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American Morning

Iraqi Reconstruction

Aired December 12, 2003 - 07:15   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


BILL HEMMER, CNN ANCHOR: The Pentagon is now raising questions about a no-big contract given to a subsidiary of the oil services company, Halliburton. At the same time, the administration is defending its decision to keep countries that opposed the war from getting Iraq reconstruction contracts.
For more from the White House today, here is our senior White House correspondent, John King.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): (AUDIO GAP) says he doesn't understand all the fuss.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: 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.

KING: But the decision to steer nearly $20 billion in Iraq reconstruction money to companies from the United States and key war allies reopened the diplomatic divide between Washington and major war opponents like France, Russia, and Germany.

KOFI ANNAN, U.N. SECRETARY-GENERAL: I would not characterize the decision taken yesterday as unifying.

KING: The president's political opponents call it more failed diplomacy.

SEN. JOHN KERRY (D), PRESIDENTIAL CANDIDATE: I think it borders on the stupid. It is counterproductive. It is the exact opposite of what we should be doing in order to bring other countries into the table.

KING: But at this year-end cabinet meeting, Mr. Bush not only defended the policy, but scoffed when asked about French and German suggestions his approach violates international law.

BUSH: International law? I'd better call my lawyer.

KING: Still, the timing is awkward to say the least. The dust- up comes just as special Bush envoy James Baker heads to Paris, Moscow and Berlin, asking leaders to forgive or at least reduce huge Iraqi debts from the days of Saddam Hussein.

IVO DAALDER, BROOKINGS INSTITUTION: If I were Mr. Baker, I would have gone into the Oval Office and told the president I'm going back to Houston until you find a way to cooperate with these guys.

KING: Canada also is excluded from major contracts, though Prime Minister Jean Chretien says Mr. Bush told him Thursday that was a mistake.

JEAN CHRETIEN, CANADIAN PRIME MINISTER: He was telling me to basically not to worry.

KING: The White House says Mr. Bush made no promises, but did note Canada's pledge to offer money for Iraq's reconstruction.

(END VIDEOTAPE)

The urgent focus now here at the White House is slashing Iraq's $120 billion in international debt. And that debt debate could become a bargaining chip in the bitter contract dispute. Administration officials are saying those war opponents, now excluded from the lucrative contracts, could see things change if they agree to forgive or at least significantly reduce the debts racked up by the former Iraqi regime -- Bill.

HEMMER: John, back to the issue of Halliburton. It is my understanding the total contract for that oil company is about $5 billion worth. How are they explaining away the $61 million overcharge?

KING: Well, what the Pentagon is saying happened here is that Halliburton's subsidiary grossly overpaid for oil it is buying from a company in Kuwait, shipping into Iraq. The company is paying about $2.27 a gallon for this. The Pentagon says you can get it this for about $1 a gallon cheaper.

There is no allegation that Halliburton is price gouging or profiteering from this. In fact, what the Pentagon is saying is it appears to them that Halliburton was simply lazy and not diligent in getting a good market price.

But the Pentagon says because there is cheaper gasoline available, it might not pay Halliburton some $67 million in that contract. Halliburton is trying to come up with the documents to convince the Pentagon that it should get that money.

This one will continue. And, of course, Bill, a lot of focus, because that company was once headed by Vice President Dick Cheney.

HEMMER: And it is. John, thanks -- John King on the Front Lawn this morning.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.






Aired December 12, 2003 - 07:15   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: The Pentagon is now raising questions about a no-big contract given to a subsidiary of the oil services company, Halliburton. At the same time, the administration is defending its decision to keep countries that opposed the war from getting Iraq reconstruction contracts.
For more from the White House today, here is our senior White House correspondent, John King.

(BEGIN VIDEOTAPE)

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): (AUDIO GAP) says he doesn't understand all the fuss.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: 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.

KING: But the decision to steer nearly $20 billion in Iraq reconstruction money to companies from the United States and key war allies reopened the diplomatic divide between Washington and major war opponents like France, Russia, and Germany.

KOFI ANNAN, U.N. SECRETARY-GENERAL: I would not characterize the decision taken yesterday as unifying.

KING: The president's political opponents call it more failed diplomacy.

SEN. JOHN KERRY (D), PRESIDENTIAL CANDIDATE: I think it borders on the stupid. It is counterproductive. It is the exact opposite of what we should be doing in order to bring other countries into the table.

KING: But at this year-end cabinet meeting, Mr. Bush not only defended the policy, but scoffed when asked about French and German suggestions his approach violates international law.

BUSH: International law? I'd better call my lawyer.

KING: Still, the timing is awkward to say the least. The dust- up comes just as special Bush envoy James Baker heads to Paris, Moscow and Berlin, asking leaders to forgive or at least reduce huge Iraqi debts from the days of Saddam Hussein.

IVO DAALDER, BROOKINGS INSTITUTION: If I were Mr. Baker, I would have gone into the Oval Office and told the president I'm going back to Houston until you find a way to cooperate with these guys.

KING: Canada also is excluded from major contracts, though Prime Minister Jean Chretien says Mr. Bush told him Thursday that was a mistake.

JEAN CHRETIEN, CANADIAN PRIME MINISTER: He was telling me to basically not to worry.

KING: The White House says Mr. Bush made no promises, but did note Canada's pledge to offer money for Iraq's reconstruction.

(END VIDEOTAPE)

The urgent focus now here at the White House is slashing Iraq's $120 billion in international debt. And that debt debate could become a bargaining chip in the bitter contract dispute. Administration officials are saying those war opponents, now excluded from the lucrative contracts, could see things change if they agree to forgive or at least significantly reduce the debts racked up by the former Iraqi regime -- Bill.

HEMMER: John, back to the issue of Halliburton. It is my understanding the total contract for that oil company is about $5 billion worth. How are they explaining away the $61 million overcharge?

KING: Well, what the Pentagon is saying happened here is that Halliburton's subsidiary grossly overpaid for oil it is buying from a company in Kuwait, shipping into Iraq. The company is paying about $2.27 a gallon for this. The Pentagon says you can get it this for about $1 a gallon cheaper.

There is no allegation that Halliburton is price gouging or profiteering from this. In fact, what the Pentagon is saying is it appears to them that Halliburton was simply lazy and not diligent in getting a good market price.

But the Pentagon says because there is cheaper gasoline available, it might not pay Halliburton some $67 million in that contract. Halliburton is trying to come up with the documents to convince the Pentagon that it should get that money.

This one will continue. And, of course, Bill, a lot of focus, because that company was once headed by Vice President Dick Cheney.

HEMMER: And it is. John, thanks -- John King on the Front Lawn this morning.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.