Posted on 01/27/2007 5:28:46 PM PST by blam
US to reopen Iraq's factories in $10m U-turn
By Aqeel Hussein in Baghdad and Colin Freeman, Sunday Telegraph
Last Updated: 12:11am GMT 28/01/2007
US officials in Iraq are planning to re-open lumbering state industries set up as part of Saddam Hussein's command economy in an attempt to bring jobs to the country's most troubled areas.
Moribund government-owned plants, including ageing tractor factories, tyre manufacturers and cement companies, have been earmarked for a multi-million dollar scheme designed to lure Iraqis away from the insurgents' payroll.
A worker recycles glass at an oil lamp factory in Baghdad
The plan represents an extraordinary U-turn on the part of President George W Bush's officials in Baghdad, who in 2003 insisted on an aggressive privatisation programme which forced Iraq's 240 public enterprises to operate without subsidy, or close.
They viewed the bloated state sector, with its inflated workforce of 300,000 people, as little more than a tool of patronage used by Saddam to cement the rule of his Arab Ba'ath Socialist Party.
Now, however, with the country facing civil war, such Stalinist state enterprises are to get a second lease of life, this time courtesy of a Republican administration better known as a staunch advocate of free-market economics.
Under plans outlined to The Sunday Telegraph by Paul Brinkley, the American deputy under-secretary of defence for business transformation, officials have drawn up a priority list of 10 factories that they plan to kick-start with a $10 million (£5.4 million) cash injection.
Mr Brinkley admitted that some sceptics had jokingly branded him a "Stalinist," but said: "We've looked at some of these factories more closely and found they aren't quite the rundown Soviet-era enterprises we thought they were.
Some have new equipment, savvy managers and a significant amount of idle capacity. By getting people into jobs, we can hopefully cut the unemployment that has been a significant contributor to the insurgency."
US officials have declined to name the factories, fearing they could become targets for insurgents. But they are thought to include a dormant ceramics factory near Ramadi, west of Baghdad, and a factory producing Antar tractors - a copy of a 1950s British design - in Iskandaria, south of Baghdad. Both are Sunni insurgent hotspots.
By any normal measure, both would be considered economic basket cases. However, as in Saddam's time, their main use will be not in turning a profit but in keeping people in jobs. It is estimated that the 10 factories could employ up to 11,000 Iraqis, helping to drain the insurgent recruiting pool.
Even with public assistance, it is far from clear whether there will be a demand for their products. Since the lifting of international sanctions following the US-led invasion in 2003, Iraq has been flooded with imported goods from Asia and the rest of the Middle East, mostly cheaper and better-made than anything state industry offered.
While the US scheme focuses on insurgent-prone areas, a parallel Iraqi government scheme aims to attract foreign know-how and investment to state factories in more stable regions.
Iraq's industry minister, Dr Fawzi Hariri, who came to London last week to woo British businesses, said: "The idea is to rehabilitate them and produce high-quality goods, although one area we are not concerned with is international competitiveness - because everything we produce is required by the domestic market."
He estimated that about £760 million was needed to revamp the state sector, which he hoped would come from both Iraqi government coffers and foreign companies. Most factories, he pointed out, were in areas largely untouched by the insurgency, and investors prepared to shoulder some risk could end up securing assets with huge potential.
Dr Hariri will need considerable salesmanship skills for some items on the state portfolio, such as the General Company for the Vegetable Oil Industry, a leviathan of crumbling detergent factories which deliberately had extra stages of production built in to employ more people.
Shortly after the fall of Saddam, the company had no computers, a motley range of hopelessly outdated products such as "Girl Brand Cooking Oil", and a payroll of 4,000 staff, few of whom ever did more than half a day's work.
The factory renovation programme, which will be jointly funded by the US and Iraq, is billed as part of Mr Bush's new strategy of ramping up economic aid and reconstruction, in tandem with the 21,500 extra troops being sent to help stem violence.
Wow. And it only took five years ....
Waste of funds. Expect to see most if not all the new equipment pinched and sold off to the blackmarket, corrupt managers cashing in on phantom employees and of course infestation of the companies by jihadists. Once again, this money is basically being flushed down the toilet.
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