Winners and losers in Iraq’s reconstruction

The Sydney Opera House

Australia’s government has waded into the bidding war for contracts in postwar Iraq by sending a business delegation headed by Trade Minister Mark Vaile to the United States.

 

The aim of the dozen of the country’s top executives who are accompanying Vaile on the trip is to secure a role for Australian business in the multi-billion-dollar business of rebuilding Iraq.

 

Vaile said the six-day mission would focus on contacting US firms which have been awarded work in Iraq by the US government and securing lucrative sub-contracts from them.

 

“We’re talking about billions worth of dollars of US aid being injected into the rehabilitation of Iraq,” Vaile said. “Of course the majority of the prime contracts are going to go to American companies,” he admitted.

 

“Those American companies then have the ability to subcontract up to 50 percent of that work to non-US companies, and that is where the Australian companies want to compete.”

 

Australian Prime Minister John Howard is looking for payback for his country’s  small-scale military support in the Iraq war

Australia was the only other nation to contribute forces to the US-British invasion which toppled Iraqi leader Saddam Hussein and it is now keen to win some of the multi-million dollar contracts to rebuild the country.

 

Vaile is hoping to capitalize on Australia’s agricultural expertise by applying it to Iraq’s under-managed sector. He will meet with US Agriculture Secretary Ann Veneman and Commerce Secretary Don Evans to discuss Australia‘s interest on taking a key role in rebuilding Iraq‘s farm sector.

   

“I will stress to secretaries Veneman and Evans Australia’s commitment to playing a central role in helping Iraq rehabilitate its agricultural sector,” he said.

 

Asian dismay

 

With most contracts likely to be snapped up by American firms, Asian countries are seeing in the postwar phase more cause for worry than celebration. They are concerned that the opening of Iraq’s borders will produce an unending stream of highly-skilled, low-wage Iraqi workers to the Gulf who will displace many of the millions of Asian workers there and drive prices down.

 

The Gulf is a favourite destination for migrant Asian labour

“A lot of the functions that are now being carried out by Indians and Pakistanis in the Gulf region may well be taken over by the Iraqis,” Pronob Sen, a senior economic adviser to India’s Planning Commission, told Reuters.

 

“I suspect that what will happen is that there’s going to be a huge emigration of Iraqis to neighbouring countries,” Sen said.

 

The potential economic consequences of such an exodus would be significant for all of South Asia.

 

At least three million Indians work in the Middle East. The $5 billion they send home each year has helped buoy the rupee and propel India‘s currency reserves to record levels, which in turn has let the central bank ease foreign-exchange controls.

 

Some 1.8 million Bangladeshis work in the Middle East, remitting some $2.8 billion a year, alongside about one million Pakistanis. There are also about one million Sri Lankans in the region; the $1.2 billion a year they funnel home accounts for about one-quarter of the island’s foreign-exchange inflows.

 

Although U.S. firms are favoured to take the lead in rebuilding Iraq because Washington led the war to oust Iraqi President Saddam Hussein, other South Asian governments also scent opportunities — at least in subcontracting roles.

 

“We are trying to participate in Iraq‘s reconstruction as we have efficient workers and manpower,” Mohammad Quamrul Islam, Bangladeshi state minister for overseas employment, told Reuters.

 

“We are hopeful we will be able to send more labour to Iraq for reconstruction work,” added Leslie Marshall of Sri Lanka‘s state-sponsored Foreign Employment Agency.

 

Iraqi oil ministry

 

In Iraq, as business begins to return to normal, the oil ministry in Baghdad is still waiting for a new boss to take over.

 

Some 20 percent of the ministry’s staff in Baghdad have returned to work, as well as 75 percent of staff at the capital’s refinery.

 

 

Iraq’s oil infrastructure is being revived faster than expected

The former minister, general Amer Rasheed, is on the list of wanted Iraqi officials and has not been heard of since the collapse of Saddam Hussein’s regime, when US forces captured the capital on April 9.

 

The New York Times said Friday the Pentagon had begun sending a team of Iraqi exiles to Baghdad to take up positions at each of the 23 ministries.

 

The senior Iraqi at the oil ministry will be Muhammed Ali Zainy, an engineer, said the newspaper. Oil sources here said Zainy was in charge of the finance department of the ministry when he left Iraq in the 1980s.

 

The Iraqi oil official said the ministry building was looted after the fall of the capital, but US forces moved quickly to stop it being set on fire, unlike many other government departments.

 

“All the computers, all the furniture are gone, the rest is destroyed. But it is better than the other ministries.

 

“We found bottles filled with cotton and alcohol in many offices. Someone was preparing to set the building on fire and then changed his mind or was prevented from doing so,” he added.

 

US forces stand guard around the ministry and the workers who have returned are mainly cleaning their offices, said the official. “It’s volunteer work.”

 

 

The al-Dora refinery resumed operations one week ago, and is now running at 30 to 40 percent of capacity according to sources.

 

Baghdad still suffers from a shortage of gasoline and electricity and the current level of crude stocks cannot allow the al-Dora refinery to meet the demand of the city of five million people.