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Economy - In Iraq, a rapidly shrinking outlook for American companies
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13-Nov-09 [14:42] |
PNA -When Iraq held its first new Baghdad Trade Fair last week, six years and a trillion dollars after the U.S. invasion, one country in particular was conspicuous for its absence.
That would be the country that spent that trillion dollars, not only on its military invasion and occupation, but on training and equipping the Iraqi security forces and on ambitious reconstruction projects in every province aimed at rebuilding the country and restarting the Iraqi economy.
Yet when the Iraqi government swept out its old commercial fair grounds near ZawraPark and invited companies from around the world, the United States was not among the 32 countries represented.
And of the 396 companies exhibiting their wares, ‘‘there are two or three American participants, but I can’t remember their names,’’ said HashimMohammed Hatten, director general of the Iraq state fair company.
The trade fair is a telling indication of an uncomfortable truth: the war in Iraq has been good for business in Iraq—but not necessarily for American business.
When U.S. forces complete their pullout in two years,many of the big military contractors will go with them.KBR, with $33 billion in contracts to support American military bases, for instance, has no major new contracts with the Iraqi government to support facilities when they are handed over or to build anything else in the country. It has already seen its military support business decline sharply as troops have prepared to pull out.
A few big American multinationals, like Bechtel, will still be in the midst of long-term megaprojects like power plants and waterworks, but those were 5- and 10-year undertakings started with U.S. reconstruction aid.
Iraq is doling out its own money for capital projects now, and U.S. companies have so far gotten surprisingly little of it.
Sports City, a billion-dollar complex of stadiums and housing in Basra planned for the Gulf Games in 2013, was awarded to an Iraqi general contractor, Al Jiburi Construction, over 60 other bidders, many of them American.
‘‘We have a couple American companies as our subcontractors,’’ said Adai al Sitainei, an assistant to the company’s owner, with evident pride. When the Transportation Ministry put up more than $30 billion in railroad expansion contracts recently, they went to Czech, British and Italian companies.
The biggest beneficiary of Iraqi contract money is Turkey, which would not even allow U.S. warplanes to use its air bases during the invasion of Iraq, followed closely by Iran, which has financed militias aimed at undermining the American military in Iraq.
Turkey has gone from almost no legal trade with Iraq before the war to becoming its second-biggest trading partner, after Syria.
Turkey and Iran had huge pavilions at the trade fair, crowded with businessmen discussing deals. So did France and Brazil, also noncoalition countries.
An executive of Iraqiya, a leading Iraqi construction company that often forms partnerships with Turkish companies, said: ‘‘Turkish companies are acceptable to all different Iraqi ethnic groups, because they are not an occupier and they can implement big reconstruction projects at a lower cost.’’ He did not wish to be identified for fear of offending American clients.
‘‘Turkish companies are not afraid to do business in Iraq,’’ said Eren Balamir, who was in charge of Turkey’s pavilion at the fair.
U.S. officials, who spoke on condition of anonymity because they were not authorized to speak on the record, disputed that U.S. companies were having difficulty making it in the Iraqi market.
‘‘I wouldn’t read too much into American presence or lack of it at the trade fair as a bellwether,’’ one U.S. official said. ‘‘I would say the future is very positive.’’ Another official said that a recent Iraqi-American investment conference in Washington had stirred up enormous interestamongU.S. companies. ‘‘Wehad to turnaway several hundred companies that wanted to come,’’ he said.
The interest at the investment conference was indeed high, but most of the companies there were not yet doing business in Iraq.
‘‘After the conference in Washington,’’ said Mike Pullen, a lawyer for the international legal firm DLA Piper, who works in Iraq now, ‘‘I’m surprised you can get on a flight here considering all the opportunities.’’ ‘‘It’s a pity we can’t get more people to come,’’ Mr. Pullen added. ‘‘They’re losing out to Turkish companies, Russian companies.’’ It is almost an article of faith among many Iraqis, judging from opinion polls, that the United States invaded Iraq not to topple Saddam Hussein, but to get their country’s oil.
If so, the war was an even bigger mistake than some people already think.
It was not until last week that the first major oil field contract was signed with a foreign company—BP, the British oil company, in a joint deal with China’s national oil company. The next deal likely to be signed is between Iraq and Eni, the Italian oil giant, which has the U.S. company Occidental Petroleum as a junior partner. These, however, are service contracts, so the foreign oil companies do not actually own rights to any new oil they may find.
As for trade and business, U.S. exports have stayed at about the same level the past two years — a couple billion dollars a year, far less than the $10 billion to $20 billion worth of oil the United States has imported from Iraq since the war began.
There is not even an Iraqi-American Chamber of Commerce in Baghdad, though there was until Interior Ministry commandos raided it in 2008 and its head, Raad Omar, allegedly fled to the United States. Calls to his home in California were not returned. It is unclear what, if any, the charges were.
The big U.S. companies responsible for reconstruction programs, especially in the early years, were criticized in Congress for price gouging and poor performance, a reputation that Iraqis often cite. Also, Americans became such a target of insurgents that, by 2004, hardly any businesses remained except on American bases and in the Green Zone.
On top of all that, being seen as an occupier is just not good for business. Even the Iraqi prime minister, Nuri Kamal al- Maliki, has described Americans as occupiers to win electoral support.
One European ambassador, who spoke on condition of anonymity because of government policy, said his own country’s trade opportunities greatly increased in Iraq after it withdrew the last of its troops more than a year ago.
‘‘Being considered an occupier handicapped us extremely,’’ he said. ‘‘The farther we are away from that, the more our companies can be accepted on their own merits.’’
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