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[casi] Contractors Importing Labor Into Iraq (Financial Times)

The 14 October Financial Times carried the noteworthy article Nicolas
Pelham, "Contractors in Iraq accused of importing labour and exporting
profit", Financial Times, 14 October 2003.  The lead paragraph states "US
sub-contractors are importing cheap migrant labour from south Asia to Iraq,
despite high local unemployment and complaints from Iraqi contractors that
they are being overlooked by the US-led administration in Baghdad."  The
full text appears above the below footnotes.

According to the October joint UN/World Bank needs assessment, "Exact
unemployment is not known, but estimates are that 50 percent of the labor
force is either unemployed or underemployed." (1)  This follows 13 years
during which the 1991 Gulf War's infrastructural damage, UN Security Council
economic sanctions, Government of Iraq's (GoI) continued military spending
prioritization, and GoI's use of economic measures to repress specific Iraqi
groups, all (especially Security Council economic sanctions) contributed to
cyclical unemployment, entrenched poverty, and low household purchasing
power.  As the Donald Rumsfeld/Paul Bremer-commissioned, joint Center for
Strategic and International Studies (CSIS), Council on Foreign Relations,
and UN Foundation assessment team rightly stated on 17 July,

"The immediate needs will be providing short-term employment opportunities
to keep people off the streets and refurbishing basic services such as
electricity, water, and sanitation, to avoid exacerbating political and
security problems." (2)

Given both the economic and related security implications, it seems
noteworthy that the US failed/is failing to contractually require contracted
parties to employ Iraqis/contract with Iraqi entities, excluding those
instances where contracted entities reasonably demonstrate there are
entirely insufficient Iraqi capabilities to perform the tasks for which the
contracted have been contracted.  It seems the pressing need for employment
ought to trump all other considerations, except when employing/contracting
Iraqis will seriously undermine "refurbishing basic services", especially
electricity, water, and sanitation .

Source: Nicolas Pelham, "Contractors in Iraq accused of importing labour and
exporting profit", Financial Times, 14 October 2003


US sub-contractors are importing cheap migrant labour from south Asia to
Iraq, despite high local unemployment and complaints from Iraqi contractors
that they are being overlooked by the US-led administration in Baghdad.

US officials in the Iraqi capital say that six months into their occupation
of Iraq, security conditions have forced companies to turn to south Asian
labour to implement contracts, from prison-building to catering for US

Recent weeks have seen unrest in several major cities, including the capital
Baghdad, amid rising anger at Iraq's high unemployment rate.

"We don't want to overlook Iraqis, but we want to protect ourselves," says
Colonel Damon Walsh, head of the Coalition Provisional Authority's
procurement office. "From a force protection standpoint, Iraqis are more
vulnerable to a bad guy influence."

US troops and some companies under contract to the US government
nevertheless seem prepared to take the "risk".

Iraqis form the bulk of the workforce for reconstructing Iraq's prisons.
General Janis Karpinski, who is overseeing the prison programme, says she
has had "no single security incident" involving Iraqi contractors.

"You find other (non-Iraq) nationalities in out-of-the-way corners taking 15
minute naps," she says. "Iraqis see work as a way of getting the country on
its feet."

Bechtel, which is handling a Dollars 680m (Euros 577m, Pounds 408m)
reconstruction programme for USAid, has meanwhile held open days for Iraqi
contractors and intends to spend Dollars 215m of Dollars 300m on Iraqi

"If the work can be done by an Iraqi firm at a competitive price that's
who's going to do it," says Francis Caravan, Bechtel spokesman in Baghdad.

But a number of businesses based in Saudi Arabia and other Gulf states that
have contracts to supply the US army are wary of employing indigenous

"Iraqis are a security threat," says a Pakistani manager in Baghdad for the
Tamimi Company, based in the Saudi city of Dammam, which is contracted to
cater for 60,000 soldiers in Iraq. "We cannot depend on them."

The company, which has 12 years' experience feeding US troops in the Gulf,
employs 1,800 Pakistanis, Indians, Bangladeshis and Nepalese in its
kitchens. It uses only a few dozen Iraqis for cleaning.

In the dusty backyard of the US administrators' Baghdad palace, south
Asians, housed 12 to a Saudi-made temporary cabin, organise 180,000 meals a
day for US troops and administrators.

A Tamimi manager says the company pays an average salary of one Saudi riyal
(Dollars 3) a day and grants leave once every two years. The contracts are
awarded by Kellogg Brown and Root (KBR), a subsidiary of Halliburton, which
in 2001 won its second Logistics Civil Augmentation Program, or Logcap,
contract to sub-contract the supply of US military provisions. The Logcap is
open-ended and its Iraqi share is worth "in excess of Dollars 2bn",
according to officials of the Defence Contract Management Agency in Baghdad.

"The US military have never outsourced resources on this scale," says the
DCMA's Colonel Damon Walsh. "If it weren't for this service support we would
have needed at least 20,000 more troops." KBR officials in Baghdad declined
to provide details of their employment policy in Iraq, or the size of their
Asian workforce.

However, Patrice Mingo, a KBR spokesman in Houston, says: "We buy as much as
can locally and if we are unable to buy locally we go the Middle East. We
look at Iraqis first, but we don't track our employees by ethnicity."

The potential for ill-feeling nevertheless remains. "US contractors are
importing labour and expatriating the benefits," says Hakim Awad, an Iraqi
construction manager who queues for contracts outside Baghdad Airport every
day. "Where's the benefit accruing to Iraq?"

Under a new Iraqi investment law, foreigners can own companies in full and
export all the profits. US officials say they encourage firms to employ
Iraqis but do not stipulate a minimum percentage for Iraqi employees.

The recourse to an Urdu-and Bengali-speaking workforce has historical echoes
for Iraqis, who recall the south Asian workers the India Office imported to
maintain the British army following their invasion of Iraq during the first
world war.

Some also fear the replication of labour patterns from Gulf states, whose
economies are dependent on Arab and Asian migrants.


1. United Nations and World Bank, "Joint Iraq Needs Assessment", October
2003, footnote 15, pg. 8,$File/Joint+Needs+Assessment.pdf
2. John Hamre, Frederick Barton, Bathsheba Crocker, Johanna
Mendelson-Forman, Robert Orr, "Iraq's Post-Conflict Reconstruction: A Field
Review And Recommendations", 17 July 2003, pg. 5,

Nathaniel Hurd
Consultant on Iraq policy
Tel. (Mobile): 917-407-3389
Fax: 718-504-4224
777 1st Avenue (E. 44th St./1st Ave.)
Suite 7A
New York, NY  10017

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