Commerce Secretary Evans Urges U.S. Businesses to Deal with Iraq
 

Washington -- Commerce Secretary Donald Evans has encouraged U.S. companies to do business with Iraq.

"Business conditions are improving everyday in Iraq, creating a greater opportunity for U.S. business to explore virtually an untapped market," Evans said in Washington February 11.

"The country is taking the appropriate steps to compete in the global business arena and is making remarkable progress in establishing institutions and creating environments conducive to modern commerce," he added. Evans made those remarks at the "Business Conference on Export and Investment Opportunities in Iraq." About 500 businessmen attended the conference, according to a Commerce Department source.

Evans said stabilizing and developing the Iraqi economy are crucial to winning the war on terrorism and to bringing freedom, prosperity and security to the Middle East. He said that foreign investment and trade are vital to achieving those tasks.

Robert Connan, the chief of the U.S. Commercial Service, told the conference participants that the challenges of doing business in Iraq are without precedent. He said the obstacles confronted by businesses moving into Russia and Croatia in the 1990's are small compared to those of Iraq today. But he added that the possible returns on investment are correspondingly greater.

Connan said in the short term, business people are going to make profits from contracts with the Coalition Provisional Authority, but he urged them to consider establishing long-term business relationships with Iraq. He said energy, agriculture, tourism and franchising hold long-term potential.

The Commercial Service chief said it is necessary for American business people eyeing the Iraqi market to travel to Iraq to find local partners.

"It's difficult to find an Iraqi partner. It's one of the reasons why you have to be there to assess the potential partner to see if there's a match," Connan said. "When you start working in Iraq, you're going to find a lot of information, disinformation and misinformation. You being on the ground there, you and only you are going to be able to assess that partner."

Connan said that Iraq has been in a time warp for the past 20 years. Things that American business people take for granted, such as Lotus spread sheets, inventory control and quality control, are unheard of in Iraq, he said.

"Iraqis will need training in how to be competitive," Connan said. Under Saddam, business was conducted on the basis on personal contacts, not price competitiveness, he said.

Jonathan Thompson, Director for Communications and Planning of the CPA's Program Management Office, emphasized the need for patience in dealing with the Iraqi market.

"Everything takes twice as long, from turning on the power to booting the computer," he said. "There are no technical manuals, no standard plumbing practices. Patience is essential," he said. Thompson said a CPA goal is to develop Iraq's construction capacity, so that it can build its own dams, roads, power plants and other infrastructure.

"We realize that it's not the government that's going to make things happen. It's the private sector," he said.

The CPA's Director of Private Sector Development Tom Foley said the potential for profits from trade and foreign investment in Iraq is large because of pent-up demand for consumer goods. He said the unemployment rate has fallen from about 50 percent in the middle of 2003 to somewhere in the neighborhood of 25 percent at present.

Foley named a number of U.S. companies, such as IBM, Hewlett Packard, and Price, Waterhouse, Coopers, as having entered the Iraqi market. He compared the business climate of Iraq to the California gold rush in the mid-1850's that rewarded "nimble, scrappy risk takers."

Foley said there are two main deficiencies that U.S. business people will have to consider in dealing with Iraq: security and legal protection. He said while suicide bombings are taking place, danger to individuals is low. He said he travels everyday in Baghdad without protection and has encountered no problems. He said the statistical risk level of living and working in Iraq is comparable to riding a motorcycle or skydiving.

The Iraqi Representative to the United States Rend al-Rahim said that Iraqis abroad are investing about $5 million a day in their native country and per capita income has risen from $3-5 per month under Saddam to about $60 per month. She said the World Trade Organization has granted Iraq observer status, signaling its confidence, and Iraq will respond by striving to meet the WTO's standards for transparency and accountability.

The deputy general counsel of the Treasury Department, George Wolfe, briefed the business people about reforms in Iraq's banking system that have allowed the entry of foreign banks and are making possible the transfer of funds into and out of the country. Vice President of the Overseas Private Investment Corporation (OPIC) Ross Connelly explained OPIC's political risk insurance services.

Robert Ragan of the Bechtel Corporation, a heavy construction and engineering firm, briefed the business people about how to apply for subcontracts from Bechtel. Mohamed Najjari, president and chief executive officer of El Concorde USA, a Jordanian-American construction company, spoke of El Concorde's cooperation with Bechtel in rebuilding Iraq.

Urging the business people to take the risk of entering the Iraq market, Najjar said, "A turtle does not move without sticking its neck out."

Detailed information about U.S. government support for trade and investment in Iraq can be found at the Commerce Department website: www.export.gov/Iraq.
 

By Phillip Kurata Washington File Staff Writer
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site:
http://usinfo.state.gov)