The Devastation: Rebuilding a Ravaged Nation

By John Greenwald.

Now that the guns have fallen silent, the pounding of jackhammers will soon replace the din of war. At $200 billion or more over the next 10 years, the price of rebuilding ravaged Kuwait seems certain to dwarf the $50 billion or so that it took to liberate the oil-rich country. With that much money at stake, companies around the world began battles of their own long before the shooting war ended, fighting over contracts for everything from hospitals to refineries in one of history's largest reconstruction jobs. "This provides an almost unlimited backlog of good, profitable work," says John Dosher, a Houston energy consultant. "It's a potential gold mine."

So far, U.S. firms have prevailed as decisively as American troops did on the battlefield. Conspicuously absent from the fray: bidders from Japan and Germany, whose soldiers stayed home from the fighting (see box). Huddled in hotel rooms in Saudi Arabia with officials of Kuwait's government-in-exile, executives of U.S. companies have won 70% of initial awards for emergency services during the first three months of rebuilding. Such tasks as putting out oil fires and restoring water and power to blasted buildings could cost more than $500 million during this period. As part of the effort, Kuwait awarded the U.S. Army Corps of Engineers $46 million to help assess the damage and lay the groundwork for reconstruction.

The real money will go to the giant construction and oil-service firms that will rebuild Kuwait's shattered petroleum industry. Bechtel Group, based in San Francisco, recently signed a $150 million letter of intent to manage the mammoth task, a job that analysts say could bring the company $6 billion in revenue over the next few years. Bechtel, which has operated in Kuwait for more than 40 years, is gearing up to hire 4,300 workers for the project. Other U.S. heavyweights likely to land big contracts include Fluor, based in California, a leader in petroleum projects, and Halliburton, a Dallas firm that built a major Kuwaiti oil refinery.

No one will have much oil to refine until fire fighters extinguish the Iraqi-set blazes that raged last week through more than 500 of Kuwait's 1,000 wells, blackening the country's sky. It will require millions of gallons of water and tons of dynamite and other explosives to snuff out the flames. "It's one gigantic mess," says Red Adair, whose Houston company is one of four Texas firms engaged in the effort. "No one knows what we're really in for. I've never seen anything like this before in my life." Experts say dousing the fires and restoring the fields could cost up to $15 billion over the next five years. Plenty of U.S. oil-field companies like the sound of that. "The phone's been ringing off the hook with people looking for work," says T.B. O'Brien, president of the oil-field engineering firm O'Brien Goins Simpson, which is coordinating the fire-fighting campaign.

U.S. companies are receiving vigorous help from Washington. For months the Bush Administration has been urging Kuwait to give Americans a leading role in rebuilding the country. Says an insider whose Midwestern firm is part of the reconstruction's first phase: "Bush wanted to be sure that every initiative was made to secure a substantial share of business for the U.S."

Kuwait makes no secret of its gratitude to the Yanks. Sheik Saud Nasir al- Sabah, Kuwait's ambassador to the U.S., outlined his country's policy in a January letter to Republican Representative Helen Bentley of Maryland. He said Kuwait planned "to award the largest proportion of contracts to U.S. companies, in recognition of the immense sacrifice the people of the United States are making in the liberation of Kuwait."

Other countries are struggling to claim a share of the profits. British Foreign Secretary Douglas Hurd journeyed last month to meet with Kuwait's government-in-exile and seek postwar business. "The Crown Prince has said he will look favorably on Kuwait's supporters," says John Lace, managing director of Britain's Babcock Energy, which builds power plants. "So we are second in the queue." As if to confirm that, Kuwait last week awarded Britain's Attwoods PLC $1 billion to clear the war's rubble and debris.

French firms have had less luck -- not one has clinched a major Kuwaiti award, French officials say. Many companies are waiting to join a trade mission to Kuwait before pressing their bids. "We have wrongly told ourselves that our policies toward Kuwait have been too ambiguous and too varied for our companies to win contracts," says Antoine Jeancourt-Galignani, chairman of Banque Indosuez, based in Paris. He says Kuwaiti officials have assured him that "Kuwait finds France a solid ally and is prepared to give business to all the coalition members." Just not yet.

Kuwait's Arab neighbors in the multinational force have fared better. Saudi Arabia has furnished $80 million of emergency food supplies and is bidding on contracts for cement and other building materials. Egypt expects to provide much of the labor to rebuild Kuwait. Workers there before the invasion were largely Egyptians, Palestinians and Yemenites, but the last two groups supported Saddam and won't be welcome for a long time. So the 400,000 Egyptians who fled after the invasion will probably stream back, followed by many compatriots.

To absorb the first blow of expenses, Kuwait will borrow money and sell part of its $300 billion of foreign holdings. Then it needs to get oil flowing again as fast as possible, because the bills aren't going to let up. Destroying Kuwait took just seven months for Saddam's occupying forces. Rebuilding it could take an army of globe-straddling companies until the next century.

With reporting by William McWhirter/Chicago and Richard Woodbury/Houston, with other bureaus