October 24, 2003	Friday	Sha’aban 27, 1424

WASHINGTON/BAGHDAD: Rebuilding Iraq promises to be a business opportunity worth billions of dollars, and US firms are leading the pack.

Companies from countries that opposed the US-led war — especially Germany and France — have few short and medium-term prospects to capture contracts in Iraq, according to diplomats in Baghdad.

Iraq’s energy infrastructure was already dilapidated as a result of neglect during Saddam Hussein’s rule, and supporters of the old regime have frequently targeted the vital petroleum sector for sabotage during the six-month-old occupation. Restoring the oil industry to full capacity and reliability will take several years and investments of billions of dollars.

According to US government data, Iraq sits atop more than 11 per cent of the world’s proven oil reserves, second only to neighbouring Saudi Arabia.

Yet, Iraq currently relies on petrol imports from Turkey because domestic refineries are in such disrepair, which ordinary Iraqis find humiliating. In Iraq, many people suspect that their most important industry will be restored to suit US interests.

In Fallujah and other hotbeds of armed resistance to the occupation, Iraqis say over and over: We are a wealthy country, and the Americans are only here to steal our riches.

US troops and jubilant Iraqis toppled statues of Saddam on April 9 in Baghdad, just as the regime was evaporating. Days earlier, Washington began arranging for urgent work inside Iraq — and issued the early contracts exclusively to US firms with security clearances.

With a foot in the door already, US businesses are likely to continue to dominate projects inside Iraq for the foreseeable future. Trade experts have observed that many major contracts appear to have been tailor-made for specific US bidders.

A link for “commercial interests” on the Internet site of the Coalition Provisional Authority, led by US Administrator Jerry Bremer, goes directly to a US Commerce Department website, offering a downloadable “Business Guide” to give “US companies the most up-to-date information on doing business in Iraq”.

Nearly all the reconstruction money spent by the Coalition Provisional Authority in Iraq has come from US taxpayers, and legislation to provide another $20 billion for the next 12 months moving through the US Congress.

Halliburton Co., the construction and oilfield services firm that Vice President Dick Cheney headed until he joined the campaign of George W. Bush in 2000, was one of the first firms to enter Iraq even before the fighting was over, with an assignment to extinguish and cap burning wells.

The Texas-based firm has since secured several contracts totalling more than $1.7 billion for petroleum industry work, construction projects and logistics services to occupation troops.

In Baghdad, Iraqi business people and European diplomats have expressed fears that newly established regulations to govern key economic and financial fields such as investment, imports, banking and taxation could turn the country into a “self-service store” for the occupying powers and their partners and allies, especially Turkey and Kuwait.

The US companies with major contracts have organized much of the on-the-ground work through subcontractors in the region, including Kuwait, Saudi Arabia and even Iraqi firms. Companies from other countries have also snapped up assignments, such as the Czech Republic and Poland — both supported the war, and Polish troops took over an occupation zone in September in south-central Iraq.

Joe Allbaugh, who was Bush’s 2000 campaign manager and headed the Federal Emergency Management Agency until March 2003, is now chairman of New Bridge Strategies, a newly formed consulting firm headquartered four blocks from the White House. According to its website, the firm was created “specifically with the aim of assisting clients to evaluate and take advantage of business opportunities in the Middle East following the conclusion of the US-led war in Iraq”.

“The stories I’ve seen have been couched as if people are trying to game the system, and that’s not what we’re about,” Allbaugh told The New York Times. “We are trying to help Iraq become a capitalist country and a leader throughout the Middle East. Iraqis themselves are asking for help.”

Similarly, a newly founded law firm, the Iraqi International Law Group, has set up shop in a room in Baghdad’s Hotel Palestine. The outfit’s website names as its main contacts Salem Chalabi, nephew of Iraqi Governing Council member Ahmed Chalabi, who long headed an Iraqi exile group favoured by the Pentagon, and Marc Zell, a former law partner of US undersecretary of defence Douglas Feith.

“Contributing to the growing sense of unease in some quarters and outrage in others,” New York Times columnist Bob Herbert wrote, “is the blatant war profiteering in Iraq by politically connected firms.”

The refusal by many potential donor nations to contribute in the current environment led the Bush administration to agree — ahead of a donors conference beginning Thursday in Madrid — that money collected internationally would be handled by the United Nations and the World Bank, rather than the Coalition Provisional Authority in Baghdad.

That arrangement is meant to give firms from around the world equal opportunities to compete for work in Iraq, where 10-year reconstruction cost estimates range as high as $150 billion.

Further, the international institutions will focus on aspects of Iraq’s social infrastructure such as health and education, while the US administration retains major responsibility for revitalizing the Iraqi economy.—dpa