Windfall From Rebuilding Kuwait May Be Mirage

Before the recession, Jeff Bing and his six-man team would install sewers and underground utility lines for 50 houses at a time. But these days, he hauls his backhoe around in quest of more humble tasks.

“Construction is down now,” said Bing, 34, of Arroyo Grande, just south of San Luis Obispo. “It’s going day-to-day, a job here, a job there.”

Like a growing number of recession-weary Americans, Bing is hoping that financial salvation lies on the other side of the world--in newly freed Kuwait.

“I want to go right now,” he proclaims.

From builders to bankers to bulldozer makers, dreams of billion-dollar contracts to repair Kuwait have set the heart of capitalists aflame throughout the world. Recession-weary Americans increasingly fantasize of postwar Kuwait as a Shangri-La escape from hard times at home.

Yet in the afterglow of allied victory, there are signs that the Kuwait windfall may come slower--and perhaps prove smaller--than many hope. Just as the promise of Soviet perestroika has been delayed by politics, human nature and the burden of history, the financial harvest of Kuwait could be disappointing, as well.

“Although it is certain the U.S. will get contracts, any idea of Americans reshaping the region is fantasy,” cautions Alan Stoga, chief economist of Kissinger Associates in New York.

Certainly, the overall stakes of recovery are more important than the ambitions of any company to land a big contract or of an unemployed worker to get a paycheck.

As Secretary of State James A. Baker III crisscrosses the Middle East to discuss postwar security plans, some experts predict that a new economic order could emerge from the ferment of war. Optimists even see a time of healing, as economic development finally eases the disparities of wealth that fuel rage in the region.

“It will be a Marshall Plan financed from within,” declares Yassin El-Ayouti, a consultant to the United Nations and political scientist at State University of New York at Stony Brook.

All agree that the rebuilding job in Kuwait alone is mind-boggling in scope: It is estimated to cost from $40 billion to several times that amount, a task on the scale of modernizing Poland, Hungary, Czechoslovakia and Romania combined.

Kuwaiti officials, who traditionally have favored the British for large contracts, have stated that the United States will get the lion’s share of largess this time, as a gesture of goodwill.

Such intentions are being impeded by uncertain leadership and confusion inside Kuwait, however, delaying any U.S. windfall.

Kuwaiti officials, for example, recently shelved a plan for four large engineering firms to spearhead repair work on oil fields, and the emirate is confusing outside firms with the poor coordination among its business representatives in London, Washington, Saudi Arabia and Kuwait city.

Opportunities--and questions--about the Kuwaiti windfall go beyond U.S. borders. To replace bombed-out oil equipment, Tubos de Acero de Mexico, a steelmaker in Mexico City, foresees a 30% jump in orders for its seamless tubes. Like companies throughout the world, however, it awaits an official go-ahead for the big postwar orders.

“We have been contacted, although no orders have yet been placed,” said Gunter Zwingmann, export director at the Mexico City manufacturer.

Even when more contracts are awarded, economists question the degree to which Americans will benefit. Large U.S. engineering firms probably will buy American-made equipment for the reconstruction, delivering a boost to a recession-starved sector of the economy.

But much of the actual labor will be performed by low-paid workers from the Middle East or elsewhere in Asia.

That isn’t good news for Americans who fantasize of Kuwait as the answer to hard times at home.

To Bing, the construction worker, venturing all the way to Kuwait for a job “beats standing around doing nothing, or going out riding bicycles, like I did today instead of working.”

Across the country, Greg Hodges, 36, of Ormond Beach, Fla., feels the same way: “I would love to get over and make some big bucks,” the construction worker declared.

Like thousands of others, both have contacted Bechtel. But their prospects do not appear great. The San Francisco company anticipates a relatively small number of openings for its Kuwaiti reconstruction work, primarily for engineers and project managers.

“If and when we get official word of a contract being signed, it’s going to be a very limited hiring situation for Bechtel--maybe a couple hundred at most,” said Mike Kidder, a company spokesman.

George Fischer, who publishes a newsletter about overseas work opportunities, is witness to the scramble. In a three-day period after the ground war began, his Newport Beach firm logged 3,000 calls from workers who sought the names of companies likely to repair Kuwaiti airports, roads, hotels and oil facilities.

U.S. government telephone lines are also jammed. The new Gulf Reconstruction Center in the Commerce Department has received 2,000 calls a day from companies and workers wanting a piece of the action, Commerce Secretary Robert A. Mosbacher said last week.

“We have a full-blown recession. That’s why we’re getting so many calls a day,” maintains Fischer, whose office displays a Christmas card from Saudi Arabia that pictures Santa Claus wearing a gas mask. “Union leaders have been calling, saying, ‘We have 300 people on our benches! Help us!’ ”

Deep-sea divers are one group that is in demand. The U.S. Army Corps of Engineers--which has a $45-million contract to oversee some of the repairs to Kuwait’s infrastructure--is courting the divers to inspect and repair port facilities and water systems damaged during the war and occupation. Firms in New Orleans, Houston and New York City reportedly have been contacted.

Divers are worried, however, that shifting sands gradually are blanketing Iraqi mines, making the work more treacherous. “It’s not going to take very long before these suckers are covered by two or three feet of sand,” warns Douglas Hough, a director at the Institute of Diving, a professional association in Panama City, Fla.

Much more broadly, strategic economic decisions made in the coming months could affect the future of the Middle East, a region of roughly 200 million people in a dozen nations that stretch from the Persian Gulf to North Africa.

Will the proceeds of Middle East oil production be invested in lasting economic development?

Until now, oil money has not brought real progress to the Middle East; the region has never developed a real home market for its abundant natural resource. Instead, the wealthy oil countries--Saudi Arabia, Kuwait, the United Arab Emirates--have lived in luxury at home and invested much of their money in global markets from London to Tokyo.

Meanwhile, the region’s poorer countries--Egypt, Syria, Lebanon and Jordan--have provided the oil-rich states a labor pool of doctors, accountants, civil servants and manual workers.

Tension between the haves and have-nots has long been a major source of instability, and tensions could worsen with the displacement thousands of workers by the Gulf crisis. Easing such tensions may require greater democracy in Kuwait and elsewhere in the Gulf, along with economic gains in Jordan and other have-not nations, some specialists maintain.

“Economic and political development go hand in hand,” declares J. R. AbiNader, president of the National U.S.-Arab Chamber of Commerce in Washington. “When you have one without the other, there’s an imbalance--and the system doesn’t work.”

President Bush linked the turbulent politics and economics of the region this way: “We must foster economic development for the sake of peace and progress.”

Contributing to this report were Times staff writers James Flanigan and Tom Furlong in Los Angeles, Anne Michaud in Orange County, Juanita Darling in Mexico City and correspondent Garry Boulard in New Orleans.