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Iraqis Seek More Jobs Rebuilding

Reconstruction work is being funneled to local firms by Bechtel and others, but some are calling for a mandatory preference program.

June 14, 2003|Warren Vieth | Times Staff Writer

AL MAT BRIDGE, Iraq — Beneath a bombed-out highway overpass in Iraq's western desert, Ibrahim Jassem is doing his best to head off the next invasion.

The 53-year-old road-grader operator was hired early this month to help build a bridge bypass, under one of the first reconstruction subcontracts awarded to an Iraqi firm. If prime contractor Bechtel Group Inc. had not made a point of picking a local company, Jassem's job might have gone to a foreigner, perhaps from Jordan.

"Many people are looking for jobs -- engineers, equipment operators," said Jassem, who went without work for two months and has a wife and eight children at home. "Why should Iraq depend on outsiders? We have our own."

Jassem's employer, Baghdad-based Al-Bunnia Trading Co., was chosen under what amounts to a preferential hiring program for subcontractors. San Francisco-based Bechtel says it expects 90% of the work done under its $680-million prime contract to go to subcontractors, and it plans to steer two-thirds of that business to Iraqi firms.

Some prominent Iraqis say that's not good enough. Voluntary efforts like Bechtel's are a start, they say, but what is really needed is a preference program with teeth. They want the U.S.-led coalition to require foreign investors and business owners to become partners with Iraqis as a condition of doing business here. Otherwise, they say, Iraqi firms may get left at the postwar starting gate.

"Iraqi companies need to come first," said Hareth Zahawi, an Iraqi-British businessman whose Al-Zahawi Group landed a subcontract from Halliburton Co. to provide labor and procurement services for allied authorities in Baghdad. He's hiring only Iraqis, and so far has put about 400 on his payroll.

Zahawi is helping organize a coalition of business and industry associations to lobby for reconstruction work, pressure contractors to hire Iraqis, and promote a proposal to require 51% Iraqi participation in new business ventures.

"Iraqis can't stand up to Kuwaiti and Saudi contractors," he said. "Some of them will go belly-up. They'll remain nobodies, while the big fat cats of the [Persian] Gulf who have had a 40-year head start will eat them alive."

Nine weeks after Baghdad fell, some economists and policy analysts say the coalition's ability to bring stability and prosperity to Iraq will depend in part on the extent of Iraqi participation in the reconstruction process. If it appears outsiders are getting most of the lucrative postwar opportunities, Iraqis may perceive the military campaign as merely a new chapter in the long saga of Western imperialism.

A number of critics say the current debate presages a broader battle over the privatization of Iraq. Some Bush administration officials and conservative analysts advocate selling off portions of Iraq's oil industry and other state-owned enterprises to private investors who they presume would operate them more efficiently. Unless safeguards are put in place to limit outside ownership, they say, Iraq's most prized possessions may wind up in the hip pockets of foreigners.

The proposal to require majority Iraqi participation "is basically in defense of anticipated stealing of assets," said Jeffrey Sachs, director of Columbia University's Earth Institute and a former economic advisor to Russia, Poland and other post-crisis governments. "There's already a tremendous amount of jockeying for position by insiders and friends of the administration for contracts. That's why the Iraqis are suspicious. They have every reason to be."

Sachs said he does not favor mandatory participation rules because they can create a "free-rider" situation in which local investors or businesses contribute little to a venture except their names. "An across-the-board policy like that is not wise from the point of view of Iraq's future," he said. "But it is a reflection of how Iraqis view privatization will work under the American occupation."

Nobel laureate and former World Bank chief economist Joseph Stiglitz said he shares those reservations, but thinks a partnership rule might be the only way to ensure that Western nations or neighboring countries do not overrun Iraq's economy and alienate its public.

"I think it makes enormous political and economic sense," Stiglitz said. "The more Iraqi money is involved, the more likely it will be stable."

Administration officials concede that they must strike a delicate balance in drafting the ground rules for foreign investment. On the one hand, they argue that outside capital, expertise and technology are needed to revive Iraq's moribund economy, and they say privatization of state enterprises is perhaps the best approach. On the other, they acknowledge the need to nourish Iraq's emaciated private sector, create as many jobs as possible for Iraqis, and avoid a political backlash based on perceptions of foreign plunder.

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