Feb 17, 2003

NYT: Are U.S. contractors skirting foreign no-bribe rules by buying schools for foreign despots?
{Excerpt} "A DECADE ago, when the ruling sheiks in the United Arab Emirates decided to expand the local economy after the gulf war, they turned to American military contractors like Boeing, Northrop Grumman and Lockheed Martin for a helping hand.

In return for buying military gear, the emirates pressed the contractors to spend millions of dollars to create jobs and to improve the lives of citizens in their desert outposts: financing a medical diagnostic center linked by satellite to the Mayo Clinic, building a shipyard that has created thousands of jobs, helping with oil-spill cleanups, starting a laser-printer recycling business and even bringing Berlitz schools to Abu Dhabi and Dubai.

In another era, these gifts might be considered bribes. Now they are called offsets. Bribes were outlawed under the Foreign Corrupt Practices Act of 1977, which barred payments to foreign officials in exchange for business. But offsets, while little known, are a legal and, companies say, necessary part of the international arms trade not only in the emirates but around the globe.

"Offsets are the equivalent of what we used to do when we bribed foreign officials," said Robert E. Scott, an economist at the Economic Policy Institute, a liberal research group in Washington. "It's a tragedy, and it's a race to the bottom. The best way to avoid these kinds of competitive and disruptive games is to outlaw the practice."...

FM -- Normal bribes lead to bigger houses for ministers and swiss bank accounts. Here we're talking about gun-makers building hospitals for citizens of despotic countries. It certainly makes capitalism an easier sell, and isn't that the point


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