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.

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.

Fluor Corp. stands to receive a major contract in which the Irvine-based firm would supervise $10 billion in new construction, Fischer said. Fluor has excellent business contacts in the Middle East and has worked assiduously to maintain good relations with oil-rich countries such as Kuwait and Saudi Arabia, construction experts say.

Fluor spokesman Rick Maslin, however, sought to defuse speculation that Fluor has already landed a major contract. “Our reading is not nearly as certain as that,” he said. “There’s no contract.”

He added, however: “There’s a lot of work needed to be done there and we’re certainly qualified to do it.”

Officials at Bechtel and Parsons, which are both privately owned, could not be reached for comment.

Dekmejian cautioned that American firms are mistaken if they believe the rebuilding work is theirs for the asking. There will be ferocious competition from companies in Europe and the Far East, said the USC professor, who was born in the Middle East.

MIDEAST UPDATE Gulf Air said it plans to resume limited service from Bahrain Airport, which was closed to regular commercial traffic after the outbreak of war.

Saudi Aramco said it informed oil companies in Japan that they will be compensated for any oil cargoes lost at the ports of Ras Tanura and Juaymah, Saudi Arabia, as a result of the war.

Demand for copper, traditionally a key element in wartime munitions production, will not grow significantly as long as air attacks dominate the Persian Gulf War, analysts said.

Tourism in Asia, far from the fighting, has been hard hit. Travel agents say tourists and business travelers from the United States and Europe are staying home. One Tokyo hotel had 1,300 rooms canceled in two days, compared to the 60 cancellations that would be normal.

Egypt, Israel, Britain and normally popular destinations in Europe also are expecting a dismal tourism year. Egypt, which has committed troops to the multinational force, expects to lose $2.8 billion in tourist revenue this year.