Rebuilding Iraq: what role will Arabs play? US firms may have one major Iraq reconstruction contracts, but economic and political realities are compelling them to turn to Arab banks shippers and other sub-contractors to get the job done.

Author:Martin, Josh
Position:Current Affairs

Iraqi tanks were still burning on Route 8, the main highway leading into Baghdad from the south, when the Bush Administration awarded its first reconstruction contracts. Not surprisingly, the big winners so far have been American firms: Bechtel won a contract worth up to $680m, to rebuild the country's electrical, water and sewage systems. A second contract went to Halliburton (headed by US Vice President Dick Cheney before he took office), to repair damage to Iraq's oil infrastructure.

Although these companies won the primary contracts, a significant portion of the actual work will be subcontracted to others. It is creating a new opportunity for Arab companies, who are either already in Iraq, or have full awareness of local conditions.

These are only the first stages of a massive effort to get the Iraqi economy up and running again. Experts now estimate the process will take five years and cost over $100bn. It will involve rebuilding and expanding the oil industry; repairing and constructing highways, airports and shipping facilities; and investing in construction of housing, industrial plant and offices.

So far, the prime contracts to get this work done are being awarded by US government agencies, including the Department of Defence (primarily the Army Corps of Engineers), and the US Agency for International Development (USAID).

But the original American scenario is being modified, facing challenges both on the ground and in international law.


Within Iraq, the absence of a local legal system, and a system of government to validate contracts, is already calling many of the US contracts into question. Not surprisingly, the Bush Administration has responded, letting USAID award contracts to set up rules of local and economic governance.

Legal codes will be necessary, no matter how the economic resurrection of Iraq is structured. But European pressure, and realities on the ground in Iraq (especially the resurgence of Shi'ite political power), are forcing the US to abandon its "unilateralist" approach.

"Americans tend to think Iraq is a vacuum where nothing existed but Saddam Hussein and his army," observed one well-connected lawyer. "But it was a functioning country with laws and contracts and banks and businesses."

American multinational corporations, known for their engineering, energy and technological prowess, are certain to subcontract significant portions of their work to Arab firms, which have expertise in unique local market conditions. Arab companies most likely to be tapped include those...

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