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| World Marketplace |
Shifting Economic Sands
By Jean-Francois Seznec
04/01/2004
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The State Department’s recent trade shows in Aman and Kuwait, held to
announce to the world that “Iraq is open for business,” left corporate
executives more puzzled than eager. Aside from U.S. construction and engineering
giants Bechtel, Halliburton and its subsidiary Kellogg Brown &
Root—companies whose skills at managing risks to life and limb are second only
to their facility in obtaining government contracts—no one is lining up to
commit capital and personnel to Iraq. However, if and when the deadly bombings
and electoral uncertainty subside, possibly as early as this year, a number of
attractive investment opportunities will become available. Unfortunately for
those in the north of the country, these will be clustered almost exclusively in
the more stable and prosperous south—a fact that could cause significant
internal strife within Iraq.
The Iraqis are an educated people who have taken
great pride in their management of their country’s oil production since its
nationalization in 1972. They will inevitably resent the foreign business
presence; unfortunately, they need foreign capital desperately. U.S. companies
would do well to approach business in Iraq very diplomatically, seeking to hire
as many Iraqis as possible and partnering with local companies wherever
possible. The United States should also establish a level playing field that
permits investment from France, Germany, Russia, Saudi Arabia, Japan, Britain
and elsewhere; this will not eliminate resentment, but at least it will be aimed
at a wider pool of foreigners. Even so, seeing a Citibank in downtown Baghdad
will still antagonize the fiercely proud Iraqis; banks from Bahrain will elicit
only slightly less resentment.
Some form of devolution of power will take
place very soon; the U.S.-appointed Governing Council wants to hold elections
for a transitional government in June. While there may be some delay due to a
rift between the council, which wants to hold caucus-style elections, and the
highest-ranking Shi’ite cleric, Grand Ayatollah Ali al-Sistani, who wants a
national election, the Bush administration is pushing for a vote of some kind to
take place before our own presidential election in November.
There is the
possibility that there will be no resolution in the fight for influence among
various groups, which could result in bloodbaths. The northern Kurds want to
lock in the autonomy they have had since 1991. The Sunnis, who were favored
under Saddam Hussein, resent their loss of power. The southern Shi’ites, who
comprise about 60 percent of the population, suffered under Saddam and now want
their influence to reflect their numbers. On the positive side, most Iraqis
still think of themselves as Iraqis first, so there is hope for an uneasy
alliance.
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