December 12, 2003 | Broadcast


In the CROSSFIRE are UPI editor in chief Martin Walker. He’s also a senior fellow at the World Policy Institute. Also with us, Cliff May of the Foundation for the Defense of Democracies.


PAUL BEGALA, CO-HOST: Gentlemen, thank you both.


BEGALA: Always good to see you.

Cliff, it’s not just Democrats that are whining, contrary to Mr. Novak’s rhetoric. Let me just read you the news story out of today’s paper, “The Chicago Tribune.”

“Pentagon auditors” — no, not Democrats — “Pentagon auditors found, Vice President Cheney’s former company may have overcharged the Army by as much as $61 million for gasoline in Iraq, senior Defense Department officials said Thursday. The Pentagon official said a Halliburton subsidiary involved in the Iraq reconstruction work, Kellogg, Brown & Root, also submitted a proposal for cafeteria services that was $67 million too high.”

Isn’t this a legitimate and important issue to look into, whether we’re being ripped off?

CLIFF MAY, FOUNDATION FOR THE DEFENSE OF DEMOCRACIES: These are two different issues. So let’s just make sure that’s clear.

Absolutely, it’s important to do. And here’s got news. You found out about this because the Defense Department is doing its job and it’s investigating, it’s looking into any charges there are about a company that Dick Cheney used to work for. Dick Cheney is not protecting anybody. Dick Cheney is saying, hey, absolutely do your job. And they’re doing their job. We’ll find out whether Halliburton did anything. In this case, the allegation is…

BEGALA: Well, actually, Cheney said nothing.

MAY: He shouldn’t say anything. He shouldn’t say anything.

BEGALA: President Bush, to his credit — President Bush today did say something. He said, we should look into this, get to the bottom of it.


BEGALA: Now, he’s not asking for any independent investigation.

MAY: When you have a defense contractor, you want to watch over them very carefully. In the past, we haven’t watched over carefully enough. I’m glad they’re doing this.


MAY: On the other issue which I think we need to just


NOVAK: We’re going to talk about that in a minute.

Martin Walker, you’ve been a reporter for a long time. And you know that, when you do business with the U.S. government, there’s disputes, particularly when there’s big money involved. And what did the president say when he was asked about this terrible thing that perhaps there was a disagreement between Halliburton and the Pentagon? A disagreement.

Here’s what the president said.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Their investigation will lay the facts out for everybody to see. And if there’s an overcharge, like we think there is, we expect that money to be repaid.


NOVAK: Expects that money to be repaid. He’s right on the ball on that, isn’t he?

MARTIN WALKER, EDITOR IN CHIEF, UNITED PRESS INTERNATIONAL: Well, I’m glad he said that, because his press spokesman earlier in the day has said, oh, this isn’t a problem for the White House; it’s a problem for the — a problem for the Pentagon.

And before that, we had the Halliburton people saying, oh, it’s not our problem. We were overcharged by one of our subcontractors out there. The buck is being passed on this issue all the way down the line. And the real problem of this is, these were no-compete contracts. No U.S. government operation can work on that basis.

MAY: There’s two separate issues. One, the question is, if there are charges, are they being investigated, are they being look looked into? Yes, they are. That’s the way the system should work.

Now, if you want to talk about no-compete contracts, there are certain things that have to be done very quickly, very big in very dangerous places. And much as you would like too, Celestial Seasonings is not the company to do it.

NOVAK: But, Martin — but…

WALKER: Explain — explain to me, Cliff, why it is that Iraq, which is a place that sits upon a lake of oil, is charging $2.64 a gallon to the Pentagon?

MAY: Now you switched back to the other issue. And I think you’re right. Let’s let the auditors look into that. I want to know the answer, too.


NOVAK: But when you have — when you have a disagreement between the Pentagon and a contractor, that is not exactly a man bites dog, is it? That’s a normal thing that goes on.

WALKER: It really is. And I’m glad they got caught. I’m glad they’re looking into it.


WALKER: Look, they paid too much to Kuwaitis for the oil. Did the Kuwaitis overcharge them? I don’t know. You don’t know. Twenty auditors will figure it out.

BEGALA: Well, but that’s — that’s not — that’s not all that they’ve done. And this is where there’s two stories we’re talking about today.


BEGALA: First, the question of whether Halliburton ripped us off, second, the question of whether it’s wise to exclude German, French, Russian and other countries from competing.

Here’s the — the theory behind the Pentagon excluding Germany, France, Russia and other countries is, they didn’t help in the war, right? Well, Halliburton helped Saddam Hussein. “The Washington Post” reported this. Let me read you the “Post” report.

“According to oil industry executives and confidential U.N. records, Halliburton held stakes in two firms that signed contracts to sell more than $73 million in oil production equipment and spare parts to Iraq” under Saddam Hussein, “while Cheney was chairman and CEO of the Dallas-based company. Two former senior executives of the Halliburton says that, as far as they knew, there was no policy against doing business with Iraq. And one of the executives also says, although he never spoke directly to Cheney about the Iraqi contracts, he is certain Cheney knew about them.”

Dick Cheney was selling equipment to Saddam Hussein through Halliburton. And now they’re being rewarded with no-bid contracts. Why are we rewarding somebody who helped our enemy?

MAY: Years ago, years ago, years ago…


MAY: Sorry, but you have to understand that, years ago, a lot of people mistakenly in the government, in both administrations, thought Saddam Hussein wasn’t a bad guy. He was secular. He was a socialist.

BEGALA: Dick Cheney? He was secretary of defense during the last war. Why was Dick Cheney


NOVAK: Let him talk.

MAY: The point is not that. The point is, people used to have a mistaken idea. They thought they could do business with Saddam Hussein. The point in these contracts is. The principle is, being America’s friends should be great. Being America’s adversary should be uncomfortable. Being America’s enemy should be awful.


MAY: There are 63 countries that have helped us liberate Iraq.


NOVAK: Martin Walker, I know…


NOVAK: Just a minute. Paul would like to talk about Halliburton and China all night. And he can do it, but I’m not going to be here. But I want to…


NOVAK: I want to ask you about something else. And that — and that is this whole question of who the United States gives its contracts to. And, again, I’d like to quote my principal source, George W. Bush.

Let’s listen to him.


BUSH: It’s very simple. Our people risked their lives. Coalition — friendly coalition folks risked their lives. And, therefore, the contracting is going to reflect that. And that’s what the U.S. taxpayers expect.


NOVAK: Isn’t that — isn’t that crystal clear?

WALKER: I just wish it were true.

But the funny thing is, I went into Basra this year in the war on Iraq with British troops. Some of the guys I went in with were killed in the fighting in Basra. How many contracts have the British got? Zero. Two days ago, I was talking — I was talking with Heather Rideout (ph), who is the head of the Australian industrial corporation, which is their sort of Chamber of Commerce. She was over here lobbying. Why? Because Australia, who sent their troops into the war in Iraq, they have got zero contracts as well.

Now, who is getting the contracts? Who got the biggest subcontracts for the two big mobile phone operations in Iraq? I’ll tell you. Alcatel of France, Siemens of Germany. Why should that be?

MAY: So you agree with the president. You think the countries that stood by us should get preferential treatment.


WALKER: I wish this administration would put its money where its mouth is.

NOVAK: Now, let’s — let’s



NOVAK: Let’s get to that, to what the story is, Martin. The story is that the president is being attacked for saying we’re not going to give contracts to Germany, France, Canada, and Russia, because they didn’t play the game. They didn’t participate in the war. Is that good policy or bad policy?

WALKER: It’s a false — it’s lie of a policy, because…

MAY: But you agree with the policy?

WALKER: I wish it were true.

MAY: But you agree with the policy?

WALKER: The fact is…

MAY: You think we’re not implementing it, but you agree with it? You agree with it?

WALKER: … 85 percent of the money is going in subcontracts, which are open to absolutely anybody.

NOVAK: But you’re saying


WALKER: What I’m saying is, the French and the Germans are making out like bandits. Germany’s Siemens hasn’t just got one of the big phone contracts. Siemens owns Westinghouse, which is doing the electronics contracts.

MAY: So we agree we should have a tougher policy, a tougher policy.


WALKER: I would say, help your friends. You say you’re going to help your friends. What are you doing for the Brits? What are you doing for the Australians? It’s shameful.


BEGALA: I actually disagree with the policy. But that doesn’t matter. What I care about more is whether our president tells us the truth.

Was he not informed about this reporting that Martin has? Does he not read, like, UPI, or is he misleading us?


WALKER: So why they cut off Jim Baker at the knees? This is a crime and a blunder.

MAY: No, no, no. On the contrary, if they had said, this is open to anybody, Jim Baker would go and he would ask the French: Please, would you help? Please.

Now he has some bargaining chip in his pocket. When the French say, we would like some of this contract, he can say, first, the debt that Saddam incurred by buying weapons from you, write it off. Then he can


BEGALA: Why is the president saying that our allies should get contracts if Britain and Australia are getting none?

MAY: I don’t know that’s…

BEGALA: Is he misleading us or is he ignorant?

MAY: I don’t know it’s true and you don’t know it’s true.


BEGALA: I trust UPI and Martin Walker.


BEGALA: One at a time.


BEGALA: One at a time.

MAY: We all agree the president’s policy is correct.


BEGALA: No, we don’t. I don’t at all. Don’t speak for me on that, brother. He’s wrong as rain.



NOVAK: The question is, Jack Straw, your fellow countryman, the foreign secretary, was asked whether it was divisive — divisive — to have this policy, policies, to cut these people off.

Let’s listen to the foreign secretary of Britain, what he answered.


JACK STRAW, BRITISH FOREIGN MINISTER: I can’t believe it’s unexpected. And I don’t that it will be divisive in the way you suggest.


NOVAK: I couldn’t hear what he said.


NOVAK: He said, I can’t believe that it’s unexpected. I don’t believe it will be divisive the way you suggest.

WALKER: Well, that’s because he knows perfectly well 85 percent of the money is going in subcontracts that are open to absolutely everybody.

MAY: So it’s not


WALKER: Including the French and the Germans.


MAY: So you think the policy isn’t tough enough. It doesn’t penalize the French for having given night-vision glasses to the Baathists, when they were fighting the U.S.?


BEGALA: Well, again, if you have a problem with the Baathists getting night-vision glasses from the French, why don’t you have a problem with Dick Cheney selling oil field equipment to Saddam Hussein? Cliff, be consistent.


MAY: What year? What year? What year?

BEGALA: When he was the CEO of Halliburton.

MAY: When was that? When was that?

BEGALA: In the early ’90s.

WALKER: ’96 and ’97.

MAY: As long as it was before the Clinton administration correctly passed the Iraq Liberation Act, I have no problem with it.

BEGALA: It was about this same time.


BEGALA: You have no problem with Dick Cheney helping to supply Saddam Hussein?

MAY: I would have been against it.

But, as you know, Republicans and Democrats thought that a secular Saddam Hussein, who happened to be socialist, wasn’t quite so bad.


BEGALA: Dick Cheney.

MAY: We had relations with him for a long time before we went into war with him in 1991. I was in favor of that war. You probably were as well.

BEGALA: We are going to have to take a quick break. But we’ll be back in just a minute. You all just keep your seat.

And when we return, we’ll have our “Rapid Fire” segment. We will ask our folks whether it’s wrong to have to pay to play.

And then, right after the break, Wolf Blitzer has the latest on a new P.R. offensive by Michael Jackson’s family.

Stay with us.




BEGALA: Thank you, Wolf. Look forward to Reverend Al maybe teaching you a few dance steps that he used on “Saturday Night Live.” That will be a good show.

It’s time now here on CROSSFIRE for “Rapid Fire.” (AUDIO GAP) We’re talking about the Bush administration’s allegedly playing favorites in Iraq with two of our favorite guests, Cliff May of the Foundation For the Defense of Democracies, and UPI editor in chief Martin Walker.

NOVAK: Martin Walker, do you believe in pay to play, that, if you want to get contracts, you better fight?

WALKER: No, but I believe in looking after your friends, particularly those who shed blood and treasure to be on the same side as you guys.


BEGALA: Cliff May, I think it was unethical and unpatriotic for Dick Cheney and Halliburton to sell equipment to Saddam Hussein. Do you agree?

MAY: At the time, when people were trying to make Saddam Hussein our ally, it wasn’t unpatriotic at all. That’s a terrible charge. It was probably stupid.

NOVAK: Do you believe, Martin, that Jimmy Baker should be disqualified from an ambassador because he works for the Carlisle Group?

WALKER: Absolutely not. No, I think he’s a noted diplomat. I just wish the Bush administration hadn’t cut him off at the knees diplomatically by announcing this ban on the French and Germans just when he’s going over there to ask them to let Iraq off some of its debts.

BEGALA: Cliff, the White House threatened to veto the $87 billion that they needed for Iraq if the Democrats added an independent inspector general to oversee these contracts. Was that a mistake?

MAY: Well, I’m not necessarily against that. I think the more transparent, the better. So I’m not sure I’m against that.

BEGALA: Good for you.


NOVAK: Do you know of any companies, Martin, that can do the things that the Halliburton company has been doing in Iraq? Can you name any?

WALKER: Yes, I can. I can name ABB, which is Swiss and Swedish. I can name Taylor Woodrow of Britain. I can name any number of British oil firms that have expertise from the North Sea.

It’s not — this is not purely an American game and shouldn’t be. After all, the war wasn’t purely an American game and it wasn’t purely American dead either.

MAY: I agree with that.

BEGALA: Cliff May from the Foundation for the Defense of Democracies, thank you very much.