U.S., Iraq Looking for a Few Good Firms Willing to Do Business in a War Zone

The seminar was billed as “Doing Business in Iraq.” A better title might have been “Think Twice About Doing Business in Iraq.”

Forget issues such as intellectual property protections and import duties. Insurance companies won’t cover cargo shipped into the country. Ostensibly simple transactions like bank transfers are fiendishly difficult, forcing foreigners to carry large sums of cash. Kidnapping is an occupational hazard.

Americans are urged to avoid traveling to the country, where the government has imposed a curfew after deadly religious clashes sparked fears of civil war. Some firms might be thinking more than twice after last week’s events.

Asked why anyone attending a recent seminar in Los Angeles should risk trying to do business in his country, Salam Adil had a simple answer: Iraq can’t do it alone.

“We’re gathering efforts to build a country almost totally demolished,” said Adil, a former engineer who works in the commercial office at the U.S. Embassy in Baghdad.

Attracting business to Iraq is crucial for the Bush administration, which is looking for ways to strengthen a struggling economy that is being slowly weaned off big U.S. government contracts.

American officials hope to persuade some pioneering personalities with the right product and high risk tolerance to take the leap. They are taking their message directly to the marketplace, producing events such as the seminar in L.A., which was sponsored by the Commerce Department, the Iraqi American Chamber of Commerce and Industry and the Southern California Regional District Export Council.

Najib Khoury thinks he fits the bill. The Santa Rosa businessman buttonholed Adil during a coffee break and pitched his company, Global Portable Buildings Inc., which converts used shipping containers into portable buildings. And the inexpensive structures can be bulletproofed, a feature that might come in handy in Iraq.

Khoury said he was willing to sell his products for “50 cents on the dollar” to help put roofs over Iraqis’ heads. “It’s the Asian way -- lose now and get more later,” said Khoury, who heads the company’s Middle East sales unit.

Iraq’s postwar reconstruction effort has been dominated by large American firms such as Bechtel Group and Halliburton Co. But their relations with the Iraqi business community have been rocky, according to a group of Iraqis at the seminar. They said they were in the United States hoping to find smaller firms that were interested in teaming up in food processing, cement production and other areas.

Siood Omari, an architect who runs a Baghdad construction company, said some large U.S. contractors charged too much for their work and treated their Iraqi partners unfairly.

“The ones who are getting the benefits are a very, very small sector,” said Omari, president of Iwan Group.

In response, U.S. multinationals say they have worked hard to boost the economy there. Drew Slaton, Bechtel’s chief spokesman in Iraq, said the San Francisco-based company, which is working on power, telecommunications and wastewater treatment projects, had awarded the majority of its subcontracts to Iraqi firms -- about 200 as of Feb. 17.

The deals have employed tens of thousands of Iraqis, Slaton added.

Cathy Mann, a spokeswoman for Houston-based Halliburton, said the security situation required her firm to work closely with the U.S. military to determine which jobs were “appropriate and safe” for Iraqis to perform on U.S. and coalition bases. She said Halliburton had tried to increase Iraqi firms’ involvement in its projects and used a government-approved procurement system to ensure full, open bidding.

Operating in Iraq hasn’t been easy for anyone. After an initial rush of adventurous entrepreneurs in the first months after the U.S.-led invasion of March 2003, the business climate soured as the insurgency spread. The kidnapping and televised slaughter of U.S. communications contractor Nicholas Berg in May 2004 scared off businesses considering Iraqi projects and forced those in the country to bolster security.

The climate for small American businesses in Iraq, outside the three Kurdish provinces in the north and isolated pockets elsewhere, is among the most forbidding on the planet.

Employing a security guard can cost up to $1,000 a day, and rental costs have skyrocketed for residential and commercial space inside heavily guarded compounds. Businesspeople pay thousands of dollars for armed escorts on the six-mile ride from the Baghdad airport to the U.S.-protected Green Zone.

Even Andrew Wylegala, the U.S. Embassy’s commercial counselor, warns people to stay away from Iraq unless all other options have been exhausted. Those seeking more information are directed to www.export.gov/iraq and are urged to attend trade shows and meet Iraqi business partners in safer places such as Amman, Jordan.

“We try to let American companies know when there are opportunities, what they can focus on and how they can initiate their business safely without actually needing to travel to Iraq,” he said in a telephone interview from Baghdad.

Wylegala said there were at least 100 American firms in Iraq. Most do business in the Green Zone, the heavily secured area in central Baghdad that serves as headquarters for U.S. operations and the Iraqi regime. Some of the firms are run by Iraqi Americans, who can operate with greater freedom than most Westerners.

“It’s a trying but not impossible place to do business if you have a local Iraqi helper or business partner, someone who can take care of the security situation for you,” Wylegala said.

For now, U.S. officials are focused on lining up reputable Iraqi business partners so that when the time is right, Americans can jump in. Wylegala said the most promising areas are telecom, transportation, food processing and energy.

Raad Ommar, the Iraqi expatriate from Los Angeles who founded the Iraqi American Chamber of Commerce, urged Americans not to wait too long. He said his group held a trade fair in the Kurdish city of Irbil in April that attracted more than 95,000 people, even though it wasn’t advertised for fear it would become a guerrilla target.

Ommar, who is working with the Trade Bank of Iraq to issue the country’s first Visa credit cards, said Irbil was “not that dangerous” and had an international airport.

With the Iraqi economy slowly coming back to life, he said, U.S. companies should be reaping the benefits.

“Everybody is second-guessing what Iraq is going to do next,” said Ommar, whose group has offices in Baghdad and Irbil. “Americans took the lead. We went over there. Now, we need to finish the job.”

Iritani reported from Los Angeles and Daragahi from Baghdad.