Bush Is Right on Private Contracting, Just Ask the French

Outsourcing the rebuilding of Iraq

The Bush administration is getting hammered for hiring private contractors to rebuild Iraq. Lawmakers are expanding the Congressional investigation examining how the contracts were handed out. And the Senate, in an uncharacteristic display of unanimity, approved a plan that requires the Pentagon to seek other bids on a contract given to Vice President Dick Cheney’s former company, Halliburton Co., to rebuild Iraq’s oil fields – or explain why it won’t.

Volumes of research demonstrate privatization regularly produces savings up of to 30 percent for taxpayers. But in the U.S., many special interest groups try to portray privatization as dirty game of political payoffs, where politicians reward Armani-clad CEOs at the expense of those without friends in high places.

If Congress is out to scrutinize and improve the bidding process, they should continue their quest. Privatization is at its best with a fair, transparent bidding process and a clearly written contract containing precise performance standards. But much of this looks like politicians with an ax to grind or ideological opposition to privatization. And those folks should stop the partisan politics and think about what is best for the Iraqi people. In this case, even socialist France, who disagrees with us just for the thrill of it, would agree that private companies should rebuild Iraq.

Sure, it’s partly self-serving – they want French companies in on the reconstruction – just as thousands of other European and Asian companies are angling for a piece of the reconstruction pie. But France also recognizes the big-picture benefits of privatization, and has actually advanced past the U.S. in many important privatization areas.

The French look at highways and don’t see insurmountable traffic – they see markets. The entire French motorway system (equivalent to our Interstates) is tolled. Corporate entities developed, paid for, and now operate most of the motorway system through long-term contracts. Although most of the contract-holders are government companies, several are private – and the recent trend is to use competitive bidding to move new projects into private hands.

France also looks down at our wasteful water system and dramatically lower national rate of water privatization – about 75 percent of the French enjoy some form of privatized water service whereas just 15 percent of American water service is privatized.

France isn’t alone; countries across the globe are privatizing everything from roads to airport security. Even tiny Azerbaijan, a former Soviet satellite, just privatized its air traffic control system. Now we are helping Iraq along the path of liberty.

Critics of the Bush administration’s dealings in Iraq fixate on the huge amounts of money companies will receive for their work. Undoubtedly, many of the companies reconstructing Iraq will make a lot of money – that’s the goal of most businesses. But these companies are providing services the government can’t, or is providing them for a lower price than the government can. We should consider the savings, and more importantly, we should focus on how these companies are dramatically improving the quality of life for millions of Iraqis who need clean water, modern roads, and medical care.

We should fervently export privatization’s innovative spirit to Iraq, whose weary people deserve a new tradition of liberty. Open and competitive bidding helped shape America’s reputation as the dynamic patriarch of modern liberty and the world’s super power. Congress should do everything it can to ensure the bidding process for contracts is fair and impartial. But the more that lawmakers oppose common sense business solutions and allow other nations, like France, to take the lead in privatization, the more the U.S. will resemble the arthritic old-timer who shakes his fist at progress and ignores the vast advances being made all around him.

Ted Balaker is the Jacob’s Fellow at Reason Foundation.