Iraqi Firms Get Reconstruction Fillip

Institute of War and Peace Reporting

By Daud Salman in Amman and Baghdad (ICR No. 121, 19-Apr-05)

Iraqis are to play a bigger role in the post-conflict development of their country following Washington’s recent decision to refocus its Iraqi reconstruction policy.

The change in US policy emerged last week when a State Department decision to place a greater emphasis on hiring Iraqi companies - which have not been as hard-hit by insurgents nor cost as much as their US rivals - was made public.

Iraqi businesses are keen to play a major role in reconstruction, as a recent trade fair in Amman devoted to the process testified. Nearly, nearly a thousand firms from Iraq and its neighbours attended the event.

The April 4-7 fair gave potential investors, company executives and government officials an opportunity to network and set up business deals focusing on the rebuilding of Iraq’s construction, security, health, electricity and agriculture sectors.

While the ongoing security problems in the war-torn country are still putting many businesses off, both US and Iraqi officials are confident that enough companies will be willing to contribute to the estimated 60 billion US dollars of work needed to rebuild Iraq and its economy.

Washington now looks prepared to give Iraqi companies a greater involvement in the process, as it appears increasingly frustrated with the work of their US counterparts.

In a recent report to Congress, the State Department blamed those American companies that initially benefited from the US-led invasion in 2003 for causing problems in the reconstruction sector by their “poor performance” and other inadequacies.

Around 832 million dollars has since been moved from cancelled water and electricity projects to fund the recruitment and training of Iraqi workers, and local firms will now be given priority for rebuilding projects.

Only a fifth of the 18.4 billion dollars earmarked by the US for Iraq’s reconstruction has been spent to date – and half of that amount has gone on security in the troubled country.

So far, the international community has pledged a total of 33 billion dollars toward the rebuilding process – but many analysts believe that around twice that amount will be needed for the task in the next few years.

The pace of reconstruction has remained slow. Iraq’s construction and housing minister Omar al-Damluji admitted, “The implemented projects haven’t reached the required level.”

The country’s development minister Mahdi al-Hafiz says there’s a need to concentrate on getting people back to work. “There should be an increase in the number of projects designed to decrease the volume of unemployment,” he said. It is estimated that Iraq’s unemployment rate stands at around 30 per cent.

Inadequate quality control and widespread corruption have hampered reconstruction, but the main problem is the continued insurgency. It is thought to have delayed the vast majority of a planned 2,500 reconstruction projects in the areas of electricity, water, oil, industry and agriculture.

In the meantime, officials and businessmen from the comparatively peaceful north of the country are hoping that Iraqi Kurdistan will attract much-needed foreign investment by virtue of its relative stability. Nozad Bejad, who runs a reconstruction contracting company in Kurdistan, told IWPR, “We are trying to invite international companies to do investment projects in the Kurdistan region. The stable security situation should encourage a lot of investors.”

Slash Norty, an official in the US Department of Commerce for Middle East Affairs, acknowledges that the poor security situation was continuing to cause problems for reconstruction efforts, but insisted progress had been made.

“A lot of changes have happened during these two years [especially in relation to] investment, taxes and the banking industry,” he said.

Daud Salman is an IWPR trainee in Baghdad