US: State Department Appointment on Iraq Has Ties to Halliburton Contract Probe

WASHINGTON -- Just three weeks after becoming secretary of state, Condoleezza Rice is moving quickly to put her stamp on US foreign policy for Iraq and the Middle East, establishing a new coterie of senior advisers who report directly to her.

The move signals Rice's desire to personally shepherd US policy in the Arab world during President Bush's second term and to swiftly assert control over a far-flung department bureaucracy that has often been at odds with the White House, State Department officials and specialists say.

At least one of her expected appointments is controversial. She has chosen Richard Jones, a former ambassador to Kuwait and deputy of the Coalition Provisional Authority who has been linked to the Halliburton inquiries, as her new coordinator for Iraq.

According to documents released by the State Department to a member of Congress, Jones intervened in December 2003 to pressure a Halliburton subsidiary to purchase gasoline from a Kuwaiti subcontractor favored by the government of Kuwait, despite mounting evidence that the subcontractor, Altanmia Commercial Marketing Co., was charging more than twice as much as other companies for the fuel.

"Please, tell [Halliburton subsidiary Kellogg Brown and Root] to get off their butts and conclude deals with Kuwait NOW!" Jones wrote to a colleague at that time, according to the documents. "Tell them we want a deal done with Altanmia within 24 hours and don't take any excuses."

A Pentagon audit released early that month determined that the company may have overcharged the US government by at least $61 million.

US Representative Henry A. Waxman, a California Democrat who has called for an inquiry into Halliburton and who secured the Jones memo from the State Department, expressed dismay about Jones's impending appointment, which does not require congressional approval.

"There are a lot of unanswered questions about why Ambassador Jones intervened on behalf of an obscure Kuwaiti company that was overcharging the US taxpayer," Waxman said. "His actions appear to have prevented the Corps of Engineers from negotiating a lower fuel price and saving millions of dollars."

Halliburton, a Texas-based company once headed by Vice President Dick Cheney, is still the subject of various inquiries, including possible criminal investigations, involving work done under no-bid multibillion-dollar contracts in Iraq. But State Department officials say that Jones did nothing wrong and that his memo was only pressing for Halliburton to speed up its delivery of much-needed fuel to Iraq.

Jones, who left the foreign service briefly during the summer of 2004 for Harvard University's John F. Kennedy School of Government, was tapped by Rice soon after her confirmation to be her point man on Iraq.

Jones will have far more power than the current Iraq coordinator, Ronald L. Schlicher.

Unlike Schlicher, who reports to several bosses before reaching Rice, Jones is envisioned as a senior adviser with his own small staff who will report directly to Rice and occupy an office near hers.

As one of the State Department's veteran Arabists, Jones recently traveled to Iraq on an unpublicized mission to evaluate the political transition there. He has not yet been officially named to the new post, but State Department spokesman Richard Boucher confirmed that an official announcement was expected soon.

Senior State Department officials downplayed the appointment, saying that Jones will not replace the Iraq desk that exists in the Near Eastern Affairs Bureau and that Rice has assured longtime officials that she is not trying to circumvent them by bringing her own powerful player on Iraq to her side.

"It's a question of [Rice's] style," said one career State Department official who works closely with her.

He said that while Rice will make more changes, he did not expect them to be sweeping.

"It's a big bureaucracy," the official said on condition of anonymity. "You can't do a lot of reshuffling. You can do some strategic tinkering."

In a rare move, Rice has ensured that she will include the administration's key player on the Middle East, Elliott Abrams, partially under her chain of command even though he will remain at the National Security Council, according to a White House official.

She has appointed Lieutenant General William Ward as a special coordinator to help Palestinians build their security forces, and is considering appointing another adviser who will deal with Palestinian economic and political affairs, according to diplomats and US officials. Ward reports directly to Rice, as would the holder of the other position, they said.

Rice has also named Elizabeth Cheney, the vice president's daughter, as deputy assistant secretary of state for the Near East -- the second-ranking US diplomat for the Middle East.

Following a pattern of assembling an inner circle of powerful advisers, Rice has appointed Stephen Krasner, a close friend and professor of international relations at Stanford University, to head the department's Policy Planning Office, and Philip Zelikow, who co-authored a book with her, to the position of counselor. Her predecessor, Colin L. Powell, had left that post vacant for years.

"Dr. Rice's style is sort of like the president's," said Patrick Cronin, a former assistant administrator for the US Agency for International Development who is at the Center for Strategic and International Studies. "She's surrounded herself with bright people, and she expects them all to be loyal and to report to her."

• 174 War & Disaster Profiteers Campaign