Thursday, February 05, 2015

Roads to nowhere

Well we know where we're goin'
But we don't know where we've been
And we know what we're knowin'
But we can't say what we've seen
And we're not little children
And we know what we want
And the future is certain
Give us time to work it out

[Chorus:]
We're on a road to nowhere
Come on inside
Takin' that ride to nowhere
We'll take that ride


It's not every day that the esteemed Foreign Policy team delve deep into Guambat's alter-ego procurement world, but they've done it this month, twice:
Ghani, UNDP, and the NYT: Who Really ‘Overreached’ on Paying the Afghan Police? and

Steamrolled: A special investigation into the diplomacy of doing business abroad.
Guambat reckons the latter one, by Matthew Brunwasser, supported by the Investigative Reporting Program at the University of California at Berkeley Graduate School of Journalism, is the juicier one. Here's a few teasers:
To be sure, promoting the business interests of American companies abroad is in the portfolio of every U.S. diplomat. Government officials argue that such efforts benefit the United States economically by creating exports and jobs. But the drive for private profit, critics assert, can conflict with foreign-policy interests, especially when projects cause damage in host countries.

The 48-mile, four-lane Kosovo Highway, as it is known, was completed in November 2013 for roughly $1.3 billion — or about $25 million per mile — according to official government figures given to an international organization in Pristina, Kosovo’s capital. It was the most expensive public works project in Kosovo’s modern history, and it is arguably one of the highest-quality roads in the Balkans.

The road stretches through one of the poorest pockets of southeastern Europe. But today, the highway is practically empty, used at less than one-third of its capacity, according to the government’s, according to the government’s own traffic count and information provided by international economic experts. As of 2013, only one in seven Kosovars owned a car, giving the country one of the lowest automobile ownership rates in Europe. The highway’s black vein of asphalt now stands out against the Balkan countryside, as if mocking the surrounding poverty like a cruel Dickensian joke.

A six-month investigation by the Investigative Reporting Program at the University of California at Berkeley Graduate School of Journalism has found that highways in Kosovo, Croatia, Romania, and Albania were boondoggles for the countries in which they were constructed, and that members of governments and international institutions often saw problems coming before Bechtel (along with its Turkish joint venture partner, Enka) even began work on the roads.

U.S. Ambassador Dell is emblematic of a cited by Bechtel’s critics: that its Balkan road projects have blurred the line between U.S. foreign policy and the corporation’s interests. Dell spoke out publicly in support of the highway project, the contract for which was signed in April 2010 — even as international institutions questioned the road’s value to Kosovo. A May 2010 World Bank report, for instance, found that only two out of nine sections of the road (those nearest Pristina) would be “economically viable,” meaning that they could be expected to produce an economic benefit greater than the cost of construction and maintenance. (The findings were based on projections of Kosovo’s economic growth until the year 2032.)

Dell left Pristina in 2012 and took another diplomatic position elsewhere, before retiring from the State Department in October 2013. The following month, Bechtel hired him as its representative in Mozambique.

Founded in 1898, Bechtel is a private company, now in the hands of the fifth generation of the family for whom it is named. The company has long used highly placed officials in the State Department and other government agencies to shepherd international contracts; diplomatic knowledge, experience, and contacts have played vital roles in establishing the corporation as a major player in international construction. There is also a revolving door between Bechtel and the U.S. government, with some former diplomats joining the company and some former Bechtel executives and senior employees taking up public positions in the foreign service and elsewhere.

According to a Bechtel veteran, Balkan governments have chosen the company for projects because of its proven record of delivering quality products on tight deadlines. “The history of infrastructure in the Balkans is fraught with non-performance,” said Charles Redman, a senior vice-president at Bechtel from 1996 to 2008 and a retired career U.S. diplomat. (Among his senior posts, Redman was assistant secretary and State Department spokesman during the term of Secretary George Shultz, who himself was plucked from his position as president of Bechtel by Ronald Reagan. Bechtel’s onetime general counsel, Caspar Weinberger, also served alongside Shultz in Reagan’s cabinet, as secretary of defense.)

After Bechtel submitted its bid for the highway, according to interviews with officials from international institutions, Ambassador Dell put pressure on the Kosovo government not only to choose Bechtel but also to sign a contract with terms that were favorable to the corporation. Meanwhile, according to these sources, a broad coalition including the World Bank, the IMF, European embassies, NGOs, and think tanks opposed Bechtel’s bid — sometimes publicly, sometimes privately. They were concerned that the bidding process and negotiations lacked transparency, and that the proposed project was so lavish that it might damage Kosovo’s economic stability. Of particular concern was the bid’s unit-price contract, which meant the highway project’s final bill would be tallied only when all work had been completed. This left open the possibility that estimated costs could skyrocket.
Sorry, Guambat's attention span ends somewhere about here. Maybe, though, you should read the piece. Guambat's peace of mind is disturbed by such matters.


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