U.S. Tries To Convince Worldwide Firms That Iraq Is Open For Business

by Sandip Roy

(PNS) -- As U.S. troops engage in daily clashes with Iraqi insurgents, the Coalition Provisional Authority has embarked on a major charm offensive around the world -- complete with PowerPoint presentations -- in an attempt to woo business to Iraq.

Initially, the Bush administration awarded the prime contracts for reconstruction in Iraq mainly to American and British firms. In April, a new phase of subcontracting was opened to companies from all countries. A task force set up by Congress, operating under the Commerce Department, now plugs business opportunities in Iraq -- with gratifying success, officials say.

"In Rome there were over 300 companies and there was so much interest we had to use a spillover room," says Joseph Vincent Schwan, vice chair of the Iraq and Afghanistan Investment and Reconstruction Task Force. Schwan says 550 businesses showed up at a similar conference in Dubai, and another 250 in Philadelphia. The "Doing Business in Iraq" PowerPoint presentation has gone all over the world, from Sydney to Seoul to Amman and London.

In all, Congress has appropriated $18.4 billion for Iraqi reconstruction, to be spread over an estimated 2,300 projects spanning six major sectors: electricity, security, oil, water, transportation and health facilities. But Schwan says interest is broader. "There are people looking to sell beauty supplies, plumbing supplies. A lot of companies are realizing there is golden opportunity to partner with Iraqis to provide the Iraqi people with the goods they want and need."

An obvious Catch-22 lurks. Security is hoped to emerge from reconstruction, but successful reconstruction itself depends on security. But the government's "Doing Business in Iraq" presentation claims the scope of violent conflict in Iraq has been overstated. "Watching BBC or CNN would make you believe that Iraq is a no-man's land," one of the first slides in the presentation states. "The situation in Baghdad is not what it appears in the news media."

"You are just getting a distorted snapshot of some areas," says John Procter, Press Officer for the Project Management Office (PMO) in Baghdad, which oversees all the planning and reconstruction associated with the 18.4 billion dollar appropriation. "Many parts of the country are operating 'business as usual.'"

Still, the State Department's own Web site warns, "The risk of terrorism directed against U.S. citizens and interests in Iraq remains extremely high." News reports at the end of April estimated 25 percent of contractors had pulled out or curtailed operations in the country. General Electric is pulling back, the German engineering giant Siemens is leaving and British Oil has expressed concern. A recent article in the Guardian quoted an unnamed PMO official who said that if the security situation did not improve dramatically in the next few weeks, essential work on the electrical sector would not be completed before the grueling-hot summer. Siemens, in fact, was restoring the Daura power plant in Baghdad, which USAID had deemed a critical electrical project.

"The keywords here are 'if the situation doesn't improve,'" Procter says. "We are confident that PMO's reconstruction efforts will actually benefit the security situation by providing jobs to thousands of Iraqis." There is an award built into the contracts for companies that partner with Iraqi companies, though the PMO has no figures for how many takers there have been for this particular incentive.

Procter concedes that the law and order situation has led to recalibration of security needs for contracts. A month ago, about 10 percent of any particular contract went toward security costs. More recently, in some parts of Iraq, that allocation has climbed to 20 percent. Procter says the PMO is working hard to change that. Prime contractors have set up an informal network of all their security consultants to share information on potential dangers. The "Doing Business in Iraq" presentation helpfully includes a list of security companies.

"These (prime contractors) are companies that participate in countries throughout the world that have tense risk situations," Schwan says. "Obviously Iraq is not like doing business in Canada. It has emerging market risks and emerging market rewards."

Some of these rewards include income taxes and corporate taxes capped at 15 percent, tariff rates that cannot exceed 5 percent and the ability of foreign investors to own 100 percent of a local company in all sectors except energy extraction. Procter does not see that changing after any handover of power on June 30, even if the Iraqi governing council is scrapped.

"July 1 will be business as usual for the PMO. Except instead of reporting to Paul Bremer, our director Admiral Nash will report progress and receive his direction from the new U.S. ambassador to Iraq," says Procter, who expects the PMO to be in Iraq for three to five years.

"This reconstruction rivals the Marshall plan and the reconstruction of Japan after World War II," Procter says optimistically. "Of course there are dangers, but the payoff is great." The "Doing Business in Iraq" presentation states hopefully, "Theft and Violent Crimes are Declining." But the very next bullet point advises, "Be Mindful of Security. Plan Exit Strategy."