[Dewayne-Net] Crossing the Lines

[Dewayne Hendricks]

Crossing the Lines
How a top Pentagon official and a host of influential Republicans  
almost made sure that one American company gained a key stake in  
Iraq's lucrative wireless market.

Michael Scherer
September/October 2004 Issue
<http://www.motherjones.com/news/feature/2004/09/09_801.html>

The auctioning off of Iraq began in the summer of 2003 in a packed  
conference room at the Grand Hyatt in Amman, Jordan. More than 300  
executives had gathered from around the world to vie for a piece of  
one natural resource Saddam Hussein never managed to exploitbthe  
nation's cellular phone frequencies. With less than 4 percent of  
Iraqis connected to a phone, the open spectrum could earn billions of  
dollars for the eager executives working the room. Conference  
organizers tried to keep everyone focused on the prize. "Iraq needs a  
mobile communications system and it needs it now," stressed Jim  
Davies, a British expert with the Coalition Provisional Authority  
(CPA) who was leading the effort. "We want quick results."

But back in Washington, D.C., the focus had already turned from the  
needs of Iraq to the bottom lines of a select few corporations. "The  
battle for Iraq is not over oil," said one Defense Department official  
involved in communications. "It's over bandwidth." And no one was  
fighting harder for a piece of the spectrum than the consortium led by  
American cellular giant Qualcomm with such business partners as Lucent  
Technologies and Samsung of South Korea. They wanted to follow U.S.  
troops into Iraq with Qualcomm's patented cellular technology, called  
CDMA, a system no nation in the Middle East had yet been willing to  
adopt. Even as the bombs fell over Baghdad, Rep. Darrell Issa (R- 
Calif.), whose district includes many Qualcomm employees, had tried to  
wrap his favored company in the flag. He denounced the cellular system  
used by Iraq's neighbors as "an outdated French standard," and  
proposed a law that would effectively mandate Qualcomm on Iraq.  
"Hundreds of thousands of American jobs depend on the success of U.S.- 
developed wireless technologies like CDMA," Issa wrote in a March 26,  
2003, letter to Defense Secretary Donald Rumsfeld. A swarm of  
lobbyists rallied to the companies' cause, including William Walker, a  
former protC)gC) of Rumsfeld from the Ford White House, and Stacy  
Carlson, who ran President George W. Bush's California campaign in 2000.

At the conference in Amman, CPA officials promised an apolitical  
selection process that would accept any workable technology. In the  
weeks that followed, Col. Anthony Bell, the chief military procurement  
officer in Iraq, personally oversaw the selection of three cellular  
companies, assigning a panel of Iraqi and Coalition experts to a  
locked room where they reviewed blind proposals. "No names, only a  
number," said Bell, who handled $1.9 billion in contracts during his  
nine months in Baghdad. On October 6, Iraq's new minister of  
communications, Haider al-Abadi, announced the winnersbtwo Kuwaiti  
firms and one Egyptian company. Not one of them used the Qualcomm  
standard.

If any officials in Baghdad or Washington thought such a decision  
would be the end of Qualcomm's quest, the next six months would prove  
them wrong. Like dozens of American corporations looking to influence  
U.S. policybshaping everything from the banking and insurance markets  
to foreign-investment rulesbQualcomm, Lucent, Samsung, and their  
partners would only expand their efforts and broaden their reach into  
the CPA. With the guidance of a deputy undersecretary of Defense, John  
Shaw, this effort became one of the most brazen lobbying campaigns of  
the postwar reconstruction, one that has brought Shaw under  
investigation for potentially breaking federal ethics rules.

According to documents provided to Senator John McCain (R-Ariz.), the  
companies' supporters in Washington, D.C., attempted to sneak a new  
cellular license into an unrelated contract for Iraqi police and fire  
communications, tried to oust the CPA officials who resisted their  
efforts, and ultimately caused the delay of plans for a badly needed  
Iraqi 911 emergency system. "The American corporate leaders would not  
let a system be built that they couldn't make an obscene amount of  
money off of," said one former technical adviser to the Iraqi Ministry  
of Communications, who has since returned to the United States.

Senator Conrad Burns felt the sting of Qualcomm's defeat in October.  
As chairman of the Communications subcommittee, the Montana Republican  
had strong ties to the company: Qualcomm was Burns' 12th-largest  
campaign donor, and one of the company's founders, Klein Gilhousen,  
had recently given $5 million to Montana State University. Gilhousen  
also sits on the board of the Burns Telecom Center, an academic  
research program, of which the senator is chairman. During a trip to  
Iraq in October, Burns spoke with officials one-on-one about the  
process that had denied the Qualcomm consortium a license. "I think  
the bidding was open, transparent, and fair," he said upon his return  
on October 14. That same day, however, one of his chief aides began  
working behind the scenes to plan a new way to get Qualcomm into Iraq,  
a plan described in the aide's internal emails, which were obtained by  
Mother Jones. "As you know, Senator Burns is taking flak for defending  
the CPA on Iraqi telecommunications contracts which ignore CDMA,"  
wrote Burns aide Myron Nordquist to one of the Pentagon's chief  
networking officials. "The Senator remains determined to support CDMA."

And Burns had a powerful motivation. The stakes for Qualcomm, and by  
extension Burns, were far larger than just the Iraqi market of 25  
million people. For nearly a decade, Qualcomm had been engaged in an  
international battle with the non-American companies pushing GSM, a  
rival technology that had been developed in Europe and now controlled  
72 percent of the world market. A CDMA beachhead in Iraq would set the  
stage for an expansion throughout the region, with Lucent and Samsung  
well positioned to prosper as leading makers of the CDMA switches and  
phones. As Nordquist explained to the Pentagon last fall, Iraq could  
provide a "communications link between Turkey and the Gulf."

Deputy Undersecretary Shaw, an old Republican hand who had served in  
the Nixon, Ford, and Reagan White Houses, quickly became the point man  
for the initiative to bring CDMA to Iraq. Shaw and other officials in  
the Pentagon and Congress reasoned that establishing CDMA in the  
Middle East would be possible if they could find a way for Qualcomm  
and its partners to offer cellular service in Iraq under the rubric of  
the police and fire communications system that the CPA planned to  
purchase for the Iraqis. "The CDMA system could then morph into a  
commercial service with our having total control over it," Shaw wrote  
in a November email to a Coalition adviser in Baghdad.

[snip]

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