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War corrupts. Endless war corrupts absolutely.
Ever since 9/11 America has fought an endless war on terror, seeking enemies everywhere and never promising peace. In Pay Any Price, James Risen reveals an extraordinary litany of the hidden costs of that war: from squandered and stolen dollars, to outrageous abuses of power, to wars on normalcy, decency, and truth. In the name of fighting terrorism, our government has done things every bit as shameful as its historic wartime abuses—and until this audiobook, it has worked very hard to cover them up.
Lincoln suspended habeas corpus. FDR authorized the internment of thousands of Japanese Americans. Presidents Bush and Obama now must face their own reckoning. Power corrupts, but it is endless war that corrupts absolutely.
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About the Author
James Risen is an investigative journalist with the New York Times, and author of the New York Times bestseller State of War, among other books. In 2006 he won a Pulitzer Prize for his stories about warrantless wiretapping by the NSA. In 2007 he was elected into the American Academy of Arts and Sciences.
Read an Excerpt
PALLETS OF CASH
Sometimes the federal government gives very important buildings very dull names. The East Rutherford Operations Center of the Federal Reserve Bank of New York is one such place. The three-story building, nondescript and surrounded by a 13-acre compound, fenced off from the outside world, sits in New Jersey's Meadowlands, literally in the shadows of a far more recognizable landmark, MetLife Stadium, the home of the New York Giants and New York Jets football teams — and the 2014 Super Bowl. Nearby is the Izod Center, which hosts huge live entertainment acts, from Bruce Springsteen to Ultimate Fighting. People driving down the New Jersey Turnpike through the flat, gray wetlands just south of New York City would never notice the unmarked semi-tractor trailers pulling onto the turnpike at exit 16W, coming from the operations center just down the street.
But the East Rutherford Operations Center is hiding riches beyond imagining. Deep inside the complex sits a gargantuan vault, measuring 1 million cubic feet. It is filled with U.S. currency, capable of holding as much as $60 billion. And those trucks driving onto the turnpike are loaded with secret cargo — cash. The East Rutherford Operations Center is to paper currency what Fort Knox is to gold.
The New York Federal Reserve Bank has long served as a key operational hub of the Federal Reserve system. It is the hardwired connection between Washington and Wall Street, between the White House and the financial system. And its storehouse of currency in East Rutherford is there to make sure that banks have the cash they need to refill ATMs across the country. But in 2003, East Rutherford's routine was secretly twisted by the White House. It was placed in the middle of one of the most bizarre operations of the entire Iraq war. The scheme was so weird that it seems hard to believe anyone thought it might be a good idea at the time. It was also symbolic of the profligacy that has been the hallmark of America's endless war on terror — the waste, in both lives and treasure, that two successive presidencies have produced. And it was the moment when thievery in the global war on terror achieved industrial scale.
* * *
Within weeks of the toppling of Saddam Hussein's statue in Baghdad's Firdos Square in April 2003, a televised event that came to symbolize the ouster of Saddam's regime in Iraq by the U.S.-led military coalition, unmarked trucks started backing up to the loading docks at the East Rutherford Operations Center. There, they were filled end to end with dozens of pallets of shrink-wrapped $100 bills. The trucks then moved out, down the New Jersey Turnpike, carrying billions of dollars in cash. They hauled their cargo of riches past Newark, where nearly one third of the people live below the poverty level.
The trucks stopped at Andrews Air Force Base outside Washington, D.C., where the palletized cash was transferred to the cargo holds of air force C-17 transport planes. The aircraft taxied down the runway and took off for Iraq, making intermediate stops in Germany and Kuwait. Finally, the planes landed at Baghdad International Airport, where the cash was unloaded and counted in the presence of both American and Iraqi personnel.
What happened next is still one of the great unsolved mysteries of the Iraq war.
Between $12 and $14 billion, mostly in $100 bills, was taken from East Rutherford and flown into the war zone of Iraq in 2003 and 2004, with virtually no supervision or safeguards. Another $5.8 billion was sent from the New York Federal Reserve to Baghdad by electronic funds transfers. All told, approximately $20 billion was sent to Iraq without any clear orders or direction on how the money was to be used. The controls on the money were so lax that few credible records exist of exactly how much cash there was or where the cash went once it arrived in Baghdad.
Almost certainly, a portion of it ended up in the hands of some of the most powerful Iraqi leaders of the post-Saddam era. Billions of dollars in cash were wasted. And billions more simply disappeared.
* * *
Now, there is explosive new evidence that for the first time may help to solve the mystery of the missing cash. Approximately $2 billion of the money that was flown from the United States to Baghdad was stolen and secretly transported out of Iraq in what may be one of the largest robberies in modern history.
American investigators have traced the missing cash to Lebanon. It is believed to have been stolen after it arrived in Baghdad, and then secretly transported to Lebanon, where it has been hidden away ever since. Between $1.2 and $1.6 billion is believed to be hidden in a bunker in a rural village in Lebanon, according to current and former U.S. officials. These officials have received reports that the cash was stolen and stored in the bunker with the knowledge of several of Iraq's most prominent leaders.
At least several hundred million dollars in additional cash is also being hidden in several other locations in Lebanon, according to former U.S. officials, bringing the total amount stolen from Iraq and moved to Lebanon to approximately $2 billion. The figures of how much money was stolen and transported out of Iraq are inexact, but the reality is indisputable. One former American official even reported seeing the cash for himself, stored in the bunker in Lebanon.
In addition to cash, hundreds of millions of dollars' worth of gold was stolen from the Iraqi government and is also being hidden in Lebanon, current and former U.S. officials have said.
The CIA and FBI, along with the Pentagon and State Department, have all been told about the theft of the cash, and have received evidence about the bunker in Lebanon and other locations where the cash is believed to be hidden. But the agencies have not tried to retrieve the money. Nobody went after it during the Bush administration, nor has the Obama administration tried. Instead, the U.S. government has kept the entire matter secret.
The Iraqi government of Prime Minister Nouri al-Maliki has also been given information about the money's whereabouts. But the Iraqi government has not taken any action to retrieve it either. Instead, the Iraqi government has kept the information about the Lebanese bunker secret. Officials in both Washington and the Middle East seem content to let the truth lie hidden.
* * *
Like so many things about the Iraq war, the cash flights from New York started with good intentions. But ideology, chaos, and finally greed all got in the way.
Ged Smith was a veteran of the Treasury Department's tiny band of international firemen who make their living rebuilding lost and broken economies. In the 1990s, he worked in the Balkans following the breakup of Yugoslavia and the ethnic cleansing of Bosnia. In the early weeks of 2003, as the Bush administration geared up for war with Iraq, Smith, the director of the Treasury's Office of Technical Assistance, was assigned to figure out how to get Iraq's financial system restarted after the toppling of Saddam Hussein.
He quickly realized that he was facing much different problems than he had ever seen in Sarajevo. He was going to have to deal with a government of true believers who did not want to hear bad news. And that was just in Washington.
Smith's team of Treasury officials was part of a larger postwar reconstruction organization led by retired army general Jay Garner, who had been appointed by President Bush to get Iraq up and running again after the invasion. Garner had been named because he had been in charge of providing food and shelter to the Kurds following the first Gulf War, and the Bush administration believed that it would only face short-term problems, like feeding refugees, before Iraq was back on its feet. The White House and Pentagon thought that Garner's group, the Office of Reconstruction and Humanitarian Assistance (ORHA), would only be needed in Iraq for a few weeks — a few months at most. Bush and Defense Secretary Donald Rumsfeld were convinced that, after a short time, U.S. troops could come home. They neither wanted nor expected an extended occupation; as a result, any plans that assumed a long-term commitment from the United States were dismissed or ignored.
During one of the few interagency meetings on postwar planning held before the March 2003 invasion, Smith briefed a crowd of senior officials in an auditorium at Fort McNair in Washington on Treasury's plans for Baghdad. He warned that because the Iraqi economy was so centralized under Saddam Hussein, taking down the Iraqi government would likely mean the forced closure of hundreds of Iraqi companies and state-owned enterprises. Factory managers would not know what to do without orders from the regime. That meant that tens of thousands of Iraqis would almost certainly be thrown out of work immediately after Saddam lost power.
Smith looked up after he issued this dire prediction. No one in the crowd said a word. No one asked a single question.
At a follow-up meeting at Fort McNair, Smith mentioned that one of the lessons he had learned in the Balkans was the importance of maintaining a government's ability to collect tariffs and customs duties, so it could meet its payroll. This time, someone did challenge Smith. A Republican political appointee stood up in the audience and forcefully argued that the Bush administration was for free trade and that the United States was going to sweep away the remnants of protectionism along with Saddam's regime. "We are free traders in America, and we will be free traders in Iraq." Treasury's actions in the Balkans, the Republican operative said, were not going to be repeated in Iraq. "That's when you started to hear these ideological things coming out, how they were going to remake Iraq," recalls Smith.
His team waited in Kuwait during the initial stages of the invasion, and then raced for Baghdad, becoming one of the first civilian missions to make it into the capital after Saddam's regime fell. While Smith ran things from Washington, his team made its way through a broken Baghdad to the Iraqi Central Bank.
Smith had asked the U.S. military to protect the bank's compound. But when his people arrived, there were no U.S. troops in sight, and looters had already stripped the bank's buildings bare — except in the vault room. Looters and criminals had tried to get into the main vaults, which held both U.S. dollars and Iraqi dinars, but they were unable to break through. The looters stole some bags of cash held in less secure cage areas outside the main vaults but were never able to get to the bank's main deposits.
Still, the looters did set fires in the building. Pipes burst, water cascaded down into the vaults belowground, and before long the vaults were under 5 feet of water. It took weeks of digging out before the central bank could resume normal operations in its own facilities. Planning went out the window.
The Treasury team had to improvise. They had assumed that once Saddam Hussein was ousted, the Iraqi currency used by his toppled regime would be considered worthless. But to Smith's surprise, Iraqis continued to use the so-called Saddam dinar. Treasury officials couldn't find the printing plates used by Saddam's regime to print the currency, however, and didn't even know where the printing presses for the currency had been hidden.
Eventually, Iraq was going to need new currency. But it would take months to develop, print, and distribute billions of new dinars in a newly designed, post-Saddam currency. In the meantime, Iraq had to have an immediate infusion of cash to get the economy back up and running.
The Treasury officials knew where they could get cash fast: the Federal Reserve Bank of New York.
* * *
About $1.7 billion in Iraqi government funds that had been frozen since the first Gulf War were held in the United States. John Taylor, the undersecretary of the Treasury for international affairs, arranged for President Bush to sign an executive order authorizing American banks to release those Iraqi government funds to the Treasury Department. The money would be sent to an account set up by Treasury at the Federal Reserve Bank of New York, and then cash from that account would be taken from the East Rutherford Operations Center and trucked to Andrews Air Force Base outside Washington. It would then be flown to Iraq. The cash was to be "used to assist the Iraqi people, and to assist in the reconstruction of Iraq," Bush's March 20, 2003, executive order stated.
The Treasury team decided to start with an initial shipment of $250 million. Smith wanted the currency sent in small denominations, to help get the cash moving quickly through the paralyzed Iraqi economy. But when his team called the Federal Reserve in New York and asked about the logistics of sending $250 million in ones and fives, they were told that it would require six air force transport planes. So they decided to ship most of it in $100 bills, which required just one flight. (Some currency in small denominations was sent on the first flight, but the Iraqi Central Bank refused to accept it, and the Americans had nowhere to put it. Pallets filled with several million dollars in $1 and $5 bills are believed to have sat, untouched, in a U.S.-occupied building in the Green Zone, for months, perhaps years, afterward.)
After that first flight, it took eight more planeloads for the Treasury team to transport the entire $1.7 billion in cash during the first months after the invasion. Once the Treasury team had turned that cash over to the Iraqi Central Bank, Ged Smith believed they had given Iraq all of the dollars it would need to jump-start the country's moribund monetary system.
But that was just the beginning of the cash flights, much to Ged Smith's dismay. What Smith did not realize was that the post-Saddam order being established in Iraq was already becoming deeply corrupt. Worse, the United States was willing and able to keep feeding into that corruption.
* * *
Within weeks of the invasion, American troops scouring one of Saddam's palaces discovered aluminum boxes filled with cash. Each box was stuffed with about $4 million in $100 bills. There were many, many boxes.
The cashboxes were collected and secretly flown to a U.S. base in Kuwait, where the bills were counted by military personnel. In order to prevent them from skimming some of the money for themselves, the soldiers were not allowed to wear anything more than gym shorts and T-shirts while in the counting room.
Not long after that, the Treasury team learned from senior officials of the Iraqi Central Bank that just before the fall of Baghdad, Saddam Hussein had issued orders to withdraw $1 billion in cash from the central bank, and that the money had been handed over to Qusay Hussein, one of Saddam's sons, who had arranged to have the cash trucked away. The Treasury officials soon realized that the cash discovered by American troops and flown to Kuwait was the same money Qusay Hussein had taken from the central bank.
Undersecretary John Taylor and his aides at Treasury said that the money belonged to the Central Bank of Iraq. He argued that the U.S. military should send it back to allow the central bank to maintain steady foreign currency reserves to help stabilize Iraq's shaky economy. Taylor even went to the Situation Room in the White House to argue with top administration officials that the money legally belonged to the central bank and that it should be shipped back immediately. But the White House, the Pentagon, and the newly created Coalition Provisional Authority (CPA), the U.S.-led organization that had just taken over the occupation of Iraq from Jay Garner's ORHA team, did not agree. The U.S. officials decided that they were simply going to keep the money.
"We made the case that the money should go back to the Iraqi Central Bank," said Taylor. "That recommendation was rejected."
The Coalition Provisional Authority decided to dole it out to American military commanders as cash that they could use as they saw fit. The money became the original basis for what was known in the U.S. military as the Commander's Emergency Response Program, or CERP funds, used by American officers to pay for local reconstruction projects — or to pay off local officials to keep them from siding with the insurgency.
The Bush administration never publicly admitted that they simply had taken money that some top U.S. officials argued belonged to the Iraqi Central Bank, nor did the administration reveal that there was an internal high-level argument about whether to give the money back to the central bank. Instead, American officials came up with alternative explanations for the money's origins in order to justify taking it. A lengthy article in the U.S. military's Joint Forces Quarterly by Lt. Col. Mark Martins, a senior military lawyer, described the funds as "ill-gotten Baathist Party cash discovered by U.S. forces." In the article, he said that the American seizure of the cash complied with international law because it could be defined as "safeguarding movable Iraqi government property." Somehow, that movable property became the coalition's, to be used as military commanders saw fit.(Continues…)
Excerpted from "Pay Any Price"
Copyright © 2014 James Risen.
Excerpted by permission of Houghton Mifflin Harcourt Publishing Company.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
A Note on Sources ix
Part I Greed
1 Pallets of Cash 3
2 The Emperor of the War on Terror 31
3 The New Oligarchs 54
Part II Power
4 Rosetta 71
5 Alarbus 123
6 Too Big to Fail 142
Part III Endless War
7 The War on Decency 163
8 The War on Normalcy 202
9 The War on Truth 230