[casi] Last News, 21-28/05/03 (1)

[Peter Brooke <pbrooke@DELETETHISukonline.co.uk>]

News, 21-28/05/03 (1)

NEW IRAQI ORDER

*  Iraq conference 'may be in July'
*  Iraq Gov't. Workers to Get April Salaries
*  Saddam's army and apparatus sacked
*  Creating a new nation
*  Red Cross denied access to PoWs
*  Shias protest Kurds exemption

COMMERCIAL OUTLETS

*  American intentions are tainted by Iraq's oil
*  British firms fight for piece of the action
*  To the Victors Go the Spoils of Reconstruction
*  Smugglers Create Diesel-Fuel Crunch in Iraq
*  International firms vie for reconstruction role


NEW IRAQI ORDER

http://www.cnn.com/2003/WORLD/meast/05/21/sprj.nitop.bremer.meeting/index.ht
ml

*  IRAQ CONFERENCE 'MAY BE IN JULY'
CNN, 21st May

BAGHDAD, Iraq (CNN) -- An Iraqi national conference to pick a new interim
government may have to wait until July to convene, U.S. administrator Paul
Bremer said Wednesday.

Bremer's predecessor, retired Army Lt. Gen. Jay Garner, had suggested he
would like to create an interim authority by the end of May that would lay
the groundwork for the election of new leaders.

In Baghdad on May 5, Garner told reporters: "By the middle of the month,
you'll really see a beginning of a nucleus of an Iraqi government with an
Iraqi face on it that is dealing with the coalition."

But Bremer sees a different timeline.

"I don't think it'll be in June. I don't think it was ever scheduled for
June. What we're doing is continuing our active dialogue with Iraqi
leaders," Bremer said.

"But I would think that we're talking more like sometime in July for
actually getting the national conference put together."

Late last month, prominent Iraqis from a broad spectrum of political, ethnic
and religious groups met with U.S. officials and agreed to reconvene within
a month to begin "to select a transitional Iraqi government."

The town hall-style event was led by Garner.

Clerics from Iraq's Shiite majority took part, as did Sunni Muslims, who
were favored under Saddam Hussein's regime. The Supreme Council for the
Islamic Revolution, an Iran-backed Shiite opposition group, sent a low-level
delegation to the meeting.

Also in attendance were Kurds from northern Iraq, Arab tribal chiefs and
Iraqi exiles -- some of whom had not been in the country for decades.

Bremer pledged to continue sessions with Iraqi leaders who might make up an
interim government.

"I'll be meeting with two or three of them today. I've met basically every
day since Friday. And we will have another broader meeting some time in the
next week or 10 days and see where we go from there," he said.


http://www.lasvegassun.com/sunbin/stories/w-me/2003/may/21/052109466.html

*  IRAQ GOV'T. WORKERS TO GET APRIL SALARIES
by Hamza Hendawi
Las Vegas Sun, 21st May

BAGHDAD, Iraq (AP) - Some 1.4 million Iraqi government employees will
collect their first salaries in two months this week, the man who launched
the American civilian administration in Iraq said Wednesday.

Retired Lt. Gen. Jay Garner told reporters that $45 million in April
salaries would be paid starting Saturday.

Members of Iraq's disbanded armed forces and intelligence services will not
be paid. Nor will employees who haven't worked since the capture of Baghdad
by U.S. forces on April 9.

Employees will also get an emergency payment of $30 along with the $20 they
received earlier this month.

All workers will be paid in Iraqi dinars, except for those in autonomous
Kurdish areas, who will be paid in U.S. dollars. The payments will be made
in cash.

Garner said government employees will get their May and June salaries by the
end of June. The money, he said, came from Iraqi assets frozen abroad after
Saddam Hussein's 1990 invasion of Kuwait.

"Salaries in the new Iraq will be determined by rank and merit, not by party
status," said a press release issued by the U.S.-led Office of
Reconstruction and Humanitarian Assistance. "The old system of allowances
and bribes has gone."

David Nummy, senior U.S. Treasury Department representative in Iraq, said
new salary scales are based on qualifications, merit and years of service.
Most government employees will be collecting higher salaries than they did
under Saddam's rule, he said.

"There are a few losers," Nummy said, citing former presidential employees.

Salaries will now range between 100,000 dinars and 500,000 a month - or
about $80-$400 by Wednesday's exchange rate. Schoolteachers who were making
an average of 20,000 dinars will now receive 100,000, or about $80.
Policemen will make 120,000 dinars on average, or about $100 - twice what
they previously made.

The dinar has been fluctuating wildly against the dollar, but since peaking
at nearly 4,000 to the dollar during the fighting, it has been steadily
gaining strength, standing at about 1,200 to the dollar on Wednesday.

Garner said the salaries and the additional emergency payment would be "a
good boost to the economy" and said payments in Iraqi dinars are meant to
support the national currency in a country where the dollar currently
reigns.


http://www.guardian.co.uk/international/story/0,3604,962513,00.html

*  SADDAM'S ARMY AND APPARATUS SACKED
by Rory McCarthy in Baghdad
The Guardian, 24th May

Hours after the UN sanctions on Iraq were finally lifted, US officials in
Baghdad imposed a new order on the country yesterday, sacking about 400,000
soldiers and security officers.

Paul Bremer, the Pentagon-appointed official running Iraq, issued an order
dissolving the army, the defence and information ministries, the security
services, and their courts.

The US commander of land forces in Iraq, Lieutenant General David McKiernan,
admitted that the action could create security problems.

But the occupation administration, which now calls itself the coalition
provisional authority, said in a statement: "These actions are part of a
robust campaign to show the Iraqi people that the Saddam regime is gone, and
will never return."

The CPA will create a new Iraqi army corps, "Under civilian
control...professional, non political, militarily effective and
representative of all Iraqis."

All the dismissed civil servants and some of the 375,000 soldiers will
receive one month's salary, as a form of pension.

Those on and above the rank of colonel will get nothing: they are considered
to be senior Ba'ath party officials, the CPA said.

Government employees who are being allowed to stay in employment will get
their first salaries today since the war began in March.

Teachers and policemen are to get 100,000 dinars a month (about £70 at
yesterday's fluctuating rate), four times their pay under Saddam Hussein.
Today's salary is for March and payments for April, May and June will be
made next month.

Senior army officers prospered under Saddam Hussein and can hardly have
expected to have remained in post after the defeat of the regime.

But the more junior officers and other ranks are likely to be angered by the
decision. There have been some small-scale protests by officers and soldiers
in demand of payment since the war ended six weeks ago.

Gen McKiernan admitted that several hundred thousand frustrated and now
unemployed former soldiers on the streets presented a formidable security
risk."This is a concern not only from a security standpoint but from an
economic one," he said.

"It is a concern when you see a large segment of the Iraqi population that
are young male Iraqis, that are former soldiers who are right now walking
the streets."

He said the new army would absorb some, but not all, of the unemployed
soldiers. But he admitted that it would not begin to be trained until later
this summer.

There are no specific plans to try to re-employ the soldiers before then.
"It is a priority. We have got to do something soon," he said.

"The answer is all different kinds of economic stimulus to create
opportunities for them."

Few will mourn the demise of the mukhabarat and the special security
organisation, the feared intelligence agencies which intimidated Iraqi
people for years.

But at the information ministry the new policy means that 6,800 civilian
staff who were responsible for handling the regime's crude propaganda
operations, many of them well educated and some of them seconded from the
intelligence agencies, will also be left without work.

[.....]


http://www.lasvegassun.com/sunbin/stories/commentary/2003/may/22/515115818.h
tml

*  CREATING A NEW NATION
by Mike O'Callaghan (Las Vegas Sun executive editor)
Las Vegas Sun, 24th May

[.....]

Professors Adeed and Karen Dawisha, writing in the May and June edition of
Foreign Affairs magazine, have given serious thought to both a constitution
and government structure. In their essay they write: "Iraq's ethnic and
sectarian diversity -- the splits between Kurds, Arabs, and Turkmen, and
between Shi'ites and Sunnis -- is usually seen as an impediment to building
a stable democracy there. The fact is, however, that all this antagonism
could serve a constructive purpose: having factions zealously check each
others' power could actually promote democracy at the expense of rigid
communal particularism. The trick is to work out a constitutional
arrangement that makes sense of Iraq's social and cultural mosaic,
transforming diversity into an agent for positive change.

"For that reason, democratic Iraq must have a federal system of government.
Already, the Kurds -- who have enjoyed freedom from Baghdad's control since
the establishment of the northern no-fly zone -- have been adamant in
demanding such a system. But all Iraqis would benefit from federalism, as
the example of other current federal states -- the United States, Germany,
Russia, and now the United Kingdom -- suggests."

The key to success is given by the Dawishas in the following paragraph: "In
a federal Iraq, both Baghdad and the regions should be equal guardians of
the constitution. Monitoring the rights and arbitrating disputes between
these power bases should be the responsibility of a strong federal
judiciary. As other federal states have shown, constitutional amendments to
change this arrangement should be allowed only with the concurrence of both
houses of the legislature, the head of state, and all federal units.
Allowing the center to bypass the regions in amending the constitution
quickly dilutes local rights and increases regional antipathy to central
control ..."

There is seldom a simple solution to any complex problem but, with the
Dawisha thinking, continued U.S. and British presence, time, effort,
education and security, it's possible Iraq can change.


http://www.observer.co.uk/international/story/0,6903,963108,00.html

*  RED CROSS DENIED ACCESS TO POWS
by Ed Vulliamy in Baghdad
The Observer, 25th May

The United States is illegally holding thousands of Iraqi prisoners of war
and other captives without access to human rights officials at compounds
close to Baghdad airport, The Observer has learnt.

There have also been reports of a mutiny last week by prisoners at an
airport compound, in protest against conditions. The uprising was 'dealt
with' by the Americans, according to a US military source.

The International Committee of the Red Cross so far has been denied access
to what the organisation believes could be as many as 3,000 prisoners held
in searing heat. All other requests to inspect conditions under which
prisoners are being held have been met with silence or been turned down.

There is circumstantial evidence that prisoners are being gagged and hooded,
in the manner of the Afghans and other captives held at Guantanamo Bay in
Cuba - treatment in itself questionable under international law.

Unlike the Afghans in Cuba, there is no doubt about the status of these
captives, whether PoWs or civilians arrested for looting or other crimes
under military occupation: all have the right, under the laws of war, to be
visited and documented by the International Red Cross. 'There is no argument
about the situation with regard to the Iraqi armed forces and even the
Fedayeen Saddam,' said the ICRC's spokeswoman in Baghdad, Nada Doumani.

'They are prisoners of war because they have been captured during a clear
conflict between two states. If they served in the armed forces or in a
militia with distinctive clothing which came under the chain of command of
one of the warring states, they are protected under article 143 of the
Geneva Convention.'

The ICRC has gained access to prisoners held in camps at Umm Qasr in the
south. But with regard to the larger numbers reportedly held in Baghdad,
said Doumani, 'we are still waiting for the green light, more than a month
after the end of the conflict. This is in breach of the third Geneva
Convention.' She said the laws of war should give the ICRC access 'as
quickly as possible'.

The airport camps are also said to contain many hundreds of civilians
detained for looting, who, Doumani said, 'do not fit into the category of
prisoners of war, according to the Americans'.

Civilians held, she said, have similar rights because they have been
detained by an occupying power, which the ICRC insists the Americans to be,
even if they do not use those words of themselves.

'Civilian prisoners under a military occupation have the right to be visited
and documented,' she said, 'and for their next-of-kin to be informed.
Hundreds of families are looking around Baghdad for members of their
families who have gone missing and are believed to have been arrested. They
are being taken somewhere, but no one knows where.'

A US military source said a mutiny occurred at the beginning of last week at
one compound at the airport zone - for the most part a sealed-off area and
the site of some of the heaviest civilian casualties as the Americans surged
into the Iraqi capital.

The rebellion was 'dealt with' by the US authorities, said the source, with
no confirmation or denial of deaths.

Witnesses to the camps are few, since no Iraqi prisoners taken to them have
been released. But a cameraman for the France 3 television channel, arrested
at the Palestine Hotel, did manage a glimpse. Leo Nicolian has documentation
signed by a Lieutenant Brad Fisher saying he was wrongly arrested (and
beaten, with a black eye to prove it) for the alleged theft of a bag from an
American reporter.

He was held at the tennis court compound along with, he said, about 50 other
prisoners, and told he was detained 'for investiga tion'. On his way out,
Nicolian said he passed a bigger encampment in which he saw 'hundreds of
men' hooded, with their arms tied behind their backs.

A worker for a non-governmental aid organisation, who asked not to be named,
told The Observer that he saw men in a similar state aboard a truck,
apparently in transit from one place to another. The aid worker said he
managed to video the scene.

Doumani said there was no specific wording in the Geneva Convention on the
American practice of hooding and gagging, but that the law did specify that
prisoners be treated humanely. 'We have to assess what is humane,' she said.


http://www.dawn.com/2003/05/25/int2.htm

*  SHIAS PROTEST KURDS EXEMPTION
Dawn, 25th May

BAGHDAD, May 24, AFP: Iraqis will need permits to carry small arms from June
15 and all concealed or heavy weapons will be banned, the US-led
administration announced on Saturday as it moved to control the flood of
firearms swamping the country.

Under the directive issued by occupation administration chief Paul Bremer,
owners of banned arms will have 14 days from June 1 to turn them in.

But the announcement sparked an outcry from a group representing Shias as it
exempted two Kurdish militias which have controlled much of northern Iraq
under Western protection since the aftermath of the 1991 Gulf war and which
fought alongside the US troops this year.

The Supreme Assembly of the Islamic Revolution in Iraq (SAIRI) insisted that
the ban be applied equally.

"Maybe we didn't fight with the coalition, but we didn't fight against
them," (SAIRI) official Adel Abdul Mahdi told the New York Times.

"We want conditions where all militias are dissolved and we will not accept
that other militias will be allowed to stay there with their weapons while
we will not be there with ours."

The group maintained its own armed wing before the invasion in exile in
Iran. Washington barred it from entering Iraq, although many of its members
have since slipped across the border.

PROCEDURE: Detailed procedures were set down for weapons handovers during
the amnesty to prevent those complying with the order being shot at by US or
British troops.

They are to be publicized as widely as possible, a spokesman said.

"Individuals will be instructed to turn in unauthorized weapons by placing
the unloaded, disassembled weapon into a clear plastic bag provided by
coalition forces and walk slowly to the collection point," a coalition
statement said.

"Collection points will be at designated locations like police stations and
jointly manned by Iraqi and coalition forces.

"Weapons may only be turned in during daylight hours before 6pm."

Military hardware, including mortars, hand grenades and even Israeli Uzis,
has found its way into the hands of Iraqi civilians. A roadblock right
outside a US camp netted three Kalashnikovs in searches of 50 cars.


COMMERCIAL OUTLETS

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c
=StoryFT&cid=1051390222079&p=1012571727172

*  AMERICAN INTENTIONS ARE TAINTED BY IRAQ'S OIL
by Jeffrey Sachs
Financial Times, 21st May

Throughout the world people believe that the US fought the Iraq war to
secure control of Middle East oil. The Bush administration vehemently
rejects this; Donald Rumsfeld, the defence secretary, has declared that oil
had nothing to do with the war.

This difference of opinion has impeded Iraq's recovery at every step. The US
wants to lift United Nations sanctions immediately to speed Iraqi
reconstruction. Many other countries, notably France and Russia, have
expressed fears that the UN resolution pushed by the US would legitimise a
US grab of Iraqi oil. Accusations of crony politics have flown back and
forth.

Now a revised resolution is set to be voted on by the UN Security Council.
While it looks as if the US may have made enough concessions for it to pass,
possibly by consensus, they fall far short of what is needed to allay the
suspicion that this was a war about oil. If the US is to clear the air - and
secure the international co-operation to help rebuild Iraq and allow the US
rapidly to extricate itself - it will have to take further definite steps.

Above all, it should agree to place the Iraqi oil sector under direct UN
control until the US occupying authority in Iraq has been replaced by a
sovereign Iraqi government. So far, however, the US has moved in the
opposite direction. It has appointed an interim head of the Iraqi oil sector
and placed over him a US-appointed advisory board headed by an American,
Philip Carroll, the former chief executive of Shell Oil. The role earmarked
for the UN in the oil sector is that of a monitor of some financial flows,
not that of a decision maker.

The US should undertake not to decide unilaterally on new contracts for the
reconstruction and development of Iraqi oil, or on any fundamental
restructuring of the sector (such as privatisation), in lieu of a UN
authority. Indeed, all countries should abjure from negotiations behind the
backs of the Iraqi people about past and future oil contracts. As for the
existing contracts and claims on Iraq held by Russia, France and other
countries, the US should respect these. Richard Perle, the Pentagon adviser
fighting charges of financial conflict of interest, told the Russian press
recently that the US would cancel the old Russian contracts. If some of
these contractual claims do indeed contravene international law, their
cancellation should occur through an international legal process, including
direct negotiation between a sovereign Iraqi government and the contractual
counterparts.

The administration should also take steps to bolster America's own
democratic institutions by making completely transparent any links between
US business and Iraqi reconstruction. The contracts recently granted by the
US government to Bechtel, Halliburton and Fluor have caused public
consternation as a result of the intimate links between these companies,
figures in the Bush administration and campaign contributions. Bechtel, it
may be recalled, was active in Iraq in the 1980s, a time when the company
had close ties to the Reagan administration. It is now back in Iraq with a
hefty contract from the US government. The recently granted contracts should
be put out again in a proper bid. All winners of such contracts above a
minimum threshold should abjure from making campaign contributions during
the life of those contracts.

If the US were to agree to these measures, the divide between the US and the
world could be closed quickly. Instead, the US works actively against any
real UN authority, while its inability to back up its pre-war claims about
weapons of mass destruction compounds the world's suspicions. The result has
been to block international co-operation and the recovery of the Iraqi
economy, multiplying the risks and costs to the Iraqi people and the US
occupation forces.

Many Americans may wonder why the US should not simply grab the oil, even if
that was not the real purpose of the war. After all, what could be wrong
with receiving some recompense for toppling Mr Hussein? The answer is the
threat to US democracy itself, as well as to world peace. The US already has
a money-drenched political system, in which cronies secure political favours
via campaign contributions and move seamlessly between industry, the
Pentagon and State Department and the White House. It is a short step from
there to naked imperialism, a system in which public outlays for military
adventures are motivated by the private accumulation of wealth and the blood
of the poor is shed for private gain. Unless the US does more to tackle the
question of Iraqi oil, many observers may conclude that it has already
crossed the line.

The writer is director of the Earth Institute at Columbia University


http://www.guardian.co.uk/Iraq/Story/0,2763,961972,00.html

*  BRITISH FIRMS FIGHT FOR PIECE OF THE ACTION
by Jamie Wilson in London and David Teather in New York
The Guardian, 23rd May

Depending on which camp you are sitting in, the two conferences on
opportunities in the rebuilding of Iraq in west London being held today
represent either a grotesque division of the spoils or a rare opportunity
for British business to steal a march on its European rivals and secure a
piece of the biggest reconstruction effort since the second world war.

Bechtel, the controversial US construction giant which has been given the
contract to manage most of the initial rebuilding, is holding a seminar at
the Hotel Novotel in Hammersmith for companies interested in taking
subcontracts for some of the work. Later the same day Trade partners UK, an
organisation set up by the Department of Trade and Industry and the Foreign
Office, is holding a "workshop" at its headquarters in Victoria, central
London, to advise British business on how best to win a piece of the action.

The initial contracts for rebuilding and reconstruction work in Iraq have
been set at $1.1bn (£687m), but experts estimate that in time this could
become one of the biggest export bonanzas in history, worth up to $100bn.

Around the conference tables will be some of the biggest British
construction companies, including Balfour Beatty and Costain. Betchel's
decision to hold its seminar in London is seen as significant by British
companies, which believe that Britain's role in the war will give them a
significant advantage over rivals from countries which opposed the invasion.

On the outside shouting in will be the Stop the War coalition, which renamed
End the Occupation. It has promised to have its members out in force to
protest at what they see as Britain and America divvying up the spoils of
war.

"These conferences show exactly what the war was all about; the opening up
of Iraq to western markets and to big companies who have no real interest in
helping the people," said Lindsay German, its convener.

Not surprisingly the governments and business leaders deny the allegation,
but the way the contracts have been distributed so far and the noises behind
the scenes have not helped their case. The shortlist of six companies drawn
up for the main contract by USAid (the equivalent of Britain's Department
for International Development) was entirely American. The agency argued that
only US companies had the necessary security clearance and that it was
important to expedite the process.

But the decision outraged British and other European companies. Just as
America's huge and growing defence market is virtually closed to non-US
contractors, so were the multibillion dollar contracts led by USAid. British
companies saw it as a case of history repeating itself. After the
intervention in Kosovo, when Britain was again America's staunchest ally, UK
firms won virtually nothing of the rebuilding. It was the same in
Afghanistan.

But this time the British government was not prepared to sit on its hands
and, much to the surprise of some businessmen, in seems to to have been able
to exert some leverage. Andrew Scott, director of international
competitiveness at the CBI and a member of the British Iraq reconstruction
task force, which was set up to maximise the business opportunities for
Britain, said that lessons had been learned this time around.

"I think [that] clearly there were difficulties in the past, and one of the
things we have been working to is getting this all set up and working more
effectively and smoothly than perhaps happened on those particular
occasion."

It had an immediate effect. USAid opened half the primary contracts to
overseas subcontractors after a call from the trade secretary, Patricia
Hewitt, in March objecting to Britain's exclusion from the initial round.

Since then the attitude towards British firms - although not European ones -
appears to have changed. "At the beginning it looked like we were going to
get nothing," a senior executive of a big large British construction company
said last week. "But suddenly American companies have been approaching us
suggesting joint ventures. This is just speculation on my part, but it feels
as though the order might have come down from on high that they need to get
the Brits on board."

Mr Scott, who visited America last week with Lady Symons, the minister for
trade and investment, to "re-enforce" the contract links with the state
department, USAid and Bechtel, said that as a result of government to
government discussions and the work of the private sector the signs were
looking good. "The US has been making encouraging noises and very supportive
approaches and there will be some significant opportunities for UK
businesses," he said.

Mr Smith said Britain's being such a strong partner in the war had not done
it any harm, but any contracts won would be won on merit."At the end of the
day,you know, business has to be able to demonstrate it can provide the
right services and nobody is going to get anything solely because they were
a coalition partner."

The opportunities are likely to be substantial. USAid is planning to repair
3,000 schools and deliver supplies to another 12,500. About 500 diesel
generators are needed to restore electricity. Roads need rebuilding,
airports refurbishing and ports modernising.

History suggests that once the initial foot in the door has been gained, the
contracts will be worth a lot more. "A lot of federal contracts are
open-ended and the question is how big these will balloon to," said Bill
Allison of the Centre for Public Integrity in Washington. "These companies
are there on the ground and they will have a big leg-up for future
contracts. It's a big advantage."

It is a view shared by Trade Partners UK, which has invited more than 250
blue chip British companies to its seminar today. Representatives of USAid
will be there to give the companies detailed advice on how to win
subcontracts. But it is a safe bet they will not be popping over to Paris or
Berlin to give French and German companies the same advice.

The first round of jobs

‹  $34.6m (£21.6m), rising towards $680m, to Bechtel for infrastucture work
‹  $10m to ABT Associates for health facilities
‹  $7.9m, rising towards $167m, to Research Triangle Institute for local
government
‹  $7.1m to International Resources Group for personnel support
‹  $4.8m to Stevedoring Services of America for managing the port of Umm
Qasr
‹  $4m to Air Force Contract Augmentation programme for logistical support
‹  $2.5m to Skylink Air for logistic support to airport management
‹  $1m to Creative Associates for education


http://www.latimes.com/la-fg-payback23may23,0,7732832.story

*  TO THE VICTORS GO THE SPOILS OF RECONSTRUCTION
by Warren Vieth and Mark Fineman
Los Angeles Times, 23rd May

KUWAIT CITY ‹ When the first wave of U.S. forces secured Iraq's southern oil
fields and ports, British, Australian and Polish soldiers were at their
side, executing daring raids and taking heavy fire from Saddam Hussein's
army.

Now it's payback time.

As Bechtel Group Inc., Halliburton Co. and other U.S.-based prime
contractors award the first wave of subcontracts for the reconstruction of
Iraq, British and Australian firms are among the early winners, and Polish
companies are said to be on the short list for future deals.

Officially, the Bush administration and its private-sector collaborators say
the competition for subcontracts is open to all comers, and awards will be
made to the most qualified companies without respect to their country of
origin.

But in corporate suites and foreign capitals ‹ and in the swank Kuwaiti
hotels that have become the nerve centers of postwar reconstruction ‹ the
word is making the rounds: When it comes to rebuilding Iraq, America's
military partners are first among equals.

"We're certainly encouraging our contractors to hire coalition partners to
do subcontract work," said one U.S. official directly involved in the
reconstruction effort, who spoke on condition of anonymity.

The government may not be dictating the choice of subcontractors, but a
little encouragement can go a long way in contracting circles.

"The general hope is that companies whose countries fought in the war will
be the ones who participate in the economic reconstruction," said Equity
International Inc. President William Loiry, who is coaching would-be
contractors on opportunities in Iraq. "I don't know what the definition of
fair share would be, but I think they will wind up with the majority of
contracts and subcontracts."

They have certainly fared well so far.

When the U.S. Agency for International Development picks a location for its
reconstruction headquarters in Baghdad, the site preparation work will be
turned over to Crown Agents, a British firm founded in 1833 to procure goods
for colonial outposts. Crown was hired by International Resources Group, a
U.S. consulting firm that won a $7-million prime contract to help USAID plan
and manage reconstruction projects.

Other British firms are getting in on the postwar action, too.

Weir Group, Scotland's biggest engineering firm, received a six-figure
subcontract from Halliburton's Kellogg Brown & Root subsidiary to assess the
state of oil pumping equipment in southern Iraq. The firm hopes the
evaluation work will lead to bigger assignments to repair and upgrade Iraq's
antiquated oil infrastructure.

"Yes, we would be interested, obviously," said Weir spokeswoman Helen
Walker, who noted that some of the oil pumps were installed decades ago by a
firm eventually acquired by Weir. "We've worked with Halliburton in the
past. We know the area. We'd like to think it's our expertise and our
knowledge that have allowed us to carry out this assessment."

One of the more forthright examples of private-sector coalition-building is
a joint venture between Amec, Britain's biggest engineering and construction
firm, and Orange County based Fluor Corp., one of its main American rivals.
The firms intend to submit a joint bid on a big long-term contract to
rebuild the Iraqi oil industry. If the U.S. Army Corps of Engineers accepts
their offer, Fluor would hold a 51% stake and Amec 49%, satisfying
government requirements that prime contracts go to U.S. majority-owned
ventures.

Fluor spokesman Jerry Holloway said Fluor and Amec have been partners in
previous projects around the world, and their prospective collaboration in
Iraq involves more than postwar geopolitics.

"Obviously, the fact that it's a British company is not lost on us,"
Holloway said. "We're not going to shyly demur on the obvious
British-American nature of this team. But it's not a new, knee-jerk reaction
to the political environment. If Amec didn't have what it has in terms of
resources and experience, it would be unlikely we would see any reason to go
into this kind of arrangement."

Australia contributed about 2,000 military personnel to the war. Its navy
provided gunfire support to coalition troops in southern Iraq and helped
clear mines from the port of Umm al Qasr. Its special operations troops
participated in an early clandestine attack, ambushing Iraqi soldiers at
Scud missile sites before the first U.S. bombs were dropped in Baghdad.

Now, as the coalition turns its attention to repairing the damage caused by
25 days of war and 25 years of neglect, Aussies and Americans are again
working side by side.

SkyLink Air & Logistical Support, a U.S. firm holding a $10-million prime
contract to manage Iraqi airports, has farmed out part of the work to
Patrick Corp. of Australia.

Patrick personnel are already on the tarmac determining what needs to be
done to restore operations at Baghdad's main airport.

Although it is the first time SkyLink has ever partnered with Patrick, a
SkyLink official said the decision was not made in response to U.S.
government pressure.

"It's purely a need point of view," said Mike Douglas, SkyLink's liaison
officer on the ground in Baghdad. "They were flexible enough to come under
these conditions and do what's amounting to a very good job."

In Australia, however, the relationship is seen as a harbinger of future
deals for other firms. About 170 Australian companies participated in a
reconstruction conference earlier this month in Sydney, where Foreign
Minister Alexander Downer told reporters "our companies are feeling
confident they're going to get a number of contracts."

Poland's contribution to the Iraq offensive was relatively small, but the
200 or so military personnel it sent to Iraq were involved in some of the
key operations in the early days of the war. Polish commandos helped U.S.
Navy Seals seize two offshore oil terminals, a pair of pumping plants and a
metering station.

Since the war's end, Polish government and private-sector officials have
been aggressively seeking reconstruction work and expressing confidence that
their support for the U.S. military campaign would pay off.

"Poland's active participation in the coalition opens up new possibilities
for Polish companies to participate in the rebuilding of Iraq," the
government said in a statement.

"We do not hide the fact that our support for the United States should be
helpful in securing contracts for our companies," Polish Infrastructure
Minister Marek Pol told reporters in Athens last month, according to
Reuters.

Among the likely participants is Rafineria Gdanska, a state-owned oil
company that will soon be privatized. RG officials have been discussing a
possible reconstruction subcontract with representatives of Kellogg Brown &
Root, the Halliburton subsidiary that has been tapped to get Iraq's oil
sector up and running again.

"The Americans pay money and they will make decisions," RG President Pawel
Olechnowicz told the Oil & Gas Journal. "That they include Poland in part of
the project is a fact."

Denmark, which deployed a submarine to monitor Iraqi intelligence and
provide early warning support during the war, could also reap postwar
rewards.

A.P. Moeller, a Danish oil and shipping firm, said it had been told by
Denmark's foreign minister the U.S. is interested in its potential
participation in reconstruction. No deal has yet been struck, but the
company said further discussions are possible.

"Other Danish companies with other expertise have been approached," Moeller
Vice President Jette Clausen said. "I think it was a general approach to the
Danish government. Being part of the coalition, of course they'll be asked
before somebody else."

U.S. officials have not released a list of reconstruction contractors and
have referred questions about their selection to the prime contractors.
Under the law, contracts awarded by USAID must go to U.S.-owned firms, and
the government cannot dictate the choice of subcontractors. Administration
officials have said they anticipate that roughly half of the subcontracts
would be awarded to foreign companies.

Bechtel, which received a $680-million prime contract to manage
infrastructure repairs in Iraq, insists that its choice of subcontractors is
not influenced by politics.

"There is no preference for contractors from any individual country or group
of countries," Bechtel spokesman Howard Menaker said in Washington.

Loiry, whose Washington-based investment firm organized a reconstruction
conference that attracted representatives of 400 companies from 25
countries, said the U.S. government does not appear to be forcing prime
contractors to hand out work to firms from coalition countries. But he said
the widespread expectation of preferential treatment may become
self-fulfilling.

"Their perception they will get the contracts will help make that a reality,
because those are going to be the companies and the countries that are more
aggressive in attending the conferences and making the connections and going
after the subcontracts," Loiry said.

Only a dozen or so subcontracts have been announced publicly, and it is not
known how many ultimately will go to firms based in coalition countries.

Besides British and Australian firms, companies based in Saudi Arabia and
Kuwait have been among the initial subcontract winners.

So far, no French companies have made the list.


http://www.washingtonpost.com/wp-dyn/articles/A33063
2003May23.html?nav=hptop_ts

*  SMUGGLERS CREATE DIESEL-FUEL CRUNCH IN IRAQ
by Peter S. Goodman
Washington Post, 24th May

BASRA, Iraq -- As caravans continue to truck gasoline into Iraq from Kuwait
to relieve critical shortages, a flotilla of tankers is daily carrying
hundreds of thousands of gallons of diesel fuel in the opposite direction --
out of Iraq via the Persian Gulf, using the same smuggling routes that long
enriched the regime of Saddam Hussein, according to state oil industry
officials and workers involved in the stealth trade.

The smuggling is crimping the supply of diesel in Iraq, enraging truck
drivers now unable to buy fuel except at black-market prices. Managers at
Iraq's state oil companies, struggling to provide sufficient stocks to a
nation bitter about daylong waits at gas stations, are equally livid. The
trade is occurring as the country with the world's second-largest oil
reserves finds itself dependent on imported energy to meet its domestic
needs.

State oil company officials say they have repeatedly complained to the
British military authorities in control of this southern city -- a hub for
the country's most significant petroleum operations. But while the British
have stepped up patrols around pipelines and storage tanks, the smuggling
continues.

"Smuggling is the major reason for the shortage of gas," said Abdul Ridha
Hussein, director of the southern Iraq operations of the state Oil Products
Distribution Co. "We're not satisfied with the British response. No one has
been punished, no one is afraid. They simply are not stopping this
smuggling."

A spokesman for the British army said his forces were doing the best they
could with limited manpower and the press of other responsibilities. "Only a
month ago, we were fighting with fixed bayonets," said the spokesman, Maj.
James Kelly. "There are 1.5 million people in Basra, and I suspect the
entrepreneurial spirit is thriving."

Basra's refinery, one of three large refineries in Iraq, is producing about
500,000 gallons of diesel per day, roughly half of its prewar capacity. The
smugglers are making off with much of it and are supplementing their loads
by stealing diesel stored in tanks before the war.

Some smugglers are drilling into pipes between the refinery and shipping
terminals at ports on the nearby Khawr al-Zubair waterway, according to
Hussein and other oil industry officials, in an account confirmed by a pilot
engaged in the trade. They have already exhausted the large tanks at the
port of Faw, according to the pilot, who spoke on condition he not be named.

In many instances, gas station owners with the rights to shipments of diesel
from the distribution companies are paying off drivers to divert them to
tanker ships waiting to ferry the fuel into the gulf, the sources said. Gas
stations typically pay the distribution company about $200 for a truck
carrying about 9,000 gallons of diesel, according to Mohammed Jawad, a
company account manager. The stations are supposed to sell the fuel at state
controlled retail rates that allow for a reasonable profit. But the same
load can fetch 15 times as much once it enters the gulf, and 30 times as
much once it reaches the gulf emirate of Dubai.

"This is well organized," said Jabbar Luaabi, head of the South Oil Co., the
largest of Iraq's state oil companies. "There is a lot of smuggling."

One recent afternoon, four tanker trucks could be seen parked on the
promenade that runs along the Shatt al Arab waterway in Basra, a popular
place for residents to enjoy the sunset. Hoses extended from the trucks over
the sidewalk and into the bellies of fishing boats floating at a long pier.
Men tended the valves at the back of the trucks, three of which lacked
license plates. The fourth showed plates from Iraq's Ministry of Trade.

The men tending the trucks said they were delivering fuel to the fishing
boats. But the pilot -- who was preparing to depart on a smuggling run the
following day -- said each boat contained fuel tanks where the air
compressors and freezer cabinets had once been. They would float into the
gulf, then rendezvous with larger ships that would buy their cargo and carry
it to Dubai. There it would be sold for local use or pumped into
supertankers and carried off to global markets, the pilot said.

Less than 200 yards from the trucks, three British soldiers sat on a tank
parked on the street and two others stood on the sidewalk nearby -- a
routine patrol. They did not inquire about the tanker trucks, and the men at
the pier continued to work.

During and right after the war, "you didn't see one drop on the Shatt al
Arab," the pilot said. "We were afraid. But now they come by truck, they
load with hoses. They do everything. Nobody is afraid. If the British people
had only two small boats or a floating checkpoint, believe me, all this
smuggling would stop."

The pilot said dozens of fishing boats -- capable of carrying 60,000 to
90,000 gallons of fuel each -- operate from the pier. Meanwhile, 10 tankers
capable of carrying as much as 240,000 gallons each are using Abu Flous as
the jumping-off point for runs to Dubai.

The smuggling represents the resumption of a covert industry that was a
vital source of funds for Saddam Hussein, outside of the oil-for-food
program administered by the United Nations. Despite international sanctions,
pipelines and tanker trucks carried crude oil and diesel to Syria and Turkey
during Hussein's regime. Tanker ships carried it into the gulf.

In a bid to reduce diversions of diesel, the distribution company now limits
its daily shipments to the 28 gas stations in the Basra region. Previously,
all stations got at least two tanker truckloads and some received three or
four. Most now get only one.

That move has further constricted the supply, providing those with access to
diesel even more opportunity to wring profit. According to angry truck
drivers, most gas stations are charging five times the state-regulated price
of about 6 cents a gallon.

That helped explain why Hakim Khadum was sitting by the side of the road in
Basra on a recent morning, his tractor-trailer parked in the sun, its fuel
tank nearly empty. He had driven here from Najaf hoping to land a cargo job,
something he has yet to find since the war began two months ago.

"There's no economy. It's impossible to get jobs and nearly impossible to
get fuel," he said. "It's all being smuggled."

Without fuel, he could not drive around and look for work. So he just sat,
blinking through the desert haze, hoping that somehow work would come and
find him.


RFE/RL IRAQ REPORT Vol. 6, No. 23, 23 May 2003

*  INTERNATIONAL FIRMS VIE FOR RECONSTRUCTION ROLE
by Kathleen Ridolfo

[.....]

But, what about Iraq's neighbors? Some have already begun taking the
initiative to foster crossborder trade and business developments. A
conference on doing business in Iraq will be held in Amman on 2 June, "The
Jordan Times" reported on its website on 19 May
(http://www.jordantimes.com/).

The one-day conference will be sponsored by the Amman Chamber of Industry
(ACI), the Information Technology Association (int@j), and the American
Chamber of Commerce in Jordan (JABA). Citing an ACI press release, "The
Jordan Times" reported that representatives from U.S. firms holding
contracts in Iraq, UN officials, and U.S. and Jordanian officials involved
in the reconstruction process will participate in the conference. USAID and
ORHA representatives are also expected to attend. The decision to hold such
a conference is likely related to issues addressed during a 9 May meeting
between Jordanian Prime Minister Ali Abu al-Raghib and Abbud al-Tufayli, the
president of the Federation of Iraqi Chambers of Commerce, which focused on
ways to renew cooperation and trade between the two neighbors. In addition,
the U.S. Embassy in Amman (http://usembassy amman.org.jo/iraqr.html)
launched a new resource webpage, "Iraq Reconstruction," the embassy's
website announced on 6 May. The page provides links to the USAID, which
lists available contracts in Iraq.

Likewise, Turkish businessmen are making use of the reopened Turkish Trade
Consulate in Baghdad, "Anatolia" reported on 15 May. Trade Counselor Metin
Deger told the news agency that the trade consulate was working to assist
Turkish businessmen in finding opportunities in Iraq. Turkish Ambassador to
Iraq Osman Paksut eagerly predicted that Turkish businessmen would dominate
investment throughout Iraq, saying, "It will be seen soon that the
speculations saying that Turkey has lost its commercial power here after the
war are not true. Iraq is a rich country, Turkey will help in all issues to
make Iraq reach [a] level of prosperity again." Firms from Kuwait and the
Gulf States are also expected to benefit from reconstruction contracts.

Contracts to Arab firms would surely contribute to the overall regional
economy and foster stronger ties within the region. It would also serve the
U.S.'s stated goal announced by Secretary of State Colin Powell in November
2002 to revitalize the region economically and politically through the
Middle East Partnership Initiative and, more recently, President George W.
Bush's goal of establishing a U.S.-Middle East Free-Trade Area within 10
years.




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