Sophia's Peace Work

Friday, May 12, 2006

Rebuild Iraq

There was just a trade show and conference on rebuilding Iraq (I think the 3rd one they have had) here in Amman, Jordan ... my boss thinks they are a waste of time, money and energy, but I was asked to go and talk to a specific exhibitor there. The trade show was kind of interesting ... there were exhibitors who make security equiment (flak jackets, helmets, police riot gear, armored vehicles, prison doors, etc.), contruction equipment (pipes and valves, back-hoes, road building equipment, electrical parts supplies, brick and cement products), food and pharmaceuticals (packaging machines, conveyor belts, food processing equipment, test tubes, etc) ... and a whole bunch of miscellaneous stuff ... charter services, furniture makers, hotels trying to drum up business ... there was even an exhibitor from India trying to market their packaged indian foods (just boil the pouch in water for 5 minutes, open and serve ... got alot of cool samples from them).

I only attended one session (at the 5-Star Inter-Continental hotel) on Natural Resources and Environmental Management. The Ministers of Environment and Industries and Minerals for Iraq were both supposed to be there ... of course they didn't come. The guy from the MoE who came was a total loser. He didn't address any of the issues listed in the program and only gave a laundry list of Iraq's environmental ills.

"Excuse me, sir, but may I say BORING!" ... I've heard the list a thousand times and geez, I mean for god's sake, this is a conference about rebuilding Iraq and the room is filled with potential investors (well, there were only about 1/2 a dozen of us in the room). Can't you even think proactively? Propose some ideas for how people can help the MoE and Iraq to improve the environment?

The guy from the Ministry of Industry and Minerals (MIM) was much better and very informative. He spoke mostly about issues in the State-owned companies and ways that outside companies might invest. My favorite quote of his was, "Waste Treatment is a growth industry in Iraq."

He spoke about the cement factories in Iraq as an example, which are actually doing well (there are alot of needs for cement security barriers afterall). There are three State-owned cement companies running about 16 factories total. These 16 factories have 31 production lines but only 16 lines are working. Of these 16 only five have working precipitators (I believe these are the devices that keep the cement dust out of the air during the manufacturing process???). This industry could use outside investment he said and it could be profitable for Iraq and the investors.

But most interesting was what happened after the session was over. A few folks gathered around the moderator, a U.S. State Department guy named Savello who is an advisor to the Iraqi Ministry of Agriculture. He told us that, in keeping with the West's policy that Iraq should privatize it's State-owned companies, the U.S. government has not been willing to invest in Iraq's State-owned Companies. Many of these companies, if they are open at all, are running with efficiency rates as low as 10% and are paying a workforce that isn't even required to show up for work. But they will certainly not disappear over night and when they do start to disappear, Iraqis are likely to face massive unemployment as a result (just as the former soviet states have). He gave us and example.

He told us of a tour he had recently taken at a food processing plant (State-owned of course) in Abu Ghraib. He said the manager of the plant was very competent and he said that he had over 1000 families dependent on the plant (note, said Savello, he didn't say 1000 workers, he said 1000 families). The plant itself, according to Savello, was the worst he had ever seen ... boilers in disrepair and wasting fuel, production lines that looked like a rats nest, contamination issues of the food line, etc. At the end of the tour, the manager of the plant, with some pride it appears, asked Savello what he thought and if he thought they could attract outside investment. As diplomatically as he could, Savello told him basically the following.

"Well, if a large multi-national company, for example Nestle, were to come here what they would likely do is dismantle this factory, and put up a new factory about one quarter the size, install automated processes and hirer only about 30 people to run and maintain it." The Manager of course was shocked and Savello explained that the large companies would do this not because the workers cost so much (labor in Iraq is extremely cheap afterall), but because the workers represent a source of contamination to the production line. "One sneeze and you have a disaster," Savello said. Of course the question is, as the plant modernizes under such a scenario, what happens to the other 970 families.

Savello was well aware of what this would do to Iraqis (it has been clearly seen in the aftermath to the collapse of the Soviet Union) and he said the same issues face Iraq across the board. For example, Iraqi wheat farmers are grossly inefficient. It is much cheaper for Iraq to buy it's flour on the world market than buy it from small Iraqi farmers and the only way, according to Savello, of making Iraq self-sufficient in food is for it to move to large scale, automated agriculture production.

And he raised another issue, which he indicated many people were not even talking about and that is the rising population in Iraq ... (sorry I can't remember the actual rates ... will have to do some research there) but Iraq is looking at a very high population increase ... when you combine that with the economic changes that are taking place in Iraq, you have a recipy for a big, big socio-economic disaster (or well, perhaps, just a continuation or worsening of the current socio-economic disaster).

It would seem, I said, that by now we would have learned some lessons and could help Iraq make these transitions better. The problem is that we lack the political will to really do so. Such transitions need to be coupled with social programs that assist people in dealing with the changes around them, but governments have never been willing to make the required investment.

I also don't completely buy that there is one way to turn Iraq into a modern nation. Do they really have to modernize to the point at which they fire most of their workers? Are there not some State-owned enterprises that are worth saving (I'm really tired of hearing about how private companies are so much more efficient that state-owned companies ... I worked in the private sector once and that was not my experience ... there was alot of waste and fat that never got trimmed)? Do Iraqis need to change their tomato farms to the point where they are harvesting green, thick-skinned and tasteless mono-crops by automated machines like the rest of us?

Oh god, I hope not.


  • Good post on Rebuild Iraq and the economy. The US government's next step is offering micro-loans, but this will not help the larger factories and industries. In fact, some larger companies have basically shutdown, having gone from over 100 employees to 2-3 caretakers. The reasons are complex. Obviously, security is first. Workers are afraid to come to work now, and unless they are in a secured industrial compound with housing, the factories are closing. Second is the availability of materials coming into Iraq. As far as the cement factories, this is misleading. Most cement is being imported and there is a huge deficit. Unmentioned are the numerous cement factories that have closed or the ones that wish to open but do not have the technology, security and investment. Meanwhile, major cement imports are coming from Turkey and China. The same is true with petrol, because of the lack of refineries. Bottom line, the Iraqis are paying more to import cement, iron and oil, even though they are rich in these resources.

    The Rebuild Iraq Show is one big gala with little impact on the Iraqi economy. It is a money maker for the people putting on the show. The true Iraqi trade show of value is the Iraqi American Chamber of Commerce who is one of the few organizations to host a show actually in Iraq with both Iraqi exhibitors and Iraqi people in attendance. The Show is called
    Kurdistan DBX Trade Show and their website is: It will be held this September, 2006 in Erbil.

    By Blogger Miriam, at May 27, 2006 5:19 PM  

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