Kathleen Ridolfo
Radio Free Europe/Radio Liberty, Czech Republic
May 27, 2003

Efforts appear well under way to jump-start the Iraqi economy in the post-Saddam Hussein era. Iraq’s debt is estimated at $200 billion-$300 billion and upward, including foreign debt, compensation claims, and pending contracts. While some members of the Iraqi opposition have expressed the hope that at least some debt will be forgiven, it appears unlikely that all debt will be erased.

At the same time, world leaders seem to realize that some compromise is in order. Group of Eight (G-8) member states reportedly reached preliminary agreement on establishing a moratorium on Iraqi foreign-debt payments through 2004 during a meeting of G-8 finance ministers on 16-17 May in Deauville, France, ITAR-TASS reported on 19 May. That agreement is expected to be ratified when the G-8 meet in Evian, France, on 1-3 June.

The Paris Club and the International Monetary Fund (IMF) are expected to determine the amount of Iraq’s foreign debt by the end of 2003. IMF External Relations Director Thomas Dawson said on 8 May that his organization has a task force working full time in conjunction with various governments and institutions to collect and analyze data on Iraq. However, Iraq cannot rely solely upon its most valuable asset — oil — to pull its economy out from under the rubble of neglect and 13 years of UN sanctions. The U.S. plan to revitalize Iraq’s economy to enable it to sustain the country’s 27 million-strong population and repay the debts of the Hussein regime requires investment — beginning with substantial reconstruction contracts — and the promotion of private enterprise.

As the saying goes, to the victor go the spoils. In a fait accompli, the U.S.-led coalition has assumed its responsibility as an “occupying force” in Iraq and heretofore undertaken the responsibility of rebuilding the Iraqi economy and infrastructure. The Office of Reconstruction and Humanitarian Assistance (ORHA) and the U.S. Agency for International Development (USAID) have been assigned the keys to the reconstruction coffers.

USAID has already doled out one of its first and biggest contracts to the U.S. firm Bechtel, which received an 18-month contract worth up to $680 million to rebuild Iraqi infrastructure, including “one seaport, five airports, miscellaneous electric-power systems, road networks, rail systems, municipal water and sanitation services, school and health facilities, select government buildings, and irrigation systems,” according to Bechtel’s website.

Bechtel, which is in the midst of holding three “contractor-supplier conferences” in Washington, London, and Kuwait City on 21, 23, and 28 May, respectively, will solicit firms wishing to subcontract with it on Iraqi reconstruction projects. Meanwhile, the U.S. Commerce Department has also announced the launch of the Iraqi Reconstruction Task Force on 16 May and an accompanying website at http://www.export.gov/iraq. However, the commerce site focuses on helping U.S. companies invest in Iraq, with U.S. Commerce Secretary Don Evans stating in an announcement, “The resources of the Iraq Reconstruction Task Force will provide a one-stop shop for U.S. companies looking for information and counseling on Iraq reconstruction efforts.”

Nevertheless, reconstruction contracts are expected to be spread far and wide, with every country in the coalition vying for a piece of the reconstruction pie, as well as giants like Russia, to which Iraq is heavily indebted. Firms in China, Japan, and India are also eager to get aboard the reconstruction gravy train.

But what about Iraq’s neighbors? Some have already begun taking the initiative to foster cross-border trade and business developments. A conference on doing business in Iraq will be held in Amman on 2 June, “The Jordan Times” reported on its website on 19 May.

The one-day conference will be sponsored by the Amman Chamber of Industry (ACI), the Information Technology Association (int@j), and the American Chamber of Commerce in Jordan (JABA). Citing an ACI press release, “The Jordan Times” reported that representatives from U.S. firms holding contracts in Iraq, UN officials, and U.S. and Jordanian officials involved in the reconstruction process will participate in the conference. USAID and ORHA representatives are expected to attend.

The decision to hold such a conference is likely related to issues addressed during a 9 May meeting between Jordanian Prime Minister Ali Abu al-Raghib and Abbud al-Tufayli, the president of the Federation of Iraqi Chambers of Commerce. That meeting focused on ways to renew cooperation and trade between the two neighbors. In addition, the U.S. Embassy in Amman launched a new resource page called “Iraq Reconstruction,” the embassy’s website announced on 6 May. See: The American Chamber of Commerce in Jordan. The page provides links to USAID, which lists available contracts in Iraq.

Likewise, Turkish businesspeople are making use of the reopened Turkish Trade Consulate in Baghdad, Anatolia reported on 15 May. Trade Counselor Metin Deger told the news agency that the trade consulate is working to assist Turkish businesses to find opportunities in Iraq. Turkish Ambassador to Iraq Osman Paksut eagerly predicted that Turkish businesses will dominate investment in Iraq. “It will be seen soon that the speculations saying that Turkey has lost its commercial power here after the war are not true,” Paskut said. “Iraq is a rich country. Turkey will help in all issues to make Iraq reach [a] level of prosperity again.” Firms from Kuwait and the Gulf States are also expected to benefit from reconstruction contracts.

Contracts to Arab firms would surely contribute to the overall regional economy and foster stronger ties within the region. It would also serve the United States’ stated goal, as announced by U.S. Secretary of State Colin Powell in November, of revitalizing the region economically and politically through the Middle East Partnership Initiative and U.S. President George W. Bush’s more recently announced goal of establishing a U.S.-Middle East Free-Trade Area within 10 years.