It's a Bechtel World

Think that a $680 million Iraq contract is a big deal? You don't know Bechtel.

But over time, Bechtel also became a truly global player, leading construction of the Channel Tunnel between England and France and building several major airports, including a $20 billion project at Hong Kong International, among other efforts.

In the Middle East, particularly, Bechtel is a household name; it has a long history of work in Saudi Arabia, beginning with construction of the trans-Arabian pipeline in the 1940s for Standard Oil Company of California (SoCal).

SoCal was granted exploration rights in Saudi Arabia in the early 1930s. After limited success on its own, the outfit joined with Texas Oil Co. (Texaco), Standard Oil Company of New Jersey, and Mobil Oil Co. in a new venture called the Arabian American Oil Co. (Aramco). The company eventually was nationalized and renamed Saudi Aramco.

Riley P. Bechtel (left, background), who grew up in 
Piedmont and graduated from the University of 
California at Davis and Stanford University, took the 
helm of his family's firm in 1990.
Riley P. Bechtel (left, background), who grew up in Piedmont and graduated from the University of California at Davis and Stanford University, took the helm of his family's firm in 1990.
President George W. Bush appointed Riley Bechtel to 
his Export Council in February.
President George W. Bush appointed Riley Bechtel to his Export Council in February.

Thanks, in part, to Steven Bechtel Sr.'s established relationship with the heads of his San Francisco business neighbor SoCal, his firm was contracted to build an 850-mile pipeline to get oil out of Saudi Arabia.

From that early beginning, Bechtel developed a decades-long relationship with the Saudi royal family that few other American companies have been able to match, winning billions of dollars of infrastructure contracts as the kingdom's wealth grew. More recently, for instance, Bechtel was the primary contractor in a $20 billion project to create two industrial port cities in Saudi Arabia, the largest civil engineering project in history.

Once established in the Middle East, Bechtel expanded its work into Kuwait, and then Iran, Yemen, Lebanon, and Iraq, where, in 1984, Bechtel was involved in a deal that would have let the firm build a $1 billion pipeline to move oil out of the country through the port of Aqaba, Jordan.

According to a report published by the Institute for Policy Studies earlier this year, the Export-Import Bank of the United States approved a preliminary commitment of nearly $500 million for the project -- an unprecedented loan to Iraq -- and negotiations to assure the pipeline's safety were under way with then-Israeli Prime Minister Shimon Peres, through an intermediary. Donald Rumsfeld (now an outspoken secretary of defense, but then an envoy of the Reagan administration) met with representatives of Saddam Hussein in an attempt to close the deal, but in the end, Hussein rejected the plan.

As Bechtel's projects have grown larger and more complicated, its owners and managers have manufactured opportunity through carefully cultivated relationships with political and business power brokers. And that network started long before there was a man named Bush in high office or a war in an oil-rich country called Iraq.

In the 1930s, Bechtel founder W.A. Bechtel joined his buddy, Henry J. Kaiser, another Bay Area legend engaged in building the roadways and infrastructure that would shape the west, and Frank Crowe, a former U.S. Bureau of Reclamation superintendent, in the successful bid for a government contract to build Hoover Dam.

Some years later, W.A. Bechtel's son, Stephen D. Bechtel, created a partnership with his college chum John A. McCone to build pipelines and refineries for oil companies. During World War II, that firm, Bechtel-McCone Corp., entered into the business of building ships for the government, with the help of a land grant at Terminal Island in Los Angeles. (Bechtel-McCone also had sites near Sausalito and Richmond.) According to Laton McCarthy, author of Friends in High Places: The Bechtel Story, the Bechtel-McCone firm also built an oil pipeline through the Alaskan wilderness in secret for the War Department. McCone later became director of the Stanford Research Institute, a nonprofit concern studying government and business applications of science and technology, and was chairman of the Atomic Energy Commission and head of the CIA during the Kennedy administration. He remained a close friend and golf partner of Bechtel, and brought the likes of Allen Dulles, who succeeded McCone at the CIA, and Dwight Eisenhower into their social circle.

And so it has gone for decades. During the era of Stephen Bechtel Jr., a grandson of the firm's founder who ran it from 1960 to 1990, the company hired George Shultz, who'd been on Bechtel's board of directors, as president. (He later returned to a board seat.) Shultz had already served in the Nixon administration as secretary of labor and treasury secretary, and would go on to be Ronald Reagan's secretary of state in 1982. The younger Bechtel also hired Caspar Weinberger, who had been Richard Nixon's budget manager and secretary of health, education, and welfare, to be Bechtel's general counsel. Weinberger, of course, subsequently became Ronald Reagan's secretary of defense.

But Shultz and Weinberger were hardly alone in their use of the revolving door between Bechtel and federal office. Bechtel has been both a jumping-off and landing point for countless high- and midlevel government operators during the last 60 years.

Much of the corporation's overseas work in particular has been aided relatively directly by Bechtel's government connections. The Export-Import Bank of the United States, which loans money to foreign countries for the export of American goods and services, counted Stephen D. Bechtel Sr. among the members of its advisory committee from 1969 to 1972, and the engineering firm has maintained numerous ties since, with a company vice president now on the bank's advisory committee.

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