be shattered," he says. "I think we were all shocked. And then, when the voice of authority told us what happened, we just believed it."

Misleading the public

History has revealed that governments have a tradition of misleading the public into going to war, says Barrett, and the next generation of Americans will realise the truth. "Europe and Canada are way ahead of us on this."

The 9/11 scholars go to great lengths to portray themselves as rational thinkers, who have been slowly won over by a careful, academic analysis of the facts of the day.

However, a study of the full extent of their claims is a journey into the increasingly absurd: Flight 93 did not crash in Pennsylvania but landed safely in Cleveland; desperate phone calls received by relatives on the ground from passengers were actually computer-generated voices from a laboratory in California. The Pentagon was not hit by American Airlines Flight 77, but by a smaller, remote-controlled A-3 Sky Warrior, which shot a missile into the building before crashing into it.

Many of the 9/11 scholars have a history of defending conspiracy theories, including that the CIA plotted both the Lockerbie bombing and the plane crash of John F Kennedy Jr and his wife, and that "global secret societies" control the world.

Professor Robert Goldberg, of the University of Utah, wrote a book on conspiracy theories, Enemies Within: the Culture of Conspiracy in Modern America. He recounts a history of religious and political leaders using conspiracy theories for personal and political gain. The common enemy is usually Jews, big government or corporations. The public laps it up, either because these theories are more exciting than the truth, or out of emotional need.

"What the conspiracy theorists do is present their case with facts and figures: they have dates, meeting places and always name names," he says. "The case is always presented in a prosecutorial way, or the way an adventure writer presents a novel. It's a breathless account. They are willing to say hearsay is a fact, and rumour is true, and accidents are never what they seem.

"One of the stories is that a missile hit the Pentagon, and all the data is there. But what is missing is: what actually happened to the plane and the people on it? Conspiracy theorists avoid discussion of those facts that don't fit."

Perhaps it is no coincidence that the public's willingness to believe conspiracy theories parallels their dissatisfaction with the Bush administration. In recent years, the American public has felt misled over false claims that there were weapons of mass destruction in Iraq, and that Saddam Hussein was connected to 9/11.

Many fear infringements on their civil liberties now the National Security Agency has gained access to phone billing records from telecommunications companies, the Bush administration has engaged in wiretapping without court warrants and there are thousands of cases of indefinite detentions of American and foreign citizens without trial. Those who criticise the Bush administration's "war on terror" are accused of being unpatriotic.

By taking their criticisms to such extremes, though, the scholars risk caricaturing the opposition. None the less, they are pushing on, and imploring Congress to reopen the investigation.

"We're academics and we're rational, and we really believe Congress or someone should investigate this," says David Gabbard, an East Carolina education professor and 9/11 scholar. "But there are a lot of crazies out there who purport that UFOs were involved. We don't want to be lumped in with those folks."
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Terrorism linked to stock prices

Researchers mine old data for clues amid ongoing conflicts

03:15 PM CDT on Sunday, September 3, 2006

Associated Press

NEW YORK – How much does terrorism affect stock prices?

To find the answer, economists have parsed market reaction to events dating back to the 1915 sinking of the Lusitania, academics have studied how attacks on McDonald's restaurants have affected the company's stock price and researchers in Israel have chronicled what 13 years of suicide bombings did to stocks there.

Their unsurprising general conclusion is that terror attacks hurt stock prices – but some of the details are unexpected. For instance, after Sept. 11, 2001, the stocks in the Standard & Poor's 500 rebounded to their pre-attack prices faster than every other major world index except Japan's Nikkei, according to research by Andrew H. Chen of Southern Methodist University and Thomas F. Siems of the Federal Reserve Bank of Dallas.

What none of the research has answered is the degree to which the fear of another terrorist attack on the United States has been factored into stock prices.

David Sowerby, chief market analyst, Loomis, Sayles & Co., estimates that the threat of terrorism represents a 5 percent "tether" on stocks. How did he get that number?

The overhang is "more than zero, less than 10. Five seems reasonable. If I said 4, I'd be fine-tuning it too much," he said.

The price-to-earnings ratio on the S&P 500 is around 17. A traditional model pegs the price-to-earnings ratio, one of the most popular methods of gauging a stock's value, to Treasury bond yields. Under that formula, the price-to-earnings ratio should be closer to 20, said David Wyss, chief economist for Standard & Poor's.

What's holding prices back? "Is it terrorist attacks, distrust of earnings, expectations of a slowdown?" he said. "I don't know."

Similarly, "people keep saying there's a war premium in the price of oil," said Robert Streed, portfolio manager of Northern Trust Select Equity Fund in Chicago. "People keep throwing out numbers, but I can't see any objective way they come up with those numbers."

Those who say some threat of a future attack is already baked into stock prices hasten to add that another attack in the United States would still send prices lower.

"We would likely see a drop in stock prices of significant proportion, but investors seem to believe there would be a subsequent recovery," said Lynn Reaser, chief economist at the investment strategies group of Bank of America. "As an important footnote, the scope and the magnitude and the form of a terrorist attack would determine whether or not that assessment is correct."

If the extent to which terrorism has pressured stocks is "an academic question," as Streed says, it is one academics have shown little interest in. Instead, they've focused their studies on how markets responded to past terrorist attacks.

Chen and Siems tracked the Dow Jones industrial average's recovery time from events ranging from the torpedo of the passenger ship Lusitania by Germany during World War I to Hitler's invasion of France to Sept. 11. They found that while the Dow rose the day of the Oklahoma City bombing and the bombing of the U.S. embassy in Kenya, it took the index 795 trading days to recover from the invasion of France and 232 days to rebound from the attack on Pearl Harbor. They theorize that faster communication and broader market participation has led to faster stock rebounds.

A study by Israeli academics of stocks and suicide bombings found that stocks in companies outside the defense sector fell 4.58 percent.

And large-scale attacks aren't the only way terrorism affects stocks. Seventy-five attacks between 1998 and 2003 targeted businesses, according to G. Andrew Karolyi, a professor of finance at Ohio State University and Rodolfo Martell, an assistant professor of finance at Purdue University. The most frequent target was McDonald's Corp., which was attacked 10 times, including the ransacking of a half-built restaurant in France and a deadly firebombing in Indonesia. Stock in the attacked companies had a one-day decline of 0.83 percent for an average loss of $401 million, they found. Ten days later, the stocks had not recovered.

What no one seems to talk about when it comes to terrorism is the possibility of a market crash. That may be because a spate of attacks worldwide, from Madrid to Mumbai, has not caused any country's market to crash.

As former Securities and Exchange Commission Chairman Harvey L. Pitt testified before the House Committee on Financial Services on Sept. 26, 2001. "The markets did not give way to panic selling.They simply did what they do best: They assessed, and responded to, the crisis rationally. Unlike human beings, capital markets are capable of absorbing great shocks quickly."
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The 10 Most Brazen War Profiteers
By Charlie Cray, AlterNet
Posted on September 5, 2006, Printed on September 5, 2006
http://www.alternet.org/story/41083/

The history of American war profiteering is rife with egregious examples of incompetence, fraud, tax evasion, embezzlement, bribery and misconduct. As war historian Stuart Brandes has suggested, each new war is infected with new forms of war profiteering. Iraq is no exception. From criminal mismanagement of Iraq's oil revenues to armed private security contractors operating with virtual impunity, this war has created opportunities for an appalling amount of corruption. What follows is a list of some of the worst Iraq war profiteers who have bilked American taxpayers and undermined the military's mission.

No. 1 and No. 2: CACI and Titan

In early 2005 CIA officials told the Washington Post that at least 50 percent of its estimated $40 billion budget for that year would go to private contractors, an astonishing figure that suggests that concerns raised about outsourcing intelligence have barely registered at the policymaking levels.

In 2004 the Orlando Sentinel reported on a case that illustrates what can go wrong: Titan employee Ahmed Fathy Mehalba, an Egyptian translator, was arrested for possessing classified information from the Guantanamo Bay prison camp.

Critics say that the abuses at Abu Ghraib are another example of how the lines can get blurred when contractors are involved in intelligence work. CACI provided a total of 36 interrogators in Iraq, including up to 10 at Abu Ghraib at any one time, according to the company. Although neither CACI, Titan or their employees have yet been charged with a crime, a leaked Army investigation implicated CACI employee Stephen Stefanowicz in the abuse of prisoners.

CACI and Titan's role at Abu Ghraib led the Center for Constitutional Rights to pursue companies and their employees in U.S. courts.

"We believe that CACI and Titan engaged in a conspiracy to torture and abuse detainees, and did so to make more money," says Susan Burke, an attorney hired by the Center for Constitutional Rights (CCR), whose lawsuit against the companies is proceeding into discovery before the Federal Court for the District of Columbia.

The private suits seem to have already had some effect: In September 2005 CACI announced that it would no longer do interrogation work in Iraq.

Titan, on the other hand, has so far escaped any serious consequences for its problems (in early 2005, it pleaded guilty to three felony international bribery charges and agreed to pay a record $28.5 million Foreign Corrupt Practices Act penalty). The company's contract with the Army has been extended numerous times and is currently worth over $1 billion. Last year L-3 Communications bought Titan as part of its emergence as the largest corporate intelligence conglomerate in the world.

No. 3: Bechtel: precast profits

The San Francisco-based construction and engineering giant received one of the largest no-bid contracts -- worth $2.4 billion -- to help coordinate and rebuild a large part of Iraq's infrastructure. But the company's reconstruction failures range from shoddy school repairs to failing to finish a large hospital in Basra on time and within budget.

Recall that USAID chief Andrew Natsios originally touted the reconstruction as a Middle Eastern "Marshall Plan." Natsios should have known that all would not go smoothly with Bechtel in the lead: Prior to joining the Bush administration, he was chief executive of the Massachusetts Turnpike Authority, where he oversaw the Big Dig -- whose costs exploded from $2.6 billion to $14.6 billion under Bechtel's lead.

In July, the company's reputation for getting things done unexpectedly plummeted like a 12-ton slab of concrete when Stuart Bowen, the special inspector general for Iraq Reconstruction (SIGIR), released an audit of the Basra Children's Hospital Project, which was $70 million to $90 million over budget, and a year and half behind schedule. Bechtel's contract to coordinate the project was immediately cancelled.

Now that the money is running out, American officials are beginning to blame Iraqis for mismanaging their own infrastructure. But as Bowen warns, contractors like Bechtel, the CPA and other contracting agencies will only have themselves to blame for failing to train Iraqi engineers to operate these facilities (esp. water, sewage and electricity) when they leave.

No. 4: Aegis Defense Services

The General Accounting Office (GAO) estimates 48,000 private security and military contractors (PMCs) are stationed in Iraq. The Pentagon's insistence on keeping a lid on military force requirements (thereby avoiding the need for a draft) is one reason for that astronomical growth, which has boosted the fortunes of the "corporate warriors" so much that observers project the industry will be a $200 billion per year business by 2010.

Yet the introduction of PMCs has put "both the military and security providers at a greater risk for injury," the General Accounting Office says, because PMCs fall outside the chain of command and do not operate under the Code of Military Justice.

George Washington University professor Deborah Avant, author of Market for Force and an expert on the industry, says that while established PMCs may act professionally, the government's willingness to contract with a few cowboy companies like Aegis -- a U.K.-based firm whose infamous founder and CEO Tim Spicer was implicated for breaking an arms embargo in Sierra Leone -- only reinforces the fear that U.S. foreign policy is being outsourced to corporate "mercenaries."

An industry insider told Avant that the $293 million contract was given despite the fact that American competitors had submitted lower bids, suggesting the government wanted to hire the foreign company to shield both sides of the transaction from accountability for any "dirty tricks."

Industry critics, including Rep. Jan Schakowsky, D-Ill., say that, at a minimum, Spicer's contract suggests that government agencies have failed to conduct adequate background checks. While it's hard to say how often PMCs have committed human rights violations in Iraq, the Charlotte News-Observer reported in March that security contractors regularly shoot into civilian cars. The problem was largely ignored until a "trophy video" of security guards firing with automatic rifles at civilian cars was posted on a web site traced back to Aegis.

Although the Army's Criminal Investigation Division says no charges will be filed against Aegis or its employees, critics say that only proves how unaccountable contractors are under current laws. Since the war on terror began, just one civilian, CIA contract interrogator David A. Passaro, has been convicted for felony assault associated with interrogation tactics.

Even The International Peace Operations Association, a fledgling industry trade association that insists the industry abides by stringent codes of conduct has rejected Aegis' bid to join its ranks.

No. 5: Custer Battles

In March, Custer Battles became the first Iraq occupation contractor to be found guilty of fraud. A jury ordered the company to pay more than $10 million in damages for 37 counts of fraud, including false billing. In August, however, the judge in the case dismissed most of the charges on a technicality, ruling that since the Coalition Provisional Authority was not strictly part of the U.S. government, there is no basis for the claim under U.S. law. Custer Battles' attorney Robert Rhoad says the company's owners were "ecstatic" about the decision, adding that "there simply was no evidence of fraud or an intent to defraud."

In fact the judge's ruling stated that the company had submitted "false and fraudulently inflated invoices." He also allowed the jury's verdict to stand against the company for retaliating against the whistleblowers that originally brought the case under the False Claims Act, the law that allows citizens to initiate a private right of action to recover money on taxpayers' behalf. During the trial, retired Brig. Gen. Hugh Tant III testified that the fraud "was probably the worst I've ever seen in my 30 years in the Army."

When Tant confronted Mike Battles, one of the company's owners, with the fact that 34 of 36 trucks supplied by the firm didn't work, he responded: "You asked for trucks and we complied with our contract and it is immaterial whether the trucks were operational."

The Custer Battles case is being watched closely by the contracting community, since many other fraud cases could hinge on the outcome. A backlog of 70 fraud cases is pending against various contractors. Who they are is anyone's guess (one case was recently settled against Halliburton subcontractor EGL for $4 million), since cases filed under the False Claims Act are sealed and prevented from moving forward until the government decides whether or not it will join the case. The means some companies accused of fraud have yet to be publicly identified, which makes it difficult for federal contracting officers to suspend or debar them from any new contracts. The U.S. Air Force moved to suspend Custer Battles from new contracts in September 2004, after the alleged fraud was revealed.

In May, however, the Wall Street Journal reported that attempts were made to bypass the suspension order by two former top Navy officials who had formed a company that purchased the remnants of Custer Battles. Meanwhile, Alan Grayson, the attorney who filed the Custer Battles case, says that because of orders passed by the CPA, Iraqis have no chance of recovering any of the $20 billion in Iraqi money used to pay U.S. contractors. The CPA effectively created a "free fraud zone," Grayson says.

No. 6: General Dynamics

Most of the big defense contractors have done well as a result of the war on terror. The five-year chart for Lockheed Martin, for instance, reveals that the company's stock has doubled in value since 2001.

Yet The Washington Post reported in July that industry analysts agree that of the large defense contractors, the one that has received the most direct benefit from the war in Iraq is General Dynamics. Much of that has to do with the fact that the company has focused its large combat systems business on supplying the Army with everything from bullets to tank shells to Stryker vehicles, which made their debut during the 2003 invasion.

In July, the Post reported that the company's profits have tripled since 9/11. That should make some people happy, including David K Heebner, a former top aide to Army Chief of Staff Eric Shinseki, who was hired by General Dynamics in 1999, a year before the Stryker contract was sealed. According to Defense watchdogs at the Project on Government Oversight (POGO), General Dynamics formally announced it was hiring Heebner on November 20, 1999, just one month after Shinseki announced a new "vision" to transform the Army by moving away from tracked armored vehicles toward wheeled light-armored vehicles, and more than a month prior to Heebner's official retirement date of Dec. 31, 1999.

Less than a year and a half later, Heebner was present for the rollout of the first Stryker in Alabama, where he was recognized by Shinseki for his work in the Army on the Stryker project.

Although the Pentagon's inspector general concluded from a preliminary investigation that Heebner had properly recused himself from any involvement in projects involving his prospective employer once he had been offered the job, critics say the current ethics rules are too weak.

"It's clear that the Army was leaning toward handing a multibillion-dollar contract to General Dynamics at the very time Heebner may have been in negotiations with the company for a high-paying executive position," says Jeffrey St. Clair, author of Grand Theft Pentagon, a sweeping review of war-profiteering during the "war on terror."

Heebner's case is similar to Boeing's infamous courtship of Darlene Druyan, the Air Force acquisition officer who was eventually sentenced to nine months in prison and seven months in a halfway house for arranging a $250,000 a year job for herself on the other side of the revolving door while negotiating contracts for the Air Force that were favorable to Boeing.

This March, Heebner reported owning 33,500 shares in the company, worth over $ 4 million, along with 21,050 options.

Not everyone has been happy with the outcome of the Stryker contract. Tom Christie, the Pentagon's director of operational testing and evaluation, sent a classified letter to Donald Rumsfeld before it was deployed in Iraq, warning that the $3 million vehicle was not ready for heavy fire. Meanwhile, the GAO warned of serious deficiencies in vehicle training provided, a concern that turned serious when soldiers accidentally drove the Stryker into the Tigris rivers. Despite public praise from top Army officials, an internal Army report leaked to the Post in March 2005 revealed that the vehicles deployed in Iraq have been plagued with inoperable gear and maintenance problems that are "getting worse not better."

Perhaps as insurance against any flap, General Dynamics has added former Attorney General John Ashcroft to its stable of high-powered lobbyists. Working the account are Juleanna Glover Weiss, Vice President Dick Cheney's former press secretary, Lori Day Sharp, Ashcroft's former assistant, and Willie Gaynor, a former Commerce Department official who also worked for the 2004 Bush-Cheney reelection campaign.

No. 7: Nour USA Ltd.

Incorporated shortly after the war began, Nour has received $400 million in Iraq contracts, including an $80 million contract to provide oil pipeline security that critics say came through the assistance of Ahmed Chalabi, Iraq's No. 1 opportunist, who was influential in dragging the United States into the current quagmire with misleading assertions about WMDs. Chalabi has denied reports that he received a $2 million finder's fee, but other bidders on the contract point out that Nour had no prior related experience and that its bid on the oil security contract was too low to be credible. Another company consultant who hasn't denied getting paid to help out is William Cohen, the former defense secretary under President Clinton. Many Iraqis now believe that Chalabi is America's hand-picked choice to rule Iraq, despite being a wanted fugitive from justice in Jordan and despite being accused of passing classified information along to Iran. Iyad Allawi, a potential rival for power in Iraq, has publicly criticized Chalabi for creating contracts for work that he says should be the responsibility of the state.

No. 8, No. 9 and No. 10: Chevron, ExxonMobil and the Petro-imperialists

Three years into the occupation, after an evolving series of deft legal maneuvers and manipulative political appointments, the oil giants' takeover of Iraq's oil is nearly complete.

A key milestone in the process occurred in September 2004, when U.S.-appointed Interim Prime Minister Iyad Allawi preempted Iraq's January 2005 elections (and the subsequent drafting of the Constitution) by writing guidelines intended to form the basis of a new petroleum law. Allawi's policy would effectively exclude the government from any future involvement in oil production, while promising to privatize the Iraqi National Oil Co. Although Allawi is no longer in power, his plans heavily influenced future thinking on oil policy.

Helping the process move along are the economic hit men at BearingPoint, the consultants whose latest contract calls for "private-sector involvement in strategic sectors, including privatization, asset sales, concessions, leases and management contracts, especially those in the oil and supporting industries."

For their part, the oil industry giants have kept a relatively low profile throughout the process, lending just a few senior statesmen to the CPA, including Philip Carroll (Shell U.S., Fluor), Rob McKee (ConocoPhillips and Halliburton) and Norm Szydlowski (ChevronTexaco), the CPA's liaison to the fledgling Iraqi Oil Ministry. Greg Muttitt of U.K. nonprofit Platform says Chevron, Shell and ConocoPhillips are among the most ambitious of all the major oil companies in Iraq. Shell and Chevron have already signed agreements with the Iraqi government and begun to train Iraqi staff and conduct studies -- arrangements that give the companies vital access to Oil Ministry officials and geological data.

Although Iraqi Oil Minister Hussain al-Shahristani said in August that the final competition for developing Iraq's oil fields will be wide open, the preliminary arrangements will give the oil giants a distinct advantage when it comes time to bid. The relative level of interest by the big oil companies depends on their appetite for risk, and their need for reserves. Shell, for example, has performed worse than most of its peers in finding new reserves in recent years -- a fact underscored by a 2004 scandal in which the company was caught lying to its investors. At this point the key challenge to multinationals is whether they can convince the Iraqi parliament to pass a new petroleum law by the end of this year.

A key provision in the new law is a commitment to using production sharing agreements (PSAs), which will lock the government into a long-term commitment (up to 50 years) to sharing oil revenues, and restrict its right to introduce any new laws that might affect the companies' profitability. Greg Muttitt of Platform says the PSAs are designed to favor private companies at the expense of exporting governments, which is why none of the top oil producing countries in the Middle East use them. Under the new petroleum law, all new fields and some existing fields would be opened up to private companies through the use of PSAs. Since less than 20 of Iraq's 80 known oil fields have already been developed, if Iraq's government commits to signing the PSAs, it could cost the country up to nearly $200 billion in lost revenues according to Muttitt, lead researcher for "Crude Designs: the Rip-Off of Iraq's Oil Wealth."

Meanwhile, in a kind of pincer movement, the parliament has begun to feel pressured from the IMF to adopt the new oil law by the end of the year as part of "conditionalities" imposed under a new debt relief agreement. Of course pressuring a country as volatile as Iraq to agree to any kind of arrangement without first allowing for legitimate parliamentary debate is fraught with peril. It is a risky way to nurture democracy in a country that already appears to be entering into a civil war.

"If misjudged -- either by denying a fair share to the regions in which oil is located, or by giving regions too much autonomy at the expense of national cohesion -- these oil decisions could fracture, and ultimately break apart, the country," Muttitt suggests.

Charlie Cray is director of the Center for Corporate Policy in Washington, D.C.
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