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When War is Swell: the Carlyle Group and the Middle East at War

by JEFFREY ST. CLAIR

Paris.

A couple of weeks ago, in a dress rehearsal for her next presidential campaign, Hillary Clinton, the doyenne of humanitarian interventionism, made a pit-stop at the Carlyle Group to brief former luminaries of the imperial war rooms about her shoot-first-don’t-ask-questions foreign policy.

For those of you who have put the playbill of the Bush administration into a time capsule and buried it beneath the compost bin, the Carlyle Group is essentially a hedge fund for war-making and high tech espionage. They are the people who brought you the Iraq war and all those intrusive niceties of Homeland Security. Call them the Knights of the Revolving Door, many of Carlyle’s executives and investors having spent decades in the Pentagon, the CIA or the State Department, before cashing in for more lucrative careers as war profiteers. They are now licking their chops at the prospect for an all-out war against Syria, no doubt hoping that the conflagration will soon spread to Lebanon, Jordan and, the big prize, Iran.

For a refresher course on the sprawling tentacles of the Carlyle Group, here’s an essay that first appeared in CounterPunch’s print edition in 2004. Sadly, not much has changed in the intervening years, except these feted souls have gotten much, much richer.  — JSC

Across all fronts, Bush’s war deteriorates with stunning rapidity. The death count of American soldiers killed in Iraq will soon top 1000, with no end in sight. The members of the handpicked Iraqi Governor Council are being knocked off one after another. Once loyal Shia clerics, like Ayatollah Sistani, are now telling the administration to pull out or face a nationalist insurgency. The trail of culpability for the abuse, torture and murder of Iraqi detainees seems to lead inexorably into the office of Donald Rumsfeld. The war for Iraqi oil has ended up driving the price of crude oil through the roof. Even Kurdish leaders, brutalized by the Ba’athists for decades, are now saying Iraq was a safer place under their nemesis Saddam Hussein. Like Medea whacking her own kids, the US turned on its own creation, Ahmed Chalabi, raiding his Baghdad compound and fingering him as an agent of the ayatollahs of Iran. And on and on it goes.

Still not all of the president’s men are in a despairing mood. Amid the wreckage, there remain opportunities for profit and plunder. Halliburton and Bechtel’s triumphs in Iraq have been chewed over for months. Less well chronicled is the profiteering of the Carlyle Group, a company with ties that extend directly into the Oval Office itself.

Even Pappy Bush stands in line to profit handsomely from his son’s war making. The former president is on retainer with the Carlyle Group, the largest privately held defense contractor in the nation. Carlyle is run by Frank Carlucci, who served as the National Security advisor and Secretary of Defense under Ronald Reagan. Carlucci has his own embeds in the current Bush administration. At Princeton, his college roommate was Donald Rumsfeld. They’ve remained close friends and business associates ever since. When you have friends like this, you don’t need to hire lobbyists..

Bush Sr. serves as a kind of global emissary for Carlyle. The ex-president doesn’t negotiate arms deals; he simply opens the door for them, a kind of high level meet-and-greet. His special area of influence is the Middle East, primarily Saudi Arabia, where the Bush family has extensive business and political ties. According to an account in the Washington Post, Bush Sr. earns around $500,000 for each speech he makes on Carlyle’s behalf.

One of the Saudi investors lured to Carlyle by Bush was the BinLaden Group, the construction conglomerate owned by the family of Osama bin Laden. According to an investigation by the Wall Street Journal, Bush convinced Shafiq Bin Laden, Osama’s half brother, to sink $2 million of BinLaden Group money into Carlyle’s accounts. In a pr move, the Carlyle group cut its ties to the BinLaden Group in October 2001.

One of Bush Sr.’s top sidekicks, James Baker, is also a key player at Carlyle. Baker joined the weapons firm in 1993, fresh from his stint as Bush’s secretary of state and chief of staff. Packing a briefcase of global contacts, Baker parlayed his connections with heads of state, generals and international tycoons into a bonanza for Carlyle. After Baker joined the company, Carlyle’s revenues more than tripled.

Like Bush Sr., Baker’s main function was to manage Carlyle’s lucrative relationship with Saudi potentates, who had invested tens of millions of dollars in the company. Baker helped secure one of Carlyle’s most lucrative deals: the contract to run the Saudi offset program, a multi-billion dollar scheme wherein international companies winning Saudi contracts are required under terms of the contracts to invest a percentage of the profits in Saudi companies.

Baker not only greases the way for investment deals and arms sales, but he also plays the role of seasoned troubleshooter, protecting the interests of key clients and regimes. A case in point: when the Justice Department launched an investigation into the financial dealings of Prince Sultan bin Abdul Aziz, the Saudi prince sought out Baker’s help. Baker is currently defending the prince in a trillion dollar lawsuit brought by the families of the victims of the 9/11 attacks. The suit alleges that the prince used Islamic charities as pass-throughs for shipping millions of dollars to groups linked to al-Qaeda.

Baker and Carlyle enjoy another ace in the hole when it comes to looking out for their Saudi friends. Baker prevailed on Bush Jr. to appoint his former law partner, Bob Jordan, as the administration’s ambassador to Saudi Arabia.

Carlyle and its network of investors are well positioned to cash in on Bush Jr.’s expansion of the defense and Homeland Security department budgets. Two Carlyle companies, Federal Data Systems and US Investigations Services, hold multi-billion dollar contracts to provide background checks for commercial airlines, the Pentagon, the CIA and the Department of Homeland Security. USIS was once a federal agency called the Office Federal Investigations, but it was privatized in 1996 at the urging of Baker and others and was soon gobbled up by Carlyle. The company is now housed in “high-security, state-of-the-art, underground complex” in Annandale, Pennsylvania. USIS now does 2.4 million background checks a year, largely for the federal government.

Another Carlyle subsidiary, Vought Aircraft, holds more than a billion dollars in federal contracts to provide components for the C-117 transport plane, the B-2 bomber and the Apache attack helicopter. Prior to 2001, Vought had fallen on hard times. Just before the 9/11 attacks, Vought announced that it was laying off more than 1,200 employees, more than 20 percent of its workforce. But business picked up briskly following the airstrikes on Afghanistan and the war on Iraq.

In 2002, Carlyle sold off its biggest holding, United Defense. The sale may have been prompted by insider information leaked to Carlucci by his pal Rumsfeld. In early 2001, Carlyle was furiously lobbying the Pentagon to approve contracts for the production of United Defense’s Crusader artillery system, an unwieldy and outrageously expensive super-cannon. Rumsfeld disliked the Crusader and had it high on his hit list of weapon systems to be killed off in order to save money for other big ticket schemes, particularly the Strategic Defense Initiative.

But, as detailed in William Hartung’s excellent book, How Much Are You Making in the War, Daddy?, Rumsfeld didn’t terminate the Crusader immediately. Instead, he held off on a public announcement of his decision for more than a year. By that time, Carlucci and Baker devised a plan to take United Defense public. The sale to unsuspecting investors netted Carlyle more than $237 million. Six months later, Rumsfeld closed the book on the Crusader. By then the gang at Carlyle had slipped out the back door, their pockets stuffed with cash. United Defense was able to petition the Pentagon to compensate them to the tune of several million for cancellation of the contract. Even when you lose, you win.

So the men behind the Carlyle Group drift through Washington like familiar ghosts, profiteering off the carnage of Bush’s disastrous crusades, untroubled by any thought of congressional investigation or criminal prosecution, firm in the knowledge that the worse things get for the people of the world, the less secure and more gripped by fear the citizens their own country become, the more millions they will reap for themselves. Perpetual war means perpetual profits.

Let’s leave the last word to Dan Broidy, author of The Iron Triangle, an illuminating history of the Carlyle Group: “It’s not an exaggeration to say that September 11 is going to make the Carlyle investors very, very rich men.”

JEFFREY ST. CLAIR is the editor of CounterPunch and the author of Been Brown So Long It Looked Like Green to Me: the Politics of NatureGrand Theft Pentagon and Born Under a Bad Sky. His latest book is Hopeless: Barack Obama and the Politics of Illusion. He can be reached at: sitka@comcast.net.

This essay is excerpted from Jeffrey St. Clair’s book Grand Theft Pentagon  

Jeffrey St. Clair is editor of CounterPunch. His new book is Killing Trayvons: an Anthology of American Violence (with JoAnn Wypijewski and Kevin Alexander Gray). He can be reached at: sitka@comcast.net.

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