Pentagon Probe Delays Start of Iraqi Phone Service

Iraqi phone service, thwarted for months because of delays in deploying a mobile network, has been put on hold again with the Pentagon’s decision Thursday to investigate suspect license awards.

Nearly nine months after much of Iraq’s infrastructure and industry was wrecked during the U.S.-led invasion and the rioting that ensued, there is still no way to make a simple telephone call.

The licenses were supposed to be finalized today, and dozens of cellphone equipment sellers are already stocked up to meet public demand, which analysts estimate will be at least 100,000 handsets in the first few days of service. But the Pentagon probe will mean further delays.

The lack of service is slowing the recovery of every public and private enterprise and further alienating Iraqis, who are already skeptical of Washington’s vision for democracy in their nation.

At the brand-new job center of the Ministry of Labor and Social Services, for instance, Shayma Abdul Ilah manages a computer database that matches applicants with employers, chipping away at the 60% unemployment rate one person at a time.

As bearer of the news to those in need that the perfect position is available, she ought to find the work satisfying. But for all the state-of-the-art computers and wireless Internet stations, there’s not a single telephone in the 18 buildings of the ministry, which employs more than 6,000 people.

“I have to send a motorcycle courier to inform applicants who have a job offer,” Ilah said. “It’s very inefficient and time-consuming, especially with all the traffic on the roads now and the gasoline shortage.”

Throughout Iraq, communication -- the lifeblood of business -- is stymied. E-mail allows most government officials and their mentors in the U.S.-led coalition to stay in touch. In addition, MCI has been operating a cellphone network for 10,000 users with the Coalition Provisional Authority and their partners in the Iraqi government, but that oversubscribed system is unavailable to private industry or the general public.

A Bahraini company, Batelco, briefly extended coverage to Iraq in June, proving, as has MCI, that service is physically and technically possible. But U.S. authorities ran it out of the country for jumping ahead of the competition for a license.

Without public cellphone service, contact between authorities and the populace remains hostage to stalled work on the heavily damaged national telephone exchange.

Land-line repairs have suffered from the same problems that still afflict the electricity supply in Iraq: The infrastructure was poor to begin with, and insurgents fighting the occupation routinely sabotage key segments of the network.

But the absence of a mobile network is more irritating to Iraqis because they see the delay as the result of fighting within the Iraqi Governing Council over which companies should get the lucrative contracts.

Said one council member peeved at what he sees as his colleagues’ pursuit of special interests: “This is the first opportunity for favoritism in the new Iraq.”

Iraq’s new communications minister, Haider Ebadi, announced the award of service licenses to three foreign providers in October after much jostling among the region’s contenders.

The exclusive contracts, which would net government coffers only $5 million, were to go to Egypt’s Orascom for Baghdad and the vicinity and to two Kuwaiti companies for the northern and southern sectors.

But complaints from unsuccessful American and Turkish bidders prompted the Pentagon’s review of the selection process. The challengers contended that one of the winners had ties to Saddam Hussein’s regime and that another was run by close friends of Governing Council member Ahmad Chalabi.

In Washington, the Pentagon inspector general’s office said Thursday that it was escalating its probe into the awards to the three Arab service providers.

“It has moved from a preliminary inquiry to an investigation,” a Defense Department official said.

A source familiar with the probe said a key focus was on the relationship between Orascom and an Iraqi-born British businessman, Nadhmi Auchi, who is said to have profited during Hussein’s reign and was recently fined by a French court for violations involving his dealings with a French oil company.

Jowan Masum, the coalition’s technical advisor to the Communications Ministry, dismissed the accusations as the griping of “sore losers.”

“The true reason for the delay has been that we had to review each of the companies,” she said, predicting that the license awards would be finalized within days.

Once the chosen companies get their licenses, it will take about three weeks to distribute SIM cards, which create customer accounts, to authorized dealers, Masum said.

Although the ministry predicts that service will start early next year, the sellers of mobile equipment say they’ve heard such predictions before.

“I’ve been told I will get 10 to 20 SIM cards a day for the initial period, but I could sell 10 times that many,” said George Alah, owner of a hole-in-the-wall electronics shop in the Karada district of Baghdad. “We’ll have to sell them to friends and family first as there is no way we will be able to meet demand.”

Haidar Fahmi, accounting manager at a technology store, complained that he spent three hours a day driving to clients’ homes and offices to deliver messages that would take only a minute or two to convey by phone.

“It’s such a waste of time,” said the father of two, who has already arranged for three cellphones to be set aside for his family.

Basher Shaheen has sold hundreds of mobile handsets for $85 to $350 apiece as Iraqis prepare for the advent of cellular service. Like the other merchants waiting impatiently, he blames corruption and political maneuvering for the delays.

They may not be usable, but the devices are still in demand. They communicate prestige and clout for Iraqis.

“Customers come in to buy the handsets even though they know there isn’t any service,” Shaheen said.

“There’s a sense of looking chic just having a cellphone attached to your belt.”

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Times staff writer Edmund Sanders in Washington contributed to this report.