American firm pulls out of Iraq
Contrack International Inc has become the first major US contractor to pull out of the reconstruction effort in Iraq, citing security concerns, the Los Angeles Times said.
A company spokesman also said spiralling costs were a reason for the withdrawal.
“We reached a point where our costs were getting to be prohibitive,” company president Karim Camel-Toueg said in the Wednesday edition of the paper.
Virginia-based Contrack had won a $325 million award to rebuild Iraq‘s shattered transport system.
US officials said Contrack’s decision to terminate work in Iraq was reached with the US government in November, but had not been publicly disclosed.
Contrack, the leader of a partnership that won one of 12 major reconstruction contracts awarded in 2004, was the largest company to pull out of Iraq to date, the officials told the Times.
Reconstruction plows ahead
But the company’s move would not hamper rebuilding in Iraq, they said, adding that the contract would be put up for rebidding, a process which the newspaper said could take months.
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Contractors’ dwellings and offices |
“It’s not a terrible loss,” Army Burns, spokesman for the Pentagon’s Iraq Project and Contracting Office, told the Los Angeles Times.
But some analysts thought differently.
“It’s a very bad sign,” said Michael O’Hanlon, a scholar at the Brookings Institution thinktank in Washington. “If this is how other private companies are thinking, it’s a very bad potential warning.”
In the eight months Contrack was under contract in Iraq it was paid about $30 million, mostly for site assessments and design work, company and US officials told the daily.
The Contrack partnership intended to build new roads, bridges and transportation terminals in Iraq, but only managed to refurbish a handful of train depots, company officials said.
Sham companies in Iraq
The Contrack revelation comes fast on the heels of a potentially controversial legal dispute between a US-based firm accused of setting up sham companies in Iraq and the US government.
According to the 19 December edition of the LA Times, lawyers for Custer Battles security firm argued they could not be sued for a multimillion-dollar fraud scheme in Iraq because the allegedly stolen money belonged to Iraqis, not Americans.
“The potentially precedent-setting case could undercut fraud claims involving billions of dollars in reconstruction contracts that were issued by the US-led Coalition Provisional Authority and paid for with money belonging to the Iraqi people,” the LA Times said.