Rebuilding Iraq: What Role Will Arabs Play? US Firms May Have One Major Iraq Reconstruction Contracts, but Economic and Political Realities Are Compelling Them to Turn to Arab Banks Shippers and Other Sub-Contractors to Get the Job Done. (Current Affairs)

By Martin, Josh | The Middle East, June 2003 | Go to article overview

Rebuilding Iraq: What Role Will Arabs Play? US Firms May Have One Major Iraq Reconstruction Contracts, but Economic and Political Realities Are Compelling Them to Turn to Arab Banks Shippers and Other Sub-Contractors to Get the Job Done. (Current Affairs)


Martin, Josh, The Middle East


Iraqi tanks were still burning on Route 8, the main highway leading into Baghdad from the south, when the Bush Administration awarded its first reconstruction contracts. Not surprisingly, the big winners so far have been American firms: Bechtel won a contract worth up to $680m, to rebuild the country's electrical, water and sewage systems. A second contract went to Halliburton (headed by US Vice President Dick Cheney before he took office), to repair damage to Iraq's oil infrastructure.

Although these companies won the primary contracts, a significant portion of the actual work will be subcontracted to others. It is creating a new opportunity for Arab companies, who are either already in Iraq, or have full awareness of local conditions.

These are only the first stages of a massive effort to get the Iraqi economy up and running again. Experts now estimate the process will take five years and cost over $100bn. It will involve rebuilding and expanding the oil industry; repairing and constructing highways, airports and shipping facilities; and investing in construction of housing, industrial plant and offices.

So far, the prime contracts to get this work done are being awarded by US government agencies, including the Department of Defence (primarily the Army Corps of Engineers), and the US Agency for International Development (USAID).

But the original American scenario is being modified, facing challenges both on the ground and in international law.

ENLISTING ARAB EXPERTISE

Within Iraq, the absence of a local legal system, and a system of government to validate contracts, is already calling many of the US contracts into question. Not surprisingly, the Bush Administration has responded, letting USAID award contracts to set up rules of local and economic governance.

Legal codes will be necessary, no matter how the economic resurrection of Iraq is structured. But European pressure, and realities on the ground in Iraq (especially the resurgence of Shi'ite political power), are forcing the US to abandon its "unilateralist" approach.

"Americans tend to think Iraq is a vacuum where nothing existed but Saddam Hussein and his army," observed one well-connected lawyer. "But it was a functioning country with laws and contracts and banks and businesses."

American multinational corporations, known for their engineering, energy and technological prowess, are certain to subcontract significant portions of their work to Arab firms, which have expertise in unique local market conditions. Arab companies most likely to be tapped include those active ill construction, land and sea transport, banking, and legal services.

A CRUCIAL ROLE

"It is in everyone's interest that Arab firms play a crucial role," says Nofal Barbar, regional manager of The Arab Bank, a Jordanian-based institution with long historic ties to Iraq. "These companies are familiar with the people, the politics and the culture. They can help any newcomer avoid pitfalls."

Such deals will also have the effect of deflecting a firestorm of criticism over the way the US government has so far awarded the prime contracts--a process often excluding foreign companies and without competitive bidding procedures mandated by law.

Even close allies, like British Prime Minister Tony Blair and Canada's Deputy Prime Minister John Manley, believe the reconstruction contracting will have to be opened up, to conform to international law. In a recent interview, Manley pointed out that while the US may be the world's sole superpower, it might not best suited to the lead the reconstruction effort, because of its vested interests in the region, and in Iraq's energy reserves in particular.

Any reconstruction effort, Manley said, must be broadly based in order to get UN support. That support is needed because the legal standing of earlier UN sanctions and oil-for-food programmes remain in place. …

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Rebuilding Iraq: What Role Will Arabs Play? US Firms May Have One Major Iraq Reconstruction Contracts, but Economic and Political Realities Are Compelling Them to Turn to Arab Banks Shippers and Other Sub-Contractors to Get the Job Done. (Current Affairs)
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