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U.S. Firms See Lead Role in Reconstruction : Kuwait: The government-in-exile has already awarded some contracts to American construction companies as part of the first phase of the rebuilding plan.

January 23, 1991|TOM FURLONG | TIMES STAFF WRITER

Contracts have already been signed by Kuwait's government-in-exile to begin the nation's postwar reconstruction--an effort expected to cost $20 billion to $40 billion and provide a bonanza for California's large engineering and construction firms.

The rebuilding program, designed to commence once Iraqi troops are driven from oil-rich Kuwait, may take as long as five years, depending on how severe the damage is, according to Ibrahim Al-Shaheen, a Kuwaiti exile spearheading the planning effort in Washington.

"The more the (damage), the more building there will be," noted Richard Dekmejian, a political science professor at USC. For U.S. contractors, he said, "that's the irony."

One of the American companies expected to play a a major role is Fluor Corp., the behemoth Orange County firm that has extensive building experience in the Middle East. A Fluor spokesman cautioned, however, that no contracts have been signed.

One company that has signed a contract is Motorola, which the Kuwaitis want to provide communications equipment if the allied forces win the war, Al-Shaheen said.

Iraqi troops have already looted Kuwait of virtually everything of value, from bank computers and safe deposit boxes to school supplies and amusement park equipment, according to refugees.

American David W. Strecker, an erstwhile commercial banker in Kuwait, told of one Kuwaiti lawyer whose villa on the outskirts of Kuwait city was so badly ransacked and looted that even the air conditioning ducts were searched for valuables.

"Everything needs to be rebuilt," Strecker said in a phone interview from Paris, where he now lives. "They were the biggest consumer society you can imagine."

The most extensive damage, though, may occur when U.S.-led ground troops move to drive the Iraqis out of Kuwait. At risk are Kuwait's vast petroleum production and refining network as well its extensive system of water desalinization plants along the coast.

The dangers were underscored Tuesday when the Iraqis apparently set fire to oil facilities in Kuwait and the Neutral Zone between Kuwait and Saudi Arabia.

Whatever the damage done by the war, the rebuilding of Kuwait is likely to receive markedly increased attention in the months ahead. GulfAmerica, a U.S.-Arab trade promotion firm in Champaign, Ill., has scheduled a conference in Los Angeles for late February that will focus on the reconstruction effort.

Unlike countries ravaged in previous wars, Kuwait probably will not need much financial assistance to rebuild. Though smaller than Massachusetts, with a population of just over 2 million, Kuwait has estimated petroleum reserves of some 100 billion barrels, among the largest in the world. (Oil is currently selling for about $22 a barrel.)

The Kuwait Investment Office, a London-based arm of the government-in-exile, controls worldwide investment assets valued at about $40 billion. The government's other properties include Santa Fe International, an Alhambra oil-drilling firm acquired in 1981 for $2.5 billion.

American engineering and construction firms should figure prominently in the rebuilding effort because of the lead role that U.S. troops have played in the war effort and because of their history of activity in the Middle East.

"There will be big business for construction companies, and I would think the U.S. companies would do rather well," said Graham E. Fuller, a Middle East scholar for the RAND Corp. in Santa Monica.

According to Al-Shaheen, contracts have already been consummated with some American companies as part of the first phase of the rebuilding plan--a three-month emergency effort designed to stabilize Kuwait and return a sense of normality. Motorola's contract, for instance, is part of the initial phase.

A Motorola spokesman declined to comment.

This first phase will cost "hundreds of millions" of dollars and involve the negotiation of more than 100 contracts, Al-Shaheen said in a phone interview.

Phase two will last two to five years--depending on how badly the country is damaged--and will seek to repair Kuwait's damaged communications, transportation and industrial facilities, Al-Shaheen said.

Obviously, no one knows at this point how immense the rebuilding job will be. If Kuwait is eventually leveled, the price tag for reconstruction could easily exceed $40 billion, according to George E. Fischer, publisher of the Fischer Report, a newsletter on international business published in Newport Beach.

"When (Iraqi President Saddam Hussein) goes, he plans to pull the plug and leave a scorched earth behind," Fischer said in a telephone interview.

It is in the expected repair of Kuwait's infrastructure that several major California construction companies are likely to play a lead role, construction experts say. Companies such as Fluor--as well as Bechtel in San Francisco and Parsons in Pasadena--have all had extensive building experience in the Middle East.

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